Nasdaq, Inc.
NASDAQ, INC. (Form: DEF 14A, Received: 03/29/2017 16:27:03)
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.     )

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Nasdaq, Inc.

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LOGO

Notice of 2017
Annual Meeting
of Stockholders
and Proxy Statement
WEDNESDAY, MAY 10, 2017
8:30 A.M. (EDT)
Nasdaq
FMC Tower
2929 Walnut Street
Philadelphia, PA 19104
Nasdaq


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MARCH 29, 2017

 

 

Dear Fellow Stockholders,

 

The Board of Directors works closely with the management team to develop and execute a sound strategic and governance framework to ensure Nasdaq is focused on the issues, investments and application of resources that will position the company to realize its fullest potential and maximize long-term value creation. In 2016, as stewards of your company, we helped guide Nasdaq through a period of significant progress that we believe further establishes a foundation for the company to better serve its clients and the capital markets in the months and years to come. We are pleased to share with you our progress and thoughts on the year regarding the actions we took on your behalf.

 

Leadership for the Future

 

Cultivating a leadership team with strong vision and a diverse skillset has always been a priority for this Board. Detailed succession planning and talent development are vital to sound management of risk and the achievement of our long-term objectives. Following a well-developed, multi-year succession plan, we were extremely pleased to appoint Adena T. Friedman as President and CEO of Nasdaq. Having spent most of her career at Nasdaq, Adena brings a passion, energy and insight to the role that we believe uniquely positions her for success. She was instrumental in helping Bob Greifeld steer the strategic transformation of the company’s business model–which now generates approximately 75% of its revenue from subscription and recurring sources. We look forward to continuing to work with her as she builds on the remarkable progress made over the last 14 years under Bob’s leadership. This, along with the other additions to the leadership team, including the appointment of Michael Ptasznik as EVP, Corporate Strategy and CFO, Stacie Swanstrom as EVP, Corporate Solutions and Bjørn Sibbern as EVP, Global Information Services, gives us great confidence in the company’s ability to continue to execute on its long-term strategy and growth objectives.

 

In addition, there were significant leadership transitions announced at the Board level. Börje E. Ekholm, who served as Chairman of our Board from May 2012 through December 2016, will end his service as a director at our 2017 Annual Meeting after being named CEO of Ericsson. We thank Börje for his service and contributions to the Board and Nasdaq and wish him well. Bob Greifeld, who stepped in to act as Chairman of the Board in January 2017 during this period of transition, also will end his service as a director at the 2017 Annual Meeting. We also wish to thank Bob for his 14 years of service as CEO of Nasdaq. During his tenure, he took Nasdaq from a small U.S. equities exchange to a global financial technology and capital markets franchise that is worth over $11 billion today. Following our 2017 Annual Meeting, the Board will elect a new Chairman. We continue to evaluate our Board composition to ensure that we have the right balance of viewpoints and expertise.

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Oversight of Allocation of Capital and Long-Term Strategic Priorities

 

Sound capital allocation continues to play an important role in the company’s strategy and the achievement of its long-term objectives. The Board is fully involved in thoughtful allocation of capital and the investments the company makes in its future. To this end, we re-initiated the Finance Committee in 2016 to review the corporate capital plan and ensure we remain focused on maximizing value for our stockholders through the strategic deployment of capital.

 

In 2016, Nasdaq continued to execute across a number of areas that greatly enhance its capabilities to serve clients and strengthen its competitive position as a leading provider to the global capital markets. For example, we completed four strategic transactions that enhance our capabilities across our Market Services segment with the acquisitions of the International Securities Exchange, the operator of three U.S. equity options exchanges, and Nasdaq CXC, formerly Chi-X Canada, an alternative Canadian equity trading platform, and across our Corporate Solutions business with the acquisitions of Marketwired, a global provider of news distribution services, and Boardvantage, a leading board collaboration and productivity platform. The company is well on its way to achieve the synergy targets for these acquisitions along with the benefits they provide the business and clients.

 

In addition, the company continued to make progress with important organic investments such as NFX, Nasdaq’s energy futures market, which has represented one of the most successful market launches in the company’s history. NFX continues to grow both volumes and client base since its launch in 2015 and continues to play a vital role in Nasdaq’s overall long-term growth strategy.

 

Technology has always been fundamental to Nasdaq’s strategy to better serve its clients, and as such, the Board is keenly focused on investments in areas that are driving its future. Last year, the company made significant progress to enhance its use of emerging technologies like blockchain, machine intelligence and the cloud. Staying ahead of these trends is vital to evolving and advancing the company’s Market Technology segment and continuing to meet clients’ growing demand for these services as the pace of technology change accelerates across the industry. The high point of these efforts in 2016 was the development of the Nasdaq Financial Framework, which brings together all the elements of Nasdaq’s market technology capabilities into a single platform. This framework will enable clients to take full advantage of all the technology that Nasdaq continues to invest in and develop and accelerate the pace of their own initiatives and objectives.

 

Core to this effort is Nasdaq’s robust R&D process, which continues to fund key proofs of concept like the blockchain-driven proxy voting solution that we are developing in Estonia as well as many others. The Board will continue actively to monitor the R&D process to ensure that Nasdaq is developing the kinds of opportunities that better serve clients and lead to long-term value creation.

 

Cybersecurity is another area of increasing focus for us. Cybersecurity is a critical component of our risk assessment and mitigation framework. To this end, Nasdaq today utilizes an array of tools, processes and policies to prevent, detect and respond to attacks and ultimately to mitigate risk for its own internal systems and those of its client-facing systems. To this end, in 2016 the Audit Committee approved a strategic plan that establishes a critical long-term framework to monitor and mitigate cyber risk.

 

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Developing and Maintaining a Strong Ethical Culture

 

In addition to ensuring a long-term focus, sound capital allocation management practices and measures to control risk, the Board works very closely with the management team to ensure that a proper ethical tone is established at the top. Nasdaq plays a vital role in the global economy that is built on trust and doing the right thing. As a role model to companies, regulators and the clients and constituents we serve, we take this responsibility very seriously, and acting with integrity is a core value of our culture. As such, the Board regularly reviews the company’s initiatives and programs to ensure the ongoing development of a strong ethical culture. Last year the company rolled out a number of new initiatives internally to increase awareness of ethics and compliance issues and strengthen channels for employees to anonymously bring potential issues to the management team. Our strong commitment to our values, transparency and sound business practices have always been crucial to our success and a top focus of the management team and the Board.

 

Listening to Your Views

 

In addition to the highlights and areas of focus mentioned above, your feedback and input are vital to the progress we make as a public company. As such, we continue to work with stockholders to increase the level and transparency of our stockholder engagement. As an example and as a result of your input, last year we adopted “proxy access,” which enables stockholders that meet the requirements set forth in the By-Laws to place a limited number of additional nominees for director on the ballot. We view engagement with our stockholders as vital to our long-term success.

 

Finally, your support is important and we value your opinions, suggestions and feedback about our company and governance practices. You can submit your views by writing to us at: AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan Conley, SVP and Corporate Secretary, 805 King Farm Blvd., Rockville, MD 20850.

 

Nasdaq continues to play a critical role at the intersection of the capital markets and technology. Through a thoughtful strategic approach and governance framework, the Board will continue to work on your behalf to ensure Nasdaq continues advancing its business to better serve broker-dealers, exchange operators, clients, investors and employees—and foremost—you, our stockholders. We thank you again for your support and confidence.

 

 

The Board of Directors of Nasdaq, Inc.

 

March 29, 2017

 

Charlene T. Begley   /   Steven D. Black   /   Börje E. Ekholm   /   Adena T. Friedman

 

Robert Greifeld   /   Glenn H. Hutchins   /   Essa Kazim   /   Thomas A. Kloet

 

Ellyn A. McColgan   /   Michael R. Splinter   /   Lars R. Wedenborn

 

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Wednesday, May 10, 2017

 

8:30 a.m. (EDT)

 

Nasdaq

 

FMC Tower

 

2929 Walnut Street

 

Philadelphia, PA 19104

 

To the Stockholders of Nasdaq, Inc.:

 

You are receiving this proxy statement because you were a stockholder at the close of business on the record date of March 13, 2017 and are entitled to vote at the meeting. The Annual Meeting will be held to:

 

·    elect nine directors for a one-year term;

 

·    approve the company’s executive compensation on an advisory basis;

 

·    conduct an advisory vote on the frequency of future advisory votes on executive compensation;

 

·    ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017;

 

·    consider a stockholder proposal described in the accompanying proxy statement, if properly presented at the meeting; and

 

·    transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the meeting.

 

We urge you to read the attached proxy statement for additional information concerning the matters to be considered at this meeting.

 

If you plan to attend the meeting in Philadelphia, you will need to request an admission ticket in advance and present a valid form of photo identification and proof of ownership of our common stock as of the record date as detailed on page 69 of the proxy statement. Please plan to arrive at the meeting location in enough time to check in and join the meeting.

 

If you are unable to attend in person, please join the live webcast from our Investor Relations website.

 

By Order of the Board of Directors,

 

Adena T. Friedman

 

President and CEO

 

New York, New York

 

March 29, 2017

 

 

   

How to Vote

 

Your vote is important. You are eligible to vote if you were a stockholder of record at the close of business on March 13, 2017.

 

Please read the proxy statement with care and vote right away using any of the following methods and your control number.

 

    LOGO    By Internet Using Your
     Tablet or Smart Phone
    

Scan this QR code 24/7 to

vote with your mobile device

 
    LOGO   

By Phone

Call +1 800 690 6903 in the

U.S. or Canada to vote your

shares

    
 
    LOGO   

By Internet Using Your

Computer

Visit 24/7

www.proxyvote.com

    
    
 
    LOGO   

 

By Mail

Cast your ballot, sign your

proxy card and return by

free post

    
 
    LOGO   

Attend the Annual Meeting

Vote in Person

    
   

 

Join the live webcast of the meeting from our Investor Relations website:

http://ir.nasdaq.com/annual-meeting-info.cfm

 

 

 


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Proxy Summary

 

            

Corporate Governance

 

   

Corporate Governance Framework

 

    

 

 

 

 

   

Corporate Responsibility and Focus on Entrepreneurship

 

    

 

12 

 

 

 

   

Stockholder Outreach

 

    

 

13 

 

 

 

   

Stockholder Communication with Directors

 

    

 

13 

 

 

 

Board of Directors

 

   

Proposal 1: Election of Directors

 

    

 

14 

 

 

 

   

Board Committees

 

    

 

19 

 

 

 

   

Director Compensation

 

    

 

24 

 

 

 

Named Executive Officer Compensation    

 

Proposal 2: Approval of the Company’s Executive Compensation on an Advisory Basis

 

    

 

27 

 

 

 

   

 

 

Compensation Discussion and Analysis

 

    

 

28 

 

 

 

   

Business Performance Highlights

 

    

 

28 

 

 

 

   

Pay for Performance Framework

 

    

 

29 

 

 

 

   

What We Pay and Why: Elements of Executive Compensation

 

    

 

33 

 

 

 

   

Risk Mitigation and Other Pay Practices

 

    

 

42 

 

 

 

   

Management Compensation Committee Report

 

    

 

44 

 

 

 

   

Management Compensation Committee Interlocks and Insider Participation

 

    

 

44 

 

 

 

   

Executive Compensation Tables

 

    

 

44 

 

 

 

   

2016 Summary Compensation Table

 

    

 

45 

 

 

 

   

2016 Grants of Plan-Based Awards Table

 

    

 

47 

 

 

 

   

2016 Outstanding Equity Awards at Fiscal Year-End Table

 

    

 

48 

 

 

 

   

2016 Option Exercises and Stock Vested Table

 

    

 

49 

 

 

 

   

2016 Pension Benefits Table

 

    

 

49 

 

 

 

   

2016 Non-Qualified Deferred Compensation Table

 

    

 

50 

 

 

 

   

Employment Agreements

 

    

 

50 

 

 

 

   

Potential Payments upon Termination or Change of Control

 

    

 

52 

 

 

 

   

Proposal 3: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

 

    

 

58 

 

 

 

Audit Committee Matters

 

   

Audit Committee Report

 

    

 

59 

 

 

 

   

Annual Evaluation and 2017 Selection of Independent Auditors

 

    

 

60 

 

 

 

   

Proposal 4: Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2017

 

     61   

Other Items

 

   

Proposal 5: Stockholder Proposal – Right to Act by Written Consent

 

    

 

62 

 

 

 

   

Other Business

 

    

 

64 

 

 

 

   

Section 16(a) Beneficial Ownership Reporting Compliance

 

    

 

64 

 

 

 

   

Security Ownership of Certain Beneficial Owners and Management

 

    

 

64 

 

 

 

   

Executive Officers

 

    

 

66 

 

 

 

   

Certain Relationships and Related Transactions

 

    

 

68 

 

 

 

   

Questions and Answers About our Annual Meeting

 

    

 

69 

 

 

 


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COBRA

 

          Consolidated Omnibus Budget Reconciliation Act

 

ECIP

 

          Executive Corporate Incentive Plan

 

EQUITY PLAN

 

          Nasdaq’s Equity Incentive Plan

 

ESPP

 

          Employee Stock Purchase Plan

 

EXCHANGE ACT

 

          Securities Exchange Act of 1934, as amended

 

FASB ASC TOPIC 718

 

          Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation”

 

GAAP

 

          Generally Accepted Accounting Principles

 

H.E.

 

          His Excellency

 

IPO

 

          Initial Public Offering

 

NEO

 

          Named Executive Officer

 

PCAOB

 

          Public Company Accounting Oversight Board

 

PSUs

 

          Performance Share Units

 

RSUs

 

          Restricted Stock Units

 

SEC

 

          U.S. Securities and Exchange Commission

 

S&P

 

          Standard & Poor’s

 

TSR

 

          Total Stockholder Return

 

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This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in voting your shares. You should read the entire proxy statement, as well as our 2016 annual report on Form 10-K, carefully before voting.

 

Voting Roadmap

 

     

 

Proposal

 

             Our Board’s Recommendation     
    

 

Proposal 1. Election of Directors (Page 14)

 

The Board and Nominating & Governance Committee believe that the nine director nominees possess the skills, experience and diversity to effectively monitor performance, provide oversight and advise management on the company’s long-term strategy.

 

            FOR EACH NOMINEE    
    

 

Proposal 2. Approval of the Company’s Executive Compensation on an Advisory Basis (Page 27)

 

The company seeks a non-binding advisory vote to approve the compensation of its NEOs as described in the Compensation Discussion and Analysis section beginning on page 28. The Board values stockholders’ opinions and the Management Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

            FOR    
    

 

Proposal 3. Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation (Page 58)

 

The company seeks a non-binding advisory vote to approve the frequency of future advisory votes on executive compensation. The Board recommends that the advisory vote to approve executive compensation occur every year and believes this frequency is appropriate at this time.

 

            ONE YEAR    
    

 

Proposal 4. Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2017 (Page 61)

 

The Board and Audit Committee believe that the retention of Ernst & Young LLP to serve as the company’s independent auditor for 2017 is in the best interests of the company and its stockholders.

 

            FOR    
    

 

Proposal 5. Stockholder Proposal - Right to Act by Written Consent (Page 62)

 

The Board believes that the stockholder proposal to allow stockholder action by written consent is inconsistent with Nasdaq’s commitment to transparency in governance and not in the best interests of Nasdaq and its stockholders.

 

            AGAINST    

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PROXY SUMMARY

    

 

Performance Highlights

 

Nasdaq delivered excellent results for stockholders in 2016 as we continued to propel our business forward and position ourselves as a financial technology leader.

 

 

 86.2% 

 

   3-Year Cumulative Total Stockholder Return, significantly
outperforming both the S&P 500 and Nasdaq Composite 1
     
          
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Key Acquisitions Completed: Boardvantage, International Securities Exchange, Marketwired  and Nasdaq CXC (formerly known as Chi-X Canada)  

1-Year

Total Stockholder Return  1  

  Returned to Stockholders in Repurchased Stock and Dividends  over the Last Three Years  

Year-over-Year

Increase in Net

Revenues 2

                

 

  1.

In this proxy statement, TSR is calculated by adding cumulative dividends to the ending stock price, and dividing this by the beginning stock price. A 60-trading-day average is used to calculate the beginning and ending stock prices.

 

 

  2.

Represents revenues less transaction-based expenses.

Board Refreshment

 

·   Adena T. Friedman joined the Board effective January 1, 2017, and Melissa M. Arnoldi has been nominated to join the Board.

 

·   Börje E. Ekholm, Robert Greifeld and Ellyn A. McColgan will leave the Board when their current terms expire at the Annual Meeting.

 

 

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PROXY SUMMARY

    

 

Director Nominees

 

                                      

Name

 

 

Age

 

 

Director
Since

 

  

Principal Occupation

 

 

Independent

 

 

 

Current Committee Memberships 1

 

 

Other
Public Co.
Boards

 

          

 

 AC   

 

 

 FC   

 

 

 MCC   

 

 

 NGC   

 

 

 

Melissa M. Arnoldi

Non-Industry; Public

 

  44   N/A    President, Technology Development, AT&T Services, Inc.   X                   None

 

Charlene T. Begley

Non-Industry; Public

 

  50   2014    Retired SVP & Chief Information Officer, General Electric Company   X    X                  2

 

Steven D. Black

Non-Industry; Public

 

  64   2011    Co-CEO, Bregal Investments   X            X       X      None

 

Adena T. Friedman

Staff

 

  47   2017    President and CEO, Nasdaq, Inc.           X              None

 

Glenn H. Hutchins

Non-Industry; Public

 

  61   2005    Co-Founder, Silver Lake   X        Chair           X      1

 

Essa Kazim

Non-Industry

 

  58   2008    Governor, Dubai International Financial Center; Chairman, Borse Dubai and Dubai Financial Market   X       X              None

 

Thomas A. Kloet

Non-Industry; Public

 

  58   2015    Retired CEO & Executive Director, TMX Group Limited   X    Chair                  None

 

Michael R. Splinter

Non-Industry; Public

 

  66   2008    Retired Chairman and CEO, Applied Materials, Inc.   X            Chair          2

 

Lars R. Wedenborn

Non-Industry

 

  58   2008    CEO, FAM AB   X    X            None

    

                  

 

Number of Meetings in 2016

 

                    10       5       5       8       

 

  1.

The current Committee composition also includes directors who are not standing for re-election. The Committees will be reconstituted immediately following the 2017 Annual Meeting.

 

 

AC: Audit Committee

  

 

MCC: Management Compensation Committee

 

FC: Finance Committee

 

  

 

NGC: Nominating & Governance Commitee

 

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Board Refreshment
JOINING THE BOARD LEAVING THE BOARD
Börje E. Ekholm
Adena T. Friedman* Nasdaq
Robert Greifeld
Melissa M. Arnoldi
Ellyn A. McColgan
* Ms. Friedman joined the Board
effective January 1, 2017.
Director Qualifications
6 3 9 7 8 9 9
Capital Cybersecurity FinTech Mergers & Public Company Risk Senior
Markets 33% 100% Acquisitions Board & Corporate Management Leadership
67% 78% Governance 100% 100%
89%
Director Tenure
0-2 years 3
3-5 years 1
6-10 years 4
11-15 years 1
44% with 5 years or less
89% with 10 years or less
Average = 5.5 years
Diversity of Background
8 3 3 2
Current & Current & Women Born
Former Former 33% Outside
CEOs or Exchange the U.S.
Chairmen Operators 22%
89% 33%
Current Number of Public Company Boards
(Other than Nasdaq)
6 1 2
0 1 2
# of Public Company Boards
Director Age
Average Age
56
44 66
67% younger than 60

 

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“The Board of Directors works closely with the management team to develop and execute a sound strategic and governance framework to ensure Nasdaq is focused on the issues, investments and application of resources that will position the company to realize its fullest potential and maximize long-term value creation.”

 

Nasdaq’s Board of Directors

 

 

 

 

 

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PROXY SUMMARY

Corporate Governance Highlights

We are committed to good corporate governance, as it promotes the long-term interests of

stockholders, strengthens Board and management accountability and builds public trust in the

company. The Corporate Governance section beginning on page 8 describes our governance

framework, which includes the following highlights.

 

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PROXY SUMMARY

    

 

Engaging with Our Stockholders

 

We value our stockholders’ perspectives and maintain a vigorous stockholder engagement program. During 2016, we conducted outreach to a cross-section of stockholders owning approximately 75% of our outstanding shares. In 2016, our key stockholder engagement activities included 6 investor (non-deal) road shows in 8 countries, 19 investor conferences, our Investor/Analyst Day and our 2016 Annual Meeting of Stockholders. We also conducted quarterly outreach to the governance teams at many of our top institutional holders.

 

Executive Compensation Highlights

 

Compensation decisions made for 2016 were aligned with Nasdaq’s strong financial and operational performance and reflected continued emphasis on variable, at-risk compensation paid out over the long-term. Compensation decisions are intended to reinforce our focus on performance and sustained, profitable growth.

 

 

 

The majority of our NEOs’ pay is based on performance and consists primarily of equity-based compensation. 90% of our NEOs’ total direct compensation was performance-based or “at risk” in 2016; 62% of our NEOs’ total direct compensation was equity-based compensation. Total direct compensation includes base salary, annual cash incentive awards and equity awards.

 

      

Questions and
Answers about
Our Annual Meeting

 

Beginning on page 69, you will find answers to frequently asked questions about proxy materials, voting, our Annual Meeting and company filings and reports. We also created an Annual Meeting Information page on our Investor Relations website, which allows our stockholders to easily access the company’s proxy materials, vote through the Internet, submit questions in advance of the 2017 Annual Meeting of Stockholders, access the webcast of the meeting and learn more about our company. Come visit us at http://ir.nasdaq.com/annual-meeting-info.cfm .

 

Annual incentives are based on achievement of rigorous performance goals. In 2016, payouts of annual incentives reflected our achievement of above target corporate net revenues and corporate operating income (run rate), in addition to accomplishment of strategic objectives and business unit financial results. The resulting payouts to NEOs ranged from 110%-166% of targeted amounts.

 

      

 

We use long-term incentives to promote retention and reward our NEOs. Our main long-term incentive plan for NEOs consists of PSUs based on TSR relative to other companies, including the S&P 500 companies and a group of peer companies. Over the three-year period from January 1, 2014 through December 31, 2016, Nasdaq’s cumulative TSR was 86.2%, which was at the 94th percentile of S&P companies and the 87th percentile of peer companies. This TSR performance resulted in performance vesting of PSUs at 200% of target shares.

 

      

 

Our compensation program is grounded in best practices. Our best practices include strong stock ownership guidelines, a long-standing “clawback” policy, no tax gross-ups on severance arrangements or perquisites and no hedging or pledging of Nasdaq stock.

 

      

 

Our executive compensation program does not encourage excessive risk-taking.

The Audit and Management Compensation Committees closely monitor the risks associated with our executive compensation program and individual compensation decisions. We conduct a comprehensive risk assessment of our compensation program annually.

 

      
           

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Corporate Governance Framework

Nasdaq is committed to stockholder-focused corporate governance, and the Board of Directors has adopted clear corporate policies that promote excellence. Our policies are consistent with our commitment to transparency and best-in-class practices, including annual elections of directors, majority voting for directors in uncontested elections, elimination of supermajority voting requirements and last year’s adoption of proxy access.

Our governance framework is designed to promote transparency and ensure our Board has the necessary authority to review and evaluate our business operations and make decisions that are independent of management and in the best interests of stockholders. Our goal is to align the interests of directors, management and stockholders and comply with or exceed the requirements of The Nasdaq Stock Market and applicable law. This governance framework establishes the practices our Board follows with respect to:

 

  ·   fostering a culture of integrity;

 

  ·   establishing corporate governance structures, principles and practices that contribute to effective oversight of Nasdaq and its subsidiaries;

 

  ·   rigorous strategic planning;

 

  ·   succession planning and evaluating performance and approving compensation of senior management;

 

  ·   identifying risks and overseeing risk management; and

 

  ·   overseeing internal controls, communications and public disclosure.

Governance Documents

These documents are available on our Investor Relations webpage at: http://ir.nasdaq.com/ .

 

  ·   Amended and Restated Certificate of Incorporation

 

  ·   Audit Committee Charter

 

  ·   Board of Directors Duties & Obligations

 

  ·   By-Laws

 

  ·   Code of Conduct for the Board of Directors

 

  ·   Code of Ethics

 

  ·   Corporate Governance Guidelines

 

  ·   Finance Committee Charter

 

  ·   Management Compensation Committee Charter
·   Nominating & Governance Committee Charter

 

·   Procedures for Communicating with the Board of Directors

Board Leadership Structure

In accordance with our Corporate Governance Guidelines, Nasdaq separates the roles of Chairman of the Board and CEO. We believe that this separation of roles and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, management development, succession planning, executive compensation and company performance. In November 2016, we adopted a policy to require a Lead Independent Director, if the Chairman of the Board is not an independent director.

Separate Roles of Chairman and CEO. Nasdaq’s President and CEO, Adena T. Friedman, who has over 20 years’ experience in the securities industry, is responsible for the strategic direction, day-to-day leadership and performance of Nasdaq. After retiring as Nasdaq’s CEO in December 2016, Robert Greifeld assumed the position of Nasdaq’s Chairman from January 2017 through the 2017 Annual Meeting. In appointing Mr. Greifeld as Chairman, the Board determined that doing so would promote a number of important objectives, including providing important continuity to the Board leadership during a period of transition for Nasdaq’s management. The Board also took into account Mr. Greifeld’s long-standing relationships with other members of the Board of Directors. The Board was uniformly of the view that electing him as Chairman for the transition period through the 2017 Annual Meeting would serve the best interests of stockholders. Mr. Greifeld is not standing for re-election at the 2017 Annual Meeting; following the meeting, the Board will elect a new Chairman.

Role of the Lead Independent Director. At the time Mr. Greifeld became Chairman, the independent directors unanimously elected Michael R. Splinter as Lead Independent Director. Mr. Splinter also serves as Chair of the Management Compensation Committee.

The Lead Independent Director focuses on optimizing the Board’s processes and ensuring that the Board is prioritizing the right matters. Specifically, the Lead Independent Director has the following responsibilities (and may also perform other functions at the Board’s request), as detailed in our Corporate Governance Guidelines:

 

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·   presiding at all meetings of the Board at which the Chairman is not present;

 

·   presiding during all Executive Sessions of the Board;

 

·   briefing the CEO and the Chairman on issues discussed during Executive Sessions;

 

·   serving as a liaison among the CEO, the Chairman and the other directors; and

 

·   together with the CEO and the Chairman, approving Board meeting agendas and schedules to assure content and sufficient time for discussion of all agenda items.

Board Independence

 

·   Substantial majority of independent directors. Eight of our nine director nominees are independent of the company and management.

 

·   Executive Sessions of independent directors. At each Board meeting, independent directors have the opportunity to meet in Executive Session without company management present. In 2016, the Board met 15 times in Executive Session.

 

·   Independent advisors. Each Committee has the authority and budget to retain independent advisors. In 2016, the Nominating & Governance Committee retained such independent advisors to assist with the annual Board assessment and director recruitment.

Board Committee Independence and Expertise

 

·   Committee independence. All Board Committees, with the exception of the Finance Committee, are comprised exclusively of independent directors, as required by the listing rules of The Nasdaq Stock Market.

 

·   Executive Sessions of independent directors. At each Committee meeting, members of the Audit Committee, Finance Committee, Management Compensation Committee and Nominating & Governance Committee have the opportunity to meet in Executive Session. In 2016, these Committees met 22 times in Executive Session.

 

·   Financial sophistication and expertise. Each member of the Audit Committee is independent as defined in Rule 10A-3 adopted pursuant to the Sarbanes-Oxley Act of 2002 and in the listing rules of The Nasdaq Stock Market. All members of the Audit Committee meet the “financial sophistication” standard of The Nasdaq Stock Market and are “audit committee financial experts” within the meaning of SEC regulations.

Stockholder Rights

 

  ·   New in 2017: Lead Independent Director. If the Chairman of the Board is not an independent director, the Board of Directors will annually elect a non-management, independent director to serve in a lead capacity.

 

  ·   New in 2016: Proxy Access. We implemented proxy access at 3%/3 years, through a By-Law amendment to allow stockholder director nominations.

 

  ·   Annual elections. All directors are elected annually. Nasdaq does not have a classified Board.

 

  ·   Majority voting. We have a majority vote standard for uncontested director elections.

 

  ·   Special meetings. Shareholders representing 15% or more of outstanding shares can convene a special meeting.

Meetings and Meeting Attendance

The Board held 15 meetings during the year ended December 31, 2016, and the Board met in Executive Session without management present during 15 of those meetings. None of the current directors attended fewer than 95% of the meetings of the Board and those Committees on which the director served during the 2016 fiscal year. Nasdaq’s policy is to encourage all directors to attend annual and special meetings of our stockholders. All of the current members of the Board attended the Annual Meeting held on May 5, 2016.

 

 

 

Nasdaq’s Board of Directors: 2016 By the Numbers

 

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of the current members of the Board attended the Annual Meeting held on May 5, 2016

 

 
 

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CORPORATE GOVERNANCE

    

 

Succession Planning

 

The Board is committed to positioning Nasdaq for further growth through ongoing talent management, succession planning and the deepening of our leadership bench. In this regard, formally on an annual basis and informally throughout the year in Executive Session, the Management Compensation Committee, the Board and the CEO review the succession planning and leadership development program, including a long-term succession plan for development, retention and replacement of senior officers. The Board has a formal process for reviewing internal succession candidates through regular interaction during Board meetings and strategy presentations, individual meetings between directors and potential internal candidates and internal and external feedback from a variety of sources, including meeting with stockholders. In addition, the CEO prepares, and the Board reviews, a short-term succession plan that delineates a temporary delegation of authority to certain officers of the company, if all or a portion of the senior officers should unexpectedly become unable to perform their duties. In conjunction with the annual report of the succession plan, the CEO also reports on Nasdaq’s program for senior management leadership development.

 

In 2012, the Board initiated a formal CEO succession plan in anticipation of the potential retirement of Mr. Greifeld at the end of his employment agreement term in February 2017. Over the past five years, the CEO, Board and/or its Committees completed the following CEO succession activities:

 

·   drafted a CEO success profile, including skills, expertise, and competencies, with input from Board members;

 

·   identified and assessed internal and external candidates for succession against the CEO success profile;

 

·   recruited Adena T. Friedman as President in May 2014 with responsibility for the Information Services, Listing Services, Corporate Solutions and Market Technology businesses;

 

·   continued to consider and assess internal and external candidates;

 

·   promoted Ms. Friedman to President and Chief Operating Officer in December 2015;

 

·   continued to consider and assess internal and external candidates throughout 2016; and

 

·   held extensive discussions in Executive Session relating to CEO succession.

 

At the end of 2016, the Board assessed Ms. Friedman against the CEO success profile, considered her performance in the roles of President and President and Chief Operating Officer and determined her readiness to assume the role of President and CEO as of January 1, 2017. CEO and executive session planning will continue to be a priority for the Board in 2017 and beyond.

    

 

 

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CORPORATE GOVERNANCE

    

 

Risk Oversight

Nasdaq’s management has day-to-day responsibility for: (i) identifying risks and assessing them in relation to Nasdaq’s strategies and objectives, (ii) implementing suitable risk mitigation plans, processes and controls and (iii) appropriately managing risks in a manner that serves the best interests of Nasdaq, its stockholders and other stakeholders. Nasdaq has a Global Risk Management Committee, comprised of employees, that regularly reviews risks for materiality and refers significant risks to the Board or specific Board Committees. To support the work of the Global Risk Management Committee, Nasdaq has a Technology Risk Steering Committee, which is responsible for monitoring technology and cyber systems risks across the organization, a Global Compliance Council, which monitors regulatory and corporate compliance risks across the company, and a Nordic Local Risk Management Forum, which facilitates and ensures an effective risk management process in the region. Nasdaq also has an internal Global Risk Management Group that oversees the enterprise risk management framework, supports its implementation, and aggregates and reports risk information.

Nasdaq’s Board has ultimate responsibility for overseeing risk management with a focus on the most significant risks facing the company. The Board is assisted in meeting this responsibility by several Board Committees as described below under “Board Committees.” Furthermore, non-management directors meet in Executive Session on a regular basis without the presence of management to discuss matters, including matters pertaining to risk. Nasdaq does not believe that the Board’s role in risk oversight has affected its leadership structure.

Compensation

 

·   Stock ownership. We have stock ownership policies for directors, executive officers and other senior executives to promote a long-term perspective in managing the enterprise and to help align the interests of our stockholders, executives and directors.

 

·   Anti-hedging, anti-pledging and anti-short sale policy. We prohibit our directors and executive officers from hedging their ownership of Nasdaq stock, including (without limitation) short sales as well as any hedging transactions in derivative securities (e.g., puts, calls, swaps or collars) related to Nasdaq stock. We also prohibit our directors and executive officers from pledging their shares of Nasdaq stock.

 

·   Compensation clawback. We have an incentive recoupment policy that applies to officers with the rank of EVP and above.

Director Orientation and Continuing Education

Our comprehensive orientation programs familiarize new and existing directors with Nasdaq’s businesses, strategies and policies and assist new directors in developing the skills and knowledge required for their service on the Board. We also provide in-person or telephonic tutorials to educate Board members regarding new and evolving businesses and strategies. In addition, directors attend continuing education programs at external organizations and universities that provide relevant learning opportunities.

Board and Committee Evaluations

Each year, through an independent consultant, our Board and Board Committees conduct a self-evaluation to assess the governing entities’ effectiveness and adherence to the Corporate Governance Guidelines and Committee charters. The results of the evaluation provide an opportunity to identify potential areas of improvement, resulting in an action plan for the improvements.

The processes used to determine Board and Committee effectiveness include an annual evaluation of the performance of the Board and each Committee as well as individual Board members. The results are reported to and discussed with the Board in Executive Session.

 

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CORPORATE GOVERNANCE

    

 

Code of Ethics: Board and Employees

We embrace good governance by holding ourselves to the highest ethical standards in all of our interactions. As such, we have adopted the Nasdaq Code of Ethics, which is applicable to the Board, all of our employees, including the principal executive officer, the principal financial officer and the controller and principal accounting officer, and contractors. We also have a separate Nasdaq Code of Conduct for the Board, which contains supplemental provisions specifically applicable to directors. These codes embody the company’s fundamental ethics and compliance principles and expectations of business conduct.

These codes are supported by the Global Ethics and Corporate Compliance Program, which is based on industry-leading practices and is designed to meet or exceed available standards, including those promulgated by U.S. and European regulators in the jurisdictions in which we operate. Pillars of the program include structural elements, such as policies, risk assessment, monitoring, training and communications, and key risk areas, including anti-bribery and corruption, data privacy and antitrust and competition. Furthermore, in 2016 we launched our SpeakUp! Program which enhanced existing policies and procedures to ensure that Nasdaq employees and other stakeholders have channels to raise issues, seek guidance and report potential violations of our Code of Ethics or other company policies. The program is administered within the Legal and Regulatory Group and implemented by cross-functional teams representing all areas of the company. Oversight is provided by the Global Compliance Council.

 

 

“We can only bring the best of Nasdaq to our clients, stakeholders and each other through our unwavering commitment to integrity. Our strong ethical principles form the very cornerstones of our mission and values and are pivotal to everything we do.”

Adena T. Friedman, President and CEO

 

 

We post amendments to and intend to post waivers from the Nasdaq Code of Ethics (to the extent applicable to the principal executive officer, the principal financial officer or the controller and principal accounting officer) or to the Nasdaq Code of Conduct for the Board on our Investor Relations website. We also will disclose amendments or waivers to the codes in any manner otherwise required by the standards applicable to companies listed on The Nasdaq Stock Market.

Corporate Responsibility and Focus on Entrepreneurship

Nasdaq’s Corporate Responsibility Program demonstrates an ongoing commitment to thoughtfully manage our social, environmental and corporate governance operations. Corporate responsibility encompasses a broad range of disciplines within the company, including sustainability, philanthropy, volunteerism and corporate citizenship. Good corporate responsibility practices help us cut costs, create new business opportunities, attract top talent to the company and support the communities where we live and work.

Sustainability. Nasdaq recognizes the growing scarcity of natural resources and our shared responsibility for the betterment of the planet. To that end, we embed sustainability into our corporate structure and way of life. Nasdaq was included in the 2016 Dow Jones Sustainability Index, which honors the most sustainable and transparently operated companies. Our Helsinki Stock Exchange has been carbon-neutral since 2011, and again won recognition for its Green Office programs.

 

 

Nasdaq was one of 16 companies selected for the Dow Jones Sustainability North America Index in 2016.

 

 

Philanthropy. Nasdaq provides philanthropic assistance to local communities and institutions in a variety of ways. Our donation matching program, open to all employees and contractors, provides 100% corporate matching funds (and sometimes more for specific initiatives) for donations to an IRS-registered, 501(c)(3)-compliant organization. In 2016, over 400 qualifying donations were made through this program, generating $289,000 in charitable impact. We also launched our first global impact matching day–Giving Tuesday–in 2016, recording nearly $100,000 in donations in 24 hours. Nasdaq again partnered with Angelwish to send toys to chronically ill children. The company also continued a separate contributions program that regularly evaluates charitable causes and institutions for donations, as well as a system for generating need-based donations in times of crisis.

Volunteerism. A robust and inclusive corporate volunteering program benefits not only our company and employees, but also the community. Nasdaq offers employees two paid days per year to donate their time to a worthy cause, and our employees generated a 150% increase in the use of this benefit in 2016. The company sponsored more than a dozen team volunteering events, partnering with New York Cares, Junior Achievement, Mentoring USA, Habitat for Humanity, College Summit and others. Nasdaq also awarded its second annual “Volunteer of the Year” award.

 

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CORPORATE GOVERNANCE

    

 

Corporate Citizenship. In addition to these activities, Nasdaq reinforced its corporate citizenship throughout 2016. By leveraging the Nasdaq MarketSite Opening and Closing Bell platform to publicize dozens of charitable causes and non-profit institutions–at no cost–Nasdaq enhanced media exposure and public awareness of certain issues, including STEM education, gender equality, health and fitness, disease prevention and literacy.

Focus on Entrepreneurship. The Nasdaq Entrepreneurial Center is a San Francisco-based non-profit organization whose mission is to educate, innovate, and connect aspiring and current entrepreneurs. Since launching in September 2015, the Nasdaq Entrepreneurial Center has developed 185 original programs that have benefitted 5,000 entrepreneurs across the globe. In keeping with a commitment to advancing inclusivity, the Center is proud that 49% of its entrepreneurs are women. To achieve these milestones, the Center has partnered with universities and thought leaders around the world, including Wilson Sonsini Goodrich & Rosati, KPMG, Lehigh University and The University of Melbourne. In addition to its own entrepreneurial education

and original research, the Center supports a wide variety of like-minded organizations, including non-profits, accelerators, investors, universities and government agencies, with curriculum and joint programming to serve local and international audiences.

The Center was established with the support of the Nasdaq Educational Foundation, a non-profit organization whose mission is to connect the business, capital and innovative ideas that advance global economies. In 2016, the Nasdaq Educational Foundation also supported academic programs on entrepreneurship at Columbia University, Fordham University and the Massachusetts Institute of Technology.

Stockholder Outreach

Nasdaq believes that strong corporate governance should include regular, constructive year-round engagement. We actively engage with our stockholders as part of our annual corporate governance cycle as described below.

 

 

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·    Active outreach with institutional holders to discuss important governance items to be considered at Annual Meeting

 

·    Publish annual communications to stockholders: annual report, proxy statement and 10-K

 

·   Conduct Annual Meeting

      

 

·    Post Annual Meeting results on Nasdaq website

 

·   Review results and feedback from Annual Meeting with institutional holders

 

·   Share investor feedback with the entire Board

 

·    Active outreach with institutional holders to discuss vote and follow up issues

      

 

·    Conduct annual Board assessment of governance, including feedback of stockholders

 

·    Active outreach with institutional holders to identify focus and priorities for the coming year

      

 

·    Active outreach with institutional holders to understand their priorities in the areas of corporate governance, executive compensation, environmental sustainability and other disclosures

 

·    Share investor feedback with the entire Board

 

·    Review governance best practices and trends, regulatory developments and our governance framework

 

   

Stockholder Communication with Directors

Stockholders and other interested parties are invited to contact the Board by writing us at: AskBoard@nasdaq.com or Nasdaq Board of Directors, c/o Joan C. Conley, SVP and Corporate Secretary, 805 King Farm Boulevard, Rockville, Maryland 20850.

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The Board of Directors unanimously recommends a vote FOR each of the nominees for director.

  

Proposal 1: Election of Directors

 

The business and affairs of Nasdaq are managed under the direction of our Board of Directors. Our directors have diverse backgrounds and experience and represent a broad spectrum of viewpoints.

 

Pursuant to our Amended and Restated Certificate of Incorporation and By-Laws and based on our governance needs, the Board may determine the total number of directors. The Board is authorized to have nine directors following our 2017 Annual Meeting.

 

Each of the nine nominees identified in this proxy statement has been nominated by our Nominating & Governance Committee and Board of Directors for election to a one-year term. All nominees have consented to be named in this proxy statement and to serve on the Nasdaq Board, if elected.

 

In an uncontested election, our directors are elected by a majority of votes cast at any meeting for the election of directors at which a quorum is present. This election is an uncontested election and therefore, each of the nine nominees must receive the affirmative vote of a majority of the votes cast to be duly elected to the Board. Any shares not voted, including as a result of abstentions or broker non-votes, will not impact the vote.

 

Our Corporate Governance Guidelines require that, in an uncontested election, an incumbent director must submit an irrevocable resignation as a condition to his or her nomination for election. If an incumbent director fails to receive the requisite number of votes in an uncontested election, the irrevocable resignation becomes effective and such resignation will be considered by the Nominating & Governance Committee. This Committee will recommend to the full Board whether or not to accept the resignation. The Board is required to act on the recommendation and to disclose publicly its decision-making process with respect to the resignation. All the incumbent directors have submitted an irrevocable resignation.

 

Director Nomination Process

 

The Nominating & Governance Committee considers possible candidates suggested by Board and Committee members, industry groups, stockholders and senior management. In addition to submitting suggested nominees to the Nominating & Governance Committee, a Nasdaq stockholder may nominate a person for election as a director, provided the stockholder follows the procedures specified in Nasdaq’s By-Laws. The Nominating & Governance Committee reviews all candidates in the same manner, regardless of the source of the recommendation. In addition, the Nominating & Governance Committee may engage a third-party search firm from time-to-time to assist in identifying and evaluating qualified candidates. The Nominating & Governance Committee has retained the search firm of Spencer Stuart to help identify director prospects, perform candidate outreach, assist in reference and background checks and provide other related services. For 2017, the new nominee to our Board was brought to the attention of the Nominating & Governance Committee by one of our current directors.

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We are obligated by the terms of a stockholders’ agreement dated February 27, 2008 between Nasdaq and Borse Dubai, as amended, to nominate and generally use best efforts to cause the election to the Nasdaq Board of one individual designated by Borse Dubai, subject to certain conditions. H.E. Kazim is the individual designated by Borse Dubai as its nominee.

Director Independence

Nasdaq’s common stock is currently listed on The Nasdaq Stock Market and Nasdaq Dubai. In order to qualify as independent under the listing rules of The Nasdaq Stock Market, a director must satisfy a two-part test. First, the director must not fall into any of several categories that would automatically disqualify the director from being deemed independent. Second, no director qualifies as independent unless the Board affirmatively determines that the director has no direct or indirect relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Under the Nasdaq Dubai listing rules and the Markets Rules of the Dubai Financial Services Authority, a director is considered independent if the Board determines the director to be independent in character and judgment and to have no commercial or other relationships or circumstances that are likely to affect, or could appear to impair, the director’s judgment in a manner other than in the best interests of the company.

Based upon detailed written submissions by each individual, the Board has determined that all of our current directors and director nominees are independent under the rules of each of The Nasdaq Stock Market and Nasdaq Dubai, other than Ms. Friedman and Mr. Greifeld. Ms. Friedman is deemed not to be independent because she is Nasdaq’s President and CEO. Mr. Greifeld is deemed not to be independent because he is Nasdaq’s Chairman, which is currently an executive officer position.

None of the current directors or director nominees are party to any arrangement with any person or entity other than

the company relating to compensation or other payments in connection with the director’s or nominee’s candidacy or service as a director, other than arrangements that existed prior to the director’s or nominee’s candidacy.

Director Criteria, Qualifications, Experience and Tenure

In evaluating the suitability of individual Board nominees, the Nominating & Governance Committee takes into account many factors, including a general and diverse understanding of the global economy, capital markets, finance and other disciplines relevant to the success of a large publicly-traded financial technology company; a general understanding of Nasdaq’s business and technology; the classification requirements under our By-Laws; the individual’s educational and professional background and personal accomplishments; and factors such as geography, gender, age and diversity. The Committee evaluates each individual candidate in the context of the Board as a whole, with the objective of maintaining a group of directors that can further the success of Nasdaq’s business, while representing the interests of stockholders, employees and the communities in which the company operates. In determining whether to recommend a Board member for re-election, the Nominating & Governance Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the most recent Board self-assessment.

 

 

The average Board tenure of Nasdaq’s independent director nominees is 6.3 years compared to 8.2 years for S&P 500 companies.

 

 

As illustrated below, the Board and the Nominating & Governance Committee believe there are certain characteristics all director nominees exhibit.

 

 

 

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BOARD OF DIRECTORS

    

 

Our Director Nominees

 

In addition, there are other attributes, skills and experience that should be represented on the Board as a whole, but not necessarily by each director. The table below summarizes key qualifications, skills and attributes most relevant to the decision to nominate candidates to serve on the Board of Directors. A mark indicates a specific area of focus or expertise on which the Board relies most. The lack of a mark does not mean the director does not possess that qualification or skill. Each director biography below describes each director’s qualifications and relevant experience in more detail.

 

 

   

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Capital Markets

 

 

Cybersecurity

 

 

FinTech

 

 

Mergers &
Acquisitions

 

 

Public Company
Board & Corporate
Governance

 

 

Risk

Management

 

 

Senior
    Leadership    

 

 

Melissa M. Arnoldi

 

                 

 

Charlene T. Begley

 

                 

 

Steven D. Black

 

               

 

Adena T. Friedman

 

               

 

Glenn H. Hutchins

 

               

 

Essa Kazim

 

                 

 

Thomas A. Kloet

 

               

 

Michael R. Splinter

 

               

 

Lars R. Wedenborn

 

               

 

           
     LOGO   Melissa M. Arnoldi     LOGO  
          
  Age: 44  
 

 

Director since: N/A

 
 

 

Other Public Company Boards: None

 
 

 

Nasdaq Board Committees: N/A

 
 

 

Ms. Arnoldi has been President of Technology Development at AT&T Services, Inc., a telecommunications company, since September 2016. Ms. Arnoldi has served in various capacities at AT&T since 2008 including: SVP, Technology Solutions & Business Strategy, from December 2014 to September 2016; VP, IT Strategy & Business Integration, from December 2012 to December 2014; and AVP, IT from January 2008 to December 2012. Prior to AT&T, Ms. Arnoldi was a partner in the Communications & High Technology Industry Group at Accenture Ltd. from 2006-2008 serving in various other capacities from 1996-2008.

 

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BOARD OF DIRECTORS

    

 

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  Charlene T. Begley     LOGO  
 

 

Age: 50

 
 

 

Director since: 2014

 
 

 

Other Public Company Boards: Red Hat, Inc. (Audit and Nominating and Governance Committees); WPP plc (Audit and Nominating and Governance Committees)

 
 

 

Nasdaq Board Committees: Audit

 
 

 

Ms. Begley served in various capacities for the General Electric Company, a diversified infrastructure and financial services company, from 1988-2013. Ms. Begley served in a dual role as SVP and Chief Information Officer, as well as President and CEO of GE’s Home and Business Solutions Office, from January 2010-December 2013. Previously, Ms. Begley served as President and CEO of GE’s Enterprise Solutions from 2007-2009. At GE, Ms. Begley served as President and CEO of GE Plastics and GE Transportation. She also led GE’s Corporate Audit staff and served as CFO for GE Transportation and GE Plastics Europe and India.

 

   

 

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Steven D. Black  

 

 

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Age: 64

 
 

 

Director since: 2011

 
 

 

Other Public Company Boards: None

 
 

 

Nasdaq Board Committees: Management Compensation and Nominating & Governance

 
 

 

Mr. Black has been Co-CEO of Bregal Investments, a private equity firm, since September 2012. He was the Vice Chairman of JP Morgan Chase & Co. from March 2010-February 2011 and a member of the firm’s Operating and Executive Committees. Prior to that position, Mr. Black was the Executive Chairman of JP Morgan Investment Bank from October 2009-March 2010. Mr. Black served as Co-CEO of JP Morgan Investment Bank from 2004-2009. Mr. Black was the Deputy Co-CEO of JP Morgan Investment Bank since 2003. He also served as head of JP Morgan Investment Bank’s Global Equities business since 2000 following a career at Citigroup and its predecessor firms.

 

   

 

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Adena T. Friedman  

 

 

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Age: 47

 
 

 

Director since: 2017

 
 

 

Other Public Company Boards: None

 
 

 

Nasdaq Board Committees: Finance

 
 

 

Ms. Friedman was appointed President and CEO and elected to the Board effective January 1, 2017. Previously, Ms. Friedman served as President and Chief Operating Officer since December 2015. Ms. Friedman rejoined Nasdaq in 2014 as President, after serving as CFO and Managing Director at The Carlyle Group, a global alternative asset manager, from March 2011 to June 2014. Prior to joining Carlyle, Ms. Friedman was a key member of Nasdaq’s management team for over a decade including as head of data products, head of corporate strategy and CFO.

 

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BOARD OF DIRECTORS

    

 

     LOGO   Glenn H. Hutchins     LOGO
 

 

Age: 61

 

 

Director since: 2005

 

 

Other Public Company Boards: AT&T Inc.

 

 

Nasdaq Board Committees: Finance (Chair) and Nominating & Governance

 

 

Mr. Hutchins is a Co-Founder of Silver Lake, a technology investment firm that was established in January 1999 where he served as Managing Director and Co-CEO until 2011. Mr. Hutchins serves as a director of the Federal Reserve Bank of New York. He served as Chairman of the Board of SunGard Capital Corp. and SunGard Capital Corp. II until November 2015.

 

 

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Essa Kazim   

 

 

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Age: 58

 

 

Director since: 2008

 

 

Other Public Company Boards: None

 

 

Nasdaq Board Committees: Finance

 

 

H.E. Kazim has been Governor of the Dubai International Financial Center since January 2014. Since 2006, he has served as Chairman of Borse Dubai and Chairman of the Dubai Financial Market. H.E. Kazim began his career as a Senior Analyst in the Research and Statistics Department of the UAE Central Bank in 1988 and then he moved to the Dubai Department of Economic Development as Director of Planning and Development in 1993. He was then appointed Director General of the Dubai Financial Market from 1999-2006. H.E. Kazim is Deputy Chairman of the Supreme Legislation Committee in Dubai and a member of the Supreme Fiscal Committee of Dubai.

 

 

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Thomas A. Kloet  

 

 

LOGO

 

 

Age: 58

 

 

Director since: 2015

 

 

Other Public Company Boards: None

 

 

Nasdaq Board Committees: Audit (Chair)

 

 

Mr. Kloet was the first CEO and Executive Director of TMX Group Limited, the holding company of the Toronto Stock Exchange; TSX Venture Exchange; Montreal Exchange; Canadian Depository for Securities; Canadian Derivatives Clearing Corporation and the BOX Options Exchange, from 2008-2014. Previously, he served as CEO of the Singapore Exchange and as a senior executive at Fimat USA (a unit of Société Générale), ABN AMRO and Credit Agricole Futures, Inc. He also served on the Boards of CME and various other exchanges worldwide. Mr. Kloet is a CPA and a member of the AICPA. He is also a member of the U.S. Commodity Futures Trading Commission’s Market Risk Advisory Committee and was inducted into the FIA Hall of Fame in March 2015. Mr. Kloet is a Trustee of Northern Funds, which offers 44 portfolios, and Northern Institutional Funds, which offers 7 portfolios. Mr. Kloet also chairs the Boards of Nasdaq’s U.S. exchange subsidiaries.

LOGO

 

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Table of Contents

BOARD OF DIRECTORS        

    

 

     LOGO   Michael R. Splinter   LOGO  
 

 

Age: 66

 

 

Director since: 2008

 

 

Other Public Company Boards: Meyer Burger Technology Ltd; TSMC, Ltd.

(Audit and Compensation Committees)

 

 

Nasdaq Board Committees: Management Compensation (Chair)

 

 

Mr. Splinter was elected Lead Independent Director of Nasdaq’s Board effective January 1, 2017. He is a business and technology consultant and the co-founder of WISC Partners, a regional technology venture fund started in June 2016. He served as Executive Chairman of the Board of Directors of Applied Materials, a leading supplier of semiconductor equipment from September 2013 until he retired in June 2015. At Applied Materials, he served as Chairman of the Board of Directors from March 2009-September 2013 and CEO from April 2003-September 2013. An engineer and technologist, Mr. Splinter is a 40-year veteran of the semiconductor industry. Prior to joining Applied Materials, Mr. Splinter was an executive at Intel Corporation. Mr. Splinter was elected to the National Academy of Engineers in 2017.

 

 

     LOGO

 

 

Lars R. Wedenborn  

 

 

LOGO

 
 

 

Age: 58

 

 

Director since: 2008

 

 

Other Public Company Boards: None

 

 

Nasdaq Board Committees: Audit

 

 

Mr. Wedenborn is CEO of FAM AB, which is owned by the three largest Wallenberg foundations. He started his career as an auditor. During 1991-2000, he was Deputy Managing Director and CFO at Alfred Berg, a Scandinavian investment bank. He served with Investor AB, a Swedish industrial holding company, as EVP and CFO from 2000-2007. Mr. Wedenborn was a member of the Board of OMX AB prior to its acquisition by Nasdaq. Mr. Wedenborn was elected Chairman of the Nasdaq Nordic Ltd. Board in October 2009.

 

 

Board Committees

 

Our Board has four standing Committees: an Audit Committee, a Finance Committee, a Management Compensation Committee and a Nominating & Governance Committee. Each of these Committees, other than the Finance Committee, is composed exclusively of directors determined by the Board to be independent. The Chair of each Committee reports to the Board in Chairman’s Session or Executive Session on the topics discussed and actions taken at each meeting. The Lead Independent Director is responsible for chairing the Executive Sessions of the Board and reporting to the CEO, Chairman and Corporate Secretary on any actions taken during Executive Sessions. A description of each standing Committee is included on the following pages.

 

LOGO

 

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Table of Contents

BOARD OF DIRECTORS

    

 

Audit Committee

 

  LOGO  

Meetings in 2016

Thomas A. Kloet (Chair)

Charlene T. Begley

Ellyn A. McColgan

Lars R. Wedenborn

 

 

 

“Individual characteristics of Audit Committee members support a group dynamic that drives a Board towards excellence.”

 

Thomas A. Kloet

 

 

 

Key Objectives:

 

·   Oversees Nasdaq’s financial reporting process on behalf of the Board.

 

·   Appoints, retains, approves the compensation of and oversees the independent registered public accounting firm.

 

·   Assists the Board by reviewing and discussing the quality and integrity of accounting, auditing, staffing and financial reporting practices at Nasdaq.

 

·   Assists the Board by reviewing the adequacy and effectiveness of internal controls and the effectiveness of Nasdaq’s enterprise risk management, corporate compliance and regulatory programs.

 

·   Reviews key enterprise risk management, regulatory, control and compliance matters.

 

·   Reviews and approves or ratifies all related party transactions, as further described below under “Certain Relationships and Related Transactions.”

 

·   Assists the Board in reviewing and discussing Nasdaq’s Global Ethics and Corporate Compliance Program and confidential whistleblower process.

 

·   Assists the Board in its oversight of the internal audit function.

 

·   Reviews and recommends to the Board for approval the company’s regular dividend payments.

 

·   Updates the Board on discussions and decisions from the Audit Committee meetings.

2016 Highlights:

 

·   Oversaw Nasdaq’s financial reporting process, reviewing the disclosures in the company’s quarterly earnings releases, quarterly reports on Form 10-Q and annual report on Form 10-K.

 

·   Reviewed non-GAAP disclosures, impairment assessments and the impact or potential impact of changes in various accounting standards.

 

·   Provided oversight on the performance of the internal audit function during the year.

 

·   Oversaw control remediation efforts by management.

 

·   Reviewed and discussed the company’s enterprise risk management process including its governance structure, risk assessment and risk management practices and guidelines.

 

·   Reviewed and approved the company’s Corporate Information Security and Technology Risk Strategic Plan and focused significant attention on the company’s information and cybersecurity program and market systems’ resiliency.

 

·   Received updates on cybersecurity, new U.S. and global technology initiatives from the Chief Information Officer.

 

·   Reviewed key regulatory compliance matters.

 

·   Provided oversight for the Global Ethics and Corporate Compliance Program.

 

·   Evaluated the performance of the independent auditor and continued to review and approve all services provided and fees charged by such auditors.

 

·   Reviewed and approved or ratified all related party transactions, as further described below under “Certain Relationships and Related Transactions.”

 

·   Oversaw and discussed with management at every meeting key risks, including emerging and escalating risks.

 

·   Held Executive Sessions individually with external auditors, internal auditors, the General Counsel, the CFO and the Chief Information Officer.

Risk Oversight Role:

 

·   Reviews the systems of internal controls, financial reporting and the Global Ethics and Corporate Compliance Program.

 

·   Reviews the enterprise risk management structure and process.

Independence:

 

·   Each member of the Audit Committee is independent as defined in Rule 10A-3 adopted pursuant to the Sarbanes-Oxley Act of 2002 and in the listing rules of The Nasdaq Stock Market. The Board determined that all of the members of the Audit Committee are “audit committee financial experts” within the meaning of SEC regulations. Each also meets the “financial sophistication” standard of The Nasdaq Stock Market.
 

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BOARD OF DIRECTORS        

    

 

Finance Committee

 

LOGO   Meetings in 2016

Glenn H. Hutchins (Chair)

Börje E. Ekholm

Adena T. Friedman 1

Essa Kazim

 

 

“Our prudent approach to managing our capital structure has allowed us to execute our company’s strategy and puts us in a stronger position to create long-term value for our stockholders.”

Glenn H. Hutchins

 

 

 

1. Appointed effective January 1, 2017 to replace Robert Greifeld, who served on the Finance Committee in 2016.

Key Objectives:

 

·   Reviews and recommends for approval by the Boar the capital plan of the company, including the plan for repurchasing shares of the company’s common stock and the proposed dividend plan.

 

·   Reviews and recommends for approval by the Board significant mergers, acquisitions and business divestitures.

 

·   Reviews and recommends for approval by the Board significant capital market transactions and other financing arrangements.

 

·   Reviews and recommends for approval by the Board significant capital expenditures, lease commitments and asset disposals, excluding those included in the approved annual budget.

 

·   Oversees and approves the Treasury policy.

2016 Highlights:

 

·   Reviewed and approved certain financing transactions in connection with the acquisition of International Securities Exchange.

 

·   Reviewed and recommended for Board approval the 2017 Capital Allocation Plan.

 

·   Reviewed and approved an updated Finance Authorization Policy and a template for Board analysis of future M&A transactions.

Risk Oversight Role:

 

·   Monitors operational and strategic risks related to Nasdaq’s financial affairs, including capital structure and liquidity risks.

 

·   Reviews the policies and strategies for managing financial exposure and certain risk management activities of Nasdaq’s treasury function.
 

 

 

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BOARD OF DIRECTORS

    

 

Management Compensation Committee

 

     LOGO   Meetings in 2016

  Michael R. Splinter (Chair)

  Steven D. Black

  Börje E. Ekholm

 

 

 

 

“The Management Compensation Committee remains focused on maintaining a strong link between executive compensation and the company’s strategy. To that end, we continue to align performance metrics with the company’s strategic priorities.”

 

Michael R. Splinter

 

Key Objectives:

 

·   Establishes and annually reviews the executive compensation philosophy.

 

·   Reviews and approves all compensation and benefit programs applicable to Nasdaq’s executive officers annually. Any program changes applicable to the CEO and CFO are referred to the Board for final approval.

 

·   Reviews and approves the base salary, incentive compensation, performance goals and equity awards for executive officers. For the CEO and CFO, these items will be referred to the Board for final approval.

 

·   Reviews and approves the base salary and incentive compensation for those non-executive officers with target total cash compensation in excess of $1,000,000 or an equity award valued in excess of $600,000.

2016 Highlights:

 

·   Extensive focus on development of executive talent and succession planning, specifically CEO succession planning.

 

·   Reviewed the effectiveness of the annual and long-term incentive plans.

 

·   Together with the Nominating & Governance Committee, led the annual performance evaluation of the CEO.

Risk Oversight Role:

 

·   Monitors the risks associated with elements of the compensation program, including organizational structure, compensation plans and goals, succession planning, organizational development and selection processes.

 

·   Evaluates the effect the compensation structure may have on risk-related decisions.

Independence:

 

·   Each member of the Management Compensation Committee is independent and meets the additional eligibility requirements set forth in the listing rules of The Nasdaq Stock Market.
 

 

 

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BOARD OF DIRECTORS        

    

 

Nominating & Governance Committee

 

LOGO   Meetings in 2016

Börje E. Ekholm (Chair)

Steven D. Black

Glenn H. Hutchins

 

 

“The Nominating & Governance Committee seeks a Board with diverse opinions and perspectives that is representative of our global business and our stockholders.”

Börje E. Ekholm

 

 

Key Objectives:

 

·   Determines the skills and qualifications necessary for the Nasdaq Board and develops criteria for selecting potential directors.

 

·   Identifies, reviews, evaluates and nominates candidates for annual elections to the Nasdaq Board.

 

·   Leads the annual review of the overall effectiveness of the Board and Committees.

 

·   Monitors company compliance with corporate governance requirements.

 

·   Reviews and recommends the Board and Committee membership and leadership structure.

 

·   Reviews and recommends to the Board candidates for election as officers with the rank of EVP or above.

 

·   Together with the Management Compensation Committee, leads the annual performance review of the CEO.

2016 Highlights:

 

·   Focused significant time on the ongoing Board refreshment process.

 

·   Discussed the qualifications and skills of potential director nominees.

 

·   Conducted the annual Board effectiveness assessment and monitored follow-up items.

 

·   Discussed and considered stockholder input on governance topics and evolving governance issues, trends and policies.

 

·   Reviewed and recommended the By-Law amendments to implement proxy access.

Risk Oversight Role:

 

·   Oversees risks related to the company’s governance structure, trends, policies and processes.

 

·   Monitors independence of the Board.

Independence:

 

·   Each member of the Nominating & Governance Committee is independent, as required by the listing rules of The Nasdaq Stock Market.
 

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BOARD OF DIRECTORS

    

 

Director Compensation

Annual non-employee director compensation is based upon a compensation year beginning and ending in May. Staff directors, including Mr. Greifeld and Ms. Friedman, do not receive compensation for serving on the Board. Every two years, the Management Compensation Committee reviews the Director Compensation Policy, considers a competitive market analysis of director compensation data and recommends changes, if any, to the policy to the Board for approval. The table below reflects the compensation policy for non-employee directors for the current and prior compensation years. The 2016 revisions to the policy eliminated Board and Committee meeting fees and placed a greater emphasis on equity awards.

Under the Board Compensation Policy that was in effect from May 2015 through May 2016, each non-employee director received Board and Committee meeting fees that the director could elect to receive in cash or equity. Cash payments for Board and Committee meeting fees were made in arrears on a semi-annual basis. If a director elected to receive equity for Board and Committee meeting fees in lieu of cash, the equity will be awarded on the date of the Annual Meeting and will vest in full immediately.

Each non-employee director may elect to receive the annual retainer in cash (payable in equal semi-annual installments), equity or a combination of cash and equity. The annual equity award and any equity elected as part of the annual retainer are awarded automatically on the date of the Annual

Meeting of Stockholders immediately following election and appointment to the Board. These equity awards vest in full one year from the date of grant.

Each non-employee director also may elect to receive Committee Chair and/or Committee member fees in cash or equity. Cash payments for Committee service are made in a lump sum near the beginning of the compensation year. If a director elects to receive equity for Committee service in lieu of cash, the equity will be awarded on the date of the Annual Meeting and will vest in full one year from the date of grant.

All equity paid to Board members consists of RSUs. The amount of equity to be awarded is calculated based on the closing market price of our common stock on the date of the Annual Meeting. Unvested equity is forfeited in certain circumstances upon termination of the director’s service on the Board.

Directors are reimbursed for business expenses and reasonable travel expenses for attending Board and Committee meetings. Non-employee directors do not receive retirement, health or life insurance benefits. Nasdaq provides each non-employee director with director and officer liability insurance coverage, as well as accidental death and dismemberment and travel insurance for and only when traveling on behalf of Nasdaq.

 

 

Item

 

 

May 2016-
May 2017

 

 

May 2015-

May 2016

 

   

 

Board Meeting Attendance Fee (Per Meeting)

 

  –      $1,500     

 

Committee Meeting Attendance Fee (Per Meeting)

 

  –      $1,500     

 

Annual Retainer for Board Members

(Other than the Chairman and Lead Independent Director)

 

  $75,000      $80,000     

 

Annual Retainer for Board Chairman

 

  $240,000      $205,000     

 

Annual Retainer for Lead Independent Director

 

  $150,000      –     

 

Annual Equity Award for All Board Members (Grant Date Market Value)

 

  $200,000      $115,000     

 

Annual Audit Committee Chair Compensation

 

  $30,000      $25,000     

 

Annual Audit Committee Member Compensation

 

  $10,000      $5,000     

 

Annual Management Compensation Committee Chair Compensation

 

  $30,000      $25,000     

 

Annual Management Compensation Committee Member Compensation

 

  $10,000      $5,000     

 

Annual Nominating & Governance Committee Chair Compensation

 

  $20,000      $15,000     

 

Annual Nominating & Governance Committee Member Compensation

 

  $5,000      –     

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BOARD OF DIRECTORS        

    

 

Stock Ownership Guidelines

 

Under our stock ownership guidelines, non-employee directors must maintain a minimum ownership level in Nasdaq common stock of five times the annual cash retainer. Shares owned outright, through shared ownership and in the form of vested and unvested restricted stock, are taken into consideration in determining compliance with these stock ownership guidelines. Exceptions to this policy may be necessary or appropriate in individual situations and the Chairman of the Board may approve such exceptions from time to time. New directors have until four years after their initial election to the Board to obtain the minimum ownership level. All of the directors were in compliance with the guidelines as of December 31, 2016.

2016 Director Compensation Table

 

  Name 1

 

  

Fees Earned  
or Paid

in Cash

($) 2,3

 

    

Stock    
Awards    

($) 4,5,6     

 

    

Option
Awards
($)

 

    

Non-Equity
Incentive Plan
Compensation
($)

 

  

 

Change

in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)

 

  

All Other
Compensation
($)

 

    

Total        

($)        

 

 

 

Charlene T. Begley

 

     $104,000        $196,168                        $300,168  

 

Steven D. Black

 

 

     $33,000        $269,700                        $302,700  

Börje E. Ekholm 7

 

 

     $48,000        $431,582                        $479,582  

Glenn H. Hutchins

 

 

     $17,000        $269,700                        $286,700  

Essa Kazim

 

 

     $50,500        $269,700                        $320,200  

Thomas A. Kloet 8

 

     $222,472        $196,168                        $418,640  

 

John D. Markese 9

 

     $86,743                               $86,743  

 

Ellyn A. McColgan 7

 

     $31,000        $269,700                        $300,700  

 

Michael R. Splinter

 

     $43,500        $269,700                        $313,200  

 

Lars R. Wedenborn 10

 

     $98,309        $269,700                        $368,009  

 

   1.

Robert Greifeld and Adena T. Friedman are not included in this table as they are employees of Nasdaq and thus receive no compensation for their service as directors. For information on the compensation received by Mr. Greifeld and Ms. Friedman as employees of the company, see “Compensation Discussion and Analysis” and “Executive Compensation Tables.”

 

 

   2.

The differences in fees earned or paid in cash reported in this column largely reflect differences in each individual director’s election to receive the annual retainer in cash or RSUs. This election is made at the beginning of the Board compensation year in May and applies throughout the year. In addition, the difference in fees earned or paid also reflects Committee service and meeting attendance.

 

 

   3.

As discussed above, Nasdaq allows directors to receive Committee Chair and/or Committee member fees in equity, rather than cash. In addition, for part of 2016, directors received meeting fees, which they could elect to receive in equity, rather than cash. Accordingly, Directors Black, Hutchins and Splinter have elected to receive the amounts reported in this column in the form of equity that will be awarded in May 2017.

 

 

   4.

The amounts reported in this column reflect the grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 12 to the company’s audited financial statements for the fiscal year ended December 31, 2016 included in our annual report on Form 10-K. The differences in the amounts reported among non–employee directors primarily reflect differences in each individual director’s election to receive the annual retainer in cash or RSUs.

 

 

   5.

These stock awards, which were awarded on May 5, 2016, represent the annual equity award and the annual retainer if the director elected to receive it in equity. Each non-employee director received the annual equity award, which consisted of 3,164 RSUs with a grant date fair value of $196,168. Mr. Ekholm elected to receive his Chairman retainer in equity so he received an additional 3,797 RSUs with a grant date fair value of $235,414. Directors Black, Hutchins, Kazim, McColgan, Splinter and Wedenborn elected to receive all of their annual retainers in equity, so they each received an additional 1,186 RSUs with a grant date fair value of $73,532.

 

 

 

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BOARD OF DIRECTORS

    

 

   6.

The aggregate number of unvested and vested shares and units of restricted stock beneficially owned by each non-employee director as of December 31, 2016 is summarized in the following table.

 

 

  Director

 

  

Number of Unvested  
Restricted Shares and  
Units  

 

    

Number of Vested  
Restricted Shares and  
Units  

 

 

 

Charlene T. Begley

 

     3,164        5,465    

 

Steven D. Black

 

     4,350        21,712    

 

Börje E. Ekholm

 

     6,961        32,685    

 

Glenn H. Hutchins

 

     4,350        33,684    

 

Essa Kazim

 

     4,350        25,181    

 

Thomas A. Kloet

 

     3,164        2,348    

 

John D. Markese

 

            62,246    

 

Ellyn A. McColgan

 

     4,350        22,196    

 

Michael R. Splinter

 

     4,350        39,807    

 

Lars R. Wedenborn

 

     4,350        –    

 

   7.

Mr. Ekholm and Ms. McColgan are not standing for re-election at the 2017 Annual Meeting of Stockholders.

 

   8.

Fees Earned or Paid in Cash to Mr. Kloet include fees for his service as a director of both Nasdaq, Inc. ($124,000) and our U.S. exchange subsidiaries ($98,472). Mr. Kloet directs the fees for his service as a director to a 501(c)(3) charity of his choice. Mr. Kloet was elected Chairman of the Boards of our U.S. exchange subsidiaries and their Regulatory Oversight Committees in June 2016. Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash.

 

 

   9.

Fees Earned or Paid in Cash to Dr. Markese include fees for his partial year of service as a director of both Nasdaq, Inc. ($48,743) and our U.S. exchange subsidiaries ($38,000). Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash. In 2016, Dr. Markese did not stand for re-election either to the Boards of Nasdaq, Inc. or our U.S. exchange subsidiaries.

 

 

   10.

Fees Earned or Paid in Cash to Mr. Wedenborn include fees for his service both as a director of Nasdaq, Inc. ($66,500) and as Chairman of the Board of Nasdaq Nordic Ltd ($31,809 (  28,750)). The latter amount was converted to U.S. dollars from euros at an exchange rate of $1.1064 per euro, which was the average exchange rate for 2016. Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash.

 

 

 

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LOGO

 

The Board of Directors unanimously recommends a vote FOR the approval of the company’s executive compensation on an advisory basis.        

Proposal 2: Approval of the Company’s Executive Compensation on an Advisory Basis

 

We are asking stockholders to approve, on an advisory basis, the company’s executive compensation as reported in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the executive compensation program and practices described in this proxy statement.

 

We urge stockholders to read the Compensation Discussion and Analysis on the following page as well as the executive compensation tables and narrative beginning on page 44. The Compensation Discussion and Analysis describes our executive compensation program and the decisions made by our Management Compensation Committee in 2016 in more detail. The compensation tables provide detailed information on the compensation of our NEOs. The Board and the Management Compensation Committee believe that the compensation program for our NEOs has been effective in meeting the core principles described in the Compensation Discussion and Analysis in this proxy statement and has contributed to the company’s long-term success.

 

In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2017 Annual Meeting of Stockholders.

     

 

RESOLVED , that the stockholders of Nasdaq, Inc. approve, on an advisory basis, the compensation of Nasdaq’s NEOs, as disclosed in the proxy statement for Nasdaq’s 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the executive compensation tables and other related tables and narrative disclosure.

     

 

This advisory vote is not binding on the Board and the Management Compensation Committee. Although non-binding, the Board and the Management Compensation Committee will review and consider the outcome of the vote when making future decisions regarding our executive compensation program.

 

The Board has adopted a policy providing for annual stockholder advisory votes to approve the company’s executive compensation. Under the current version of the policy, the next advisory vote to approve executive compensation will occur at the 2018 Annual Meeting of Stockholders.

 

 

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NAMED EXECUTIVE OFFICER COMPENSATION

    

 

Compensation Discussion and Analysis

Key Topics Covered

 

  ·   Business Performance Highlights, page 28

 

  ·   Pay for Performance Framework, page 29

 

  ·   What We Pay and Why: Elements of Executive Compensation, page 33

 

  ·   Risk Mitigation and Other Pay Practices, page 42

This Compensation Discussion and Analysis provides a summary of our executive compensation philosophy and programs and describes the compensation decisions we have made under these programs and the factors considered in making those decisions. This Compensation Discussion and Analysis and the Executive Compensation Tables focus on the compensation of our NEOs for 2016. 2016 was a year of significant transition for Nasdaq and our management team. The description below outlines the current and former roles of each of our NEOs.

 

  ·   Robert Greifeld was appointed Chairman of the Board effective January 1, 2017, transitioning from his role as CEO, a position he held through December 31, 2016.

 

  ·   Michael Ptasznik was appointed EVP, Corporate Strategy and CFO upon joining Nasdaq on July 11, 2016.

 

  ·   Adena T. Friedman was appointed President and CEO effective January 1, 2017, transitioning from her role as President and Chief Operating Officer, a position she held through December 31, 2016.

 

  ·   Hans-Ole Jochumsen was appointed Vice Chairman effective January 1, 2017, transitioning from his role as President with responsibility for Global Trading and Market Services, a position he held through December 31, 2016.

 

  ·   Bradley J. Peterson continues to serve as EVP and Chief Information Officer, a position he also held in 2016.

 

  ·   Ronald Hassen served as SVP, Controller and Principal Accounting Officer through March 31, 2016. After the announcement of Mr. Shavel’s retirement, Mr. Hassen served as SVP and Interim CFO from February 1, 2016 through July 10, 2016. From July 11, 2016 through his retirement date of December 31, 2016, Mr. Hassen served as Strategic Advisor.

 

  ·   Lee Shavel served as CFO and EVP, Corporate Strategy through January 31, 2016. Effective February 1, 2016, Mr. Shavel transitioned to the role of Strategic Advisor through his retirement date of March 31, 2016.

 

Business Performance Highlights

We achieved strong financial and operational performance across many of our business segments in 2016 while continuing to diversify our business, invest significantly in future initiatives and integrate our recent acquisitions.

 

 

 

Achieved record revenues less transaction-based expenses of $2.3 billion for the full year ended December 31, 2016

 

 

Led all U.S. exchanges with 91 IPOs , representing 73% of all U.S. IPOs , and welcomed 283 total new listings on The Nasdaq Stock Market

 

 

Introduced the Nasdaq Financial Framework to deliver to our Market Technology clients a single operational core that ties together Nasdaq’s portfolio of technology offerings across the trade lifecycle

 

 

Increased our Information Services revenues 5.5% year-over-year to $540 million

 

 

Achieved the largest market share in the U.S. market for multiply-listed options on equities and exchange traded funds

 

 

Closed four key acquisitions , including Boardvantage, International Securities Exchange, Marketwired and Nasdaq CXC (formerly Chi-X Canada)

 

 

Returned $300   million in value to stockholders through $100  million in repurchased stock and $200   million in paid dividends

 

 

Achieved 86.2% three-year cumulative total stockholder return, significantly outperforming the S&P 500 and the Nasdaq composite over this time period

 

 
 

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NAMED EXECUTIVE OFFICER COMPENSATION

    

 

Pay for Performance Framework

 

We design our executive compensation program to reward financial and operational performance, effective strategic leadership and achievement of business unit goals and objectives, which are key elements in driving stockholder value and sustainable growth. Our compensation program is grounded in best practices and ethical and responsible conduct.

 

Key Governance Features of Executive Compensation Program

 

The following table summarizes the specific features of our executive compensation program. We believe our executive compensation practices drive performance and serve our stockholders’ long-term interests.

 

 What We DO

 

         

What We DON’T Do

 

 

Pay for performance; 100% of annual incentives and annual long-term incentive grants are performance-based

 

         Guarantee bonus payments for our NEOs

 

Maintain robust stock ownership guidelines

 

        

 

Allow hedging or pledging of Nasdaq stock

 

 

Maintain a long-standing incentive “clawback” policy

 

        

 

Award non-performance based stock options

 

 

Provide change in control protection that requires a “double trigger”

 

        

 

Pay tax gross-ups on severance arrangements and perquisites

 

 

Provide only limited perquisites, which provide nominal additional assistance to allow executives to focus on their duties

 

        

 

Provide ongoing supplemental executive retirement plans;
all benefits have been frozen

 

 

Conduct a comprehensive annual risk assessment
of our compensation program

 

        

 

Permit re-pricing of underwater stock options without
shareholder approval

 

          

 

Accrue or pay dividends on unearned or unvested
equity awards

 

 

Compensation Philosophy

We have endeavored to create a performance-based compensation program that meets the needs of our global company and its stockholders. On an annual basis, the Management Compensation Committee reviews Nasdaq’s compensation philosophy, programs and practices. The following core principles reflect the Management Compensation Committee’s current compensation philosophy.

 

·   The compensation program creates long-term stockholder value by fostering an ownership culture. We promote employee stock ownership by granting long-term incentives to all employees and providing the ability to buy shares through our ESPP.

 

·   The compensation program focuses on key business objectives. Our compensation program starts with strategic and financial goals and objectives, which inform all compensation decisions. Compensation decisions are also strongly influenced by client focus, regulatory compliance and ethical behavior.

 

·   The compensation program supports a high-performance environment via performance-based rewards. Variable pay is emphasized over fixed pay through participation of all employees in annual and long-term incentive plans.
·   The compensation program reinforces the importance of meeting and/or exceeding performance targets through superior awards for superior performance and through differentiated awards based on performance achieved. However, compensation plans and arrangements do not encourage excessive risk-taking by management.

 

·   The compensation program enables Nasdaq to compete effectively for talent. The program is designed to attract, motivate and retain talented, high-performing individuals who are willing to commit to our success and to build long-term stockholder value.

 

·   We communicate compensation objectives and program clearly. Ongoing employee educational programs ensure that the compensation objectives and program are well understood and serve as an effective motivational tool.

 

 

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Our philosophy is based on the following guiding principles. Each individual component of compensation

is considered independently and is not based on a formula. Each component, however, is intended to be

complementary to the overall compensation package awarded to the executive.

 

 Pay For Performance

 

 

Retention

 

 

Competitive Market Analysis

 

 

A substantial portion of compensation is

variable or “at risk” and directly linked

to individual, company and business unit

performance.

 

 

Long-term vesting features ensure that

an employee must remain with the

company for a period of time to receive

value from an award.

 

 

 

Total compensation is sufficiently competitive with industry peers to attract and retain executives with similar levels of experience, skills, education and responsibilities.

 

 

 Internal Equity

 

 

 

Collateral Implications

 

 

 

Stockholder Alignment

 

 

Compensation takes into account

the different levels of responsibilities, scope,

risk, performance and future potential

of our executives.

 

 

Our total compensation mix encourages

executives to take appropriate, but

not excessive, risks to improve our

performance and build long-term

stockholder value.

 

 

 

The financial interests of executives are aligned with the long-term interests of our stockholders through stock-based compensation and performance metrics that correlate with long-term stockholder value.

 

 

Say on Pay Results

 

 

 

For the last three consecutive years, more than 98% of the votes cast on our say-on-pay proposal were in favor of our executive compensation program and policies.

 

Each year we carefully consider the results of our Say on Pay advisory vote from the prior year. At our 2016 Annual Meeting of Stockholders, over 98% of the votes cast were in favor of the advisory vote to approve executive compensation. These results demonstrated significant stockholder support of our compensation program’s design and goals, and we took into account the results of this advisory vote when making compensation decisions through the remainder of 2016 and into early 2017. In addition to the Say on Pay results, we also consider many other factors in evaluating our executive compensation programs, including our pay for performance philosophy and a competitive market analysis of peer companies. Consistent with our Say on Pay results and these other factors, in 2016 we retained the core elements of our executive compensation program, policies and decisions and believe that our programs continue to appropriately motivate and reward our senior management.

In addition to the perspective provided by the Say on Pay results, we also carefully solicit and consider feedback from our stockholders on executive compensation, corporate governance and other issues throughout the year. We welcome input from our stockholders on our executive compensation program through the communication process discussed in “Stockholder Communication with Directors.”

Compensation Determinations

We have established a process for evaluating the performance of the company, the CEO and other NEOs for compensation purposes. On an annual basis, the Management Compensation Committee, the Board and Nominating & Governance Committee review our CEO’s performance in Executive Session. As part of their deliberative process, the Management Compensation Committee and Board evaluate our CEO’s performance against the pre-established corporate goals and determine appropriate CEO compensation. The factors considered include our CEO’s performance against annual performance objectives, the performance of the company, the quality and development of the management team and employee engagement.

With the support of the Human Resources Department, our CEO develops compensation recommendations for the executive officers for consideration by the Management Compensation Committee and/or the Board. As part of this process, our CEO meets individually with each executive to discuss his or her performance against pre-established objectives determined during the previous year, as well as performance objectives and development plans for the coming year. This meeting gives each executive an opportunity to present his or her perspective of his or her performance and potential objectives and challenges for the upcoming year. Our CEO presents the results of each of the executive meetings to the Management Compensation Committee for its review and consideration as part of its deliberation process.

 

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Competitive Positioning

 

To evaluate the external competitiveness of our executive compensation program, we compare certain elements of the program to similar elements used by peer companies. In setting 2016 compensation levels, the Management Compensation Committee used a comprehensive peer group, consisting of 20 companies, to conduct a competitive market analysis of the compensation program for our NEOs. We believe using and disclosing a peer group supports good governance and provides valuable input into compensation levels and program design.

 

When forming the peer group, we considered potential peers among both direct industry competitors and companies in related industries with similar talent needs. After identifying potential peers on this basis, we used the seven screening criteria to the right to select appropriate peer companies.

 

Each of these factors was initially weighted equally to develop a more refined list of companies for consideration. We then further reviewed each remaining company to determine its appropriateness for the final peer group with a particular focus on identifying meaningful talent peers. Certain companies were eliminated because of factors such as a significantly different market capitalization, limited competitive position for executive talent or limited global complexity relative to Nasdaq.

 

We believe the current peer group includes an accurate representation of Nasdaq’s industry competitors and size-relevant, talent-focused comparators. In addition, we believe that year-over-year consistency in peer group usage is desirable for reviewing trends in market pay movement.

      

Screening Criteria

Used to Select

Peer Companies

 

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REVENUE SIZE

 

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MARKET CAPITALIZATION SIZE

 

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FINANCIAL PERFORMANCE

 

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DIRECT EXCHANGE COMPETITORS

 

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FINANCIAL SERVICE COMPANIES

 

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TECHNOLOGY

DEPENDENT COMPANIES

 

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COMPANIES WITH GLOBAL COMPLEXITY

 

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Peer Group

The peer group consists of the following companies. 1

 

Automatic Data

Processing, Inc.

   Deutsche Börse   

 

Fidelity National

Information Services,

Inc.

 

   Legg Mason, Inc.   

TD Ameritrade Holding

Corporation

   
BGC Partners Inc.   

 

Discover Financial

Services

 

   Fiserv, Inc.   

London Stock

Exchange Group plc

   TMX Group Inc.    
CBOE Holdings, Inc.    DST Systems, Inc.   

 

Intercontinental

Exchange, Inc.

 

  

MasterCard

Incorporated

  

The Charles Schwab

Corporation

   
CME Group Inc.   

 

E*TRADE Financial

Corporation

 

   Invesco Ltd.    McGraw Hill Financial    Visa Inc.    

 

1. 

This peer group differs from the peer group used for the performance graph included in Item 5 of our annual report on Form 10-K, which is for stock performance comparisons and includes industry-only competitors.

 

In addition to the peer group, we also take into account that Nasdaq faces competition for talent from private firms, such as high frequency and other small trading firms, private equity funds and non-public technology companies for which public compensation data is not available.

Peer group data serves as only one reference point in evaluating our executive compensation program. We use this data to see how various elements of our executive compensation program compare to other companies. However, we do not set the compensation of our executives based on this data or target executive compensation to a specific percentile of the compensation set by our competitors. Instead, the comparison is conducted solely to determine if the compensation is competitive to the market. Each executive is evaluated individually based on skills, knowledge, performance, growth potential and, in the Management Compensation Committee’s business judgment, the value he or she brings to the organization and Nasdaq’s retention risk.

CEO’s Role in the Executive Compensation Process

Our CEO regularly attends Management Compensation Committee meetings at the invitation of the Management Compensation Committee and provides his (or in 2017, her) perspective to the Management Compensation Committee regarding executive compensation matters generally and the specific performance of the other executive officers.

However, in accordance with the listing rules of The Nasdaq Stock Market, the CEO does not vote on executive compensation matters or attend Executive Sessions of the

Management Compensation Committee or Board and the CEO is not present when his (or in 2017, her) own compensation is being discussed or approved.

Role of Compensation Consultants

In 2016, our Human Resources Department engaged Meridian Compensation Partners to assist staff in gathering data, reviewing best practices and making recommendations to the Management Compensation Committee about our executive compensation program. Meridian does not provide any other services to Nasdaq other than executive compensation consulting. Meridian does not directly advise the Management Compensation Committee or attend meetings. In 2016, we paid Meridian $48,184 in fees for competitive market data for executives and outside directors and $83,321 in fees for other executive compensation services. However, Meridian does not determine or recommend the amount or form of executive or director compensation.

Tally Sheets

When recommending compensation for the CEO and other NEOs, the Management Compensation Committee reviews tally sheets that detail the various elements of compensation for each executive. These tally sheets are used to evaluate the appropriateness of the total compensation package, to compare each executive’s total compensation opportunity with his or her actual payout and to ensure that the compensation appropriately reflects the compensation program’s focus on pay for performance.

 

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What We Pay and Why: Elements of Executive Compensation

 

       
    

Element

 

 

Description

 

  

Objectives

 

Fixed

  Base Salary   Fixed amount of compensation for service during the year   

 

Reward scope of responsibility, experience and individual performance

 

At-Risk

  Annual Incentive Compensation  

 

At-risk compensation, dependent on goal achievement

 

Formula-driven annual incentive linked to corporate financial, business unit financial and strategic objectives and other organizational priorities

 

  

Promote strong business results by rewarding value drivers, without creating an incentive to take excessive risk

 

Serve as key compensation vehicle for rewarding results and differentiating individual performance each year

  Long-Term Incentive Compensation  

 

Award values are granted based on market competitive norms and individual performance

 

For Executive Vice Presidents and above, 100% PSUs are paid in shares of common stock upon vesting based on three-year relative TSR ranking compared to peers and to the broad market, over each cycle–

 

  

Motivate and reward executives for outperforming peers over several years

 

Ensure that executives have a significant stake in the long- term financial success of the company, aligned with the stockholder experience

 

Promote longer-term retention

   

 

For Senior Vice Presidents, 50% PSUs are paid in shares of common stock upon vesting based on three-year relative TSR ranking compared to peers and to the broad market, over each cycle, and 50% paid in common shares upon vesting based on one-year Operating Income, then subject to three-year vesting

 

  

Benefits

  Retirement, Health and Welfare  

 

401(k) plan with company match

 

Competitive welfare benefits

 

Frozen pension plan and frozen supplemental executive retirement plan

 

  

Provide market-competitive benefits to attract and retain top talent

 

Frozen plans reflect legacy arrangements

Severance

  Severance Arrangements– Termination Due to Change in Control (“Double Trigger”)  

Severance and related benefits paid upon termination without cause or resignation for good reason following a change in control

 

Accelerated equity vesting upon termination post-change in control

  

 

Assist in attracting top talent

 

Preserve executive objectivity when considering transactions in the best interest of stockholders

 

Retention of executives through a change in control

 

Equity provisions keep executives whole in situations where shares may no longer exist or awards cannot otherwise be replaced

 

  Severance Arrangements - Other  

Specified amounts under employment arrangements with some executive officers

 

Discretionary guidelines, for involuntary terminations without cause

  

 

Assist in attracting top talent

 

Provide transition assistance if employment ends involuntarily

 

Promote smooth succession planning upon retirement

 

Allow the company to obtain release of employment-related claims

 

Other

  Limited Perquisites   Limited additional benefits provided to certain executives   

 

Provide nominal additional assistance that allows executives to focus on their duties

 

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Pay for Performance

 

Nasdaq’s executive compensation program is designed to deliver pay in accordance with corporate, business unit and individual performance. A large percentage of total target compensation is “at-risk” through long-term equity awards and annual cash incentive awards. These awards are linked to actual performance and include a substantial portion of equity. The mix of actual direct compensation for our NEOs in 2016 is shown below.

 

 

 

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Base Salary

We review base salaries on an annual basis in December. In addition, we may make adjustments to base salaries during the year in response to significant changes in an executive’s responsibilities or events that would impact the long-term retention of a key executive. Salaries are established at levels commensurate with each executive’s title, position and experience, recognizing that each executive is managing a component of a complex global company.

Under the terms of Mr. Greifeld’s employment agreement, his base salary for 2016 was $1 million, which has remained unchanged since 2006, consistent with the terms of his employment agreement.

In January 2016, Mr. Hassen’s base salary was increased from $380,000 to $500,000 to reflect his role as Interim CFO.

The table to the right shows each NEO’s base salary at December 31, 2016 and 2015.

Named

Executive Officer

 

  

Base Salary at 
December 31, 2016 
($) 

 

    

Base Salary at   
December 31, 2015   
($)   

 

 

 

Robert Greifeld

 

     $1,000,000        $1,000,000    

 

Michael Ptasznik

 

     $500,000        –    

 

Adena T. Friedman

 

     $850,000        $850,000    

 

Hans-Ole Jochumsen

 

     $600,000        $600,000    

 

Bradley J. Peterson

 

     $525,000        $525,000    

 

Ronald Hassen

 

     $500,000        $380,000    

 

Lee Shavel

 

            $500,000    
 

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Annual Incentive Compensation

Annual performance-based cash incentives are an integral part of our executive compensation program. Our NEOs receive such awards through our ECIP.

Plan-Based Target Award Opportunities . At the beginning of each year, target annual cash incentive award opportunities are established for our NEOs based on an assessment of each officer’s position and responsibilities, the competitive market analysis and the company’s retention objectives.

In 2016, Mr. Greifeld’s target annual incentive compensation remained unchanged at $2,300,000. Ms. Friedman’s target annual incentive compensation was increased from $1,250,000 to $1,500,000 associated with her promotion to President and Chief Operating Officer. Mr. Hassen’s target annual incentive compensation was increased to $750,000 from $380,000 in connection with his transition to the role of Interim CFO.

The table below shows each NEO’s target annual incentive opportunity in 2016 and 2015.

 

Named Executive

Officer

 

  

2016 Target        
Annual        
Incentive        
Opportunity        

($)        

 

    

2015 Target        

Annual        

Incentive        

Opportunity        

($)        

 

 

Robert Greifeld

 

   $2,300,000      $2,300,000  

 

Michael Ptasznik

 

   $750,000      –  

 

Adena T. Friedman

 

   $1,500,000      $1,250,000  

 

Hans-Ole Jochumsen

 

   $1,000,000      $1,000,000  

 

Bradley J. Peterson

 

   $800,000      $800,000  

 

Ronald Hassen

 

   $750,000      $380,000  

 

Lee Shavel

 

        $750,000  

Performance Goals. The annual cash incentive award payments for our executives are based on the achievement of pre-established, quantifiable performance goals. The CEO selects and recommends goals for the other executive officers based on their areas of responsibility and input from each executive. The Management Compensation Committee and/ or the Board review and consider our CEO’s recommendations and approve the goals for the coming year after identifying the objectives most critical to our future growth and most likely to hold executives accountable for the operations for which they are responsible.

The annual cash incentive awards are tied to results in the following areas:

 

·   corporate objectives, including:

 

    operating income (run rate), which measures business efficiency and profitability;

 

    net revenues, which measure the ability to drive revenue growth; and

 

    employee engagement, which measures overall employee satisfaction and motivation; and

 

·   business unit objectives, which are defined business unit-specific goals (financial and strategic) that contribute to the company’s short and long-term performance.

Operating income (run rate) and net revenues are the company’s primary measures of short-term business success and key drivers of long-term stockholder value. Targets for operating income (run rate) and net revenues are set at the beginning of each year, as part of the company’s annual budgeting process and are subject to adjustment for transactions and other extraordinary events. The employee engagement objectives are established at the beginning of the year by the Management Compensation Committee and/or the Board to focus the executive team on certain enterprise initiatives.

Business unit objectives also are established at the beginning of the year and are subject to adjustment for transactions and other extraordinary events. The business unit objectives consist of financial and strategic objectives specific to the business unit. The Management Compensation Committee and/or the Board set the business unit objectives to reflect the key responsibilities of each executive and incent focus on particular objectives in 2016. In lieu of business unit objectives, our CEO had strategic objectives relating to the entire organization.

 

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Named Officer’s Performance Objectives for 2016 and the Relative Weighting of these Objectives. We set goals at levels where the maximum payout would be difficult to achieve and beyond budget assumptions. The table below shows each NEO’s performance objectives for 2016 and the relative weighting of these objectives.

 

 

    Named Executive Officer

 

  

Corporate Operating
Income (Run Rate)

 

  

Corporate Net
Revenues

 

  

Employee
Engagement

 

  

Business Unit    
Financial and Strategic    
Objectives     

 

 

Robert Greifeld

 

   45%    30%    –     25%

 

Michael Ptasznik

 

   55%    10%    5%    30%

 

Adena T. Friedman

 

   50%    30%    5%    15%

 

Hans-Ole Jochumsen

 

   10%    10%    5%    75%

 

Bradley J. Peterson

 

   30%    10%    5%    55%

 

Ronald Hassen

 

   75%    20%    5%    – 

 

Lee Shavel

 

   –     –     –     – 

 

Potential Payouts. Payouts are determined after the end of the year and are based on the sum of (i) actual performance under each corporate objective and (ii) actual performance against an executive’s business unit/strategic objectives. Each goal applicable to the NEOs for 2016 had a minimum, target and maximum performance level.

 

Scoring of each goal is based on actual goal achievement compared to the target. In 2016, payouts on each goal could vary between 0% and 200% of the target. However, the non-financial goals were subject to a funding modifier aligned with the achievement of either corporate or business unit financial goals. This limitation ensures that the payout of overachievement against non-financial goals is aligned with financial results.

 

Payouts under the incentive compensation program also take into account ethical and responsible conduct, and awards are subject to a negative adjustment at the full discretion of the Management Compensation Committee and/or the Board based on conduct.

 

Corporate Objectives Performance vs. Goals.

The table to the right summarizes the 2016 corporate objectives.

 

Corporate Objective

 

 

Threshold (0% payout)

 

 

Target (100% Payout)

 

 

Maximum

(200%

payout)

 

 

Nasdaq’s

Results

for 2016 as Measured for Compensation Purposes

 

  

Payout Percentage of Target Incentive Award Amount

 

 

 

Operating

Income

(Run Rate) 1

 

  $973.6m   $1,040.5m   $1,078.4m   $1,071.0m    180%
 

 

Net

Revenues 1

 

  $2,183.3m   $2,276.1m   $2,344.2m   $2,278.3m    103%
 

 

Employee

Engagement

 

 

4%

decrease

 

3%

improvement

  6% improvement  

Sustained

current level

   60%
 

1.  Corporate operating income (run rate) excludes R&D for NFX implementation, foreign exchange impact, non-GAAP expense items and other non-operating revenue/expense items. Corporate net revenues exclude R&D, foreign exchange impact and non-recurring revenue items. Non-GAAP expense items primarily include amortization expense of acquired intangible assets, merger and strategic initiatives costs and restructuring charges. As a result, these calculations differ from the U.S. GAAP calculations of operating income and revenues less transaction-based expenses reported in our annual report on Form 10-K.

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2016 Business Unit Financial and Strategic Objectives Performance vs. Goals. The Management Compensation Committee and/or the Board assessed each officer’s achievement of the business unit financial and strategic objectives in 2016, as described below. Specific metrics for these goals are not disclosed for competitive purposes. However, 100% of our NEO goals were defined with quantifiable performance metrics and were approved by the Management Compensation Committee. No discretion was applied to any goal scoring unless specially noted below.  

 

    Named Executive Officer

 

  

Goal

 

  

Goal Weighting

 

  

     Score as a Percent     
of Target

 

Robert Greifeld

  

 

Strategic Initiatives 1

Succession Planning and Execution

 

   15%

10%

 

   79%

200%

 

Michael Ptasznik

  

 

Expense Management

Risk Management

Operational Improvements 2

 

   10%

10%

10%

 

   200%

175%

176%

 

Adena T. Friedman

  

 

Strategy/Innovation Initiatives 1

 

   15%

 

   141%

 

 

Hans-Ole Jochumsen

 

  

 

    

Global Trading & Market Services Operating Income

Global Trading & Market Services Revenues

Global Trading & Market Services Strategic Initiatives 1

    

 

  

 

 

30%

    

25%

    

20%

 

  

 

145%

    

100%

    

45%

 

 

Bradley J. Peterson

 

  

 

Global Technology Expense Run Rate

Business Unit Blended Research and Development 2

Systems Reliability 2,3

System Resiliency Risk 2

 

  

 

15%

15%

    

15%

10%

 

  

 

200%

176%

    

101%

176%

 

 

Ronald Hassen

 

        

 

Lee Shavel

 

        

 

1. 

For non-financial goals, maximum payout was limited by applicable business unit profit results.

 

2. 

Maximum payout was limited to 176% of target based on Corporate Operating Income results.

 

3. 

The Management Compensation Committee and Board of Directors explicitly considered certain systems reliability issues in 2016 in connection with their review and determination of this goal score. The Committee and Board reduced the formulaic score of 197% to a score of 101% of target for certain employees in the Global Technology Group.

Award Payouts. In early 2017, the Management Compensation Committee and/or the Board determined the final levels of achievement for each of the goals and approved payout amounts. There were no guaranteed minimum payouts for any of our NEOs; 100% of payouts were based on performance vs. pre-defined, measurable goals.

 

Named Executive Officer

 

  

2016 ECIP Award Payout ($)

 

    

                         2015 ECIP Award Payout ($)

 

 

 

Robert Greifeld

 

     $3,306,250          $4,177,950    

 

Michael Ptasznik 1

 

     $1,200,000          –    

 

Adena T. Friedman

 

     $2,175,750          $2,088,125    

 

Hans-Ole Jochumsen

 

     $1,095,500          $1,649,500    

 

Bradley J. Peterson

 

     $1,327,600          $1,522,000    

 

Ronald Hassen

 

     $1,197,000          $733,020    

 

Lee Shavel

 

     –          $1,437,375    

 

1. 

Mr. Ptasznik joined Nasdaq on July 11, 2016 as EVP, Corporate Strategy and CFO. Since he started mid-year, Mr. Ptasznik’s 2016 annual incentive award was limited to a maximum payout of $1,200,000.

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Long-Term Incentive Compensation

 

Long-term incentive compensation for our executive officers consists entirely of performance-based equity awards. For officers at the EVP level or above, we grant PSUs based on relative TSR over a three-year performance period. Consistent with our pay for performance philosophy, this program represents 100% of the officer’s long-term stock-based compensation. For SVPs, we grant two types of PSUs, each of which constitutes 50% of an SVP’s equity award:

 

·   PSUs based on relative TSR over a three-year performance period; and

 

·   PSUs based on corporate operating income (run rate) over a one-year performance period, then subject to three-year vesting.

 

PSUs Based on Relative TSR. In 2016, each NEO (except Mr. Shavel) received a grant of PSUs subject to a three-year cumulative performance period beginning on January 1, 2016 and ending on December 31, 2018. The shares earned, if any, vest at the end of the performance period. Performance is determined by comparing Nasdaq’s TSR to two groups of companies, each weighted 50%.

 

One group consists of all S&P 500 companies and the other group consists of the peer companies on the right. The peer companies include other global exchanges with sizable market capitalizations.

   

Peer Companies  

 

   

 

ASX Limited  

 

   

 

BM&F Bovespa  

 

   

 

Bolsa Mexicana de Valores  

 

   

 

Bolsas Y Mercados Espanoles  

 

   

 

CBOE Holdings, Inc.  

 

   

 

CME Group Inc.  

 

   

 

Deutsche Börse AG  

 

   

 

Euronext  

 

   

 

Hong Kong Stock Exchange  

 

   

 

ICAP plc (now NEX Group plc)  

 

   

 

International Exchange, Inc.  

 

   

 

Japan Exchange  

 

   

 

London Stock Exchange Group plc  

 

   

 

Singapore Exchange  

 

   

 

TMX Group Inc.  

 

 

 

The TSR results are measured at the beginning and end of the three-year performance period. Nasdaq’s relative performance ranking against each of these groups will determine the final number of shares delivered to each individual. The maximum payout will be 200% of the target number of PSUs granted if Nasdaq ranks at the 85th percentile or above of both groups. However, if Nasdaq’s TSR is negative for the three-year performance period, regardless of TSR ranking, the payout cannot exceed 100% of the target number of PSUs granted.

 

The table on the right shows the amount of shares a grantee may receive based upon different levels of achievement against each of the groups. For each group, the resulting shares earned will be calculated by multiplying the relevant percentage from the table below by one-half of the target award amount.

 

For levels of achievement between points, the resulting shares earned will be calculated based on straight-line interpolation.

 

   

Percentile Rank of Nasdaq’s Three-Year TSR Versus the Relevant Group

 

 

      Resulting      

Shares

Earned

 

   

 

>= 85th Percentile

 

  200%  
   

 

67.5th Percentile

 

  150%  
   

 

50th Percentile

 

  100%  
   

 

25th Percentile

 

  50%  
   

 

15th Percentile

 

  30%  
   

 

0 Percentile

 

  0%  

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NAMED EXECUTIVE OFFICER COMPENSATION

    

 

PSUs Based on Corporate Operating Income (Run Rate).

In 2016, Mr. Hassen also received a grant of PSUs subject to a one-year performance period beginning on January 1, 2016 and ending on December 31, 2016. Performance was determined by comparing Nasdaq’s actual corporate operating income (run rate) against a targeted amount, as set forth in the table below.

Performance between the minimum and the target and between the target and the maximum levels would result in incremental changes in payout on a straight-line basis.

 

    Performance    

Range

  

 

Performance    
Against Target    
Corporate    

Operating    

Income    

(Run Rate)    

 

  

      Percent of      

Targeted

Payout

 

Below Threshold

 

   <$973.6 million        0%

 

Threshold

 

   $973.6 million        50%

 

Target

 

   $1,040.5 million        100%

 

Ceiling

 

   $1,078.4 million        150%

Award Determination. In setting Mr. Greifeld’s 2016 equity award target, the Management Compensation Committee focused on motivating performance, with significant upside and downside based on relative performance. Historical awards and the retention value of Mr. Greifeld’s outstanding equity were taken into account when determining the target amount of his award. Peer group data also was considered in establishing a market-competitive award level.

Mr. Greifeld recommended the specific equity award targets for each of the other NEOs, which varied among executives depending upon responsibilities and retention considerations. The Management Compensation Committee and Board evaluated these recommendations and determined that the amount of each award reflected the individual’s contributions, was aligned with competitive market levels and was appropriate for retention purposes. Mr. Shavel did not receive an equity award in 2016 due to his planned retirement date of March 31, 2016.

 

 

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The target amount and target face value of the PSUs awarded to each of the NEOs under this program is set forth in the table below. With the exception noted below, the 2016 awards were approved on March 23, 2016 and granted on March 31, 2016, which was the date of Nasdaq’s annual employee equity grant.

 

 

Named Executive Officer

 

  

Target TSR PSUs (#)

 

    

                    Target  Operating
Income PSUs (#)

 

    

                    Target  Grant Date
Face Value ($)

 

 

 

Robert Greifeld

 

     112,985          –          $7,499,944    

 

Michael Ptasznik 1

 

     8,279          –          $549,974    

 

Adena T. Friedman

 

     54,781          –          $3,636,363    

 

Hans-Ole Jochumsen

 

     27,390          –          $1,818,148    

 

Bradley J. Peterson

 

     19,173          –          $1,272,704    

 

Ronald Hassen

 

     2,739          3,012          $381,752    

 

Lee Shavel

 

     –          –          –    

 

   1.

Mr. Ptasznik’s award was approved on June 10, 2016 and granted on July 11, 2016.

 

 

Settlement of 2014 PSU Grants Based on Relative TSR. In January 2017, the Management Compensation Committee and the Board evaluated and approved the performance results for the PSUs granted to senior executives in 2014. These PSUs were subject to a three-year cumulative performance period beginning on January 1, 2014 and ending on December 31, 2016 and performance was determined by comparing Nasdaq’s TSR to two groups of companies, each weighted 50%. One group consisted of all S&P 500 companies and the other group consisted of 15 peer companies.

 

The table below sets forth the 2014 PSU performance measure results.

 

 

 

Equity Award

 

 

  Cumulative TSR  

 

 

      Weighting      

 

 

Performance Factors

 

 

    Percentile    
Rank

 

 

        Payout        

 

 

    Blended    
Payout

 

2014 Three-Year

PSU Award

  86.2%   50%  

 

Based on Relative TSR Against the S&P 500

 

  94%   200%   200%
    50%  

 

Based on Relative TSR Against Peers

 

  87%   200%  

 

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Based on these results, the NEOs earned the number of PSUs set forth below as compared to the target amounts granted.  

 

Named Executive Officer

 

  

Target PSUs

 

    

            PSUs Earned

 

 

 

Robert Greifeld

 

     180,000           360,000     

 

Michael Ptasznik

 

     –           –     

 

Adena T. Friedman

 

     62,181           124,362     

 

Hans-Ole Jochumsen

 

     44,431           88,862     

 

Bradley J. Peterson

 

     29,532           59,064     

 

Ronald Hassen

 

     2,708           5,416     

 

Lee Shavel

 

     34,454           68,908     

 

Settlement of 2016 PSU Grants Based on Corporate Operating Income (Run Rate). In January 2017, the Management Compensation Committee and the Board determined the number of shares that Mr. Hassen earned in connection with his 2016 PSU grant based on corporate operating income (run rate).

Based on the company’s corporate operating income (run rate) of $1,071.0 million, PSUs awarded to all participants constituted 140% of the target shares. Since Mr. Hassen’s target award was 3,012 shares, the final number of shares awarded to him was 4,216 shares. Under the terms of Mr. Hassen’s retirement agreement, due to retirement eligibility, these shares vested immediately upon settlement.

Other 2016 Equity Grants. Upon hire, Mr. Ptasznik received a special one-time grant of RSUs with a face value of $1,000,000. In addition, Mr. Ptasznik received an additional grant of RSUs with a face value of $550,000, which constituted one-half of his annual equity award; the other half consisted of the PSUs based on relative TSR discussed above. The RSU grants vest 1/3 each year over a three-year period. The purpose of these grants was to compensate for forfeited unvested equity at his prior employer. The grants also serve as a long-term retention vehicle.

General Equity Award Grant Practices. The Management Compensation Committee and the Board approve annual equity awards at their regular March meetings, which are scheduled well in advance without regard to material company news announcements.

We believe that the current and expected expense and share utilization are reasonable and justified in light of the Management Compensation Committee’s goals of aligning the long-term interests of officers and employees with those of stockholders, rewarding officers for long-term relative TSR growth and retaining a strong management team. We actively monitor the expense and share utilization associated with annual grants, and are committed to making adjustments to grant practices when appropriate.

Throughout the performance periods for equity awards, the Management Compensation Committee receives updates on the executives’ progress in achieving applicable performance measures and monitors the compensation expense and share run rate that the company is incurring for outstanding equity awards.

The reference price for calculating the value of equity awards granted is the closing market price of Nasdaq’s common stock on the date of grant. Existing equity ownership levels are not a factor in award determinations as we do not want to discourage senior executives from holding significant amounts of Nasdaq’s common stock.

 

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Benefits

Nasdaq provides a comprehensive benefits program to our executives, including the NEOs, which mirrors the program offered to our other employees. These benefits include, among others things, a 401(k) plan with 6% matching contributions, health and welfare benefits and an employee share purchase program. Under these plans, our NEOs participate on the same terms as other employees.

Severance

Except in employment agreements and other agreements for certain officers as described in this proxy statement, we are not obligated to pay general severance or other enhanced benefits to any NEO upon termination of his or her employment. However, the Management Compensation Committee and/or the Board has the discretion to pay severance plan benefits. Severance plan decisions do not influence other compensation decisions as these decisions are focused on motivating our executives to remain with Nasdaq and contribute to our future success.

Change in control severance is defined in employment agreements for certain NEOs, as described in this proxy, and in a change in control severance policy for NEOs without an employment agreement. We believe that the terms for triggering payment under each of the arrangements described in this proxy statement are reasonable. For example, these arrangements use what is known as a “double trigger,” meaning that a severance payment as a result of a change in control is activated only upon the occurrence of both a change in control of the company and a loss of employment. Benefits under these arrangements will be provided only if Nasdaq is the target organization. In addition, a change in control under these arrangements is limited to situations where the acquirer obtains a majority of Nasdaq’s voting securities or the current members of our Board (or their approved successors) cease to constitute a majority of the Board.

For further information on Nasdaq’s limited severance arrangements, see “Executive Compensation Tables – Potential Payments Upon Termination or Change in Control.”

Other

Because our executive compensation program emphasizes pay for performance, it includes very few perquisites for our executives. Under his employment agreement, for security reasons, we provide Mr. Greifeld with a company car and security-trained driver for use when conducting company business. Officers at the level of SVP and above are eligible to receive basic financial planning services and executive health

exams. In addition, like all employees and contractors, our executives are eligible to receive 100% corporate matching funds (and sometimes more for specific initiatives) for donations to an IRS-registered, 501(c)(3)-compliant organization. Participation in each of these programs is voluntary. We do not provide tax gross-up payments on perquisites.

During 2016, Mr. Ptasznik received a one-time payment of $18,157 for relocation expenses incurred for his move from Canada to the U.S. to join Nasdaq.

Risk Mitigation and Other Pay Practices

Risk Assessment of Compensation Program

We monitor the risks associated with our compensation program on an ongoing basis. In February 2017, the Management Compensation Committee and Audit Committee were presented with the results of an annual formal assessment of our employee compensation program in order to evaluate the risks arising from our compensation policies and practices. This risk assessment report reflected a comprehensive review and analysis of the components of our compensation program, including the performance measures established under the 2017 cash performance-based incentive award program. The Management Compensation Committee and Audit Committee both concluded, based on the risk assessment report’s findings, that any risks arising from our compensation program are not reasonably likely to have a material adverse effect on the company.

The risk assessment was performed by an internal working group consisting of employees in the Human Resources, Risk Management and Internal Audit Departments, as well as the Offices of General Counsel and Corporate Secretary. The findings were presented to the Global Risk Management Committee, which concurred with the working group’s report. The risk assessment included the following steps:

 

·   collection and review of existing Nasdaq compensation policies and pay structures;

 

·   development of a risk assessment scorecard, analysis approach and timeline;

 

·   conducting a qualitative risk assessment of performance goals to determine overall risk level; and

 

·   review and evaluation of controls that might mitigate risk-taking (e.g., equity vesting structure, incentive recoupment policy and stock ownership guidelines).
 

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Stock Ownership Guidelines

 

We have long recognized the importance of stock ownership as an essential means of closely aligning the interests of our executives with the interests of our stockholders. In addition to using equity awards as a primary long-term incentive compensation tool, we have in place stock ownership guidelines for our senior executives. Under its charter, the Management Compensation Committee is responsible for reviewing the stock ownership guidelines annually and verifying compliance.

Under the guidelines, the covered executives are expected to own specified dollar amounts of Nasdaq common stock based on a multiple of their base salary. The multiple is determined by officer level: our CEO must hold shares valued at six times base salary, our CFO must hold a four times multiple, other EVPs must hold a three times multiple and SVPs and Vice Chairmen must hold a one times multiple. Individual holdings, shares jointly owned with immediate family members or held in trust, shares of restricted stock (including vested and unvested), shares underlying PSUs after completion of the performance period and shares purchased or held through Nasdaq’s plans, such as the Nasdaq ESPP, count toward satisfying the guidelines. New executives and executives who incur a material change in their responsibilities are expected to meet the applicable level of ownership within four years of their start date or the date of the change in responsibilities. All of the NEOs who were required to be in compliance with the guidelines on December 31, 2016 were in compliance with the guidelines as of that date.

Stock Holding Guidelines

We encourage our senior executives to retain equity grants until the applicable stock ownership level discussed above is reached. Under the stock ownership guidelines, these officers must hold the specified dollar amounts of stock through the end of their employment with Nasdaq. We feel that our guidelines provide proper alignment of the interests of our management and our stockholders and therefore, we do not have additional stock holding requirements beyond the stock ownership guidelines.

Trading Controls and Hedging and Pledging Policies

We prohibit directors or executive officers from engaging in securities transactions that allow them either to insulate themselves, or profit, from a decline in Nasdaq’s stock price (with the exception of selling shares outright). Specifically, these individuals may not enter into hedging transactions with respect to Nasdaq’s common stock, including short sales and transactions in derivative securities. Finally, these individuals may not pledge, hypothecate or otherwise encumber their shares of Nasdaq common stock.

 

Nasdaq permits all employees, including the NEOs, to enter into plans established under Rule 10b5-1 of the Exchange Act to enable them to trade in our stock, including stock received through equity grants, during periods in which they might not otherwise be able to trade because material nonpublic information about Nasdaq has not been publicly released. These plans include specific instructions to a broker to trade on behalf of the employee if our stock price reaches a specified level or if certain other events occur and therefore, the employee no longer controls the decision to trade.

Incentive Recoupment Policy

The Board and Management Compensation Committee have adopted an incentive recoupment or “clawback” policy that is applicable to officers with the rank of EVP and above. The policy provides that the company may recoup any cash or equity incentive payments predicated upon the achievement of financial results or operating metrics that are subsequently determined to be incorrect on account of material errors, material omissions, fraud or misconduct.

Tax and Accounting Implications of Executive Compensation

The Management Compensation Committee considers the income tax consequences of individual compensation elements when it is analyzing the overall level of compensation and the mix of compensation among individual elements.

Section 162(m) of the Internal Revenue Code of 1986, as amended, provides a limit of $1 million on the remuneration that may be deducted by a public company in any year in respect of the CEO and the three other most highly compensated executive officers (other than the principal financial officer). However, “performance-based compensation” is fully deductible if the plan under which the compensation is paid has been approved by the stockholders and meets other requirements. We attempt to structure our compensation arrangements so that amounts paid are tax deductible to the extent feasible and consistent with our overall compensation objectives. Depending upon the relevant circumstances at the time, the Management Compensation Committee may determine to award compensation that may not be deductible. In making this determination, the Management Compensation Committee balances the purposes and needs of our executive compensation program against the potential tax implications.

Generally, under U.S. GAAP, compensation is expensed as earned. We generally recognize compensation expense for equity awards on a straight-line basis over the requisite service period of the award.

 

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Management Compensation Committee Report

The Management Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with our management. After such discussions, the Management Compensation Committee recommended to Nasdaq’s Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into Nasdaq’s annual report on Form 10-K.

The Management Compensation Committee

Michael R. Splinter, Chair

Steven D. Black

Börje E. Ekholm

Management Compensation Committee Interlocks and Insider Participation

None of the members of the Management Compensation Committee is an executive officer, employee or former officer of Nasdaq. With the exception of Ms. Friedman and Mr. Greifeld, none of Nasdaq’s executive officers serves as a current member of the Nasdaq Board. None of Nasdaq’s executive officers serves as a director or a member of the Compensation Committee of any entity that has one or more executive officers serving on the Nasdaq Board or Management Compensation Committee.

Executive Compensation Tables

The following tables, narrative and footnotes present the compensation of the NEOs during 2016 in the format mandated by the SEC.

 

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2016 Summary Compensation Table

 

 

 

Name and

Principal Position 1

 

  

Year 

 

    

Salary

($)

 

    

Bonus
($)

 

  

Stock

Awards

($) 2

 

    

Option
Awards
($)

 

  

Non-Equity
Incentive Plan
Compensation
($) 3

 

    

Change in
Pension

Value and
Nonqualified
Deferred
Compensation
Earnings

($) 4

 

    

All Other
Compensation
($) 5

 

    

Total

($)

 

 

Robert Greifeld

Chief Executive Officer

  

 

 

 

2016

 

 

     $1,000,000           $10,541,500           $3,306,250          $344,626          $110,528          $15,302,904  
  

 

 

 

2015

 

 

     $1,000,000           $9,427,265           $4,177,950          $157,131          $101,230          $14,863,576  
  

 

 

 

 

2014

 

 

 

 

    

 

$1,000,000

 

 

 

  

 

    

 

$7,763,400

 

 

 

  

 

    

 

$2,550,450  

 

 

 

    

 

$711,724  

 

 

 

    

 

$58,355  

 

 

 

    

 

$12,083,929

 

 

 

 

Michael Ptasznik

Executive Vice President,

Corporate Strategy and

Chief Financial Officer

 

     2016        $221,154           $2,252,756           $1,200,000          –          $23,542          $3,697,452  

Adena T. Friedman

President and Chief

Operating Officer

  

 

 

 

2016

 

 

     $850,000           $5,111,067           $2,175,750          $26,519          $30,642          $8,193,978  
  

 

 

 

2015

 

 

     $751,538           $3,428,038           $2,088,125          $5,792          $26,277          $6,299,770  
  

 

 

 

 

2014

 

 

 

 

    

 

$396,947

 

 

 

  

 

    

 

$8,449,284

 

 

 

  

 

    

 

$1,636,250  

 

 

 

    

 

$61,907  

 

 

 

    

 

$8,678  

 

 

 

    

 

$10,553,066

 

 

 

Hans-Ole Jochumsen

President

  

 

 

 

2016

 

 

     $600,000           $2,555,487           $1,095,500          –          $36,443          $4,287,430  
  

 

 

 

2015

 

 

     $600,000           $2,285,359           $1,649,500          –          $40,015          $4,574,874  
  

 

 

 

 

2014

 

 

 

 

    

 

$558,409

 

 

 

  

 

    

 

$1,916,309

 

 

 

  

 

    

 

$1,623,000  

 

 

 

    

 

–  

 

 

 

    

 

$262,963  

 

 

 

    

 

$4,360,681

 

 

 

Bradley J. Peterson

Executive Vice President

and Chief Information

Officer

  

 

 

 

2016

 

 

     $525,000           $1,788,841           $1,327,600          –          $34,873          $3,676,314  
  

 

 

 

2015

 

 

     $524,231           $1,599,726           $1,522,000          –          $20,400          $3,666,357  
  

 

 

 

 

2014

 

 

 

 

    

 

$497,115

 

 

 

  

 

    

 

$1,273,715

 

 

 

  

 

    

 

$874,575  

 

 

 

    

 

–  

 

 

 

    

 

$15,417  

 

 

 

    

 

$2,660,822

 

 

 

 

Ronald Hassen

Former Interim Chief

Financial Officer and

Senior Vice President,

Controller and Principal

Accounting Officer

 

     2016        $486,054           $446,419           $1,197,000          –          $20,400          $2,149,873  

 

Lee Shavel

Former Chief Financial

Officer and Executive

Vice President, Corporate

Strategy

 

  

 

 

 

2016

 

 

     $162,036                            –          $8,538          $170,574  
  

 

 

 

2015

 

 

     $500,000           $1,599,726           $1,437,375          –          $20,208          $3,557,309  
  

 

 

 

 

2014

 

 

 

 

    

 

$500,000

 

 

 

  

 

    

 

$1,486,001

 

 

 

  

 

    

 

$900,375  

 

 

 

    

 

–  

 

 

 

    

 

$17,350  

 

 

 

    

 

$2,903,726

 

 

 

 

1.

Titles reflect each NEO’s principal position(s) during 2016. For more information on 2017 roles, please see “Corporate Governance Framework — Succession Planning” on page 10, “Compensation Discussion and Analysis” on page 28 and “Executive Officers” on page 66.

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2.

The amounts reported in this column reflect the grant date fair value of the stock awards, including PSUs and RSUs, computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 12 to the company’s audited financial statements for the fiscal year ended December 31, 2016 included in our annual report on Form 10-K. Since the 2016 three-year PSU award payouts are contingent on TSR-related performance-based vesting conditions, the grant date fair values were determined based on a Monte Carlo simulation model.

The Monte Carlo simulation model takes into account expected price movement of Nasdaq stock as compared to peer companies. As a result of the company’s pre-grant 2016 TSR performance relative to peer companies, the Monte Carlo simulation model assigned a significantly higher value to each 2016 three-year PSU than the closing price of Nasdaq’s stock on the grant date. Therefore, the value reflected in the 2016 Summary Compensation Table does not reflect the target grant date face value shown in the Long-Term Stock-Based Compensation section of the Compensation Discussion and Analysis in this proxy statement, and there is no assurance that the target grant date face values or FASB ASC Topic 718 fair values will ever be realized. The table below summarizes the target grant date face value of PSU grants that the Management Compensation Committee and the Board approved for the NEOs compared to the FASB ASC Topic 718 fair value.

 

Name

 

  

Year

 

    

Target PSUs (#)       

 

    

Target Grant Date      
Face Value ($)      

 

    

FASB ASC Topic      
718 Fair Value ($)      

 

 

 

Robert Greifeld

 

     2016        112,985        $7,499,944        $ 10,541,500  

 

Michael Ptasznik

 

     2016        8,279        $549,974        $755,542  

 

Adena T. Friedman

 

     2016        54,781        $3,636,363        $5,111,067  

 

Hans-Ole Jochumsen

 

     2016        27,390        $1,818,148        $2,555,487  

 

Bradley J. Peterson

 

     2016        19,173        $1,272,704        $1,788,841  

 

Ronald Hassen

 

     2016        2,739        $181,815        $255,549  

 

Lee Shavel

 

     2016                       

 

3.

The amounts reported in this column reflect the cash awards made to the NEOs under the ECIP or other performance-based incentive compensation programs.

 

4.

The amounts reported in this column reflect the actuarial increase in the present value of the NEOs’ benefits under all pension plans established by Nasdaq. No amount is reported in this column for Mr. Hassen for 2016 as the actuarial present value of his benefits under the pension plans decreased by $7,786. Assumptions used in calculating the amounts include a 4.15% discount rate as of December 31, 2016, a 4.30% discount rate as of December 31, 2015, a 4.20% discount rate as of December 31, 2014, a 4.90% discount rate as of December 31, 2013, retirement at age 62 (which is the earliest age at which a participant may retire and receive unreduced benefits under the plans) and other assumptions used as described in note 11 to the company’s audited financial statements for the fiscal year ended December 31, 2016 included in our annual report on Form 10-K. Since Mr. Hassen is older than 62, his actual age was used to calculate the present value of his accumulated benefit. None of the NEOs received above-market or preferential earnings on deferred compensation in 2016, 2015 or 2014.

 

5.

The following table sets forth the 2016 amounts reported in the “All Other Compensation” column by type. The incremental cost of personal use of the company car (including commutation) is calculated based on an allocation of the cost of the driver, tolls, fuel, maintenance and other related expenses.

 

 

Name

 

  

Contribution
to the 401(k)
Plan

($)

 

    

Cost of
Executive
Health Exam

($)

 

    

Cost of
Financial/Tax
Planning
Services

($)

 

    

Incremental
Cost of Personal
Use of
Company Car
($)

 

    

Matching
Charitable
Donations
($)

 

    

Relocation
Expenses
($)

 

    

Total All Other
Compensation
($)

 

 

 

Robert Greifeld

 

     $15,900               $17,883        $76,595        $150               $110,528  

 

Michael Ptasznik

 

     $5,385                                    $18,157        $23,542  

 

Adena T. Friedman

 

     $14,265               $16,377               $5,990               $36,632  

 

Hans-Ole Jochumsen

 

     $15,900        $4,500        $16,043               $300               $36,743  

 

Bradley J. Peterson

 

     $15,900        $4,500        $24,950               $750               $46,100  

 

Ronald Hassen

 

     $15,900        $4,500                                    $20,400  

 

Lee Shavel

 

     $8,538                             $300               $8,838  

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   2016 Grants of Plan-Based Awards Table

 

 

  Name

 

   Committee            

 

Estimated Future Payouts Under Non-
Equity Incentive Plan Awards 1

 

    

Estimated Future Payouts Under
Equity Incentive Plan Awards 2

 

     All Other
Stock
Awards:
     All Other
Option
Awards:
     Exercise
or Base
     Grant Date
Fair Value of
 
  

and/or
Board
Approval
Date

 

    

Grant Date  

 

    

Thres-   

hold   

($)   

    

Target  

($)  

    

Maximum    

($)    

    

Thres-   

hold   

(#)   

     Target  
(#)  
     Maximum 
(#) 
    

Number of
Shares of
Stock or
Units (#)

 

    

Number of
Securities
Underlying
Options (#)

 

    

Price of
Option
Awards
($/Sh)

 

    

Stock and
Option
Awards

($) 3

 

 

Robert

Greifeld

  

 

 

 

 

2/25/2016

 

 

 

 

     2/25/2016                 $2,300,000        $4,600,000                      –                               –    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      112,985        225,970                               $10,541,500    

Michael

Ptasznik

  

 

 

 

 

10/25/2016

 

 

 

 

     10/25/2016                 $750,000        $1,200,000  4                      –                               –    
  

 

 

 

 

6/10/2016

 

 

 

 

     7/11/2016                                      8,279        16,558                               $755,542    
  

 

 

 

 

6/10/2016

 

 

 

 

     7/11/2016                                             –          15,053                      $965,951    
  

 

 

 

 

6/10/2016

 

 

 

 

     7/11/2016                                             –          8,279                      $531,263    

Adena T.

Friedman

  

 

 

 

 

2/25/2016

 

 

 

 

     2/25/2016                 $1,500,000        $3,000,000                      –                               –    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      54,781        109,562                               $5,111,067    

Hans-Ole

Jochumsen

  

 

 

 

 

2/25/2016

 

 

 

 

     2/25/2016                 $1,000,000        $2,000,000                      –                               –    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      27,390        54,780                               $2,555,487    

Bradley J.

Peterson

  

 

 

 

 

2/25/2016

 

 

 

 

     2/25/2016                 $800,000        $1,600,000                      –                               –    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      19,173        38,346                               $1,788,841    

Ronald

Hassen 5

  

 

 

 

 

2/25/2016

 

 

 

 

     2/25/2016                 $750,000        $1,500,000                      –                               –    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      2,739        5,478                               $255,549    
  

 

 

 

 

3/23/2016

 

 

 

 

     3/31/2016                                      3,012        4,518                               $190,870    

Lee Shavel

  

 

 

 

 

 

 

 

 

     –                                             –                               –    

 

1.

The amounts reported in these columns represent the possible range of payments under the ECIP or other performance-based incentive compensation programs. For information about the amounts actually earned by each named executive officer under the ECIP or other performance-based incentive compensation programs, see “Executive Compensation Tables – 2016 Summary Compensation Table.” Amounts are considered earned in fiscal year 2016 although they were not paid until 2017.

 

2.

The amounts reported in these columns represent the possible range of PSUs that each named executive officer may earn under the Equity Plan, depending on the achievement of performance goals established by the Management Compensation Committee and/or Board.

 

3.

The amounts reported in this column represent the grant date fair value of the total equity awards reported in the previous columns calculated pursuant to FASB ASC Topic 718 based upon the assumptions discussed in note 12 to the company’s audited financial statements for the fiscal year ended December 31, 2016 included in our annual report on Form 10-K. For further information about the calculation of these amounts, see “Executive Compensation Tables – 2016 Summary Compensation Table” on page 45.

 

4.

Mr. Ptasznik joined Nasdaq on July 11, 2016 as Executive Vice President, Corporate Strategy and Chief Financial Officer. Since he started mid-year, Mr. Ptasznik’s 2016 annual incentive award was limited to a maximum payout of $1,200,000.

 

5.

Mr. Hassen’s equity incentive plan awards consisted of both (i) 3-year PSUs based on relative TSR with a target amount of 2,739 shares and (ii) 1-year PSUs based on corporate operating income (run rate) with a target amount of 3,012 shares. Under the terms of Mr. Hassen’s retirement agreement, due to retirement eligibility, the final award amount of 4,216 shares under the 1-year PSUs vested immediately upon settlement in January 2017.

LOGO

 

47


Table of Contents

NAMED EXECUTIVE OFFICER COMPENSATION

    

 

   2016 Outstanding Equity Awards at Fiscal Year-End Table

 

  Name

 

  

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

    

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

 

    

Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

 

    

Option
Exercise
Price ($)

 

    

Option
Expiration
Date

 

    

Number of

Shares or

Units of Stock

that Have Not

Vested (#)

 

    

Market Value

of Shares or

Units of Stock
That Have
Not Vested ($)

 

    

Equity
Incentive

Plan Awards:

Number of

Unearned
Shares, Units

or Other

Rights that

Have Not

Vested (#)

 

   

Equity

Incentive

Plan Awards:
Market or

Payout Value

of Unearned
Shares, Units

or Other

Rights that

Have Not

Vested ($)

 

 

Robert

Greifeld

  

 

 

 

 

900,000

 

 

 

 

                   $21.31        6/30/2019                             
    

 

 

 

 

    

 

 

 

 

                                     

 

 

 

 

147,232

 

 

1  

 

    $9,882,212  
                                                     

 

112,985

 

2  

 

 

 

 

 

$7,583,553

 

 

Michael

Ptasznik

                                        23,332 3     

 

 

 

 

$1,566,044

 

 

 

 

            
                                                   

 

 

 

 

8,279

 

 

2  

 

    $555,686  

Adena T.

Friedman

                                     

 

 

 

 

54,720 4

 

 

 

 

     $3,672,806               
                                                   

 

 

 

 

53,538

 

 

1  

 

    $3,593,471  
                                                   

 

 

 

 

54,781

 

 

2  

 

    $3,676,901  

Hans–Ole

Jochumsen

     15,771                      $41.36     

 

 

 

 

3/24/2018

 

 

 

 

                          
     22,059                      $19.75     

 

 

 

 

3/4/2020

 

 

 

 

                          
     33,995                      $25.28     

 

 

 

 

3/28/2021

 

 

 

 

                          
                                                   

 

 

 

 

35,692

 

 

1  

 

    $2,395,647  
                                                   

 

 

 

 

27,390

 

 

2  

 

    $1,838,417  

Bradley J.

                                                   

 

 

 

 

24,984

 

 

1  

 

    $1,676,926  

Peterson

                                                   

 

 

 

 

19,173

 

 

2  

 

    $1,286,892  

Ronald