DEF 14A
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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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Filed by a Party other than the Registrant ☐

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Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Nasdaq, Inc.

(Name of Registrant as Specified In its Charter)

N/A

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N Nasdaq 2021 Proxy Statement


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Select ESG Awards and Recognition

 

LOGO          

HRC Corporate Equality Index

 

2nd Consecutive Year

   LOGO     

Dow Jones Sustainability Index

 

5th Consecutive Year

     LOGO      Bloomberg Gender-Equality Index
LOGO      Boldest Action of the Year
LOGO     

“Best Companies for Women to Advance”

 

 

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2020 NET REVENUES

 

LOGO

$2.9B IN 2020

April 27, 2021

Dear Shareholders,

The last year was one of the most difficult in recent memory due to the widespread impact of the global pandemic. No one was unaffected, and we express our sincere and heartfelt condolences for those who have lost loved ones or experienced severe disruptions in their lives.

Despite the challenges of 2020, Nasdaq had a strong year, both in terms of our business performance and our commitment to our clients, shareholders, employees, communities and other stakeholders. We could not be prouder of the Company’s resiliency, which is a testament to the diversity of Nasdaq’s business model.

We also celebrate the Company’s history, following its 50th anniversary in February 2021. At the same time, we are firmly focused on building the next generation Nasdaq as a leading technology, analytics and infrastructure provider to capital markets.

Strategic and Business Highlights

The Board continued to work with management in 2020 to adjust and advance the strategic direction of the Company. The Board examined the Company’s progress executing the strategic pivot that was announced in 2017. This shift has accelerated our performance, which is evidenced by our strong 2020 results. Net revenues1 were $2,903 million, an increase of 15% over 2019, Nasdaq’s highest annual growth in the last decade. Revenues in the Solutions segments2 increased 11%, while Market Services revenues increased 21% due to elevated trading volumes. ARR3 was $1,577 million in the fourth quarter of 2020, an increase of 9% from the prior year period, while the Solutions segments’ SaaS revenues increased 11%.

 

 

 

1

Represents revenues less transaction-based expenses.

 

2

Constitutes revenues from the Market Technology, Investment Intelligence and Corporate Platforms segments.

 

3

ARR for a given period is the annualized revenue derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

 

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The Company made significant progress in all segments of its business in 2020. Among other things, Nasdaq’s Market Services segment set new highs in U.S. option and European equity trading in 2020. Last year was also the first year Nasdaq’s options exchanges led all exchanges in total volume traded for options.4 In our Investment Intelligence segment, ETP AUM tracking Nasdaq indexes and derivative product volume tracking Nasdaq indexes each set new quarterly records in the fourth quarter of 2020. The Nasdaq Stock Market welcomed 316 IPOs in 2020 representing $81 billion in capital raised, first amongst U.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised.

 

To further our ongoing evolution into a leading technology provider and execute on an important aspect of the strategic pivot, Nasdaq acquired Verafin, an industry pioneer in anti-financial crime management solutions. The acquisition, which closed in February 2021, will create a global SaaS leader in the fight against financial crime. Also, as part of our strategy to increase our investment in higher growth opportunities, in March 2020, Nasdaq acquired Solovis, which is broadening the capabilities of Nasdaq’s eVestment business with portfolio analysis and monitoring for institutional investors and consultants.

 

We also continued to enhance our technology in 2020, including capacity upgrades for our U.S. equities and options markets. Our markets performed extremely well during a year of heightened market volatility and historically high message rates. In addition, our technology preparedness enabled us to transition both our operations and employees seamlessly to a remote work environment during the global pandemic.

 

As we focus on Nasdaq’s future, we intend to continue our clear and transparent capital strategy. We expect to invest organically to drive disciplined growth, continue to grow our dividend as earnings and free cash flow grow and maintain a leverage profile consistent with an investment grade issuer. In 2020, we increased our dividend from $0.47 per share to $0.49 per share and returned $542 million to our shareholders, consisting of $320 million in dividend payments and $222 million in share repurchases. Nasdaq also delivered a 3-year cumulative TSR5 of 72.0% for the period ending December 31, 2020.

 

COVID-19 Response

 

During the global pandemic, our primary focus was on ensuring the health, safety and well-being of our employees. Among other things, Nasdaq committed that there would be no broad-based layoffs in 2020 to provide better employment certainty during an uncertain economic macro-environment triggered by the pandemic. Nasdaq also implemented minimum and maximum payouts for most performance goals under the Company’s 2020 annual incentive program to continue to motivate employees, while also balancing the differing impact of the pandemic on the financial results across our businesses. Finally, Nasdaq provided additional family care resources and benefits, wellness benefits and mental health resources to help our employees with the additional stress in balancing their work and personal commitments in the new environment.

 

ANNUALIZED RECURRING

REVENUE IN THE FOURTH

QUARTER OF 2020

 

LOGO

 

 

 

4

Inclusive of both multiply-listed equity options and index option products.

 

5

In this Proxy Statement, TSR for a particular period is calculated by adding cumulative dividends to the ending stock price and dividing this by the beginning stock price. A 30- day average is used to calculate the beginning and ending stock prices.

 

 

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Purpose Initiative and ESG Performance

In 2020, Nasdaq also refined its mission, vision and values, which are the guiding principles for everything we do both internally and externally. In addition, Nasdaq defined and articulated its purpose to champion inclusive growth and prosperity. The Company simultaneously launched a new Purpose Initiative, comprising its philanthropic, community outreach, corporate sustainability and employee volunteerism programs. Some of the highlights since the launch of the Purpose Initiative have included: the relaunch of the Nasdaq Foundation, with a new mission to enhance diversity in investor engagement and a commitment for annual funding from Nasdaq; cash and in-kind donations totaling $7 million from Nasdaq to organizations and business partners focused on COVID-19 relief and social justice-related causes; and a further impact of almost $2 million from employee-led philanthropy through Nasdaq’s GoodWorks program.

As of December 1, 2020, the Company achieved its continued commitment to be carbon neutral across all business operations through the purchase of green power, carbon offsets and renewable energy certificates. Our new London office has been rated as “BREEAM Excellent” and the city’s only WELL certified building, and our new headquarters in New York is expected to achieve a Green Building LEED Platinum Certification in 2021.

In the area of sustainability, Nasdaq increased disclosure, deepened commitments and initiated new policies and practices in 2020, and our ESG program’s progress was recognized through our score improvement by leading ESG research firms including Sustainalytics, MSCI ESG Research, Institutional Shareholder Services and EcoVadis.

Diversity, Inclusion and Belonging

In 2020, Nasdaq continued its commitment to diversity and inclusion by filing a proposal with the SEC to adopt new listing rules related to board diversity and disclosure. The Board advised on and unanimously approved the proposal, which we believe is one step in a broader journey to achieve inclusive representation across corporate America. Additionally, Nasdaq signed on as a Charter Pledge Partner to The Board Challenge, an initiative seeking to enhance representation in the boardroom by asking companies to retain or add a Black director. In collaboration with the Allbright Foundation, Nasdaq also promoted diversity and gender equality work among listed and non-listed companies in the Nordic region.

Nasdaq increased investment in its internal diversity, inclusion and belonging programs, including initiatives relating to professional advancement, talent acquisition and raising awareness of racial justice issues. For the first time, Nasdaq published comprehensive diversity statistics in its annual Sustainability Report.6 Finally, Nasdaq was recognized as a “Best Place to Work for LGBTQ Equality” by the Human Rights Campaign’s Corporate Equality Index for the second consecutive year.

Conclusion

For Nasdaq, 2020 was a year of significant advancement of our strategy and performance. We are excited about the future as we work to build the next generation Nasdaq, and we look forward to sharing our progress.

Thank you for your support and feedback.

The Board of Directors of Nasdaq, Inc.

Melissa M. Arnoldi, Charlene T. Begley, Steven D. Black, Adena T. Friedman, Essa Kazim,

Thomas A. Kloet, John D. Rainey, Michael R. Splinter, Jacob Wallenberg, Alfred W. Zollar

 

 

 

6

Diversity data was provided from countries where such data collection is permitted.

 

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LOGO

Our strong financial performance in 2020 underscores the resilience of Nasdaq’s diversified product offering and business model and our ability to address the needs of our clients in an evolving capital markets environment. Adena T. Friedman President and CEO


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Dear Shareholders,

 

LOGO

 

Adena T. Friedman

 

President and CEO

  

We are celebrating Nasdaq’s 50th anniversary at a time in history like no other. This past year has been one of extremes, dominated by a global pandemic, market volatility, and a stark reminder of the inequalities that remain in our society. And yet this period has also been one of strength in the capital markets and resilience for the global economy at large, spurred by accelerated innovation across the key industries that will drive us forward.

 

When much of the world hurtled toward lockdown last spring, the uncertainty was palpable. We were all focused on keeping our loved ones safe, even as we were processing the unknown economic impacts of our new way of working. Fortunately, given our history as a technology pioneer, Nasdaq was built for the challenges we faced in 2020. I am proud of our team for staying mission-focused and ensuring that our platforms and technologies were able to withstand immense market activity and volatility. There is no question this strength helped our clients maintain a sense of normalcy. Additionally, it has been remarkable to see so many Nasdaq-listed companies take the lead on building the products and services that have kept us safe and connected during this historically challenging time.

 

While Nasdaq’s founders 50 years ago could not have anticipated this moment, I am certain that the technology-driven innovation, agility, and resilience we’ve shown this past year reflects and honors those founding principles. We believe that our strong financial performance in 2020 underscores the resilience of Nasdaq’s diversified product offering and business model and our ability to address the needs of our clients in an evolving capital markets environment.

 

As it was in 1971, our question in 2021 remains: what’s next?

 

For us, the answer lies in integrity: integrity in the markets, across the financial system, and in broader society.

 

Across Nasdaq’s markets, we are proud and excited to see the level of engagement from investors of all kinds. Technology, coupled with smart regulation, has tremendous power to facilitate equitable access to the markets. Today, in the U.S. equities and options markets, we believe that we provide a robust, resilient, and scalable market system that empowers investors to deploy a multitude of investment and trading strategies. Yet, we know the journey to perfection is never ending. We will continue to seek to improve our markets to adapt to changing technologies and investor needs, with a constant north star: to operate markets to the highest integrity that enable investors and entrepreneurs alike to achieve their ambitions.

 

One area of focus in this regard is the fight against a rising threat of digital financial crime. Estimates from the United Nations suggest up to $2 trillion in laundered money flows through the financial system each year. The heightened risk of online fraudsters and money launderers undermines confidence in the global financial system, and therefore it is imperative to bring the latest technology, tools, and know-how to fight this ever-growing challenge.

 

Our strategy to combat fraud and money laundering focuses on three key challenges: insufficient detection systems, high operational costs for companies, and a compartmentalized approach that leads to limited resource sharing between companies, and across the public and private sectors. In November 2020, we announced the acquisition of Verafin, a leader in the fight against financial crimes. Verafin’s expertise, especially in building artificial intelligence and machine learning-based solutions, will complement our established anti-financial crime offerings as we scale this area of our business, a major strategic focus for us in 2021 and beyond.

 

Throughout 2020, we also continued to grow several ESG initiatives, anticipating the evolving need and desire from our clients to have a set of tools that help them measure, analyze, and take positive action. Our ESG Advisory offering deepens our engagement with our clients’ executive leadership teams and helps them accelerate development of their ESG programs. Nasdaq’s OneReport solution, which we acquired in January 2020, helps companies streamline how they publicly report their ESG metrics. We also saw a significant increase last year in

 

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sustainable bond listings on our European Debt Market and continued to grow our Nasdaq Sustainable Bond Network to bring increased transparency to this area of the market. We have been encouraged by how client demand is rising for our expanded ESG offerings and have continued to look for unique ways to further build on these solutions.

To challenge ourselves and increase our own impact in society, in September 2020 we launched the Purpose Initiative and relaunched the Nasdaq Foundation to advance Nasdaq’s mission of inclusive growth and prosperity. The foundation’s work and philanthropy will focus on providing financial and entrepreneurship education to under-represented communities, in complement to our investment in the Nasdaq Entrepreneurial Center.

Lastly, to drive greater transparency on corporate governance, we submitted a U.S. listings proposal to the Securities and Exchange Commission in December 2020 that seeks to standardize board-level diversity statistics through a consistent disclosure framework, coupled with a recommended minimum diversity objective.

By combating market manipulation and malfeasance, by advancing corporate sustainability and governance best practices, and by planting seeds for inclusive growth and prosperity across the communities in which we do business, we can continue to redefine the role of corporations in society for the better. In doing so, we are well-positioned to facilitate safe, strong markets that catalyze long-term economic growth.

Amidst all the challenges of this past year, I am deeply grateful to my colleagues for their single-minded focus on delivering results. Nasdaq was tested in many ways, along with our global markets as a whole, and I am gratified to say that we proved our company to be extraordinarily resilient.

My colleagues and I are deeply committed to the important and exciting work ahead.

Sincerely,

Adena T. Friedman

President and CEO

Nasdaq, Inc.

 

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Notice of 2021 Annual Meeting

of Shareholders

 

LOGO    When            LOGO    Where        LOGO    Record date   LOGO    Who can vote
  

 

Tuesday, June 15, 2021 at 9:00 a.m. (Eastern time)

  

 

www.virtualshareholder meeting.com/NDAQ2021

  

 

April 19, 2021

  

 

Shareholders of record at the close of business on April 19, 2021

Dear Nasdaq, Inc. Shareholders,

 

You are invited to attend the Nasdaq, Inc. 2021 Annual Meeting of Shareholders, which will be held on Tuesday, June 15, 2021 at 9:00 a.m. (Eastern time) at www.virtualshareholdermeeting.com/NDAQ2021.

 

You are receiving this Proxy Statement because you were a shareholder at the close of business on the record date of April 19, 2021 and are entitled to vote at our Annual Meeting of Shareholders. Our Board of Directors is soliciting the accompanying proxy for use at the Annual Meeting.

 

Items of Business      
1.    To elect ten directors for a one-year term                    > see page 24
2.    To approve the Company’s executive compensation on an advisory basis       > see page 74
3.    To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ended December 31, 2021       > see page 122
4.    To consider a shareholder proposal described in the accompanying Proxy Statement, if properly presented at the meeting       > see page 124
5.    To consider any other business that may properly come before the Annual Meeting or any adjournment or postponement of the meeting      

Date of mailing

In accordance with rules of the SEC, instead of mailing printed copies of our proxy materials to each shareholder of record, we are furnishing the proxy materials for the 2021 Annual Meeting by providing access to these documents on the internet. We will be mailing the Notice of Internet Availability of Proxy Materials on or about April 27, 2021. Further information about the Notice of Internet Availability may be found on page 139.

Your vote is important

We have created an annual meeting website to make it easy for you to access our Annual Meeting materials at www.nasdaq.com/annual-meeting. There you will find an overview of voting items, this Proxy Statement, other important information, as well as a link to vote your shares.

You are eligible to vote if you were a shareholder as of the close of business on April 19, 2021, the record date. To express our appreciation for your participation, Nasdaq will make a $1 charitable donation to Operation Hope on behalf of every unique holder that votes.

 

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To vote, be sure to have your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials and follow the instructions below:

 

LOGO      

By phone

 

You can vote your shares by calling 800.690.6903 toll-free

           LOGO    Online before the meeting            LOGO   

By mail

 

Complete, sign, date and return your proxy voting card or voting instruction form in the postage-paid envelope provided

           LOGO    Online during the meeting
  

 

You can vote your shares online at www.proxyvote.com

  

 

Attend our annual meeting and vote by following the instructions on the website

The Annual Meeting will include a question and answer session that will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your 16-digit control number. You may submit a question during the meeting through the virtual meeting website.

Please refer to page 139 for additional information on how to vote your shares and attend our Annual Meeting.

By Order of the Board of Directors,

Erika Moore

Vice President, Deputy General Counsel and Corporate Secretary

April 27, 2021

 

LOGO   

  
  

 

Important notice regarding the availability of proxy materials for the Annual Meeting of Shareholders

 

Nasdaq’s 2021 Proxy Statement and 2020 Form 10-K are available at

www.nasdaq.com/annual-meeting

 

  

 

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Acronyms and Certain Defined Terms

 

  

 ARR

   Annualized Recurring Revenue

 AUM

   Assets Under Management

 CEO

   Chief Executive Officer

 CFO

   Chief Financial Officer

 CIO

   Chief Information Officer

 COBRA

   Consolidated Omnibus Budget Reconciliation Act

 CTO

   Chief Technology Officer

 ECIP

   Executive Corporate Incentive Plan

 EPS

   Earnings Per Share

 Equity Plan

   Nasdaq’s Equity Incentive Plan

 ERM

   Enterprise Risk Management

 ESG

   Environmental, Social and Governance

 ESPP

   Employee Stock Purchase Plan

 ETP

   Exchange Traded Products

 Exchange Act

   Securities Exchange Act of 1934, as amended

 EVP

   Executive Vice President

 FASB ASC Topic 718      

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

 Form 10-K

   Nasdaq’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2020, as filed with the SEC on February 23, 2021

 GAAP

   Generally Accepted Accounting Principles

 H.E.

   His Excellency

 IPO

   Initial Public Offering

 M&A

   Mergers and Acquisitions

 NEO

   Named Executive Officer

 PCAOB

   Public Company Accounting Oversight Board

 People@Nasdaq

   Nasdaq’s Human Resources Team

 PSU

   Performance Share Unit

 RSU

   Restricted Stock Unit

 SaaS

   Software as a Service

 SEC

   U.S. Securities and Exchange Commission

 S&P

   Standard & Poor’s

 SVP

   Senior Vice President

 TSR

   Total Shareholder Return

 

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Proxy Summary

     14  

 

Director Nominees

     23  

Proposal 1: Election of Directors

     24  

Director Criteria and Qualifications

     24  

Values

     25  

Board Composition

     26  

Board Diversity

     28  

Director Orientation and Continuing Education

     29  

Board Assessment Process

     29  

Board Refreshment and Nominations Process

     30  

Our Director Nominees

     31  

Board Committees

     41  

Director Compensation

     46  

 

Corporate Governance

     49  

Corporate Governance Framework

     50  

Leadership Structure

     50  

Board Independence

     50  

Committee Independence and Expertise

     51  

Strategic Oversight

     52  

ESG Oversight

     52  

Cybersecurity and Information Security Oversight

     52  

Risk Oversight

     53  

Executive Succession Planning

     54  

Board Meetings

     55  

Director Attendance at Annual Meetings

     55  

Shareholder Rights

     55  

Public Policy Advocacy for Investors, Capital Formation and Inclusive Capitalism

     55  

Communicating with the Board

     56  

 

Shareholder Engagement

     57  

Shareholder Engagement

     58  

 

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People and Purpose

     59  

Enterprise-wide Approach to ESG

     60  

Our Board’s Engagement

     60  

COVID-19 Response and Employee Safety

     61  

Talent Management and Development

     61  

Our Ethical Culture

     62  

Diversity, Inclusion and Belonging

     66  

The Purpose Initiative

     67  

Philanthropy and Community Involvement

     68  

Environmental Initiatives

     70  

ESG Reporting and Analytics

     72  

 

Executive Compensation

     73  

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

     74  

Compensation Discussion and Analysis

     75  

Management Compensation Committee Report

     104  

Management Compensation Committee Interlocks and Insider Participation

     104  

Executive Compensation Tables

     104  

Employment Agreements

     110  

CEO Pay Ratio

     116  

 

Audit & Risk Committee Matters

     118  

Audit & Risk Committee Responsibilities

     119  

Annual Evaluation and 2021 Selection of the Independent Auditor

     120  

Proposal 3: Ratification of the Appointment of Independent Registered Public Accounting Firm

     122  

 

Other Items

     123  

Proposal 4: Shareholder Proposal – Adopt a Mainstream Shareholder Right – Written Consent

     124  

Other Business

     129  

Security Ownership of Certain Beneficial Owners and Management

     129  

Delinquent Section 16(a) Reports

     131  

Nasdaq’s Employee Networks

     132  

Executive Officers

     133  

Certain Relationships and Related Transactions

     136  

 

About our Annual Meeting

     138  

Questions and Answers About Our Annual Meeting

     139  

 

Annex

     145  

Annex A: Non-GAAP Financial Measures

     146  

 

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Proxy Summary


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This summary is intended to provide a broad overview of our Annual Meeting, as well as performance, corporate governance, executive compensation, and shareholder engagement highlights. It does not contain all the information that you should consider in voting your shares. We encourage you to read the entire Proxy Statement, as well as our Form 10-K, prior to voting.

Annual Meeting of Shareholders

 

Date and time    June 15, 2021, 9:00 a.m. (Eastern time)
Place    www.virtualshareholdermeeting.com/NDAQ2021
Record date    Shareholders as of April 19, 2021 are entitled to vote

Meeting Agenda and Voting Matters

 

             
 Proposal    Board’s Voting
Recommendation
     Page Reference    

No. 1

Election of Ten Directors for a One-Year Term

    FOR (each nominee)      p. 24

No. 2

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

   FOR      p. 74

No. 3

Ratification of the Appointment of our Independent Registered Public Accounting Firm for the Fiscal Year Ended December 31, 2021

   FOR      p. 122

No. 4

Shareholder Proposal – Adopt a Mainstream Shareholder Right – Written Consent

    AGAINST      p. 124

Your vote is important. We want to hear from you and all of our shareholders.

Nasdaq will make a $1 charitable donation to Operation Hope on behalf of every unique holder that votes. Contributing to Operation Hope aligns with our continued commitment to advance inclusive growth and prosperity.

 

LOGO    Operation HOPE is a nonprofit for-purpose organization working to disrupt poverty and empower inclusion for low and moderate-income youth and adults. They equip young people and adults with the financial tools and education to secure a better future—coaching them through their personal aspirations and life’s challenges and facilitating their journey to financial independence.

Nasdaq is proud to support investor education workshops with Operation Hope. By voting, you can join our efforts to further promote and accelerate financial literacy, engagement and empowerment throughout underserved communities in need. Together, we can help fulfill Operation Hope’s mission to expand economic opportunity, making free enterprise work for everyone.

 

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2020 Performance Highlights

Financial Results

In 2020, we delivered on our commitment to shareholders while accelerating our progress as

an advanced technology and analytics provider to the financial industry.

 

LOGO

 

1

Solutions segments revenues were $1,795 million in 2020, an increase of 11% compared to 2019, which was almost entirely due to organic growth.

2

Refer to Annex A of this Proxy Statement for a reconciliations of U.S. GAAP to non-GAAP measures.

 

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Year in Review

Our year-end results across our four segments attest to Nasdaq’s ability to address the needs of our clients and were made possible by both our resilient, scalable technology and the flexibility that our team exhibited in effectively delivering for clients, notwithstanding the impact of COVID-19.

 

      

Corporate

Platforms

  

  316 IPOs on The Nasdaq Stock Market, representing $81 billion in total capital raised

 

  The Nasdaq Stock Market led U.S. exchanges with a 67% IPO total win rate, including an 83% win rate among operating companies and a 53% win rate among special purpose acquisition companies

 

Investment

Intelligence            

  

 

  Achieved record overall AUM in ETPs benchmarked to Nasdaq’s proprietary indexes, totaling $359 billion as of December 31, 2020, an increase of 54% compared to December 31, 2019

 

  Record futures, and options on futures, contracts volume tracking Nasdaq indexes, totaling 329 million in 2020

 

Market

Services

  

 

  Set a new high in U.S. option total volumes and a new decade high in annual market share in Nordic equity trading in 2020

 

  Set a record for closing cross for Nasdaq-listed securities for the quarterly reconstitution of S&P indices, and for the 17th consecutive year, set a record for the annual reconstitution of the family of Russell U.S. indexes

 

Market

Technology

  

 

  ARR totaled $283 million in the fourth quarter of 2020, an increase of 8.8% as compared to the fourth quarter of 2019

 

  Announced the acquisition of Verafin, a leading provider of anti-financial crime management solutions that provides a cloud-based platform to help detect, investigate and report money laundering and financial fraud, strengthening our suite of anti-financial crime offerings

 

 

COVID-19 Response

As the COVID-19 pandemic continues around the world this year, we remain committed to our efforts to ensure the safety and well-being of our employees and stakeholders. The COVID-19 pandemic created significant uncertainty, operational disruption and market volatility for us and for our clients and listed companies. We operated during 2020 with the majority of our workforce working remotely and continued to serve our clients, enhance our exchanges and advance our technology and analytics solutions while facing this unprecedented work environment. Nasdaq continues to operate in a reduced office access environment. We have informed our employees that they may continue to work remotely through at least August 31, 2021, and we will continue to evaluate local conditions and regulations before we fully transition back to our offices. We also introduced additional benefits for our employees to assist them with the various challenges confronting them, and their families, during the pandemic. For more on our response to COVID-19, please see page 61.

Diversity, Inclusion, and Belonging

During 2020, as the social justice movement gained momentum, Nasdaq continued to build on its foundation of diversity, inclusion and belonging. We have bolstered our efforts to ensure that our employee population is representative of the communities in which we operate, sought to create a positive workplace for all of our employees, invested in our communities, expanded diversity recruiting efforts and published diversity statistics. Our efforts to support and improve our diversity and inclusion are long-term in nature, and we will measure our progress in the years ahead to ensure that we are building a sustainable culture to achieve our long-term ambitions for our company to better reflect the communities in which we operate. For more on our Diversity, Inclusion and Belonging efforts, please see page 66.

 

 

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Our 2021 Director Nominees

 

LOGO      

            Are Independent                                                         Are Women                                                 Have CEO or Board Chair Experience

 

     
LOGO      

            Are Current or Former                                     Are Racially/Ethnically Diverse                                   Were Born Outside the U.S.

              Exchange Operators

 

     
LOGO      
            Years Average Age                                      Years Average Board Tenure      

 

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  Name and

  Classification1

 

  

Age    

 

  

Director    

Since

 

  

Title

 

  

Independent  

 

  

 

No. of

Other Public  

Company

Boards

  

Committee

Memberships

 

             

  Melissa M. Arnoldi

 

  Non-Industry; Public

   48    2017    CEO, Vrio Corp. (a subsidiary of AT&T Inc.)    Yes    0   

Finance

Management Compensation

             

  Charlene T. Begley

 

  Non-Industry; Public

   54    2014    Retired SVP & CIO, General Electric Company    Yes    1   

Audit & Risk

Management Compensation

             

  Steven D. Black

 

  Non-Industry; Public

   68    2011    Co-CEO, Bregal Investments    Yes    1    Management Compensation (Chair) Nominating & ESG
             

  Adena T. Friedman

 

  Staff

   51    2017    President and CEO, Nasdaq    No    0    Finance
             

  Essa Kazim

 

  Non-Industry

   62    2008    Governor, Dubai International Financial Center & Chairman of Borse Dubai & Dubai Financial Market    Yes    2    Finance
             

  Thomas A. Kloet

 

  Non-Industry; Public

   62    2015    Retired CEO & Executive Director, TMX Group Limited    Yes    0   

Audit & Risk (Chair)

Nominating & ESG

             

  John D. Rainey

 

  Non-Industry; Issuer

   50    2017    CFO & EVP of Global Customer Operations, PayPal Holdings, Inc.    Yes    0   

Audit & Risk

Finance (Chair)

             

  Michael R. Splinter2

 

  Non-Industry; Public

   70    2008    Retired Chairman & CEO, Applied Materials, Inc.    Yes    1   

Management Compensation

Nominating & ESG (Chair)

             

  Jacob Wallenberg

 

  Non-Industry

   65    2018    Non-Executive Chairman, Investor AB    Yes    3    Nominating & ESG
             

  Alfred W. Zollar

 

  Non-Industry; Public

   66    2019    Executive Advisor, Siris Capital Group, LLC    Yes    2    Audit & Risk

 

1

To ensure that balanced viewpoints are represented on our Board of Directors, Nasdaq’s By-Laws require that all directors be classified as: Industry Directors; Non-Industry Directors, which may be further classified as either Issuer Directors or Public Directors; or Staff Directors. The requirements for each classification are outlined in the By-Laws.

 

2

Mr. Splinter is the Chairman of the Board.

 

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Corporate Governance Practice Highlights

Board Composition

 

 

All director nominees are independent, except for our President and CEO

 

 

 

No director may serve on more than four public company boards (including the Nasdaq Board), without specific approval from the Audit & Risk Committee and Nominating & ESG Committee

 

 

 

Philosophy of continuous Board refreshment to ensure a mix of skills, experience, tenure and diversity

 

Board Structure and Processes

 

 

Separation of the roles of Chairman of the Board and President and CEO

 

 

 

Directors have the opportunity to meet in Executive Session without management present at every Board and Committee meeting

 

 

 

Three-tiered annual Board assessment, consisting of full Board evaluation, Committee evaluations and individual director self-assessments

 

 

 

Ongoing Board review of strategic planning and capital allocation for long-term value creation

 

 

 

Nominating & ESG Committee oversight of environmental, social and human capital management policies, practices, initiatives and reporting

 

 

 

Comprehensive risk oversight by the full Board under Audit & Risk Committee leadership

 

 

 

Director stock ownership guidelines require equity ownership of at least 2x the annual equity award (for the Chairman, 6x)

 

Shareholder Rights

 

 

15% threshold for shareholders to call a special meeting

 

 

 

Proxy access allowing holders of 3% of our stock for three years to include up to two nominees (or nominees representing 25% of the Board) in our Proxy Statement

 

 

 

Annual election of directors, with majority voting in uncontested elections

 

 

 

No “poison pill”

 

 

 

Annual advisory vote on executive compensation

 

 

 

Robust shareholder engagement program throughout the year

 

Engaging with Our Shareholders

Nasdaq views accountability to shareholders as both a mark of good governance and a critical component of our success. Ongoing communication with our shareholders helps the Board and senior management gain useful feedback on a wide range of subjects and understand the issues that matter most to our shareholders.

During 2020, we conducted outreach to a cross-section of shareholders beneficially owning approximately 75% of our outstanding shares. Our key shareholder engagement activities included 5 investor (non-deal) road shows, attendance at 13 investor conferences, our 2020 Annual Meeting of Shareholders and the 2020 Investor Day.

We continued our formal engagement sessions with the investment stewardship teams of shareholders, and we conducted quarterly outreach to the investment stewardship teams at many of our institutional holders.

See “Shareholder Engagement” on page 58 for more information on our year-round shareholder engagement activities and highlights.

 

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Responsiveness to Investors and Stakeholders

Our continuous engagement and ongoing dialogue with our shareholders have led to improvements in our corporate governance, corporate strategy, human capital management, ESG, and enterprise risk management practices. For example, we:

LOGO Advanced our strategic positioning to maximize opportunities as a technology, markets and analytics provider with significant, strategic organic investments in the Nasdaq Financial Framework, Nasdaq Trade Surveillance, Nasdaq Private Market and eVestment Private Markets.

LOGO Increased our regular quarterly dividend by 4% to $0.49 per share, consistent with our policy to provide shareholders with regular and growing dividends over the long term as our earnings and cash flow grow.

LOGO Implemented modifications for all employees, including the NEOs, to our annual cash incentive program due to the anticipated effects of COVID-19 (see page 84).

LOGO Actively conducted year-round planning for director succession and Board refreshment, including a review and analysis of the preferred skills, attributes and expertise for future Board nominees (see page 30).

LOGO Filed a proposal with the SEC to adopt new listing rules related to board diversity and disclosure (see page 28).

LOGO Published our workforce composition data for the first time and established a dedicated diversity recruitment function to accelerate our ability to attract diverse talent (see page 66).

LOGO Strengthened and intensified our diversity and inclusion initiatives, resources and leadership training tools by leveraging existing programs, such as our 11 employee networks, and undertaking new initiatives (see page 66).

LOGO Updated our Supplier Code of Ethics and began efforts to improve our supplier diversity (see page 64).

LOGO Enhanced our ESG disclosures including annualizing our sustainability reporting (see page 72) and expanding our ethics training and whistleblower program discussion (see page 64).

LOGO Continued our carbon neutral program for the third consecutive year and signed a science-based targets commitment letter to produce, and then report, our reduction targets and monitor progress towards the targets (see page 70).

LOGO Provided focused disclosure on the Board’s oversight of our response to COVID-19, including support of our employees, clients, and communities around us (see page 61).

 

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Executive Compensation Highlights

Compensation decisions made for 2020 were aligned with Nasdaq’s strong financial and operational performance and reflected a continued emphasis on variable, at-risk compensation paid over the long-term. Compensation decisions are intended to reinforce our focus on performance and sustained growth. The Compensation Discussion and Analysis section beginning on page 75 describes the compensation of our NEOs, which includes the following highlights.

The majority of our NEOs’ pay is based on performance and consists largely of equity-based compensation.

86% of our NEOs’ total direct compensation was performance-based or “at risk” in 2020. 61% of our NEOs’ total direct compensation was equity-based compensation. Total direct compensation includes base salary, annual cash incentive awards and equity awards.

Annual incentives are based on achievement of rigorous performance goals.

In 2020, payments of annual incentives reflected our achievement of performance goals relating to corporate net revenues and corporate operating income (run rate), in addition to strategic objectives, business unit financial results and employee engagement. As described further on page 84, due to the anticipated effects of COVID-19, we implemented minimum and maximum payouts for most performance goals under our annual incentive program. The resulting payouts to NEOs ranged from 143% to 173% of targeted amounts.

We use long-term incentives to promote retention and reward our NEOs.

Most of our long-term incentive program 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, 2018 through December 31, 2020, Nasdaq’s cumulative TSR was 72.0%, which was at the 82nd percentile of S&P 500 companies and the 62nd percentile of peer companies. This TSR performance resulted in performance vesting of PSUs at 162% of target shares. PSUs account for 80% of our LTI program. In 2020, to mitigate retention risk, we introduced 20% of long-term incentives to consist of Restricted Stock Units.

Our compensation program is grounded in best practices.

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

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

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

 

22


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LOGO

DIRECTOR Nominees


Table of Contents

 

 

Proposal 1:

Election of Directors

 

The business and affairs of Nasdaq are managed under the direction of our Board. Our directors have diverse backgrounds, attributes and experiences that provide valuable insights for the Board’s oversight of the Company.

 

Pursuant to our Amended and Restated Certificate of Incorporation and By-Laws and based on our governance needs, the Board determines the total number of directors. The Board is authorized to have ten directors following our 2021 Annual Meeting.

 

Each of the ten nominees identified in this Proxy Statement has been nominated by our Nominating & ESG Committee and Board for election to a one-year term expiring at our 2022 Annual Meeting of Shareholders. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal. All nominees have consented to be named in this Proxy Statement and to serve on the 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 ten 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 & ESG Committee, which will recommend to the full Board whether or not to accept the resignation. The Board will act on the Committee’s recommendation and disclose publicly its decision-making process with respect to the resignation. Each of the incumbent directors has submitted an irrevocable resignation.

 

 

Director Criteria and Qualifications

 

In evaluating individual Board nominees, the Nominating & ESG 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, including cybersecurity;

 

  a general understanding of Nasdaq’s business and technology;

 

  a client experience orientation;

 

  the classification requirements under our By-Laws;

 

  the individual’s educational and professional background and personal accomplishments;

 

  diversity, including, but not limited to, factors such as gender, ethnicity, race, sexual orientation, and geography; and

 

  an independent mindset that constructively challenges the status quo and provides a strong view of the future.

  

 

LOGO

   The Board unanimously recommends that shareholders vote FOR each nominee to serve as a director.

 

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The Nominating & ESG 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 our businesses, while representing the interests of shareholders, employees and the communities in which the Company operates. In determining whether to recommend a Board member for re-election, the Nominating & ESG Committee also considers the director’s participation in and contributions to the activities of the Board, the contents of the most recent Board assessment and attendance at meetings.

The Board and the Nominating & ESG Committee believe all director nominees exhibit the characteristics below:

 

 

A commitment to long-term value creation for our shareholders

 

 

 

An appreciation for shareholder feedback

 

 

 

High personal and professional ethics

 

 

 

A proven record of success

 

 

 

A commitment to the integrity of affiliated self-regulatory organizations

 

 

 

Sound business judgment

 

 

 

A strategic vision and leadership experience

 

 

 

Knowledge of financial services

 

 

 

Sufficient time to devote to Board service

 

 

 

An appreciation of multiple cultures and perspectives

 

Values

Nasdaq’s values are the bedrock of our culture as they identify our shared principles and the behaviors that shape our daily work together. The Board and the Nominating & ESG Committee believe all director nominees also reflect our corporate values.

 

LOGO

 

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LOGO

Board Composition Our director nominees represent a wide range of diverse backgrounds, experiences, leadership and skills that, together, embody the knowledge relevant to Nasdaq’s strategic long-term vision and global operations. Nasdaq also believes that advancing diversity creates a competitive advantage that differentiates and elevates everything we do—and that commitment starts at the top. Director Nominee Highlights GENDER 30 % Female RACE/ETHNICITY 20 % Racially/Ethnically Diverse SKILLS AND EXPERTISE Capital Markets 7 Including deep industry knowledge of the complexity of the evolving landscape Client Experience 2 Expertise in enhancing and transforming customer service experiences Information Security 4 Including cybersecurity and data privacy Environmental & Social 6 To strengthen our Board’s review and oversight of our own sustainability initiatives FinTech 7 Experience with financial technology, the industry and the power of innovation 26


Table of Contents

LOGO

AGE RANGE 48 Average age: 59.6 70 BOARD TENURE 0-3 Years 2 4-6 Years 4 7-10 Years 2 10+ Years 2 6.6 Years average M&A 9 Experience with assessing and executing on new opportunities to reallocate capital Public Company Board & Corporate Governance 10 An understanding of regulatory requirements and best practices for public company governance Risk Management 9 Experience operating in a complex regulatory and risk environment Innovation and Technology 4 10 9 8 7 6 5 4 3 2 1 0 Including experience in traditional, new and emerging technologies 27


Table of Contents

    

  

 

Board Diversity

In December 2020, we filed a proposal, which was amended in February 2021, with the SEC to adopt new listing rules related to board diversity and disclosure. If approved by the SEC, the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors. The goal of the proposal is to provide stakeholders with a better understanding of the company’s current board composition. The Board Diversity Matrix, below, provides the diversity statistics for Nasdaq’s Board in the format required by the proposed rules.

Board Diversity Matrix (As of April 27, 2021)

 

       
 Total Number of Directors           10  
       
          Did Not  
          Disclose              
  Female       Male           Non-Binary         Gender  
         

  Part I: Gender Identity

                   

Directors

 

3

 

7

 

-

    -  
         

  Part II: Demographic Background

                   

African American or Black

 

-

 

1

 

-

    -  

Alaskan Native or Native American

 

-

 

-

 

-

    -  

Asian

 

-

 

-

 

-

    -  

Hispanic or Latinx

 

-

 

-

 

-

    -  

Native Hawaiian or Pacific Islander

 

-

 

-

 

-

    -  

White

 

3

 

6

 

-

    -  
         

Two or More Races or Ethnicities

 

-

 

-

 

-

    -  

LGBTQ+

 

-

 

-

 

-

    -  
         

Did Not Disclose Demographic

Background

  -   -   -     -  

“Our goal with this proposal is to provide a transparent framework for Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders; we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”

– Adena T. Friedman

 

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Director Orientation and Continuing Education

Our director orientation program familiarizes new directors with our businesses, strategies and policies, providing in-person experiences to directly engage with our Executive Leadership Team. We also provide year-round in-person or virtual tutorials to educate Board members on emerging and evolving initiatives and strategies. Our directors receive frequent updates on recent developments, press coverage and current events that relate to our strategy and business.

Newly elected directors are matched with an experienced director for ongoing mentorship.

Ongoing director education is essential for the Board to be a strategic asset for the Company. Our directors are encouraged to participate in, and reimbursed for, continuing education programs at external organizations and universities to enhance the skills and knowledge used to perform their duties on the Board and relevant Committees.

Attendance at these programs provides directors with additional insight into our business and industry and gives them valuable perspective on the performance of our Company, the Board, our President and CEO and members of senior management.

Board Assessment Process

We have a three-tiered annual Board assessment process that is coordinated by the Chairman of the Board. The assessment consists of a full Board evaluation, Committee evaluations and individual director self-assessments and feedback. The Board and all the Board Committees determine action plans for the next year based on input from the annual assessment. In addition, the Nominating & ESG Committee considers input from the assessment in determining the criteria for potential nominees to the Board.

 

LOGO

 

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Board Refreshment and Nominations Process

The selection of qualified directors is key to ensuring the Board remains a strategic asset to the Company. We believe our director nominees—individually and collectively—have the right skills, qualifications, experience, diversity and tenure needed for the successful oversight of Nasdaq’s strategy and enterprise risks.

The Nominating & ESG Committee oversees and plans for director succession and refreshment of the Board to ensure the proper mix continues to promote and support our long-term vision. In doing so, the Committee takes into consideration the corporate strategy and the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director qualifications.

Director Recruitment

 

LOGO

 

 

 

LOGO

  LOGO

 

 

 

LOGO

  LOGO

 

 

 

LOGO

  LOGO

 

 

 

LOGO

  LOGO

 

Candidate

recommendations

are gathered

from directors,

management and

shareholders

  Nominating &

ESG Committee
screens

qualifications,
considers

diversity and

skills, interviews

potential
candidates

and makes

recommendations

to the Board

  Board of Directors

evaluates

candidates and

selects nominees

  Shareholders
vote on nominees
at the Annual
Meeting
  Six new directors

have been

nominated, and

elected, to our

Board in the last

six years

 

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Our Director Nominees

 

LOGO            

 

 

MELISSA M. ARNOLDI

 

 

CEO, Vrio Corp. (a subsidiary of AT&T Inc.)

 

 

Age 48

 

 

Director since 2017

 

 

Independent

 

 

Finance Committee; Management Compensation Committee

 

 

United States

 

 

Career Highlights

 

  Ms. Arnoldi has been CEO of Vrio Corp., a holding company for AT&T’s Latin American digital services, DIRECTV Latin America and SKY Brasil businesses since September 2018. She is responsible for leading business growth, bringing innovations and delivering superior customer experiences to more than 11 million customers in 10 countries and territories across the region. Ms. Arnoldi has served in various capacities at AT&T Inc., a telecommunications company, since 2008. She previously served as President of Technology & Operations where she was responsible for the company’s global technology, software development, supply chain, network and cybersecurity operations, chief data office, as well as AT&T’s Intellectual Property group, Labs and Foundries. Prior to joining AT&T, Ms. Arnoldi was a senior executive at Accenture from 1996 to 2008.
 

Specific Expertise

 

  Innovative technology leader with experience in cybersecurity, software development and network operations

 

  Broad expertise in providing a superior customer experience

 

  Strategic thinker with global business and operational capabilities

 

Select Professional and Community Contributions

 

  Director of Sky Mexico

 

  Former Director of the Girl Scouts of Northeast Texas

 

  Former Member of the National Action Council for Minorities in Engineering

 

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LOGO             

 

 

CHARLENE T. BEGLEY

  Retired SVP, CEO of Home and Business Solutions and CIO,
  General Electric Company
  Age 54
  Director since 2014
  Independent
  Audit & Risk Committee; Management Compensation Committee
  United States
  Career Highlights
 

 

Ms. Begley served in various capacities for the General Electric Company, a diversified infrastructure and financial services company, from 1988 to 2013. Ms. Begley served in a dual role as SVP and CIO, as well as President and CEO of GE’s Home and Business Solutions, from January 2010 to December 2012. Previously, Ms. Begley served as President and CEO of GE’s Enterprise Solutions from 2007 to 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.

  Specific Expertise
 

  Extensive leadership experience of highly complex global, industrial, customer, and technology businesses

 

  Significant risk management experience as a member of the executive-level Risk Management Committee at GE

 

  Broad financial and audit expertise from prior roles at GE and service on the Audit Committees of several public companies

  Select Professional and Community Contributions
 

  Director and Chair of the Audit Committee of Sentinel Labs, Inc. (SentinelOne)

  Current Public Company Boards
 

  Hilton Worldwide Holdings, Inc.: Audit Committee (Chair), Nominating and Governance Committee

  Other Public Company Boards in the Past Five Years
 

  Red Hat, Inc.

 

  WPP plc

 

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LOGO           

 

 

 

STEVEN D. BLACK

 

 

Co-CEO, Bregal Investments

 

 

Age 68

 

 

Director since 2011

 

 

Independent

 

 

Management Compensation Committee (Chair); Nominating & ESG Committee

 

 

United States

 

 

Career Highlights

 

  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 to 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 to March 2010. Mr. Black served as Co-CEO of JP Morgan Investment Bank from 2004 to 2009. Mr. Black was the Deputy Co-CEO of JP Morgan Investment Bank from 2003 to 2004. He also served as head of JP Morgan Investment Bank’s Global Equities business from 2000 to 2003 following a career at Citigroup and its predecessor firms.
 

 

Specific Expertise

 

  Extensive leadership experience of a highly complex global financial services company

 

  Depth of knowledge from over 40 years of experience in the global financial services industry

 

  Management development, compensation and succession planning experience

  Current Public Company Boards
 

  Wells Fargo & Company: Finance Committee

  Other Public Company Boards in the Past Five Years
 

  The Bank of New York Mellon Corporation

 

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LOGO             

 

 

ADENA T. FRIEDMAN

  President and CEO, Nasdaq, Inc.
 

 

Age 51

 

 

Director since 2017

 

 

Finance Committee

 

 

United States

  Career Highlights
  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 from December 2015 to December 2016 and President from June 2014 to December 2015. Ms. Friedman served 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.
  Specific Expertise
 

  More than 25 years of industry leadership and expertise, including four years as Nasdaq’s President and Chief Executive Officer

 

  Significant contributions that shaped Nasdaq’s strategic transformation to a leading global exchange and technology solutions company with operations on six continents

 

  Deep strategy, financial, M&A and product development experience

  Select Professional and Community Contributions
 

  Member of the Vanderbilt University Board of Trust

 

  Director of the Federal Reserve Bank of New York

 

  Director of FCLTGlobal, a non-profit organization that researches tools to encourage long-term investing

 

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LOGO             

 

 

ESSA KAZIM

  Governor, Dubai International Financial Centre
  and Chairman of Borse Dubai and Dubai Financial Market
  Age 62
  Director since 2008
  Independent
  Finance Committee
  United Arab Emirates
  Career Highlights
  H.E. Kazim is the Governor of Dubai International Financial Centre, having joined the Centre in January 2014. Alongside his current position, he is also the Chairman of Borse Dubai and the Chairman of 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 moved to the Dubai Department of Economic Development as Director of Planning and Development in 1993. He was then appointed as Director General of the Dubai Financial Market from 1999 to 2006.
  Specific Expertise
 

  Extensive leadership of a complex regulated business in the financial services industry

 

  Broad knowledge of international markets with experience in finance, accounting and corporate strategy

 

  Global perspective, as well as a representative of a large shareholder

  Select Professional and Community Contributions
 

  Deputy Chairman of the Supreme Legislation Committee in Dubai

 

  Member of the Dubai Supreme Fiscal Committee

 

  Board Member of the Dubai Free Zones Council

 

  Secretary General of the Dubai Islamic Economy Development Centre

  Current Public Company Boards
 

  Dubai Financial Market PJSC

 

  Emirates Telecommunications Group Company PJSC (Etisalat Group): Audit Committee (Chair)

 

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LOGO             

 

 

THOMAS A. KLOET

  Retired CEO and Executive Director, TMX Group Limited
  Age 62
  Director since 2015
  Independent
  Audit & Risk Committee (Chair); Nominating & ESG Committee
  United States
  Career Highlights
  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 to 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.
  Specific Expertise
 

  Leadership of complex regulated businesses in the financial services industry

 

  Broad knowledge of international markets with experience in finance, accounting and corporate strategy

 

  Significant experience in risk management, clearing house, central depository and broker-dealer operations at executive and board levels in North America and Asia

  Select Professional and Community Contributions
 

  Chair of the Boards of Nasdaq’s U.S. exchange subsidiaries

 

  Chair of the Board of Northern Funds, which offers 44 portfolios, and Northern Institutional Funds, which offers 7 portfolios

 

  Member of the FIA Hall of Fame

 

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LOGO             

 

 

JOHN D. RAINEY

  CFO and EVP of Global Customer Operations, PayPal Holdings, Inc.
  Age 50
  Director since 2017
  Independent
  Audit & Risk Committee; Finance Committee (Chair)
  United States
 

 

Career Highlights

  Mr. Rainey is Chief Financial Officer and Executive Vice President of Global Customer Operations at PayPal Holdings, Inc., a company that creates innovative technology to make the management and movement of money safer, simpler and more affordable in over 200 markets around the globe. Prior to joining PayPal in 2015, Mr. Rainey was Executive Vice President and CFO at United Airlines, having spent 18 years at Continental Airlines, and later United Airlines.
  Specific Expertise
 

  Deep experience in customer relations from leading PayPal’s Global Customer Services

 

  More than 20 years of financial management experience, including leading PayPal’s financial operations, corporate accounting, treasury, financial planning and analysis, investor relations, internal audit, tax, real estate and sourcing functions

 

  Experience in highly regulated businesses within the financial services industry with responsibility for risk management

  Select Professional and Community Contributions
 

  Member of the Advisory Board of the Hankamer School of Business at Baylor University

 

  Former Member of the National Board of Trustees for the March of Dimes

 

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LOGO             

 

 

MICHAEL R. SPLINTER

  Retired Chairman and CEO, Applied Materials, Inc.
  Age 70
  Director since 2008
  Independent
  Management Compensation Committee; Nominating & ESG Committee (Chair)
  United States
 

 

Career Highlights

  Mr. Splinter was elected Chairman of Nasdaq’s Board effective May 10, 2017. He is currently a business and technology consultant. Mr. Splinter served as Executive Chairman of the Board of Applied Materials, a Nasdaq-listed company, from 2009 to his retirement in 2015 and was CEO from 2003 to 2013. An engineer and technologist, Mr. Splinter is a 40-year veteran of the semiconductor industry. Prior to joining Applied Materials, he was an executive at Intel Corporation for 20 years.
  Specific Expertise
 

  Leadership of a complex global technology business

 

  Extensive background in international public company governance at a Nasdaq-listed company

 

  Management development, compensation and succession planning experience

  Select Professional and Community Contributions
 

  Chair of the US-Taiwan Business Council

 

  Member of the National Academy of Engineers

 

  Board Member of the University of Wisconsin Foundation

 

  Splinter Scholarships for Diversity in Engineering at University of Wisconsin

  Current Public Company Boards
 

  TSMC, Ltd.: Audit Committee, Compensation Committee (Chair)

  Other Public Company Boards in the Past Five Years
 

  Meyer Burger Technology Ltd.

 

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LOGO             

 

 

JACOB WALLENBERG

  Non-Executive Chairman, Investor AB
  Age 65
  Director since 2018
  Independent
  Nominating & ESG Committee
  Sweden
 

 

Career Highlights

  Mr. Wallenberg has been Non-Executive Chairman of the Board of Investor AB since 2005. Founded by the Wallenberg family in 1916, Investor AB holds long-term positions in global companies. In connection with his role at Investor AB, Mr. Wallenberg serves on the Boards of Directors of several of its portfolio companies. Previously, Mr. Wallenberg served as Vice Chairman of Investor AB from 1999 to 2005 and as a member of Investor AB’s Board since 1998. Mr. Wallenberg was the President and CEO of Skandinaviska Enskilda Banken AB in 1997 and the Chairman of its Board of Directors from 1998 to 2005. Mr. Wallenberg also was EVP and CFO of Investor AB from 1990 to 1993.
  Specific Expertise
 

  Vast international business experience

 

  Extensive service on the boards of several large public companies

 

  Global perspective, as well as a representative of a large Nasdaq shareholder

  Select Professional and Community Contributions
 

  Director of the Knut and Alice Wallenberg Foundation

 

  Member of the Steering Committee of The European Round Table of Industrialists

 

  Member of the Tsinghua School of Economics Advisory Board

 

  Honorary Chairman of IBLAC, the Mayor of Shanghai’s International Business Leaders Advisory Council

 

  Member of the Royal Swedish Academy of Engineering Sciences

  Current Public Company Boards
 

  ABB Ltd.: Governance and Nomination Committee

 

  Investor AB: Audit and Risk Committee, Remuneration Committee (Chair)

 

  Telefonaktiebolaget LM Ericsson: Finance Committee

  Other Public Company Boards in the Past Five Years
 

  SAS AB

 

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LOGO             

 

 

ALFRED W. ZOLLAR

  Executive Advisor, Siris Capital Group, LLC
  Age 66
  Director since 2019
  Independent
  Audit & Risk Committee
  United States
 

 

Career Highlights

  Mr. Zollar has been an Executive Advisor with Siris Capital Group, LLC since March 2021. Previously, he was an Executive Partner since February 2014. Mr. Zollar retired from IBM in January 2011 following a 34-year career. Mr. Zollar was formerly general manager of IBM Tivoli Software from July 2004 until January 2011, where he was responsible for the executive leadership, strategy and P&L of the Tivoli Software. Previously, Mr. Zollar was general manager, IBM iSeries, where he was responsible for the executive leadership, strategy and P&L of the iSeries (formerly AS/400) server product line. Before that he held senior management positions in each of IBM’s diverse software businesses, including general manager of IBM Lotus Software.
  Specific Expertise
 

  Career technologist with skills in product development, customer satisfaction and strategy

 

  Broad leadership experience, including senior management positions in every IBM software group division

 

  Extensive service on the boards of several large public companies

  Select Professional and Community Contributions
 

  Director of EL Education

 

  Director of the Eagle Academy Foundation

 

  Member of the Executive Leadership Council

 

  Lifetime Member of the National Society of Black Engineers

  Current Public Company Boards
 

  Public Service Enterprise Group Incorporated: Audit Committee, Finance Committee (Chair), Industrial Operations Committee

 

  The Bank of New York Mellon Corporation: Risk Committee, Technology Committee (Chair)

  Other Public Company Boards in the Past Five Years
 

  Red Hat, Inc.

 

  The Chubb Corporation

 

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Board Committees

 

  
Our Board has four standing Committees: Audit & Risk, Finance, Management Compensation and Nominating & ESG. Each of these Committees, other than the Finance Committee, consists exclusively of independent directors. 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. Each of these Committees operates under a written charter that includes the Committee’s duties and responsibilities.   
A description of each standing Committee is included on the following pages.   

 

AUDIT & RISK COMMITTEE

 

Key Objectives:

 

  Oversees Nasdaq’s financial reporting process and reviews the disclosures in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and quarterly earnings releases.

 

  Appoints, retains and 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 and financial reporting practices at Nasdaq, including assessing the staffing of employees in these functions.

 

  Assists the Board by reviewing the adequacy and effectiveness of internal controls and the effectiveness of Nasdaq’s ERM and regulatory programs.

 

  Reviews and approves or ratifies 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 Compliance Program, SpeakUp! Program and confidential whistleblower process.

 

  Assists the Board by reviewing and discussing litigation, regulatory and compliance risks.

 

  Assists the Board in reviewing and discussing the adequacy and effectiveness of Nasdaq’s cyber, privacy and technology controls.

 

  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 & Risk Committee meetings.

 

2020 Highlights:

 

  Conducted annual review of the independent auditor relationship and recommended the retention of Ernst & Young LLP as the Company’s independent auditor. For further information on the Audit & Risk Committee’s review of the independent auditor relationship, see “Audit & Risk Committee Matters – Annual Evaluation and 2021 Selection of the Independent Auditor.”

 

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

 

  Approved the Company’s Cybersecurity Strategic Plan and received regular updates on emerging information security issues from the Company’s CIO/CTO and Chief Information Security Officer, including updates on the Development Organization’s focus on security.

 

  Reviewed Ernst & Young LLP’s Information Security Program Assessment Report, which measured the maturity of Nasdaq’s program within 20 information security areas.

  

 

LOGO

  

 

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  Received regular reports from the Chief Legal and Regulatory Officer on litigation, regulatory and compliance topics.

  Discussed informational reports on:

>   the ongoing enhancement of the governance and operations of Nasdaq Clearing;

>   Nasdaq’s compliance initiatives with respect to the International Organization of Securities Commissions’ Principles for Financial Benchmarks and the European Union’s Benchmark Regulation;

>   Nasdaq’s privacy program;

>   Nasdaq’s COVID-19 response;

>   the capacity enhancements to the technology supporting Nasdaq’s U.S. exchanges; and

>   the SEC Statement on the Role & Responsibilities of Audit Committees.

Risk Oversight Role:

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

  Reviews the ERM program, including policy, structure and process.

Independence:

  Each member of the Audit & Risk Committee is independent as defined in Rule 10A-3, adopted pursuant to the Sarbanes-Oxley Act of 2002, and in accordance with the listing rules of The Nasdaq Stock Market.

  The Board determined that each of Messrs. Kloet and Rainey and Ms. Begley are “audit committee financial experts” within the meaning of SEC regulations and each also meets the “financial sophistication” standard of The Nasdaq Stock Market.

 

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FINANCE COMMITTEE

 

Key Objectives:

 

  Reviews and recommends, for approval by the Board, 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.

 

2020 Highlights:

 

  Conducted a comprehensive review of the capital plan for Board approval.

 

  Reviewed and recommended, for Board approval, enhancing the Company’s liquidity during the COVID-19 crisis by refinancing and retiring the 3.875% Senior Notes due 2021 with 600 million of 0.875% Senior Notes due 2030, and issuing $500 million of 3.25% Senior Notes due 2050.

 

  Reviewed and recommended, for Board approval, the $2.75 billion acquisition of Verafin, and the associated financing of that transaction, including the issuance of an aggregate of $1.9 billion in senior notes and the execution of a new five-year, $1.25 billion revolving credit facility.

 

  Advised on Nasdaq’s release of new financial metrics at its 2020 Investor Day.

 

  Received an update on Nasdaq’s minority investment activities through the Nasdaq Ventures portfolio.

 

  Reviewed and recommended, for Board approval, Nasdaq’s acquisition of Solovis.

 

Risk Oversight Role:

 

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

  

LOGO

  
  
    

 

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MANAGEMENT COMPENSATION COMMITTEE

 

Key Objectives:

 

  Establishes and annually reviews the executive compensation philosophy and strategy.

 

  Reviews and approves the executive compensation and benefit programs applicable to Nasdaq’s executive officers, including the base salary, incentive compensation and equity awards. Any executive compensation program changes solely applicable to the President and CEO and CFO are submitted to the Board for final approval.

 

  Reviews and approves the performance goals for executive officers. For the President and CEO and CFO, these items are 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.

 

  Evaluates the performance of the President and CEO, together with the Nominating & ESG Committee.

 

  Reviews the succession and development plans for executive officers and other key talent.

 

  Establishes and annually monitors compliance with the mandatory stock ownership guidelines.

 

  Reviews the results of any shareholder advisory votes on executive compensation and any other feedback that may be garnered through the Company’s ongoing shareholder engagement.

 

2020 Highlights:

 

  Reviewed the effectiveness of the annual and long-term incentive plans in supporting Nasdaq’s strategy and compensation structure.

 

  Implemented minimum and maximum achievement amounts upon the satisfaction of certain performance goals under the Company’s 2020 annual incentive program to continue to motivate employees, while also balancing the differing impact of the pandemic on the financial results across our businesses. The minimum achievement score did not apply to the performance goals of our President and Chief Executive Officer, the NEOs or any of our other EVPs.

 

  Reviewed the succession and development plans for all EVPs and SVPs.

 

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.

  

LOGO

 

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NOMINATING & ESG COMMITTEE    LOGO
Key Objectives:

  Determines the skills and qualifications necessary for the Board, develops criteria for selecting potential directors and manages the Board refreshment process.

 

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

  Leads the annual assessment of effectiveness of the Board, Committees and individual directors.

  Together with the Management Compensation Committee, leads the annual performance assessment of the President and CEO.

  Identifies and considers emerging corporate governance issues and trends.

  Reviews feedback from engagement sessions with investors and determines follow-up actions and plans.

  Monitors Company compliance with corporate governance requirements and policies.

  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.

  Oversees environmental and social matters as they pertain to the Company’s business and long-term strategy and identifies and brings to the attention of the Board current and emerging environmental and social trends and issues that may affect the business operations, performance and public image of Nasdaq.

  Provides oversight for Nasdaq’s environmental and social policies, practices, initiatives and reporting, including those related to environmental sustainability, social and ethical issues, human capital management, responsible sourcing and strengthening the community.

  Reviews the Annual Sustainability Report.

 

2020 Highlights:

  Reviewed and advised on The Nasdaq Stock Market’s proposed listing standard, filed with the SEC, to advance Board diversity and enhance the transparency of board diversity statistics.

  Monitored the achievement of Nasdaq’s corporate ESG goals.

  Focused on Nasdaq’s ongoing Board refreshment, including determining the criteria for the next Board nominee and reviewing and interviewing potential candidates.

  

  Discussed and recommended Nasdaq’s Corporate Purpose Statement to the Board for approval.

  

  Considered shareholder feedback from engagement sessions, the 2020 Annual Meeting of Shareholders and publicly available sources.

  
Risk Oversight Role:     

  Oversees risks related to the Company’s ESG issues, trends and policies.

  

  Monitors the independence of the Board.

  
Independence:     

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

  

 

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Director Compensation

Our Board Compensation Policy establishes the compensation of our non-employee directors. 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 following table reflects the compensation elements for non-employee directors for the current compensation year, which began immediately following the 2020 Annual Meeting of Shareholders and ends with the 2021 Annual Meeting.

Compensation Policy for Non-Employee Directors

 

 
 Item   May 2020 - June 2021                                         
   

 Annual Retainer for Board Members (Other than the Chair)

  $75,000
   

 Annual Retainer for Board Chair

  $240,000
   

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

  $260,000
   

 Annual Audit & Risk Committee Chair Compensation

  $40,000
   

 Annual Management Compensation Committee Chair Compensation

  $30,000
   

 Annual Finance and Nominating & ESG Committee Chair Compensation

  $20,000
   

 Annual Audit & Risk Committee Member Compensation

  $20,000
   
 Annual Management Compensation and Nominating & ESG Committee Member Compensation   $10,000
   

 Annual Finance Committee Member Compensation

  $5,000

Each non-employee director may elect to receive the annual retainer in cash (payable in equal semi-annual installments) or equity. Each non-employee director also may elect to receive Committee Chair and/or Committee member fees in cash (payable in equal semi-annual installments) or equity.

The annual equity award and any equity elected as part of the annual retainer or for Committee Chair and/or Committee member fees are awarded automatically on the date of the Annual Meeting of Shareholders immediately following election and appointment to the Board.

All equity paid to Board members consists of RSUs that vest in full one year from the date of grant. 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 our retirement, health or life insurance benefits. We provide 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.

Stock Ownership Guidelines

Under our stock ownership guidelines, the Chairman of the Board must maintain a minimum ownership level in Nasdaq common stock of six times the annual equity award for Board members. Other non-employee directors must maintain a minimum ownership level of two times the annual equity award. 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

 

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or appropriate in individual situations and the Chairman of the Board may approve such exceptions from time to time. New directors have 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, 2020.

Under our stock ownership guidelines, the Chairman of the Board must maintain a minimum ownership level in Nasdaq common stock of six times the annual equity award for Board members. Other non-employee directors must maintain a minimum ownership level of two times the annual equity award.

Director Compensation Table

The table below summarizes the compensation paid by Nasdaq to our non-employee directors for services rendered during the fiscal year ended December 31, 2020.

 

                    
 Name1  

Fees Earned or        

Paid in Cash ($)2

 

Stock Awards    

($)3,4,5

  Option
Awards        
($)
  Non-Equity
Incentive Plan
Compensation     
($)
 

Change in
Pension Value

and Nonquali-

fied Deferred

Compensation        
Earnings ($)

  All Other
Compensation        
($)
  Total ($)
               

 Melissa M. Arnoldi

  $75,000   $270,548           $345,548      
               

 Charlene T. Begley

  $105,000   $255,807           $360,807
               

 Steven D. Black

    $368,858           $368,858
               

 Essa Kazim

    $334,389           $334,389
               

 Thomas A. Kloet6

  $152,500   $378,612           $531,112
               

 John D. Rainey

    $368,858           $368,858
               

 Michael R. Splinter

    $521,367           $521,367
               

 Jacob Wallenberg

  $85,000   $255,807           $340,807
               

 Alfred W. Zollar

    $349,130           $349,130

 

1

Adena T. Friedman is not included in this table as she is an employee of Nasdaq and thus received no compensation for her service as a director. For information on the compensation received by Ms. Friedman as an employee of the Company, see “Executive Compensation.”

 

 

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 and Committee service fees in cash or RSUs. These elections are made at the beginning of the Board compensation year and apply throughout the year. In addition, the difference in fees earned or paid also reflects individual Committee service.

 

 

3

The amounts reported in this column reflect the grant date fair value of the stock awards computed in accordance with

 

 

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FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in Note 11 to the Company’s audited financial statements for the fiscal year ended December 31, 2020 included in our 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 and Committee service fees in cash or RSUs.

 

 

4

These stock awards, which were awarded on May 19, 2020 to all the non-employee directors elected to the Board on that date, represent the annual equity award and any portion of annual retainer or Committee service fees that the director elected to receive in equity. Each non-employee director received the annual equity award, which consisted of 2,308 RSUs with a grant date fair value of $255,807. Mr. Splinter elected to receive his Chairman retainer in equity, so he received an additional 2,130 RSUs with a grant date fair value of $236,078. Directors Black, Kazim, Kloet, Rainey, and Zollar elected to receive all of their annual retainers in equity, so they each received an additional 665 RSUs with a grant date fair value of $73,705. In addition, individual directors received the following amounts for Committee service fees: Ms. Arnoldi (133 RSUs with a grant date fair value of $14,741); Mr. Black (355 RSUs with a grant date fair value of $39,346); H.E. Kazim (44 RSUs with a grant date fair value of $4,877); Mr. Kloet (443 RSUs with a grant date fair value of $49,100); Mr. Rainey (355 RSUs with a grant date fair value of $39,346); Mr. Splinter (266 RSUs with a grant date fair value of $29,482); and Mr. Zollar (177 RSUs with a grant date fair value of $19,618).

 

 

5

The aggregate numbers of unvested RSUs and vested shares under the Equity Plan beneficially owned by each non-employee director as of December 31, 2020 are summarized in the following table. All unvested RSUs will vest on May 19, 2021.

 

 

     
 Director   Number of Unvested RSUs                       Number of Vested Shares                    

 Melissa M. Arnoldi

  2,441   6,143
     

 Charlene T. Begley

  2,308   6,679
     

 Steven D. Black

  3,328   38,930
     

 Essa Kazim

  3,017   36,094
     

 Thomas A. Kloet

  3,416   17,362
     

 John D. Rainey

  3,328   9,437
     

 Michael R. Splinter

  4,704   63,219
     

 Jacob Wallenberg

  2,308   4,933
     

 Alfred W. Zollar

  3,150   3,401

 

6

Fees earned or paid in cash to Mr. Kloet include fees of $152,500 for his service as Chairman of the Boards of our U.S. exchange subsidiaries and their Regulatory Oversight Committees. Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash. Mr. Kloet directed all of the cash fees to 501(c)(3) charities of his choice for this reporting year.

 

 

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Corporate Governance


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Corporate Governance Framework

Our governance framework focuses on the interests of our shareholders. It is designed to promote governance 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 our shareholders. Our goal is to align the interests of directors, management and shareholders while complying with, or exceeding, the requirements of The Nasdaq Stock Market and applicable law.

This governance framework establishes the practices our Board follows with respect to oversight of:

 

 

our corporate strategy for long-term value creation;

 

 

 

capital allocation;

 

 

 

risk management, including risks relating to information security and the protection of our market systems;

 

 

 

our human capital management program, corporate culture initiatives and ethics program;

 

 

 

our corporate governance structures, principles and practices;

 

 

 

Board refreshment and executive succession planning;

 

 

 

executive compensation;

 

 

 

corporate sustainability, including our ESG program and environmental and social initiatives; and

 

 

 

compliance with local regulations and laws across our business lines and geographic regions.

 

Key Corporate Governance Documents

Nasdaq’s commitment to governance transparency is foundational to our business. This commitment is reflected in our governance documents listed below, which are all available online at ir.nasdaq.com.

 

 

Corporate Governance Guidelines

 

 

Board of Directors Duties & Obligations

 

 

Amended and Restated Certificate of Incorporation

 

 

By-Laws

 

 

Committee Charters

 

 

Procedures for Communicating with the Board of Directors

Leadership Structure

In accordance with our Corporate Governance Guidelines, we separate the role of Chairman of the Board from the role of President and CEO. Our Board Chairman is an independent director. 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 the Company’s performance.

Nasdaq’s President and CEO, Adena T. Friedman, has over 25 years’ experience in the securities industry. She is responsible for the strategic direction, day-to-day leadership, and performance of Nasdaq. The Chairman of Nasdaq’s Board, Michael R. Splinter, brings to the Board leadership experience as a former public company CEO. The Chairman provides guidance to the President and CEO, presides over Board meetings, including Executive Sessions, and serves as a primary liaison between the President and CEO and other directors.

Board 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.

 

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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.

Nine of our ten director nominees are independent under the listing rules of The Nasdaq Stock Market and Nasdaq Dubai. Based upon detailed written submissions by each director nominee, the Board has determined that all of our director nominees are independent under the rules of each of The Nasdaq Stock Market and Nasdaq Dubai, other than Ms. Friedman. Ms. Friedman is deemed not to be independent because she is Nasdaq’s President and CEO.

None of the 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.

The Board believes that a key element to effective, independent oversight is that the independent directors meet in Executive Session on a regular basis without company management present. As such, at each Board meeting, independent directors have the opportunity to meet in Executive Session. The independent Chairman of the Board is responsible for chairing the Executive Sessions of the Board and reporting to the President and CEO and Corporate Secretary on any actions taken during Executive Sessions. In 2020, the Board met ten times in Executive Session. Additionally, each Committee has the authority and budget to retain independent advisors, if needed.

 

 

LOGO

 

 

ISS Governance QualityScore -

Lowest Level of Concern

 

ISS Governance QualityScore Components: Board Structure, Compensation, Shareholder Rights and Audit & Risk Oversight

Committee Independence and Expertise

All Board Committees, except for the Finance Committee, are comprised exclusively of independent directors, as required by the listing rules of The Nasdaq Stock Market. At each Committee meeting, members of each Board Committee have the opportunity to meet in Executive Session.

Each member of the Audit & Risk 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. Three members of the Audit & Risk Committee are “audit committee financial experts” within the meaning of SEC regulations and also meet the “financial sophistication” standard of The Nasdaq Stock Market.

 

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Strategic Oversight

The Board takes an active role with management to formulate and review our long-term corporate strategy and capital allocation plan for long-term value creation.

The Board and management routinely confer on our execution of our long-term strategic plans, the status of key strategic initiatives and the principal strategic opportunities and risks facing us. In addition, the Board periodically devotes meetings to conduct an in-depth long-term strategic review with our senior management team. During these reviews, the Board and management discuss emerging technological and macroeconomic trends and short and long-term plans and priorities for each of our business units.

Additionally, the Board annually discusses and approves our budget and capital allocation plan, which are linked to our long-term strategic plans and priorities. Through these processes, the Board brings its collective, independent judgment to bear on the most critical long-term strategic issues facing Nasdaq.

In 2020, the Board received updates on Nasdaq’s corporate strategy at least quarterly, and often more frequently. The Board also held a multi-day, virtual strategy session during which it considered the next steps in our strategic pivot, discussed our strategic ambitions and evaluated certain near-term strategic focus areas. The Board also reviewed and approved our acquisitions in 2020, including Solovis and Verafin. For further information on our corporate strategy, see “Item 1. Business—Growth Strategy” in our Form 10-K.

ESG Oversight

Our Board is committed to overseeing Nasdaq’s integration of ESG principles and practices throughout the entire enterprise. Sixty percent of our Board members have experience with environmental and social matters, which strengthens our Board’s review and oversight of our sustainability initiatives. The Nominating & ESG Committee has formal responsibility and oversight for all environmental, social and governance policies and programs and receives regular reporting on related key matters.

Our Corporate ESG Steering Committee, which is comprised of members of senior management and internal subject matter experts, meets monthly to:

 

 

oversee and discuss the current and emerging ESG risks and their potential impact to the strategy of the Company;

 

 

 

approve short, medium and long-term ESG objectives and targets and assess progress against these targets on a regular basis; and

 

 

 

review and approve the annual Sustainability Report.

 

The Corporate Sustainability Team, which reports to the CFO, is responsible for execution of the sustainability strategy.

Cybersecurity and Information Security Oversight

Our Audit & Risk Committee receives quarterly reports, as well as additional reports as needed, on cybersecurity and information security matters from our Chief Information Security Officer. A Cybersecurity Dashboard is presented each quarter which contains information on cybersecurity controls; incidents and threats to the Company’s information security; and ongoing prevention and mitigation efforts for such threats.

On an annual basis, the Information Security team reviews and updates its governance documents, such as the Information Security Charter, the Information Security Policy and the Information Security Program Plan, and then presents the revised documents to the Audit & Risk Committee for review and/or approval.

Additionally, during 2020, the Information Security team presented a new three-year plan to the Audit & Risk Committee. This plan outlines the strategic vision and associated goals for the cybersecurity of Nasdaq’s global operations for the three-year period from 2020 through the end of 2022.

Finally, the Information Security team engaged Ernst & Young LLP to perform an analysis of Nasdaq’s information security procedures. Ernst & Young LLP reviewed program documentation and conducted on-site and remote interviews to determine the maturity of Nasdaq’s program within 20 information security areas, and the findings were reviewed by the Audit & Risk Committee.

 

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Risk Oversight

The Board’s role in risk oversight is consistent with our leadership structure, with management having day-to-day responsibility for assessing and managing the Company’s risk exposure and the Board having 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 previously described under “Director Nominees — Board Committees.” The Audit & Risk Committee receives regular reports relating to operational compliance with the Company’s risk appetite and reviews any deviations, ultimately reporting on them to the Board.

Additionally, management provided updates to the Board throughout the year regarding various risks arising from the COVID-19 pandemic, including with respect to cybersecurity, remote work arrangements, customer implementations, the operation of our exchanges and other potential corporate performance issues.

The Board, through the Audit & Risk Committee, sets the Company’s risk appetite, which is the boundaries within which our management operates while achieving corporate objectives. In addition, the Board reviews and approves the Company’s ERM Policy, which mandates ERM requirements and defines employees’ risk management roles and responsibilities.

Under our ERM Policy, we employ an ERM approach that manages risk through objective and consistent identification, assessment, monitoring and measurement of significant risks across the Company. We classify risks into the following four broad categories:

 

 

Strategic and Business Risk: Risk to earnings and capital arising from changes in the business environment and from adverse business decisions, improper implementation of decisions or lack of responsiveness to changes in the business environment.

 

 

 

Financial Risk: Risk to our financial position or ability to operate due to investment decisions and financial risk management practices, as it relates to market, credit, capital and liquidity risks.

 

 

 

Operational Risk: Risks arising from our people, processes and systems and external causes, including, among other things, risks related to transaction errors, financial misstatements, technology, information security (including cybersecurity), engagement of third parties and maintaining business continuity.

 

 

 

Legal and Regulatory Risk: Exposure to civil and criminal consequences — including regulatory penalties, fines, forfeiture and litigation — while conducting our business operations.

 

Our management has day-to-day responsibility for managing risk arising from our activities, including making decisions within stated Board-delegated authority; ensuring employees understand their responsibilities for managing risk through a “three lines of risk management” model; and establishing internal controls as well as guidance and standards to implement the risk management policy. In the “three lines of risk management” model, the first line, consisting of the business units and expert teams (i.e., corporate support units), executes core processes and controls. The second line, consisting of the risk, compliance, control and oversight teams, sets policies and establishes frameworks to manage risks. The third line, which is the Internal Audit Department, provides an independent review of the first and second lines.

Our Global Risk Management Committee, which includes our President and Chief Executive Officer and other senior executives, assists the Board in its risk oversight role, ensuring that the ERM framework is appropriate and functioning as intended and the level of risk assumed by the Company is consistent with Nasdaq’s strategy and risk appetite.

We also have other limited scope risk management committees that address specific risks, geographic areas and/or subsidiaries. These risk management committees, which include representatives from business units and expert teams, monitor current and emerging risks within their purview to ensure an appropriate level of risk. Together, the various management risk committees facilitate timely escalation of issues to the Global Risk Management Committee, which escalates critical issues to the Board. These risk management committees include the following.

 

 

The Nasdaq Regulatory Capital Committee oversees the global regulatory capital framework for our regulated entities and the level of regulatory capital risk.

 

 

 

The Compliance Council identifies, monitors and addresses regulatory and corporate compliance risks.

 

 

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The Technology Risk Committee oversees technology risks within our strategic products and applications.

 

 

 

The Business Continuity and Crisis Management Committee oversees business continuity and resiliency related risks.

 

Nasdaq’s Group Risk Management Department oversees the ERM framework, supports its implementation and aggregates and reports risk information.

Our risk oversight organizational structure is depicted below:

 

LOGO

Executive Succession Planning

Our Board believes leadership succession planning is one of its most critical duties and is committed to positioning Nasdaq for further growth through ongoing talent management, succession planning and the deepening of our leadership bench. Both formally on an annual basis and informally throughout the year in Executive Session, the Nominating & ESG Committee, the Management Compensation Committee, the Board and the President and CEO review the succession planning and leadership development program. This includes a short-term and long-term succession plan for development, retention and replacement of senior officers. These reviews and succession planning discussions take into account desired leadership skills, key capabilities and experience in light of our current and evolving business and strategic direction. Our directors also have exposure to potential internal succession candidates through Board and Committee presentations and discussions, as well as informal events and interactions throughout the year.

In conjunction with the annual report of the succession plan, the President and CEO also reports on Nasdaq’s program for senior management leadership development.

 

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In addition, the President and 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 some or all of the senior officers should unexpectedly become unable to perform their duties. In 2020, the Board approved an update to the short-term succession plan in light of the COVID-19 pandemic. The Board also approved its own short-term succession plan in the event any of the Directors became temporarily incapacitated or unable to act due to the pandemic.

In addition, the Board conducted a detailed talent review, and considered succession planning, for the senior officers of the Company in 2020. The Nominating & ESG Committee and Board considered the Company’s succession plans in identifying a successor for Michael Ptasznik in connection with his retirement. Consistent with the previously discussed plans, the Board appointed Ann M. Dennison as Mr. Ptasznik’s successor as CFO, effective March 1, 2021.

Board Meetings

The Board held 12 meetings during the 2020 fiscal year and the Board met in Executive Session without management present during ten of those meetings. The Board expects its members will meticulously prepare for, join and participate in all Board and applicable Committee meetings and each Annual Meeting.

Each of the incumbent directors attended at least 92% of the meetings of the Board and those Committees on which the director served during the 2020 fiscal year.

Director Attendance at Annual Meeting

All ten of our Board members who served on the Board at the time of our 2020 Annual Meeting of Shareholders attended the meeting.

Shareholder Rights

Nasdaq does not have a classified Board. All directors are elected annually. We also have a majority vote standard for uncontested director elections.

We implemented proxy access by amending our By-Laws to allow a shareholder, or group of shareholders, that owns at least 3% of our outstanding common stock for three years and complies with certain customary requirements, to nominate candidates for service on the Board and have those candidates included in Nasdaq’s proxy materials. Candidates nominated pursuant to this provision may constitute up to the greater of two individuals or 25% of the total number of directors then in office for a particular annual meeting of shareholders.

Shareholders representing 15% or more of outstanding shares for one year can convene a special meeting.

For more on our proactive outreach efforts with our shareholders, see “Shareholder Engagement” on page 58.

Public Policy Advocacy for Investors, Capital Formation and Inclusive Capitalism

As part of our duty to shareholders, employees and the markets, Nasdaq actively participates in public policy debates in Europe, the United States and elsewhere. Nasdaq maintains a vigorous global employee education program with respect to the Foreign Corrupt Practices Act and other jurisdictional prohibitions on pay-for-play. Nasdaq does not support any political campaigns, or so-called “Super PACs,” directly with Nasdaq funds.

 

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In the United States, Nasdaq has the responsibility to use its voice to educate policymakers and advocate for policies affecting the capital markets. Nasdaq concentrates its efforts on education and outreach and utilizes a modest Political Action Committee, or PAC, program, known as the Nasdaq PAC. The Nasdaq PAC is funded entirely through employee contributions and supports only federal campaigns. Nasdaq’s PAC is governed by a board of employees who vote on every disbursement.

With respect to our European operations, we focus our advocacy programs on active education and engagement with elected leaders and key policymakers. Our policies in Europe follow prevailing jurisdictional law and preclude any monetary contributions to political parties, candidates or their designees.

Nasdaq maintains memberships in a number of associations around the globe that serve as important partners for our industry and clients, including the World Federation of Exchanges, Federation of European Stock Exchanges, Equity Markets Association, Partnership for New York City, Business RoundTable, Silicon Valley Leadership Group, U.S. Chamber of Commerce, TechNet and others.

Communicating with the Board

Shareholders and other interested parties may contact the Board, the Chairman or other individual Directors by writing us at AskBoard@nasdaq.com or c/o Erika Moore, Vice President, Deputy General Counsel and Corporate Secretary, 805 King Farm Boulevard, Rockville, Maryland 20850.

Complaints or Ethical Concerns?

We have also established mechanisms for receiving, retaining, and addressing ethics and compliance concerns or allegations of misconduct through our SpeakUp! Program. Employees, contractors and third parties doing business with Nasdaq have multiple channels for raising ethics concerns in a highly confidential and/or anonymous manner. Nasdaq does not tolerate retaliation against anyone who reports potential misconduct regardless of the reporting channel used.

For more on our Code of Ethics, see page 62 or visit ir.nasdaq.com.

 

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LOGO

Shareholder Engagement


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Shareholder Engagement

At Nasdaq, fostering long-term relationships and maintaining trust with our shareholders is a key priority for both management and the Board. Strong corporate governance must include constructive, year-round engagement with portfolio managers and investment stewardship teams—and our Corporate Governance Guidelines codify our Board’s commitment to oversight of shareholder engagement.

We actively listen to our investors through industry conferences, non-deal roadshows and meetings on a regular basis. Shareholder feedback provides our Board and management with valuable insights on our business strategy and performance, corporate responsibility, executive compensation, ESG initiatives and many other topics. This feedback informs various business decisions and helps us more effectively tailor the information we disclose to the public. Generally, webcasts of management’s presentations at industry or investor conferences are made available to investors and are accessible for a period of time at ir.nasdaq.com.

2020 Year-Round Engagement

 

LOGO

 

Spring

  

LOGO

 

Summer

  

LOGO

 

Fall

  

LOGO

 

Winter

   

  Filed Form 10-K and Proxy Statement, implementing disclosure improvements based on shareholder feedback

 

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

 

Annual Meeting,

May 19

 

  Had a 47% increase in shareholder attendance

 

  Addressed all live questions

 

  100% of Nasdaq Directors were in attendance

  

  Reviewed results and feedback from Annual Meeting

 

  Shared investor feedback with the entire Board

 

  Identified areas for development

  

  Engaged with institutional holders in preparation for Investor Day

 

Investor Day,

November 10

 

  President and CEO, and Executive Leadership Team, hosted webcast on company operations and strategy

 

  Addressed top focus areas of our investors around organic growth drivers, mid-term outlook and capital allocation priorities

 

  Analysts and investors were able to participate in live Q&A sessions

 

  Agenda, presentation and replay are all online and available to the public at ir.nasdaq.com

  

  Conducted annual Board assessment, which included specific questions informed by our shareholder engagement initiatives

 

  Continued to review shareholder feedback with the Board

 

  Assessed governance best practices and trends, regulatory developments and our governance framework

 

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LOGO

People and Purpose


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“A company’s purpose is the foundation that underpins its culture, operations, and business mandate. At Nasdaq, our purpose is to champion inclusive growth and prosperity. For us, it means powering stronger economies, creating more equitable opportunities and contributing to a more sustainable world to help our communities, clients, employees and people of all backgrounds reach their full potential.”

– Adena T. Friedman, President and CEO

In what has been one of the most challenging years in recent history, it became clearer than ever before that our people are our most valuable resource. Nasdaq’s commitment to—and investment in—attracting, retaining, developing and motivating its employees strengthened throughout 2020.

As the COVID-19 pandemic created challenges for our employees, and as the social justice movement gained momentum throughout the United States, we continued to bolster our human capital management efforts. We strive to create a diverse and inclusive work environment of equal opportunity, where employees feel respected and valued for their contributions, and where Nasdaq and its employees have opportunities to make positive contributions to our local communities.

We put the health, safety and well-being of our Nasdaq family first, expanding and enhancing employee benefits and resources. We have continued to heavily invest in our efforts to ensure a diverse and inclusive workplace, and we remain committed to building a sustainable and equitable world both inside of Nasdaq and beyond.

Enterprise-wide Approach to ESG

Nasdaq’s sustainability strategy includes all ESG issues that affect our business, operations and internal and external stakeholders. As part of our company-wide commitment to sustainability, Nasdaq’s ESG efforts are reflected in our work with corporate clients and within our own operations. Our global teams work together to create an impact in the marketplaces and communities where we live and work and advocate for ESG practices in our markets.

Nasdaq is honored as the only stock exchange in the Dow Jones North America Sustainability Index. We are fully committed to continuing our ESG efforts and to leading the shift towards more sustainable and inclusive capital markets.

Our Board’s Engagement

The Board, the Management Compensation Committee and the Nominating & ESG Committee engage with the Executive Leadership Team and People@Nasdaq across a broad range of people and culture topics. In-depth discussions on these topics occur at least twice a year, and specific aspects of these topics are touched upon more frequently. Recent human capital management topics discussed by the Board, the Management Compensation Committee and the Nominating & ESG Committee include: the alignment of our culture with our corporate strategy; our COVID-19 response; efforts to shape our corporate culture; succession planning; talent development; and our diversity, inclusion and belonging initiatives.

The Nominating & ESG Committee has formal responsibility and oversight for environmental and social policies and programs and receives regular reporting on key environmental and social matters and initiatives.

Our internal ESG Steering Committee is co-chaired by executive leaders and comprised of geographically diverse representatives from multiple business units. The ESG Steering Committee serves as the central oversight body for our environmental and social strategy and regularly reports on that strategy to the Nominating & ESG Committee.

 

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COVID-19 Response and Employee Safety

As the COVID-19 pandemic continues around the world, affecting all of our offices, we are committed to ensuring the safety and well-being of our employees and stakeholders, and complying with local government regulations in the locations in which we operate. In an effort to prevent further strain on our employees, we informed them in March 2020 that Nasdaq would not conduct any broad-based COVID-19 related layoffs throughout 2020.

When COVID-19 was first identified in Asia, Nasdaq quickly mobilized its resources to respond and support its employees in the region. We continued to proactively monitor the progression of COVID-19 throughout the world, and in March 2020, we closed all of our global offices and directed employees to work from home. Currently, Nasdaq continues to operate in a reduced office access environment. We have informed our employees that they may continue to work remotely through at least August 31, 2021. We will continue to evaluate local conditions and regulations before we fully transition back to our offices.

We launched a return-to-office strategy and plan to provide employees the opportunity to return to our offices as they re-open, which also will help support local businesses in these areas. The key priorities of this plan include continuing to safeguard the health of employees and stakeholders and ensuring the resiliency of our markets and global operations, while adhering to local regulations and health authorities’ guidelines.

For our offices that have re-opened, additional safety measures were instituted, including enhanced cleaning and disinfection protocols, social distancing, use of face coverings, contact tracing and pre-entry health and travel screenings. Face coverings, canisters of disinfectant wipes and hand sanitizers are available to those entering the offices.

The majority of our employees have been consistently working from home since we closed our offices in March 2020. We delivered face masks to employees, provided a home office equipment allowance and increased certain health benefits. In an effort to help our employees with the additional stress in balancing their work and personal commitments in this COVID-19 environment, we provided “flex days” for additional time away from the office without requiring the usage of vacation or personal leave days, additional family care resources and benefits (including back-up childcare and other caregiver support), wellness benefits and mental health resources.

In order to keep employees informed and connected, communication channels increased. Bi-weekly meetings are hosted by Nasdaq’s President and CEO. Periodic town halls by location and by business unit are hosted by our senior leadership. Each month, we hold an information and training series for managers.

Talent Management and Development

Throughout 2020, we continued to increase our efforts in attracting and retaining our employees. Given the challenges posed by COVID-19 restrictions, we reinvented our internship program to welcome over 150 interns and our onboarding program to welcome over 1,000 new employees to Nasdaq remotely. Additionally, we introduced new hire and employee exit surveys to better understand why employees join, and leave, Nasdaq. We conducted annual performance management, succession planning and advancement exercises to ensure we are aligning our employees with the right opportunities across the Company.

We have invested in professional development for our employees, including offering access to more than 14,000 professional development programs; providing tuition assistance to employees enrolled in degree-granting academic programs; holding internal career fairs and career development programs; and providing one-on-one professional coaching opportunities.

Nasdaq continued to conduct employee sentiment surveys frequently during 2020, and realized significant improvements across many categories, including leadership, management, and culture, compared to average scores within the past two years. We attribute these gains primarily to the ways the Company quickly and robustly responded to COVID-19, taking prompt actions to prioritize its employees’ safety and well-being.

 

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Our Ethical Culture   

We believe that ethical business practices are a critical element of our corporate culture.

 

Code of Ethics: Board and Employees

 

Ethical business practices are foundational to our corporate culture. Central to our core corporate values is to “Lead with Integrity.” This includes the expectation that everyone working for Nasdaq, from our directors to employees to contractors working on our behalf, demonstrate honesty and ethics in all workplace interactions. We believe our ethical culture enables us to build lasting, trusting relationships with our shareholders, customers and communities, and efficiently manage compliance risk.

 

Given the diversity and geographic scope of Nasdaq’s business, we maintain an ethics program, along with a variety of compliance programs designed to support our ethical culture and meet our compliance obligations. At an enterprise level, our corporate ethics and compliance program employs a “continuous improvement” model built around the following pillars, which are derived from government and industry best practices.

 

  Executive and Board             

Leadership            

  

Policies, Procedures         

and Controls       

   Risk Assessment            Outreach and Training           

Monitoring, Audit    

and Response    

  Board and top management oversight with reporting channel to senior management and Board for concerns.

  

  Policies, procedures and controls to support compliance.

  

  Prioritization and reallocation of resources based on assessment of compliance risks.

  

  Expectations communicated and staff trained in an appropriate manner.

  

  Measures to monitor misconduct and program effectiveness with investigation and resolution of issues.

Executive and Board Leadership

Our corporate ethics and compliance programs have the support of our senior management and are subject to regular oversight by the Audit & Risk Committee, as set forth in its charter.

Executive Leadership Team members and certain corporate committees provide top-level management of compliance obligations and support our global compliance program. For example, we have an enterprise-level Compliance Council, which is co-chaired by our Chief Legal and Regulatory Officer and our Chief Risk Officer, to oversee our corporate ethics program and primary compliance risks. Additionally, compliance risks and obligations are monitored by our Global Risk Management Committee, chaired by our Chief Risk Officer.

At an operational level, we maintain dedicated compliance teams of experienced professionals to manage daily activities. In addition to a team that supports our enterprise-wide programs, we also have teams that are specific to our individual lines of business or regulated entities, such as our broker-dealer subsidiaries.

Policies, Procedures and Controls

Nasdaq’s Code of Ethics and related policies are applicable to all of our directors, employees (including the principal executive officer, the principal financial officer and the controller and principal accounting officer) and other associates. We also have a separate Nasdaq Code of Conduct for the Board, which contains supplemental provisions specifically applicable to directors. These codes and policies include specific requirements related to our ethical standards, conflicts of interest disclosure, self-regulatory organization status, regulatory transparency, whistleblowing and compliance with securities trading requirements, antitrust laws, anti-corruption requirements, and sanctions and trade control laws. These codes and policies are supplemented by policies specific to certain legal entities or business areas.

 

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We maintain procedures, systems and controls to support the key requirements of our internal policies. These procedures, systems and controls help document compliance with core policy requirements and ensure that requirements are met. They also help in preventing and detecting potential violations of our policies and compliance requirements.

As part of onboarding and annually following our regular Code of Ethics and policy review cycle, each Nasdaq employee, including our executive officers, is required to certify compliance with our Code of Ethics and related policies as well as attest to the accuracy of required financial disclosures and compliance with reporting obligations including those related to conflicts of interest. As part of their annual assessments, employees are evaluated as to whether they are modeling our core values in their work.

We post amendments to, and intend to post waivers of (to the extent applicable to the principal executive officer, the principal financial officer or the controller and principal accounting officer) the Nasdaq Code of Ethics or 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.

Risk Assessment

We conduct regular assessments of compliance risk and individual compliance programs. In assessing compliance risk, we consider various factors, including regulatory trends and expectations, client requirements and expectations, the evolution of our business operations and best practices published by industry associations and peers. Our risk assessments seek to account for trends in the business environment and our strategic business goals. Results of these assessments are reported to senior management and used to help develop compliance program strategies and prioritize activities.

The Audit & Risk Committee receives quarterly updates on significant regulatory, compliance and enforcement risks, semi-annual updates on the Company’s ethics program and ad hoc reports on significant issues.

Our risk assessments also contribute to our annual process in which senior management and the Board of Directors review the Code of Ethics and related policies, as well as the Code of Conduct for the Board. As part of this process, we adopt modifications to the codes and policies to address new or emerging risks or requirements.

Outreach and Training

We conduct regular training and publish information on our intranet to help our employees stay current on ethics and compliance topics and to help them understand how to apply requirements in specific situations.

Training includes:

 

 

onboarding training for all new hires and staff from acquired companies;

 

 

company-wide “Ethics in Action” webinars that address topical issues; and

 

 

targeted training sessions that address specific requirements for a regional office or team.

To supplement training events, we also have an “open door” policy for individuals who have questions or need specific guidance; we also conduct “office hours” in conjunction with certain training events that provide employees an opportunity to better understand our compliance requirements.

Each year, we publish information on our Code of Ethics and policy changes after their adoption by the Board of Directors. A company-wide training is then offered (live and recorded) that reviews the Code of Ethics and policies and highlights key changes to the documents.

Monitoring, Audit and Response

To provide assurance that our ethics and compliance standards are being met, we undertake regular compliance testing and monitoring for identified risk areas, conduct periodic audits to review the design and control effectiveness of certain compliance programs and respond to individual situations where potential non-compliance is detected or reported. In addition to consulting with the business units and managing compliance

 

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programs, our compliance teams monitor ongoing compliance through different means, including, where relevant, transaction risk scoring and individualized testing. Additionally, our Internal Audit team develops a risk-based work plan that includes audits of compliance areas and reports the results of these audits to senior management and the Board.

If a compliance concern is identified, we conduct a review to ascertain relevant facts, reach conclusions and, if appropriate, take corrective action, including, if required, disclosure to regulatory bodies. We review significant allegations to determine whether the incident was an isolated occurrence or reflective of an ongoing pattern of conduct. We also incorporate investigation outcomes into policy enhancements, training and outreach programs and control improvements.

Whistleblower Program and Protection

A cornerstone of our ethics program is our SpeakUp! Program. Under our SpeakUp! Program, employees, contractors and third parties doing business with Nasdaq have multiple channels for raising ethics and compliance concerns or allegations of misconduct. These channels include directly contacting our Global Ethics Team through a dedicated email address and phone line and reporting through our SpeakUp! Line, a whistleblower hotline that enables individuals to make anonymous reports. The SpeakUp! Line is operated by a third-party hotline provider that enables Nasdaq to communicate with an individual reporting an issue on an anonymous basis. This Program includes specific investigation procedures for notifying appropriate business management (including, where appropriate, Internal Audit and SOX compliance functions), conducting investigations, resolving matters and closing out matters with the individual reporting the concern. In addition to the SpeakUp! Program, individuals can directly and confidentially contact our Audit & Risk Committee Chair via email or physical mail.

Nasdaq also permits employees to report suspected violations of law or regulations to relevant government authorities regardless of any confidentiality or intellectual property agreements signed with the Company. This includes the right to disclose trade secrets in confidence to government authorities. Employees can contact regulators, law enforcement or authorities without notifying Nasdaq in advance or first pursuing internal reporting channels.

As detailed in our Code of Ethics, Nasdaq does not tolerate retaliation against anyone who reports potential misconduct regardless of the reporting channel used.

The SpeakUp! Program and its supporting procedures enable compliance with global financial reporting and whistleblower laws. The Audit & Risk Committee receives regular reporting on the SpeakUp! Program, and significant financial reporting matters are promptly referred to the Audit & Risk Committee Chair. We promptly investigate any allegations of misconduct.

Supplier Code of Ethics

Ethical business practices are not only foundational to our own corporate culture, but Nasdaq expects that its suppliers share the same level of commitment to integrity. The Supplier Code of Ethics, or the Supplier Code, sets forth our expectation that all suppliers act ethically and comply with relevant laws and regulations in all Nasdaq-related business dealings.

In 2020, Nasdaq updated its Supplier Code to address certain topics that were not previously covered, including:

 

 

Freedom of Association and Right to Collective Bargaining: Suppliers must respect workers’ rights to freedom of association and collective bargaining in accordance with local legal requirements.

 

 

 

Health and Safety: We expect suppliers to provide a safe and healthy work environment to their employees and contractors and to abide by local laws and regulations that address, where applicable and not limited to: occupational safety, emergency preparedness, occupational injury and illness, industrial hygiene, physically demanding work, sanitation, food, and housing. Suppliers must provide a safe work environment that

 

 

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supports and maintains relevant programs for accident prevention and minimizing exposure to health risks.

 

 

Minimum Living Wages and Maximum Working Hours: We expect compliance with all applicable wage and working hour laws, including but not limited to: compliance with maximum work week hours regulations established by local law, including overtime requirements, except, as allowed by applicable law, in extraordinary business circumstances and with the prior consent of the individual. Employees and contractors must be compensated appropriately in line with prevailing market conditions and at least at the minimum wage required by applicable laws and regulations and with all required benefits. They must be compensated in compliance with local laws for overtime hours worked. Suppliers must comply with all labor laws and employ only workers who meet applicable minimum age and other requirements in the jurisdiction for the services being performed.

 

 

 

Acceptable Living Conditions: Where the supplier is providing housing for workers, such housing should be clean and safe, and provide reasonable living space.

 

 

 

Corporal Punishment and Disciplinary Practices: Suppliers must provide a non-violent, safe work environment, free of verbal abuse, sexual harassment, threats, intimidation, or physical harm. Suppliers may not use disciplinary procedures to retaliate against individuals or apply disciplinary actions in a discriminatory or otherwise unlawful manner.

 

Additionally, in line with Nasdaq’s Diversity, Inclusion and Belonging efforts, we began an initiative involving supplier diversity. To help us better understand the current diversity in our supplier pool, we are introducing a new procurement process to help monitor our spend and drive further diversity within our supplier ecosystem. In 2021, these efforts will include:

 

 

a public statement describing the objectives of the supplier diversity initiative;

 

 

the development of a portal for diverse suppliers;

 

 

enhanced reporting and analytics; and

 

 

becoming active members of, and participants in, a variety of diverse organizations.

We believe these efforts will promote transparency and allow Nasdaq to determine how it can improve engagement with diverse suppliers moving forward.

Ethics Documents

Nasdaq’s commitment to transparency, integrity and ethical business practices is foundational to our business. This commitment is reflected in our core ethics documents listed below, which are available on our Investor Relations website at ir.nasdaq.com.

 

 

Code of Conduct for the Board of Directors

 

 

Code of Ethics

 

  >  

SpeakUp! Program

 

  >  

Nasdaq’s Commitment to Diversity, Inclusion & Belonging

 

  >  

Duty of Loyalty to Nasdaq and Avoiding Conflicts of Interest

 

  >  

Gifts, Business-Related Events & Anti-Bribery and Corruption

 

  >  

Trading Restrictions – Complying with the Global Trading Policy

 

  >  

Confidentiality and External Communications

 

  >  

Antitrust and Fair Competition

 

  >  

Self-Regulatory Obligations, Accurate Reporting and Disclosure and Responding to Regulators

 

  >  

Sanctions, Export and Trade Control Compliance

 

  >  

Ethical Supplier and Expense Management

 

 

The Supplier Code of Ethics

 

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Diversity, Inclusion and Belonging

Nasdaq has invested significantly in its Diversity, Inclusion and Belonging, or DIB, efforts, from creating a dedicated DIB team, to publishing our diversity demographics for the first time, to enabling employees to organize around their own interests and identity.

Nasdaq’s diversity, inclusion and belonging philosophy is based on three pillars that guide our efforts:

 

 

Workforce, to ensure our employee population is representative of the communities in which we operate.

 

 

Workplace, to ensure a positive workplace experience for all employees of Nasdaq.

 

 

Marketplace, to positively influence our peers in the capital market space and to invest in the local communities in which we operate.

Our actions and initiatives under each of these pillars are described below.

Workforce

For the first time, Nasdaq publicly disclosed data on its workforce composition. Given our aspiration to achieve greater balance in our workforce composition at all levels, we believe workforce composition data transparency is important in order to hold ourselves accountable for the progress that we seek. Statistics on the composition of our global workforce by gender, and the composition of our U.S. workforce by gender, race and ethnicity, are available on our corporate website www.nasdaq.com/diversity-inclusion-belonging/inside-nasdaq, along with details about our programs and practices to elevate workforce diversity and inclusion.

We continually monitor our diversity efforts, with each business unit tracking its own data via live dashboards. We have enhanced our human capital analytics capability so that we can continue to deliver on our commitment to the Parity Pledge (achieving greater gender diversity in our executive ranks). We also have established a dedicated diversity recruitment function to accelerate our ability to attract diverse talent.

Workplace

The professional and personal challenges of confronting the COVID-19 pandemic and the social unrest of 2020 underscored the importance at Nasdaq of ensuring a culture of inclusion and belonging for every member of our workforce.

More than 1,600 employees are members of one or more of our 11 employee-led resource groups. Some groups advance the professional development and support of our Black, Asian American, Hispanic, LGBTQ+, female, disabled, veteran, and parent/caregiver employees, while other networks represent interests of employees around environmental sustainability as well as professional identities, such as administrative professionals and software engineers. We expect more resource groups will be formed over time. The networks provide both formal and informal development programs and guidance for their members, and benefit our entire workforce through educational events, guest speakers and volunteering opportunities. For a complete list of our employee networks, see page 132.

Nasdaq’s employee networks held numerous events and activities in 2020.

 

 

The Parents and Caregivers network launched in February 2020 to support the needs of employees facing a sudden impact of the pandemic due to working from home while schools began to close. At the suggestion of this network, in an effort to best support our parents and caregivers (and all employees), Nasdaq put in place a multitude of new benefits including Flex Days (a “free” day off every two weeks), backup childcare subsidies, reimbursed programs supporting family needs, and mental and physical well-being programs.

 

 

 

The employee networks curated over 140 programs to elevate connections and reduce isolation for colleagues, including weekly meditation, physical fitness sessions, professional development workshops, a speaker series, numerous holiday celebrations and other social events.

 

 

 

To ensure continuous learning and growth, some employee networks requested customized developmental programs, which were delivered through dedicated mentoring or coaching programs. Every member of the Executive Leadership Team, including the President and CEO, served as a mentor to members of underrepresented communities (and in some instances invited “reverse mentoring” as well).

 

 

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In response to the elevated awareness around race and social injustice, the DIB team launched a new “Conscious Inclusion” training program for all employees, starting with our President and CEO and most senior executives. The entire Executive Leadership Team and their direct reports have taken the training, which is now being provided to all managers and all employees. We plan to introduce additional training topics and programming regarding diversity, inclusion and belonging in 2021.

 

 

 

On a company-wide basis, as the social justice movement gained momentum in 2020, the Global Link of Black Employees, or GLOBE, hosted a monthly series of educational discussions for all employees, called “Our Talks,” featuring internal and external guest speakers addressing racial dynamics in our society and fostering greater understanding in the workplace. GLOBE also organized several targeted recruitment events for historically Black colleges and universities and candidates from the Black community.

 

Marketplace

Nasdaq accelerated efforts to raise awareness and generate action on diversity and inclusion in our external marketplace in 2020.

 

 

In February, our first public Black History Month Summit was organized by GLOBE and was attended by over 400 participants.

 

 

 

In March, we hosted our third annual program dedicated to gender equality with the UN Women organization and its partner agencies. As a signatory to the UN Women and UN Global Compact Women’s Empowerment Principles, Nasdaq hosted our sixth annual “Ring the Bell” ceremony and held public conferences in most of our locations.

 

 

 

Since the pandemic curtailed most of our public events after March 2020, many of our efforts during 2020 were moved to a virtual environment, and we organized and hosted various events, including financial literacy programs for underserved communities, LGBTQ+ Pride month, a conference on Women in the Boardroom, and a Veterans Day conference. All programs were open to our listed company clients and the general public.

 

 

 

In honor of Juneteenth, we debuted “Amplifying Black Voices,” a series of art by Black artists displayed on the Nasdaq Tower at our headquarters in New York.

 

 

 

Nasdaq donated an aggregate of $7 million, including $6 million in cash, to organizations providing critical assistance to communities disproportionally impacted by the global health, economic, and social justice crises, including: The Equal Justice Initiative, the NAACP’s COVID-19 project, and World Central Kitchen’s Restaurants for the People program. Nasdaq also triple-matched employee donations to related community engagement and social justice organizations through Nasdaq’s charitable function, GoodWorks. During 2020, GoodWorks also offered a double-match employee donation campaign to global COVID-19 relief and response organizations, as well as global charities selected by our Nasdaq employee networks.

 

The Purpose Initiative

If we have learned anything from the global pandemic, we have learned that we are resilient. Our ability to push forward, to solve problems, and to continue to innovate clearly can be done from anywhere. This time also gave us a chance to look at ourselves as an organization and re-evaluate our place in the world. Asking ourselves some difficult questions led to insightful answers, and that led to articulating a meaningful new purpose that had already been a part of what drives us.

In September 2020, we launched the “Purpose Initiative,” which is designed to advance inclusive growth and prosperity. The Purpose Initiative comprises our philanthropic, community outreach, corporate sustainability and employee volunteerism programs, all in an effort to leverage our unique place at the center of capital creation, markets, and technology to drive stronger economies, more equitable opportunities and a more sustainable world.

The Purpose Initiative focus spans three primary areas:

 

 

Reimagining Investor Engagement

Strive to equip underrepresented communities with the financial knowledge to better empower them to build a prosperous future and participate in an ecosystem that supports and sustains their growth.

 

 

Increasing Capital Markets Participation

Support Black, minority, and female entrepreneurs to strengthen, scale, and bring their ventures to market.

 

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  Building Strategic Partnerships

Collaborate with organizations that can help build a deeper, data-led understanding of where the challenges are greatest, what existing efforts could be amplified, and how the Nasdaq Foundation can make new and distinctive contributions.

 

Learn more about the Purpose Initiative at www.nasdaq.com/purpose.

 

Philanthropy and Community Involvement

     

LOGO

Volunteer Events

Around the World

 

Nasdaq GoodWorks

         

 

At Nasdaq, we engage, support and empower our communities. We give back by exercising our corporate expertise and investing our time and talent in communities where we live to make a meaningful difference. We provide eligible full and part-time employees two paid days off per year to volunteer. While most of our in-person volunteer efforts in 2020 pivoted to virtual volunteering events due to the pandemic, we still organized more than 90 volunteer events around the world, and more than 260 associates volunteered and contributed over 2,600 service hours.

 

Additionally, we donated advertising time on the Nasdaq MarketSite Tower in Times Square for COVID-19 related public service announcements, as well as philanthropic support for the social justice movement.

     

LOGO

Service Hours

 

Our aggregate philanthropic donations were $7 million and included the in-kind advertising time on our Tower and donations to the following organizations:

 

  World Central Kitchen

 

  CDC Relief Fund

 

  Migrant Kitchen

 

  NAACP COVID Project

 

  Equal Justice Initiative

 

  Small Business Opportunity Fund

 

  The Bowery Mission

 

  Angelwish

     

LOGO

Nasdaq Employees/Consultants Participated in Nasdaq-Matching Donations

 

Nasdaq Matching Gifts Program

 

We also match charitable donations of all Nasdaq employees and contractors up to
$1,000, or more in certain circumstances, per calendar year. Our matching gifts
program effectively doubles the impact of all Nasdaq employee and contractors’ cash
contributions to charitable organizations, enabling our families, fellow citizens,
communities and resources to thrive.

 

Notable giving programs this year included the following:

       

LOGO

Charities Served

 

  Two #GivingTuesday Triple-Match Campaigns

 

  COVID-19 Double-Match Campaign

 

  Social Justice Triple-Match Campaign

 

  Angelwish Global Holiday Campaign

     

LOGO

Approximate Total Charitable Impact of Employee Donations + Nasdaq Matching Donations

 

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The Nasdaq Foundation

In September 2020, we relaunched the Nasdaq Foundation with a renewed mission focused on two primary goals:

 

 

To reimagine investor engagement to equip underrepresented communities with the financial knowledge to share in the wealth that markets create.

 

 

 

To leverage our investment in the Nasdaq Entrepreneurial Center alongside new strategic partnerships with organizations that can help build a deeper, data-led understanding of where the challenges are greatest, what existing efforts could be amplified, and how the Nasdaq Foundation can make new and distinctive contributions.

 

Additionally, we contributed $10 million to support the Nasdaq Foundation and plan to annually fund the Nasdaq Foundation with approximately one quarter of one percent of our operating profits beginning in 2021.

For nearly half a century, Nasdaq has provided unwavering support to entrepreneurs and believed in their potential to shape the world. Our reimagined Nasdaq Foundation will leverage Nasdaq’s role in the capital markets to equip underrepresented communities with the financial knowledge to better empower them to build a prosperous future and participate in an ecosystem that supports and sustains their growth.

Nasdaq Entrepreneurial Center

The Nasdaq Entrepreneurial Center, or the Center, is an independent, non-profit organization established with the support of the Nasdaq Educational Foundation. The Center is a leading nonprofit committed to advancing inclusive entrepreneurial education worldwide. In four years, the Center has supported over 33,400 founders, almost half of whom are female and more than 56% minority founders.

In 2021, the Center aims to provide even more pathways for this high talent, underserved population of entrepreneurs to gain much needed access to founder education and capital while bringing new industry benchmarking to light.

The Center endeavors to serve those in society who are economically disadvantaged and underestimated, including recent immigrants, people of color, women, children and youth. The Center strives to deliver critically important training, mentorship, and connections to foster business innovation and advance the ideas of people who are capable of being the entrepreneurs of tomorrow.

To learn more about The Center, please visit thecenter.nasdaq.org.

 

LOGO

 

Entrepreneurs served                  Women          Minority              Countries

 

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Environmental Initiatives

Nasdaq is committed to environmentally friendly business practices and will continue to pursue activities that underscore our commitment to key environmental initiatives, including:

 

 

optimizing our real estate and facilities footprint, improving the accessibility of our offices and the preservation of natural resources;

 

 

 

empowering and educating our employees;

 

 

 

monitoring vendors and suppliers and partnering with those who share our values;

 

 

 

producing ESG-focused products for our clients and listed companies; and

 

 

 

serving as an ESG thought leader for the capital markets and the public.

 

Our actions under each of these initiatives are described below.

Optimizing Our Real Estate and Facilities Footprint, Improving the Accessibility of Our Offices and the Preservation of Natural Resources

 

 

We aspire to achieve a Green Building Council Certification for all of our new large office construction projects. Our new Nasdaq headquarters in New York City is expected to achieve a Green Building LEED Platinum Certification in 2021.

 

 

 

Following our sustainable leasing strategy, we have constructed and opened our new London office, which has been rated as “BREEAM Excellent” and the city’s only WELL certified building.

 

 

 

In 2020, we continued our carbon neutral program for the third consecutive year. The key focuses of the program are to:

 

 

  >  

reduce the energy requirements, corresponding greenhouse gas emissions and waste generation of our global operations through thoughtful, sustainable initiatives and strategies;

 

 

  >  

proactively procure renewable energy from projects that are less than 5 years old and feed power into the same energy distribution network as our operations;

 

 

  >  

purchase unbundled Renewable Energy Certificates from projects that are less than 5 years old and feed power into the same energy distribution network as our operations to replace any fossil fuel electricity power consumed (indirectly removing the release of greenhouse gases from the atmosphere); and

 

 

  >  

purchase credible and socially beneficial Carbon Offsets from projects that focus entirely on carbon removal to neutralize the associated greenhouse gas emissions related to our Scope 1 and Scope 3 categories (indirectly removing the release of greenhouse gases from the atmosphere).

 

 

 

Through the appointment of a sustainability consultant, we have begun a program to benchmark our global offices and develop a strategy to standardize and implement enhanced sustainable practices.

 

 

 

We signed a science-based targets commitment letter to produce, and then report, our reduction targets and monitor progress towards the targets.

 

 

 

When possible, our offices are located near public transportation or electric car charging stations.

 

 

 

In many locations, we have a longstanding practice of offering employees pre-tax public transportation passes, allowances or subsidies.

 

 

 

Our Environmental Practices Statement emphasizes our commitment to act as a responsible corporate citizen endeavoring to lessen our environmental impact and make our operations environmentally efficient.

 

 

 

We are in the process of completing our first Task Force on Climate Related Financial Disclosures report, which will outline:

 

 

  >  

our climate-related risks and opportunities,

 

  >  

the associated impact on our business,

 

  >  

our management strategy to address these risks, and

 

  >  

related metrics and targets to further address material climate risks.

 

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Empowering and Educating Our Employees

 

 

One of our employee networks, the Global Green Team, brings together Nasdaq employees who are passionate and knowledgeable about the environment and who want to drive change and sustainable initiatives in their office and community.

 

 

 

Through online educational webinars, coffee breaks, newsletters and employee engagements, we offer employee awareness trainings on ESG topics, such as supply chain, consumption, waste reduction/recycling, travel and how individuals can impact their communities.

 

Monitoring Vendors and Suppliers and Partnering with Those Who Share Our Values

 

 

We encourage suppliers to adopt sustainability and environmental practices in line with our published Environmental Practices Statement and our Supplier Code of Ethics.

 

 

 

To the extent practical and feasible, we expect suppliers to provide us with information to support our reporting and transparency commitments related to sustainability and environmental impacts.

 

Producing ESG-Focused Products for Clients and Listed Companies

 

 

We have a robust ESG-themed index family and offer ESG futures based on the OMXS30 ESG Responsible Index in Sweden. The product is the first exchange-listed and ESG-compliant index future in the world.

 

 

 

In addition, through our IR & ESG business, Nasdaq offers technology, expertise, and insights to help companies navigate the complexities of ESG as a measurement of performance and brand-building opportunity.

 

Serving as an ESG Thought Leader for the Capital Markets and the Public

 

 

The Nasdaq ESG Reporting Guide (now in its second edition) serves as a baseline template for Nasdaq listed companies and reinforces the business case for voluntary disclosure. We voluntarily report many of the metrics outlined in the ESG Guide.

 

 

 

Through our Green Voices of Nasdaq campaign, investors and issuers talk about leveraging the green bond market to support sustainable development.

 

 

 

Nasdaq has also been at the forefront of numerous ESG-related projects, working groups and industry initiatives, including:

 

 

  >  

the UN Sustainable Stock Exchanges Initiative (founding member);

 

  >  

the WFE Sustainability Working Group (founder, chair twice);

 

  >  

the UN Global Compact (U.S. Network Board Member);

 

  >  

the Global Sustainability Standards Board;

 

  >  

the SASB Advisory Board;

 

  >  

the Boston College Center for Corporate Citizenship; and

 

  >  

the Impact2030 Metrics Council (chair).

 

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ESG Reporting and Analytics

Throughout 2020, we continued our commitment to advance our sustainability disclosures with key stakeholders in the investment community through annualized ESG reporting. Sustainalytics scored Nasdaq in the seventh percentile in its ESG ratings and noted Nasdaq’s “strong management of material ESG issues and corporate governance performance.” Nasdaq also received notable score improvements from EcoVadis, MSCI ESG Research and Institutional Shareholder Services. For the first time, Nasdaq published comprehensive diversity statistics regarding gender and ethnicity in its annual Sustainability Report. For more on Nasdaq’s continued commitment to equality, see “People and Purpose — Diversity, Inclusion and Belonging” on page 66.

ESG Documents

Nasdaq’s environmental and social disclosures, policies, programs and practice statements include the following:

 

 

Anti-Discrimination and Anti-Harassment Policy

 

 

 

The Nasdaq Environmental Practices Statement

 

 

 

The Nasdaq Human Rights Practices Statement

 

 

 

The Nasdaq Information Protection and Privacy Practices Statement

 

 

 

Employee Handbooks

 

 

 

Nasdaq Code of Ethics

 

 

 

Nasdaq Supplier Code of Ethics

 

 

 

Nasdaq Sustainability Report

 

 

 

Nasdaq ESG FAQ

 

 

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Executive Compensation


Table of Contents

 

 

Proposal 2:

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

 

We are asking shareholders 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 recommend that shareholders read the Compensation Discussion and Analysis below as well as the executive compensation tables and narrative beginning on page 104. The Compensation Discussion and Analysis describes our executive compensation program and the decisions made by our Management Compensation Committee in 2020 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.

 

   LOGO    The Board unanimously recommends that shareholders vote FOR the approval of the Company’s executive compensation on an advisory basis.

In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking shareholders to approve the following advisory resolution at the 2021 Annual Meeting of Shareholders.

 

RESOLVED, that the shareholders of Nasdaq, Inc. approve, on an advisory basis, the compensation of Nasdaq’s NEOs, as disclosed in the Proxy Statement for Nasdaq’s 2021 Annual Meeting of Shareholders 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 shareholder 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 2022 Annual Meeting of Shareholders.

 

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Compensation Discussion and Analysis

 

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. Our executive compensation program supports Nasdaq’s growth strategy and is aligned to create long-term shareholder value. This Compensation Discussion and Analysis and the Executive Compensation Tables focus on the compensation of our NEOs for 2020.

 

       

 

 Business Performance

 Highlights

 

         76     

 

 Decision-Making

 Framework

 

 

Key Governance Features of Executive Compensation Program

 

     76     
 

 

Total Rewards Philosophy

 

    

 

77

 

 

 

  
 

 

Say on Pay Results

 

  

 

 

 

77

 

 

  
 

 

How We Determine Compensation

 

     78     
 

 

Role of Compensation Consultant

 

     78     
 

 

Competitive Positioning

     78     
   

 

Tally Sheets

 

     80     
 What We Pay and Why:  

 

Pay for Performance

 

     82     

 Elements of Executive

 Compensation

 

 

 

Compensation Mix

     82     
 2020 Compensation  

 

Base Salary

 

     83     
 Decisions  

 

Annual Cash Incentive Compensation

 

     83     
 

 

Long-Term Incentive Compensation

 

     86     
   

 

NEO Compensation Summaries

 

     89     

 Other Aspects

 of Our Executive

 Compensation Program

 

 

General Equity Award Grant Practices

 

     101     
 

 

Benefits

 

     101     
 

 

Severance

 

     101     
   

 

Other

 

     102     

 Risk Mitigation and

 Other Pay Practices

 

 

Risk Assessment of Compensation Program

 

     102     
 

 

Stock Ownership Guidelines

 

     102     
 

 

Stock Holding Guidelines

 

     103     
 

 

Trading Controls and Hedging and Pledging Policies

 

     103     
 

 

Incentive Recoupment Policy

 

     103     
   

 

Tax and Accounting Implications of Executive Compensation

     103     

    

    

Our NEOs

 

LOGO

LOGO

LOGO

LOGO

LOGO

 

    

 

    

Adena T. Friedman

 

President and CEO

 

    

    

 

Michael Ptasznik

 

EVP, Corporate Strategy

and CFO1

 

    

Lauren B. Dillard

 

EVP, Investment

Intelligence

 

    

    

P.C. Nelson Griggs

 

EVP, Corporate Platforms

 

    

 

Bradley J. Peterson

 

EVP and CIO/CTO

 

1

Mr. Ptasznik retired from Nasdaq and his position as EVP, Corporate Strategy and CFO, effective as of February 28, 2021. Ms. Ann M. Dennison, who was formerly our SVP, Controller and Principal Accounting Officer, was appointed EVP and CFO effective March 1, 2021.

 

 

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Business Performance Highlights

We achieved strong financial and operational performance across our business segments in 2020, while continuing to diversify our business and invest significantly in future initiatives. Our record 2020 results demonstrated our ability to address the needs of our clients in a capital markets environment characterized by elevated trading, strong IPO activity and rising index valuations amidst the COVID-19 pandemic.

 

  Net revenues in 2020 were $2.9 billion, an increase of 15% over 2019.

 

  This strong revenue performance allowed us to continue to reinvest in our business and our people, increase our quarterly dividend from $0.47 to $0.49 per share and further execute our share repurchase plan.

 

  We returned $542 million to shareholders through our share repurchase program and quarterly dividends in 2020 and an aggregate of $1.7 billion over the last three years.

Additional 2020 business highlights are described on page 17 of this Proxy Statement.

Decision-Making Framework

We design our executive compensation program to reward financial performance and operational excellence, effective strategic leadership and achievement of business unit goals and objectives, which are key elements in driving shareholder value and sustainable growth. The program is also designed to enable us to compete successfully for top talent and to build an effective leadership team. 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 key governance and design features of our executive compensation program. We believe our executive compensation practices drive performance and serve our shareholders’ long-term interests.

 

 

 

  What We DO

 

 

 

What We DON’T Do

 

Pay for performance: 100% of annual incentives and

80% of long-term incentive grants are performance based

 

Overweight non-performance-based long-term

incentives or award non-performance-based stock

options

Maintain a long-standing incentive “clawback” policy

  Pay tax gross-ups on severance arrangements and perquisites

Provide change in control protection that requires a “double trigger” (i.e., both a change in control of the Company and a qualifying loss of employment)

  Permit re-pricing of underwater stock options without shareholder approval

Conduct a comprehensive annual risk assessment of our compensation program

  Accrue or pay dividends on unearned or unvested equity awards

Conduct an annual executive talent review and discussion on succession planning

  Allow hedging or pledging of Nasdaq stock

Maintain robust stock ownership guidelines

  Provide ongoing supplemental executive retirement plans; all defined benefit pension plans have been frozen

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

  Provide uncapped award opportunities

    

 

 

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Total Rewards Philosophy

On an annual basis, the Management Compensation Committee reviews our compensation philosophy, programs and practices to ensure that they meet the needs of not only the Company, but also the shareholders.

Nasdaq’s total rewards program is designed to attract, retain, and empower employees to successfully execute the Company’s growth strategy. Nasdaq’s balanced total rewards program encourages decisions and behaviors that align with the short and long-term interests of our shareholders. The building blocks of our total rewards program are designed to promote and support our strategy and:

 

  reinforce our cultural values of: Driving Innovation, Leading with Integrity, Playing as a Team, Fueling Client Success, Expanding Your Expertise and Acting as an Owner;

 

  energize and align employees with the most important priorities, and encourage and reward high levels of performance, innovation and growth, while not promoting undue risk;

 

  retain our most talented employees in a highly dynamic, competitive talent market; and

 

  engage and excite current and future employees who possess the leading skills and competencies needed for us to achieve our strategy and objectives.

Our compensation philosophy is based on the guiding principles described in the below table.

 

 

  Pay For Performance

 

  

Retention

 

  

Competitive Pay Levels

 

A substantial portion of compensation is variable or “at risk” and directly linked to individual, Company and business unit performance.

   Our long-term incentive award vesting periods overlap, continually ensuring that a portion of previously granted equity remains unvested.    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

 

  

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

Say on Pay Results

Each year, we carefully consider the results of our Say on Pay advisory vote from the prior year. At our 2020 Annual Meeting, 96.9% of the votes cast were in favor of the advisory vote to approve executive compensation. In 2020, we retained the core elements of our executive compensation program, policies and decisions. We believe 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 shareholders on executive compensation, corporate governance and other issues throughout the year. For further information on our shareholder engagement, see “Shareholder Engagement.”

    

 

 

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How We Determine Compensation

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

With the support of People@Nasdaq, our President and CEO develops compensation recommendations for the NEOs and other executive officers for consideration by the Management Compensation Committee and/or the Board. As part of this process, our President and 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. Our President and CEO presents the results of the executive meetings to the Management Compensation Committee for its review and consideration as part of its deliberation process.

However, in accordance with the listing rules of The Nasdaq Stock Market, the President and CEO does not vote on executive compensation matters or attend Executive Sessions of the Management Compensation Committee or Board, and the President and CEO is not present when her own compensation is being discussed or approved.

Role of Compensation Consultant

In 2020, Meridian Compensation Partners, an independent compensation consultant, assisted management in gathering data, reviewing best practices and making recommendations to the Management Compensation Committee about our executive compensation program. However, Meridian did not determine or recommend the amount or form of executive or director compensation. Meridian did not provide any services to Nasdaq or its Board other than executive compensation consulting. In 2020, we paid Meridian $50,757 in fees for competitive market data for executives and outside directors, and $155,416 in fees for other executive compensation services.

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 2020 compensation levels, the Management Compensation Committee used a comprehensive peer group, consisting of an aggregate of 30 companies (comprised of 23 companies in our primary peer group and seven in our additional peer group), as the basis for a competitive market analysis of the compensation program for the President and CEO and other NEOs. Both our primary peer group and our additional peer group remained unchanged from the peer groups that were used in 2019 to determine compensation for our NEOs. We believe using and disclosing a peer group 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 following seven screening criteria to select appropriate peer companies and talent.

We believe the current peer group includes an accurate representation of similarly sized industry competitors and/or companies with which we generally compete for executive talent.

    

 

 

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Screening Criteria Used To Select Peer Companies

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
Revenue size    Market    Financial    Direct    Financial    Technology    Companies
   capitalization    performance    exchange    services    companies    with global
   size       competitors    companies       complexity

The peer group consists of the following companies.

Executive Compensation Peer Groups

Primary Peer Group (for benchmarking President and CEO and other NEOs’ compensation)1

Organized by Industry Segment

 

 

  Asset

  Management &

  Custody Banks

   Consumer
Finance
    

Data Processing

& Outsourced

Services

  

Diversified

Financial

Services

  

Financial

Exchanges &

Data

  

Investment

Banking &

Brokerage

  

Research &

Consulting

Services

Invesco Ltd.

   Discover Financial   Services      Automatic Data Processing, Inc.    Deutsche Börse AG    Cboe Global Markets, Inc.    BGC Partners, Inc.    IHS Markit Ltd.    
            Fidelity National Information Services, Inc.    London Stock Exchange Group plc    CME Group Inc.    E*TRADE Financial Corporation     
            Fiserv, Inc.         FactSet Research Systems Inc.    TD Ameritrade Holding Corporation     
            Mastercard Incorporated         Intercontinental Exchange, Inc.    The Charles Schwab Corporation     
            PayPal Holdings, Inc.         MSCI Inc.          
            Visa Inc.         S&P Global Inc.          
                      Thomson Reuters Corporation          
                      TMX Group Limited          

 

1

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

    

 

 

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Additional Peer Group (added to Primary Peer Group for benchmarking EVP and CIO/CTO’s compensation only; used as a secondary, informational reference for President and CEO and other NEOs’ compensation)1

Organized by Industry Segment

 

 

  Application

  Software

  

Internet Software

& Services

   Systems Software

Adobe Inc.

   eBay Inc.    NortonLifeLock Inc.

Citrix Systems, Inc.

         

Intuit Inc.

         

salesforce.com, inc.

         

Workday, Inc.

         

 

1

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

While the peer group represents a broad group of potential competitors for executive talent across various industries, peer group data serves as only one reference point for the Management Compensation Committee in evaluating our executive compensation program. The Management Compensation Committee uses this data to understand how various elements of our executive compensation program compare to other companies. In addition, the Management Compensation Committee uses multiple categorizations of the aggregate peer group data for each particular NEO role to better understand the competitive landscape for that position. For example, depending on the role of our NEO, the Management Compensation Committee may consider the entire peer group and/or certain subsets of the peer group. For the President and CEO and other NEO roles, with the exception of the EVP and CIO/CTO role, the primary peer group used for compensation comparisons excludes companies in the Application Software, Internet Software & Services and Systems Software sectors, as discussed above. We view these companies as talent competitors for executive roles in our Global Technology Organization, so they are included as primary peers for those roles. While the peer group comparison is utilized to ensure our executive compensation is competitive, we do not target executive compensation to a specific percentile of the compensation set by our peer group.

Each executive officer is also 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.

 

Each executive officer is also 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.

Tally Sheets

When recommending compensation for the President and CEO and other NEOs, the Management Compensation Committee reviews tally sheets that detail the various elements of compensation for each executive officer. These tally sheets are used to evaluate the appropriateness of the total compensation package, to compare each executive officer’s total compensation opportunity with his or her actual aggregate payment 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   

Where    

Described in    

More Detail    

FIXED

   Base Salary    Fixed amount of compensation for service during the year    Reward scope of responsibility, experience and individual performance    Page 83
   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

   Page 83

AT-RISK

      Award values are granted based on market competitive norms and individual performance    Motivate and reward executives for outperforming peers over several years   
   Long-Term Incentive Compensation    100% of 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    Ensure that executives have a significant stake in the long-term financial success of the company, aligned with the shareholder experience    Page 86
          RSUs are paid in shares of common stock, which have time-based vesting over four years from the grant date    Promote longer-term retention     

BENEFITS

   Retirement, Health and Welfare   

401(k) plan with company match

 

Competitive welfare benefits

 

Frozen pension plan

  

Provide market-competitive benefits to attract and retain top talent

 

Frozen plans reflect legacy arrangements

   Page 101
   Severance Arrangements - Involuntary Termination Without Cause or Voluntary Termination with Good Reason   

Specified amounts under employment arrangements with some executive officers

 

Discretionary guidelines, for involuntary terminations without cause

  

Assist in attracting and retaining top talent

 

Provide transition assistance

 

Promote smooth succession planning upon retirement

 

Allow the company to obtain release of employment-related claims

   Page 101

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 qualifying termination post-change in control

  

Retention of executives through a change in control

 

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

 

Assist in attracting and retaining top talent

   Page 101

OTHER

   Limited Perquisites    Limited additional benefits provided to certain executives    Provide nominal additional assistance that allows executives to focus on their duties    Page 102

 

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Pay for Performance

Nasdaq’s executive compensation program is market competitive and designed to deliver pay in accordance with corporate and business unit financial and strategic objectives as well as individual performance, levels of responsibility, and breadth of knowledge and experience. Our program’s intention is to align the interests of our executives with the interests of our shareholders and to link executive compensation with the drivers of short-term and long-term value creation. 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.

Compensation Mix

The mix of total target direct compensation for our NEOs in 2020 is shown below. The “at-risk” and performance-based pay is comprised of target annual cash incentive awards and PSUs (performance-based pay) and RSUs (“at-risk”).

 

LOGO

Nasdaq’s executive compensation program is market competitive and designed to deliver pay in accordance with corporate and business unit financial and strategic objectives as well as individual performance, levels of responsibility, and breadth of knowledge and experience.

    

 

 

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2020 Compensation Decisions

The sections below provide an overview as to how the Management Compensation Committee and/or Board of Directors determined each NEO’s compensation for 2020. For specific compensation amounts for each NEO, see the “NEO Compensation Summaries” beginning on page 89.

Base Salary

Base salaries are a fixed component of each NEO’s compensation. In setting each NEO’s base salary, the Management Compensation Committee and/or Board considers competitive market data derived from our peer group, annual market surveys and the NEO’s individual contributions, performance, time in role, scope of responsibility, leadership skills and experience. We review base salaries on an annual basis and may adjust 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.

Annual Cash Incentive Compensation

We maintain an annual performance-based cash incentive arrangement under which each NEO can earn cash incentive awards through our ECIP based on achievement of performance against pre-determined performance goals. The Management Compensation Committee and/ or Board established each NEO’s target annual cash opportunity based on an assessment of each NEO’s position and responsibilities, the competitive market analysis and the Company’s retention objectives.

How We Set Performance Targets

The annual cash incentive award payments for our NEOs are based on the achievement of pre-established, quantifiable performance goals. The President and 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 reviews and considers our President and 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. Based on these same factors, the Management Compensation Committee and Board determine and approve the performance goals for the President and CEO.

In determining appropriate performance targets, the Management Compensation Committee and/or the Board considers, among other things: the coming year’s budget; the prior year’s financial performance; the most significant initiatives tied to the Company’s future growth and shareholder value; and the most significant initiatives tied to the business operation for which the NEO is responsible and held accountable. These performance goals are intended to be rigorous and are set at levels where the maximum payout for any NEO would be difficult to achieve and that are in excess of budget assumptions.

The Management Compensation Committee and/or the Board reviews the Company’s financial goals and the NEOs’ individual goals throughout the year and determines if any adjustments are warranted based on significant transactions or other extraordinary events. In 2020, the only adjustment to financial goals was to reflect the acquisition of Solovis, which increased revenue and profit targets at the corporate and business unit level. No adjustments were made to performance objectives in response to the COVID-19 pandemic.

    

 

 

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The 2020 annual cash incentive awards were tied to results in the following areas:

 

Corporate Financial

Objectives

 

Business Unit Financial

Objectives

  Strategic Objectives   Employee Engagement

 

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

 

  net revenues, which measure the ability to drive revenue growth

 

  defined business unit-specific goals that contribute to the Company’s revenue growth and profitability

 

  defined corporate or business unit-specific goals that contribute to the Company’s long-term strategy execution and performance

 

  measures the extent to which employees feel passionate about their jobs, are committed to the organization and put discretionary effort into their work based on their responses to pulse surveys. Employee engagement is one important measure of progress toward our social objectives, as part of our broader ESG focus.

 

Potential Payments and Modifications to the ECIP Bonus Payments Due to COVID-19

Annual cash incentive award payments 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 financial objectives or strategic objectives. Each goal that applied to the NEOs for 2020 had a minimum, target and maximum performance level.

Scoring of each goal is based on actual goal achievement as compared to the target. In normal years, our ECIP design allows payouts for each goal to range from 0% to 200% of target. However, in 2020, in response to COVID-19 and the associated economic uncertainty of the year, the Management Compensation Committee and the Board approved a limitation to the upside payout potential of certain NEO goals. In 2020, payouts for each goal were structured as follows:

 

 

Corporate Financial Objectives: 0% to 150% of target (reduced upside)

 

 

Business Unit Financial Objectives: 0% to 200% of target (unchanged)

 

 

Strategic Objectives: 0% to 150% of target (reduced upside)

 

 

Employee Engagement: 0% to 150% of target (reduced upside)

 

 

Select Critical Resiliency Objectives: 0% to 200% of target (unchanged)

Further, to ease financial uncertainty for the broader employee population in the early days of the pandemic, the Management Compensation Committee also approved a 50% minimum payout on goal attainment for employees below the senior executive level. Our NEOs were not eligible for the minimum payout. The total bonus expense impact of the COVID-19 plan modifications was a reduction of $15 million, or approximately 10%, of the total bonus pool.

Although our ECIP is highly formulaic by design, awards are subject to adjustment at the discretion of the Management Compensation Committee, based on a holistic, qualitative assessment of individual performance delivered as well as ethical and responsible conduct. In 2020, the award to Mr. Griggs was increased at the discretion of the Management Compensation Committee, due to the strong performance of Mr. Griggs’ business unit. However, that discretionary adjustment for Mr. Griggs did not result in his award exceeding the 200% maximum payout under the ECIP program. The adjustment amount was equal to 1.3% of the aggregate awards granted to NEOs.

 

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Award Payouts

In February 2021, the Management Compensation Committee and/or the Board determined the final levels of achievement for each of the goals and approved the cash payout amounts. The table below shows achieved performance against each 2020 corporate objective and the percentage of target incentive opportunity yielded by such performance.

Corporate Objectives Performance vs. Goals

 

 

  Corporate

  Objective

 

Threshold 

(0%)

 

Target

(100%

Payout)    

 

Maximum    

(200%

Payout)

 

Nasdaq’s Results for

2020 as Measured for

Compensation Purposes    

 

Actual Performance    

as a Percent of

Target

 

Performance as a    

Percent of Target

After Application

of Cap3

             

Operating Income (Run Rate)1

  $1,241.7M  

$1,311.7M -

$1,321.7M

  $1,366.7M   $1,530.4M   200%   150%

Net Revenues2

  $2,459.4M  

$2,539.4M -

$2,559.4M

  $2,619.4M   $2,824.5M   200%   150%

 

1

Operating income (run rate) reflects our non-GAAP operating income adjusted to exclude: Nasdaq Next (i.e., our innovation investment program); the impact of changes in foreign exchange rates; severance; and benefits from certain one-time revenues that were not initially included in the 2020 budget. Non-GAAP operating income differs from U.S. GAAP operating income due to the exclusion of the following items: amortization expense of acquired intangible assets; merger and strategic initiatives expense; restructuring charges; and certain other expenses that are not part of ongoing business expenses. For a discussion of non-GAAP adjustments, see Annex A.

 

 

2

Corporate net revenues exclude Nasdaq Next, the impact of changes in foreign exchange rates and benefits from certain one-time revenues that were not initially included in the 2020 budget.

 

 

3

Reflects the modifications implemented as a result of COVID-19, in which amounts paid under the ECIP for the achievement of certain objectives was capped at 150%. Without this modification, the maximum would be 200%.

 

The Management Compensation Committee and/or the Board assessed each NEO’s achievement of the business unit financial objectives and strategic objectives in 2020, as set forth in the NEO Compensation Summaries beginning on page 89. Specific metrics for these goals are not disclosed for competitive reasons. However, 100% of our NEO goals were defined with quantifiable performance metrics and were approved by the Management Compensation Committee and/or the Board. No discretion was applied to any goal scoring unless specifically noted.

 

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Long-Term Incentive Compensation

Performance Share Units

In 2020, we granted PSUs to each NEO in order to incentivize and reward them for growth in our TSR relative to the TSR of two equally weighted groups over the performance period. The PSUs represented 80% of the NEO’s long-term incentive compensation. One group consists of all S&P 500 companies and the other group consists of the peer companies below. The peer companies include other global exchanges with sizable market capitalizations. We measure our TSR performance relative to two different groups in order to align with the varied interests of our shareholders.

The PSUs are subject to a three-year cumulative performance period beginning on January 1, 2020 and ending on December 31, 2022. The shares earned, if any, vest at the end of the performance period.

 

Global Exchange Peer Companies Used for Three-Year PSUs1

 

LOGO

 

 

1

While the peer group used for competitive analysis of compensation includes a broad range of companies that may compete with us for executive talent, the peer group used for the three-year PSUs includes a narrower list of more direct competitors that provide the most relevant comparators for stock price performance.

 

    

 

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The TSR results are measured at the beginning and end of the three-year performance period. Our relative performance ranking against each of these groups at the end of the performance period will determine the number of vested PSUs. For each vested PSU, Nasdaq will distribute one share of common stock to each NEO. The maximum payout will be 200% of the target number of PSUs granted if Nasdaq ranks at the 85th percentile or above of each of the groups. However, if our 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 below illustrates the percentage of the target number of PSUs granted to each NEO that the NEO 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. Any payouts earned at performance levels below the 50th percentile rank are designed to serve as a retention vehicle.

Amount of Shares a Grantee May Receive Based Upon Achievement

 

 

 

  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%

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

Restricted Share Units

In 2020, we also granted RSUs to each NEO to promote long-term shareholder alignment and retention. The RSUs represented 20% of the NEO’s long-term incentive compensation. The RSUs are subject to a four-year vesting schedule, vesting 33% on the second anniversary of the grant, 33% on the third anniversary of the grant and the balance on the fourth anniversary of the grant, in each case subject to continued employment with the Company.

Award Determination

In setting Ms. Friedman’s 2020 equity award target, the Management Compensation Committee and Board focused on motivating performance with significant upside and downside based on relative performance. Historical awards and the retention value of Ms. Friedman’s outstanding equity were considered when determining the target amount of her award. Peer group data also was considered in establishing a market-competitive award level.

Ms. Friedman 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.

The equity award targets 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.

    

 

 

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Settlement of 2018 PSU Grants Based on Relative TSR

In February 2021, the Management Compensation Committee evaluated and approved the performance results for the PSUs granted to the NEOs in 2018 (other than Ms. Dillard, as she joined Nasdaq in 2019). These PSUs were subject to a three-year cumulative performance period beginning on January 1, 2018 and ending on December 31, 2020, 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. We measure our TSR performance relative to two different groups in order to align with the varied interests of our shareholders.

The following table sets forth the 2018 PSU performance measure results.

PSU Performance Measure Results

 

 

  Equity

  Award

 

Cumulative

TSR

  Weighting       Performance Factors               Percentile    
      Rank
  Payout       Blended      
Payout

2018

Three-Year

PSU Award

 

 

72%

  50%   Based on Relative TSR Against the S&P 500         82nd   192%  

 

162%

      50%   Based on Relative TSR Against Peers         62nd   133%    

    

 

 

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NEO Compensation Summaries

 

LOGO   

 

Compensation Decisions for Adena T. Friedman

 

President and CEO

     LOGO

* Amounts above do not equal 100% due to rounding.

2020 Performance Highlights

 

    Reported record 2020 net revenues of $2.9 billion, an increase of 15% over 2019.

 

    Nasdaq’s Market Services segment set a new high in U.S. option total volumes and a new decade high annual market share in Nordic equity trading in 2020.

 

    Nasdaq led U.S. exchanges for IPOs during 2020, welcoming 316 IPOs representing $81 billion in capital raised, including 18 of the top 30 operating company IPOs by capital raised.

 

    Achieved record overall AUM in ETPs benchmarked to Nasdaq’s proprietary indexes, totaling $359 billion as of December 31, 2020, an increase of 54% compared to December 31, 2019.

 

    Reported ARR of $283 million in the fourth quarter of 2020, an increase of 8.8% as compared to the fourth quarter of 2019, for our Market Technology segment.

 

    Delivered 11% year-over-year revenue growth in the Solutions segments.

 

    Announced our commitment to acquire Verafin, a leading provider of anti-financial crime management solutions. The Verafin acquisition was completed in February 2021.

 

    Reinforced the shift towards SaaS and service client deployments by signing 11 new infrastructure operator clients, including eight new SaaS marketplace customers.

 

    Enhanced Nasdaq’s strategic focus with the acquisitions of OneReport, which provides corporate responsibility and ESG data management and report services, and Solovis, which offers multi-asset class, public and private market portfolio management, analytics and reporting tools used by institutional investors and consultants, and our investment in Caspian, which provides automated anti-money laundering investigation technology. Each of these transactions reinforced that we are more than a financial services company or a stock exchange.

 

    Filed a new proposed U.S. listing rule with the SEC that seeks to standardize disclosure of board-level diversity statistics through a consistent disclosure framework.

 

    Introduced the Purpose Initiative, comprised of Nasdaq’s philanthropic, community outreach, corporate sustainability, and employee volunteerism programs, all designed to leverage Nasdaq’s unique place at the center of capital creation, markets, and technology to drive stronger economies, more equitable opportunities and a more sustainable world.

 

    Initiated Nasdaq’s external and internal COVID-19 response, including supporting employees, customers and suppliers.

    

 

 

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2020 Compensation Elements

As shown in the table below, for 2020, the Management Compensation Committee and Board increased Ms. Friedman’s base salary from $1,000,000 to $1,250,000, which was effective April 1, 2020, along with other annual merit-based or market-aligning salary increases for eligible Nasdaq employees. The Management Compensation Committee and Board also increased her target annual cash incentive opportunity by $500,000, as well as the target grant date face value of her equity award by $500,000.

Both Ms. Friedman’s base salary and target annual cash incentive award amounts are pro-rated for 2020 since the increases became effective after the beginning of the year. In setting Ms. Friedman’s compensation, the Management Compensation Committee and Board considered her performance and a review of the competitive positioning of her overall compensation as compared to the compensation of similar officers at companies in our peer group.

 

     

Type of

Compensation

  

 

2020

Annualized        

Amounts

    

2019
Annualized

Amounts

Base Salary

   Fixed    $1,250,000      $1,000,000        

Target Annual Cash Incentive Award

   Performance-Based    $3,000,000      $2,500,000

Target Equity Award (Grant Date Face Value)

  

Performance-Based (PSUs)

 

   $7,200,0001

 

     $8,500,000

 

    

At-Risk (RSUs)

 

   $1,800,0001

 

      

Total Target Compensation

 

        $13,250,000

 

     $12,000,000

 

 

  1

Ms. Friedman was awarded a target amount of 78,031 PSUs, and 19,507 RSUs, on April 1, 2020 with the terms and conditions described in the “Long-Term Incentive Compensation” section above.

2020 Performance Goals – Annual Cash Incentive Award

Ms. Friedman earned an annual incentive award payment of $4,081,857, or 143% of target, based on the final achievement of her pre-established, quantifiable performance goals, as described below.

 

 

  Goal Type    Goal    Goal
Weighting
 

Actual
Performance
as a Percent of

Target

 

Performance

as a Percent

of Target after

Application of

Cap

 

Award

Payout            

Corporate

Financial

  

Corporate Operating Income

(Run Rate)

   60%   200%*   150%   $2,565,739
     Corporate Net Revenue    20%   200%*   150%   $855,246

Strategic

Initiatives

   Enhance Market Services Derivatives Operating Model    3%   200%*   150%   $128,287
     Enhance Nasdaq Private Markets Strategy    3%   199%*   150%   $128,287
     Enhance SaaS New Customer Acquisition    3%   50%   50%   $42,762
     Agile Design and Implementation    3%   175%*   150%   $128,287
     Nasdaq NEXT Revenue    4%   55%   55%   $62,200
     U.S. Public Policy Leadership    4%   200%*   150%   $171,049

Total

        100%       143%   $4,081,857

*Goal subject to 150% achievement cap due to COVID-19 bonus plan modification.

 

 

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Settlement of 2018 PSU Award Based on Relative TSR

The table below sets forth the number of PSUs that Ms. Friedman earned as of December 31, 2020 due to the performance results of her 2018 PSU award, which was based on relative TSR.

 

 

 

  Target PSUs Awarded in 2018   

Actual Performance as a Percent

of Target

  PSUs Earned            

  81,187

   162%   131,522            

    

 

 

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LOGO  

Compensation Decisions for Michael Ptasznik

 

EVP, Corporate Strategy and CFO

 

LOGO

2020 Performance Highlights

 

    Drove Nasdaq’s financial stewardship efforts, which resulted in $2.9 billion in 2020 net revenues, an increase of 15% over 2019 revenues. Revenues in the Solutions segments increased 11%, while Market Services revenues increased 21%.

 

    Led the transaction to acquire Verafin, a leading provider of anti-financial crime management solutions, including raising $1.9 billion in a senior notes offering in preparation for the completion of the transaction, which closed in February 2021.

 

    Enhanced the Company’s liquidity during the COVID-19 crisis by refinancing and retiring the 3.875% Senior Notes due 2021 with 600 million of 0.875% Senior Notes due 2030 and issuing $500 million of 3.25% Senior Notes due 2050.

 

    Held 2020 Investor Day to detail the next phase of our strategy, enhance disclosures and update the performance objectives against which we measure our execution.

 

    Enhanced the company’s ESG practices and disclosures, driving material improvement in scores/ratings from leading ESG research providers including EcoVadis, MSCI ESG Research and Institutional Shareholder Services.

 

    Supported Nasdaq’s external and internal COVID-19 response, including supporting employees, customers and suppliers.

2020 Compensation Elements

As shown in the table below, for 2020, the Management Compensation Committee and Board increased Mr. Ptasznik’s base salary from $600,000 to $625,000, which was effective April 1, 2020, along with salary increases for other eligible Nasdaq employees. Since the target annual cash incentive award is based on a percentage of base salary, the salary increase resulted in a corresponding increase to Mr. Ptasznik’s target annual incentive award from $900,000 to $937,500. Both Mr. Ptasznik’s base salary and target annual cash incentive award amounts are pro-rated for 2020 since the increases became effective after the beginning of the year. The Management Compensation Committee and Board also increased the target grant date face value of Mr. Ptasznik’s equity award by $100,000.

In determining these amounts, the Management Compensation Committee and Board assessed Mr. Ptasznik’s individual performance and market competitive positioning to ensure his pay was competitive with that of other CFOs in our peer group. The Management Compensation Committee and Board increased the value of Mr. Ptasznik’s equity award to recognize his performance.

As described on page 111, Mr. Ptasznik retired from his role at Nasdaq as EVP, Corporate Strategy and Chief Financial Officer, effective as of February 28, 2021.

    

 

 

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Type of

Compensation

   2020
Annualized        
Amounts
   2019
Annualized        
Amounts

Base Salary

   Fixed    $625,000    $600,000

Target Annual Cash Incentive Award

   Performance-Based    $937,500    $900,000

Target Equity Award (Grant Date Face Value)

   Performance-Based (PSUs)    $1,520,0001    $1,800,000
  

 

At-Risk (RSUs)

  

 

$380,0001

    

Total Target Compensation

        $3,462,500    $3,300,000

 

  1

Mr. Ptasznik was awarded a target amount of 16,473 PSUs, and 4,118 RSUs, on April 1, 2020 with the terms and conditions described in the “Long-Term Incentive Compensation” section above.

2020 Performance Goals – Annual Cash Incentive Award

Mr. Ptasznik earned an annual incentive award payment of $1,438,673, or 155% of target, based on the final achievement of his pre-established, quantifiable performance goals, as described below.

 

 

 

  Goal Type    Goal    Goal
Weighting
 

Actual

Performance

as a Percent of

Target

 

Performance

as a Percent

of Target after

Application of

Cap

  Award            
Payout

Corporate

Financial

  

Corporate Operating Income

(Run Rate)

   50%   200%*   150%   $696,132
     Corporate Net Revenue    20%   200%*   150%   $278,453

Business Unit

Financial

   Finance Budget Expense    5%   200%   200%   $92,818

Strategic

Initiatives

   Data and Analytics Strategy    5%   167%*   150%   $69,613
     Enhance Nasdaq’s ESG Commitment    5%   188%*   150%   $69,613
     Enhance Strategic Planning Process    5%   200%*   150%   $69,613
     CCP Resiliency and Strategy    5%   200%   200%   $92,818

Employee

Engagement

        5%   180%*   150%   $69,613

Total

        100%       155%   $1,438,673

*Goal subject to 150% achievement cap due to COVID-19 bonus plan modification.    

Settlement of 2018 PSU Award Based on Relative TSR

The table below sets forth the number of PSUs that Mr. Ptasznik earned as of December 31, 2020 due to the performance results of his 2018 PSU award, which was based on relative TSR.

 

     
  Target PSUs Awarded in 2018   

Actual Performance as a Percent

of Target

  PSUs Earned            

  18,557

   162%   30,062

    

 

 

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LOGO   

Compensation Decisions for Lauren B. Dillard

 

EVP, Investment Intelligence

 

LOGO

2020 Performance Highlights

 

    Achieved a 17% increase in Investment Intelligence revenues in 2020 as compared to 2019, which was almost entirely due to organic growth.

 

    Acquired Solovis, which offers multi-asset class, public and private market portfolio management, analytics and reporting tools used by institutional investors and consultants. Solovis solutions expand on the capabilities of Nasdaq’s eVestment group, a leading data and analytics solution facilitating institutional asset allocation research and decisions.

 

    Led business including Nasdaq’s proprietary index products, which reached record levels for AUM of $359 billion as of December 31, 2020. This total included $121 billion, or 34%, tracking smart beta indexes.

 

    Grew market data revenues by 3% in 2020 from 2019 primarily due to organic growth in proprietary products from new sales, including continued expansion geographically.

 

    Supported Nasdaq’s external and internal COVID-19 response, including supporting employees, customers and suppliers.

2020 Compensation Elements

For 2020, the Management Compensation Committee maintained Ms. Dillard’s base salary, target annual cash incentive award, and target equity award. In determining these amounts, the Management Compensation Committee assessed Ms. Dillard’s individual performance and market competitive positioning to ensure her pay is competitive with the role and peers within her area of expertise.

 

 

     

Type of

Compensation

  

2020

Annualized        
Amounts

 

2019

Annualized        

Amounts

    Base Salary

   Fixed    $525,000   $525,000

    Target Annual Cash Incentive Award

   Performance-Based    $787,500   $787,500

Target Equity Award (Grant Date Face Value)

   Performance-Based (PSUs)    $1,200,0001   $1,500,000
  

 

At-Risk (RSUs)

  

 

$300,0001

 
       

    Total Target Annual Compensation

        $2,812,500   $2,812,500

 

  1

Ms. Dillard was awarded a target amount of 13,005 PSUs, and 3,251 RSUs, on April 1, 2020 with the terms and conditions described in the “Long-Term Incentive Compensation” section above.

    

 

 

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2020 Performance Goals – Annual Cash Incentive Award

Ms. Dillard earned an annual incentive award payment of $1,300,481, or 165% of target, based on the final achievement of her pre-established, quantifiable performance goals, as described below.

 

  
  Goal Type    Goal   

Goal

Weighting

  

Actual

Performance

as a Percent of

Target

 

Performance

as a Percent

of Target after

Application of

Cap

   Award        
Payout

Corporate

Financial

   Corporate Operating Income (Run Rate)    25%    200%*   150%    $295,313
     Corporate Net Revenue    10%    200%*   150%    $118,125

Business Unit

Financial

   Investment Intelligence Revenue    10%    200%   200%    $157,500
     Investment Intelligence Nasdaq NEXT Revenue    5%    53%   53%    $20,793
     Investment Intelligence Operating Income    25%    200%   200%    $393,750

Strategic

Initiatives

   Deploy Buy Side Customer Strategy    5%    200%*   150%    $59,063
     Operational Excellence for Nasdaq’s Index Business    5%    200%   200%    $78,750
     Maturing Nasdaq Financial Framework and the Cloud    3%    186%*   150%    $35,437
     U.S. Public Policy Leadership    4%    200%*   150%    $47,250
     Agile Design and Implementation    3%    175%*   150%    $35,437

Employee

Engagement

        5%    160%*   150%    $59,063

Total

        100%        165%    $1,300,481        

* Goal subject to 150% achievement cap due to COVID-19 bonus plan modification.

    

 

 

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LOGO   

Compensation Decisions for P.C. Nelson Griggs

 

EVP, Corporate Platforms

 

LOGO

2020 Performance Highlights

 

    Achieved a 7% increase in Corporate Platforms revenues, which was almost entirely due to organic growth.

 

    The Nasdaq Stock Market led U.S. exchanges with a 67% total win rate, including an 83% win rate among operating companies and a 53% win rate among special purpose acquisition companies.

 

    The Nasdaq Stock Market welcomed 316 IPOs in 2020, representing $81 billion in capital raised, first amongst U.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised.

 

    New listings in 2020 included 20 companies switching their listings from NYSE to join Nasdaq, representing an aggregate of $282 billion in global equity market capitalization and included AstraZeneca PLC, American Electric Power Company, Inc., Keurig Dr Pepper Inc., and Opendoor Technologies.

 

    Acquired OneReport, a privately held provider of corporate responsibility and ESG data management and report services. OneReport brings efficient, effective reporting tools to the expanding set of ESG expertise and solutions Nasdaq delivers to corporate issuers and other investment community stakeholders.

 

    Supported Nasdaq’s external and internal COVID-19 response, including supporting employees, customers and suppliers.

2020 Compensation Elements

As shown in the table below, for 2020, the Management Compensation Committee increased Mr. Griggs’ base salary from $550,000 to $575,000, which was effective April 1, 2020, along with salary increases for other eligible Nasdaq employees. Since the target annual cash incentive award is based on a percentage of base salary, the salary increase resulted in a corresponding increase to Mr. Griggs’ target annual incentive award from $825,000 to $862,500. Both Mr. Griggs’ base salary and target annual cash incentive award amounts are pro-rated for 2020 since the increases became effective after the beginning of the year. The Management Compensation Committee also increased the target grant date face value of Mr. Griggs’ equity award by $100,000. In determining these compensation changes, the Management Compensation Committee assessed Mr. Griggs’ performance and the overall performance of our Corporate Platforms segment. His total compensation was determined to be market competitive when compared to similar business unit executives in our peer group.

 

 

     

Type of

Compensation

  

2020

Annualized        

Amounts

  

2019

Annualized        

Amounts

Base Salary

   Fixed    $575,000    $550,000

Target Annual Cash Incentive Award

   Performance-Based    $862,500    $825,000

Target Equity Award (Grant Date Face Value)

   Performance-Based (PSUs)    $1,280,0001    $1,500,000
  

 

At-Risk (RSUs)

  

 

$320,0001

    

Total Target Annual Compensation

        $3,037,500    $2,875,000

 

  1

Mr. Griggs was awarded a target amount of 13,872 PSUs, and 3,468 RSUs, on April 1, 2020 with the terms and conditions described in the “Long-Term Incentive Compensation” section above.

    

 

 

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2020 Performance Goals – Annual Cash Incentive Award

Mr. Griggs earned an annual incentive award payment of $1,353,329, or 159% of target, based on the final achievement of his pre-established, quantifiable performance goals, as described below. The Management Compensation Committee and Board utilized its discretion to increase Mr. Griggs’ final award payout by $125,000 to $1,478,329, to reflect his strong performance in 2020 with respect to listings.

 

 

  Goal Type    Goal   

Goal

Weighting

  

Actual

Performance

as a Percent of    
Target

  

Performance

as a Percent

of Target after    

Application of

Cap

  

Award

Payout

Corporate Financial

   Corporate Operating Income (Run Rate)    25%    200%*    150%    $319,941
     Corporate Net Revenue    10%    200%*    150%    $127,976

Business Unit Financial

   Corporate Platforms Operating Income    15%    200%    200%    $255,953
     Corporate Platforms Revenue    10%    200%    200%    $170,635
     IPOs, Switches and Issuer Retention    10%    175%    175%    $149,306
     Nasdaq NEXT Revenue – The Nasdaq Private Market’s Alternative Investments Business    5%    36%    36%    $15,251

Strategic Initiatives

   Enhance U.S. Listings Commercial ESG Positioning    2%    200%    200%    $34,127
     Position Nasdaq as the Preferred Exchange    3%    167%    167%    $42,744
     Advance the Governance Business Client Retention    3%    78%    78%    $19,836
     Enhancing Nasdaq Private Markets Strategy    2%    199%*    150%    $25,595
     U.S. Public Policy Leadership    3%    200%*    150%    $38,393
     Deploy Buy Side Customer Strategy    3%    200%*    150%    $38,393
     Agile Design and Implementation    4%    175%*    150%    $51,191

Employee Engagement

        5%    160%*    150%    $63,988

Total

        100%         159%    $1,353,329        

Positive Discretion

                       $125,000

Final Award Payout

                       $1,478,329

* Goal subject to 150% achievement cap due to COVID-19 bonus plan modification.    

    

 

 

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Settlement of 2018 PSU Award Based on Relative TSR

The table below sets forth the number of PSUs that Mr. Griggs earned as of December 31, 2020 due to the performance results of his 2018 PSU award, which was based on relative TSR.

 

 

  Target PSUs Awarded in 2018   

Actual Performance as a Percent

of Target

   PSUs Earned

  11,598

   162%    18,788

    

 

 

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Table of Contents

 

 

LOGO   

Compensation Decisions for Bradley J. Peterson

 

EVP and CIO/CTO

 

LOGO

2020 Performance Highlights

 

    Performed engineering and capacity enhancements for Nasdaq’s U.S. markets and the Securities Information Processor in order to support trading activity peaks.

 

    Led the maturation of the Nasdaq Financial Framework internally and externally to modernize our products for trading, risk management, clearing and centralized securities depository services.

 

    Launched components of the new Nasdaq Financial Framework and cloud-based products, including “TradeOptics,” a tool for the Nasdaq Financial Framework-based Global Derivatives Platform for BX Options and the BX Options Market Operation, and “Precise”, the cloud-based front end for Nasdaq ISE and Nasdaq GEMX.

 

    Delivered Market Technology client implementations and supported growth of new client onboarding, including SaaS products for the Nasdaq Risk Platform, Nasdaq Market Surveillance, Nasdaq Trade Surveillance and the Nasdaq Sustainable Bond Network.

 

    Launched the Nasdaq Cloud Data Service.

 

    Supported Nasdaq’s external and internal COVID-19 response, including supporting employees, customers and suppliers.

2020 Compensation Elements

For 2020, the Management Compensation Committee maintained Mr. Peterson’s base salary, target annual cash incentive award, and target equity award. In determining these amounts, the Management Compensation Committee assessed Mr. Peterson’s individual performance and the overall performance of our Global Technology Organization. His total compensation was determined to be competitive as compared to CIOs and CTOs in our peer group.

 

 

     

Type of

Compensation

  

2020

Annualized        
Amounts

  

2019

Annualized            

Amounts

Base Salary

   Fixed    $600,000    $600,000

Target Annual Cash Incentive Award

   Performance-Based    $900,000    $900,000

Target Equity Award (Grant Date Face Value)

   Performance-Based (PSUs)    $1,440,0001    $1,800,000
  

 

At-Risk (RSUs)

  

 

$360,0001

  
       

Total Target Annual Compensation

        $3,300,000    $3,300,000

 

  1

Mr. Peterson was awarded a target amount of 15,606 PSUs, and 3,901 RSUs, on April 1, 2020 with the terms and conditions described in the “Long-Term Incentive Compensation” section above.

    

 

 

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2020 Performance Goals – Annual Cash Incentive Award

Mr. Peterson earned an annual incentive award payout of $1,346,172, or 150% of target, based on the final achievement of his pre-established, quantifiable performance goals, as described below.

 

  Goal Type    Goal    Goal
Weighting
  

Actual

Performance

as a Percent of    

Target

  

Performance

as a Percent

of Target after    

Application of

Cap

  

Award

Payout

Corporate Financial

   Corporate Operating Income (Run Rate)    50%    200%*    150%    $675,000
     Corporate Net Revenue    20%    200%*    150%    $270,000

Strategic Initiatives

   Enhance Market Services Derivatives Operating Model    6%    200%*    150%    $81,000
     Advance the Governance Business Client Retention    2%    78%    78%    $13,950
     Product Portfolio and Technology Solutions Strategy    3%    125%    125%    $33,750
     System Reliability and Operational Excellence    4%    194%    194%    $69,972
     Agile Design and Implementation    2%    175%*    150%    $27,000
     Maturing Nasdaq Financial Framework, and the Cloud    8%    186%*    150%    $108,000

Employee Engagement

        5%    200%*    150%    $67,500

Total

        100%    150%    $1,346,172    

* Goal subject to 150% achievement cap due to COVID-19 bonus plan modification.

Settlement of 2018 PSU Award Based on Relative TSR

The table below sets forth the number of PSUs that Mr. Peterson ea