UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Nasdaq, Inc.
(Name of Registrant as Specified In its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Tuesday, April 24, 2018 8:30 a.m. (EDT) Nasdaq MarketSite Four Times Square New York, NY 10036
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
OUR VISION Reimagining markets to realize the potential of tomorrow. OUR MISSION We bring together ingenuity, integrity, and insights to deliver markets that accelerate economic progress and empower people to achieve their greatest ambitions.
Letter from Our Board of Directors
3 MARCH 14, 2018
Dear Fellow Stockholders,
Thank you for your interest in Nasdaq and for trusting us to oversee and grow your
investment in our business. In 2017, we have worked to create value for our stockholders and to position Nasdaq for continued success over the long term.
LEADERSHIP
TRANSITION One of the Boards most important responsibilities is to oversee the CEO succession process and to ensure a successful and orderly leadership transition. Following years of planning, on January 1, 2017, Adena T. Friedman became the
President and CEO of Nasdaq. In May 2017, the Board elected Michael R. Splinter, the retired Chairman and former CEO of Applied Materials, as Board Chairman. The leadership transition arrived at an important time for Nasdaq as we began to refocus
our business for the future.
STRATEGIC PIVOT Early in 2017, with the full support of the Board, our management team initiated a comprehensive review of Nasdaqs
strategy and businesses that resulted in a strategic pivot for the organization. The new corporate strategy is designed to focus our resources on the greatest growth opportunities while retaining our goal of double-digit total stockholder return.
As a result, we intend to increase investment in: our Market Technology segment, including our market infrastructure and regulatory technology businesses; our Information
Services segment, including our data analytics capabilities; and a select number of smaller growth businesses, including Nasdaq Private Market. We intend to maintain our investments in
our core businesses, notably our foundational trading and listings businesses. Finally, we intend to review areas that are not critical to our core. In these areas, we expect to target
resiliency and efficiency versus growth, and thus free up and redirect our resources toward greater opportunities.
Our financial results were strong in 2017, with full-year
net revenue1 at a record $2.43 billion. 2017 GAAP diluted EPS was $4.33, compared to $0.64 in 2016, while 2017 non- GAAP diluted EPS2 was $4.06, a 10% increase compared to the prior year.
The new corporate strategy is designed to focus our resources on the greatest growth opportunities while retaining our goal of double- digit total stockholder return.
$4.33 2017 GAAP diluted EPS 1 Represents revenues less transaction-based expenses. 2 Refer to Annex A for our reconciliations of U.S. GAAP to non-GAAP net income and diluted EPS.
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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Our financial results were strong in 2017, with full-year net revenues at a record $2.43 billion.
We are pleased to have nominated Jacob Wallenberg, Chairman of Investor AB, to the Board. | CAPITAL ALLOCATION
A fundamental objective of the strategic pivot is to optimize our capital allocation decisions to be consistent with market opportunities. The Board works closely with management in planning and executing such efforts. In 2017, the company made two key acquisitions (eVestment and Sybenetix) and explored strategic alternatives for certain existing businesses in a way that was consistent with our new strategic direction. As a result of this review, we have entered into a definitive agreement to sell the public relations (Public Relations Solutions) and webcasting and webhosting (Digital Media Services) products and services within our Corporate Solutions business. The closing of this transaction, which is subject to regulatory approvals and customary closing conditions, is expected in the second quarter of 2018.
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In addition to investments and divestitures, the Board and management remain focused on investment in organic growth opportunities, de-leveraging the balance sheet and returning capital to stockholders. These efforts include share buybacks and growing our dividend as earnings and cash flow increase.
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INDUSTRY LEADERSHIP
With a new administration in Washington, in 2017 we elevated our voice on important issues critical to market operation, market structure and our listed companies. This effort, with the Boards support, resulted in the development of a detailed blueprint, entitled The Promise of Market Reform: Reigniting America's Economic Engine, which is available at http://business.nasdaq.com/revitalize, reaffirming our commitment to capital markets reform and detailing specific proposals to promote legislative and policy reforms around market structure, proxy statements, litigation, taxes, long-termism and the Financial CHOICE Act, which was passed by the House of Representatives in June 2017.
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BOARD COMPOSITION AND GOVERNANCE FOCUS
Refreshing the Board with new perspectives and ideas is critical to a successful and strategic board of directors. In 2017, we welcomed Melissa M. Arnoldi, President of |
Letter from Our Board of Directors |
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We intend to increase investment in: our Market Technology segment, including our market infrastructure and regulatory technology businesses; our Information Services segment, including our data analytics capabilities; and a select number of smaller growth businesses, including Nasdaq Private Market.
Technology & Operations at AT&T Communications, and John D. Rainey, CFO and EVP of Global Customer Operations at PayPal Holdings, Inc., to the Board. We continue to evaluate our Board composition to ensure the Board is comprised of talented, skilled and ethical directors to represent the long-term interest of stockholders and are pleased to have nominated Jacob Wallenberg, Chairman of Investor AB, to the Board. Mr. Wallenberg will stand for election at our Annual Meeting on April 24, 2018. We also continue to strive for various types of diversity on the Board, with the Board now including three female members.
In addition to the strategic and capital allocation priorities discussed earlier, we also continue to focus our attention on the important issues of: executive compensation; board structure and composition; corporate culture, diversity and human capital; our environmental, social and governance policies; information and cybersecurity initiatives; and enterprise risk management.
As we make decisions in the boardroom, a priority for the Board is to hear from and engage with you, our stockholders. We accomplish this through ongoing outreach and engagement. Please continue to share your opinions and suggestions with us. You can submit your views by writing to us at: AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan Conley, SVP and Corporate Secretary, 805 King Farm Blvd., Rockville, MD 20850.
We thank you for the trust you have placed in us and for your continued support of Nasdaq. The Board is committed to working on your behalf to ensure Nasdaqs continued ability to optimize and execute our new strategy for the ultimate benefit of stockholders.
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 Lars R. Wedenborn |
Please continue to share your opinions and suggestions with us. You can submit your views by writing to us at: AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan Conley, SVP and Corporate Secretary, 805 King Farm Blvd., Rockville, MD 20850. |
Adena T.
Friedman
Michael R.
Splinter
Letter from Our President and CEO |
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Letter from Our President and CEO |
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The end result of execution should always be performance, and our ability to deliver on our three 2017 execution priorities yielded a strong year from a financial perspective, with Nasdaqs full-year net revenues rising in 2017 to $2.4 billion.
The first is the marketplace economy, a natural evolution of commerce in which two-sided market mechanisms are applied to the purchase and sale of non-financial assets. We are already working with clients that wish to create auction mechanics or continuous markets for such assets, and we believe the desire to give consumers the power to negotiate price will only continue to grow. This bid-and-ask of the future represents a tremendous long-term opportunity for Nasdaq.
The second trend we see is the renewed role of investment banks as critical pillars of our financial system. Now recovered from the financial crisis, these banks have demonstrated a willingness to work with partners like Nasdaq in developing the financial technologies of tomorrow. Our Ocean initiative, through which Nasdaq technology powers the internal trading venues of banks, is a great example of such a partnership in action.
Third is the virtual explosion in data that has occurred in recent years, coupled with remarkable advances in machine learning and artificial intelligence. Machine learning can add structure to this data, allowing it to be used in making trading decisions and protecting the integrity of our capital markets. Today, we are actively implementing these technologies in Nasdaqs surveillance and data analytics offerings.
The final key trend we see is the changing investment management landscape, which not only includes the well-discussed shift from active to passive management but also the importance of private company investment, the growth of quantitative and other data-driven strategies and the increasing competitiveness of the asset management space as a whole.
With this new environment top of mind and our new strategy in place, Nasdaq moved decisively this past year and made two acquisitions, both consistent with these key trends. We acquired eVestment, a leading data, content and analytics platform serving institutional investors, and Sybenetix, a leading surveillance provider that combines behavioral analytics and cognitive computing with deep financial markets expertise. In addition, our strategy prompted us to explore strategic alternatives for our Public Relations Solutions and Digital Media Services businesses, which culminated in an agreement to sell those assets to West Corporation, announced in January 2018. The transaction is subject to regulatory approvals and customary closing conditions.
In terms of our disruptive technologies, Nasdaq also continues to innovate. Our pioneering work in blockchain, for example, has resulted in new projects that include testing a platform for mutual fund trading processing and record-keeping with Skandinaviska Enskilda Banken AB in Sweden as well as a proxy voting solution |
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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Notice of 2018 Annual Meeting of Stockholders |
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Acronyms and Certain Defined Terms
COBRA
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Consolidated Omnibus Budget Reconciliation Act
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ECIP
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Executive Corporate Incentive Plan
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EPS
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Earnings Per Share
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Equity Plan
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Nasdaqs Equity Incentive Plan
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ERM
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Enterprise Risk Management
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ESG
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Environmental, Social and Governance
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ESPP
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Employee Stock Purchase Plan
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Exchange Act
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Securities Exchange Act of 1934, as amended
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FASB ASC Topic 718
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Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation
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GAAP
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Generally Accepted Accounting Principles
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H.E.
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His Excellency
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IPO
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Initial Public Offering
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NEO
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Named Executive Officer
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PCAOB
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Public Company Accounting Oversight Board
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PSUs
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Performance Share Units
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RSUs
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Restricted Stock Units
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SEC
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U.S. Securities and Exchange Commission
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S&P
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Standard & Poors
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TSR
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Total Stockholder Return
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Table of Contents |
13 |
Proxy Summary |
Voting Matters and Board Recommendations | 15 | ||||
16 | ||||||
17 | ||||||
20 | ||||||
22 | ||||||
23 | ||||||
Corporate Governance |
25 | |||||
Corporate Responsibility, Corporate Culture and Focus on Entrepreneurship |
32 | |||||
34 | ||||||
Board of Directors |
37 | |||||
44 | ||||||
49 | ||||||
Named Executive |
Proposal 2: Approval of the Companys Executive Compensation on an Advisory Basis | 53 | ||||
Officer Compensation |
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55 | ||||||
55 | ||||||
61 | ||||||
73 | ||||||
76 | ||||||
Management Compensation Committee Interlocks and Insider Participation |
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81 | ||||||
81 | ||||||
82 | ||||||
82 | ||||||
83 | ||||||
84 | ||||||
90 | ||||||
Proposal 3: Approval of the Equity Plan, as Amended and Restated |
91 | |||||
Audit Committee Matters |
105 | |||||
Annual Evaluation and 2018 Selection of Independent Auditors |
106 | |||||
Proposal 4: Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 |
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Other Items |
Proposal 5: Stockholder Proposal Shareholder Right to Act by Written Consent |
111 | ||||
113 | ||||||
114 | ||||||
Security Ownership of Certain Beneficial Owners and Management |
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117 | ||||||
119 | ||||||
121 | ||||||
Annexes |
129 | |||||
132 |
PROXY SUMMARY
Proxy Summary |
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Proxy Summary
This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in voting your shares. You should read the entire proxy statement, as well as our 2017 annual report on Form 10-K, carefully before voting.
Voting Matters and Board Recommendations
Proposal |
Nasdaq Boards Recommendation
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Proposal 1. Election of Directors (Page 37) The Board and Nominating & Governance Committee believe that the ten director nominees possess the skills, experience and diversity to advise management on the companys long-term strategy, as well as to monitor performance and provide effective oversight.
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FOR EACH NOMINEE | |||||||
Proposal 2. Approval of the Companys Executive Compensation on an Advisory Basis (Page 53) The company seeks a non-binding advisory vote to approve the compensation of its NEOs as described in the Compensation Discussion and Analysis section beginning on page 54. The Board values stockholders opinions and the Management Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.
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FOR | |||||||
Proposal 3. Approval of the Equity Plan, as Amended and Restated (Page 91) The Board and Management Compensation Committee believe that the Equity Plan is an essential component of the companys robust, performance-based executive compensation program and therefore ask stockholders to approve an increase in the number of shares available under the plan, an extension of the term of the plan and other technical and administrative revisions.
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FOR | |||||||
Proposal 4. Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 (Page 109) The Board and Audit Committee believe that the retention of Ernst & Young LLP to serve as the companys independent auditor for 2018 is in the best interests of the company and its stockholders.
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FOR | |||||||
Proposal 5. Stockholder Proposal Shareholder Right to Act by Written Consent (Page 111) As in 2015 and 2017, the Board believes that the stockholder proposal to allow stockholder action by written consent is inappropriate, unnecessary and not in the best interests of Nasdaq and its stockholders.
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AGAINST |
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Nasdaq delivered excellent results for stockholders in 2017 as we refined our strategic direction and continued to position ourselves as a financial technology leader.
3-Year cumulative TSR,1 significantly outperforming both the S&P 500 and Nasdaq Composite |
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Initial synergy target for our 2016 acquisitions, which we achieved and exceeded in 2017 | 1-Year TSR1 | Returned to stockholders in repurchased stock and dividends over the last three years | 2017 GAAP diluted EPS, compared to $0.64 in 2016; 2017 non-GAAP diluted EPS was $4.06, a 10% increase compared to the prior year |
1 | In this proxy statement, TSR for a particular period of time 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. |
Proxy Summary |
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Name
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Age |
Director Since |
Principal Occupation |
Independent |
Current Committee Memberships
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Other Public Co. Boards
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AC
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FC |
MCC |
NGC |
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Melissa M. Arnoldi
Non-Industry; Public
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45
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2017
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President of Technology & Operations, AT&T Communications
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🌑
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🌑
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0
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Charlene T. Begley
Non-Industry; Public
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51
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2014
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Retired SVP & Chief Information Officer, General Electric Company
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🌑
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🌑
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🌑
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2
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Steven D. Black
Non-Industry; Public
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65 | 2011 | Co-CEO, Bregal Investments | 🌑 | Chair | 🌑 | 0 | |||||||||||
Adena T. Friedman
Staff
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48 | 2017 | President and CEO, Nasdaq, Inc. | 🌑 | 0 | |||||||||||||
Essa Kazim
Non-Industry
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59 | 2008 | Governor, Dubai International Financial Center; Chairman, Borse Dubai and Dubai Financial Market
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🌑 | 🌑 | 0 | ||||||||||||
Thomas A. Kloet
Non-Industry; Public
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59 | 2015 | Retired CEO & Executive Director, TMX Group Limited
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🌑 | Chair | 🌑 | 0 | |||||||||||
John D. Rainey
Non-Industry; Issuer
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47 | 2017 | CFO and EVP of Global Customer Operations, Paypal Holdings, Inc.
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🌑 | 🌑 | Chair | 0 | |||||||||||
Michael R. Splinter1
Non-Industry; Public
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67 | 2008 | Retired Chairman and CEO, Applied Materials, Inc. | 🌑 | 🌑 | Chair | 2 | |||||||||||
Jacob Wallenberg
Non-Industry; Public
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62 | N/A | Chairman, Investor AB | 🌑 | 32 | |||||||||||||
Lars R. Wedenborn
Non-Industry
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59 | 2008 | CEO, FAM AB | 🌑 | 🌑 | 1 | ||||||||||||
Number of Meetings Held in 2017
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11
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3
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6
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9
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1 | Mr. Splinter is serving as Chairman of the Board from May 2017 through the 2018 Annual Meeting of Stockholders. |
2 | Mr. Wallenberg also is currently on the Board of SAS AB, but he is not standing for reelection at their Annual General Meeting on April 10, 2018. |
AC: | Audit Committee |
FC: | Finance Committee |
MCC: | Management Compensation Committee |
NGC: | Nominating & Governance Committee |
Our Board1 Director Qualifications 80% 30% 80% 80% 80% 100% 100% 8 Capital Markets 3 Cybersecurity 8 FinTech 8 Mergers & Acquisitions 8 Public Company Board & Corporate Governance 10 Risk Management 10 Strategic Acumen & Leadership Director Tenure 0-2 years 3-5 years 6-10 years 4 40% with 2 years 4 or less 60% with 5 years or less 100% with 10 years or less Average - 4.7 years Diversity of Background 80% 30% 30% 30% 40% 2 4 8 Current & Former CEOs or Chairmen 3 Current & Former Exchange Operators 3 Women 3 Born Outside the U.S. 4 Work Outside the U.S. Director Age 45 56.2 67 Average Age 1 Statistics in this chart are calculated with respect to the ten Board nominees listed on the prior page.
John D. Rainey
Thomas A. Kloet
Adena T. Friedman
Michael R. Splinter
Charlene T. Begley
Steven D. Black
Lars R. Wedenborn
Essa
Kazim
Melissa M. Arnoldi
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Proxy Summary |
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ANNUAL STOCKHOLDER OUTREACH CYCLE
Nasdaq believes that strong corporate governance should include regular, constructive year-round engagement. We actively engage with our stockholders as part of our annual corporate governance cycle as described below. |
We conduct quarterly outreach to the governance teams at many of our top institutional holders. |
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» Active outreach with institutional holders to discuss important governance items to be considered at Annual Meeting
» Publish annual communications to stockholders: proxy statement and Form 10-K
» Conduct Annual Meeting
» Engage with investors through industry conferences, non-deal roadshows and meetings
» Webcasts of most conference presentations are available to all investors, including retail |
» Post Annual Meeting results on Nasdaq website
» Review results and feedback from Annual Meeting with institutional holders
» Share investor feedback with the entire Board
» Active outreach with institutional holders to discuss vote and follow up issues
» Engage with investors through industry conferences, non-deal roadshows and meetings
» Webcasts of most conference presentations are available to all investors, including retail |
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» Conduct annual Board assessment of governance, including feedback of stockholders
» Active outreach with institutional holders to identify focus and priorities for the coming year
» Engage with investors through industry conferences, non-deal roadshows and meetings
» Conduct annual perception study
» Webcasts of most conference presentations are available to all investors, including retail |
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» Active outreach with institutional holders to understand their priorities in the areas of corporate governance, executive compensation, ESG and other disclosures
» Share investor feedback with the entire Board
» Review governance best practices and trends, regulatory developments and our governance framework
» Engage with investors through industry conferences, non-deal roadshows and meetings
» Webcasts of most conference presentations are available to all investors, including retail | |||||||
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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Proxy Summary |
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Corporate Governance Highlights
We are committed to strong corporate governance, as it promotes the long-term interests of stockholders, supports Board and management accountability and builds public trust in the company. The Corporate Governance section beginning on page 25 describes our governance framework, which includes the following highlights. Statistics about the Board of Directors in this chart are calculated with respect to the ten nominees for election at the 2018 Annual Meeting. | New in 2018: ESG Statements |
CORPORATE GOVERNANCE
Corporate Governance |
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Corporate Governance |
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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
We believe that the separation of the roles of Chairman of the Board and President and CEO and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, management development, succession planning, executive compensation and company performance. | roles and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, management development, succession planning, executive compensation and company performance.
Nasdaqs President and CEO, Adena T. Friedman, who has over 20 years experience in the securities industry, is responsible for the strategic direction, day-to-day leadership and performance of Nasdaq. The Chairman of Nasdaqs Board, Michael R. Splinter, an independent director who brings to the Board the perspective of a technology CEO, provides guidance to the President and CEO, presides over meetings and Executive Sessions of the Board and serves as a primary liaison between the President and CEO and other directors.
Throughout 2017, Mr. Splinter, who is an independent director of the company, served as either Lead Independent Director or Chairman. Mr. Splinter became Lead Independent Director on January 1, 2017 at the same time that Ms. Friedman succeeded Robert Greifeld as CEO of the company and Mr. Greifeld became Chairman. Mr. Greifeld did not stand for re-election at the 2017 Annual Meeting; immediately following the Meeting, the Board elected Mr. Splinter to serve as Chairman through the 2018 Annual Meeting. | |
BOARD DIVERSITY |
30% |
30% | 30% | 40% | |||
of our Board nominees are female |
We have been committed to gender balance in the boardroom and are a member of the 30% Club |
of our Board nominees were born outside the U.S. |
of our Board nominees work outside the U.S. |
BOARD INDEPENDENCE
» Substantial majority of independent directors. Nine of our ten director nominees are independent of the company and management.
» Executive Sessions of independent directors. At each Board meeting, independent directors have the opportunity to meet in Executive Session without company management present. In 2017, the Board met 9 times in Executive Session.
» Independent advisors. Each Committee has the authority and budget to retain independent advisors. In 2017, the Nominating & Governance Committee retained such independent advisors to assist with the annual Board assessment and director recruitment.
BOARD COMMITTEE INDEPENDENCE AND EXPERTISE
» Committee independence. All Board Committees, with the exception of the Finance Committee, are composed exclusively of independent directors, as required by the Listing Rules of The Nasdaq Stock Market. |
Corporate Governance |
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BOARD AND COMMITTEE EVALUATIONS / INDIVIDUAL DIRECTOR ASSESSMENT
The Board Assessment Process
Corporate Governance |
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GOVERNANCE DOCUMENTS
These documents are available on our Investor Relations webpage at: http://ir.nasdaq.com/.
Corporate Governance |
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We are a business based on integrity nothing else matters if we
dont have integrity.
Adena T. Friedman
BOARD OF DIRECTORS
Board of Directors |
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Board of Directors |
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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Melissa M. Arnoldi
Age: 45
Director Since: 2017
Other Public Company Boards: None
Board Committees: Audit
Ms. Arnoldi has been President of Technology & Operations at AT&T Communications, a wholly owned subsidiary of AT&T Inc., a telecommunications company, since August 2017. Ms. Arnoldi has served in various capacities at AT&T since 2008 including: President of Technology Development at AT&T Services, Inc. from September 2016 to August 2017; SVP, Technology Solutions & Business Strategy, from December 2014 to September 2016; VP, IT Strategy & Business Integration, from December 2012 to December 2014; and AVP, IT from January 2008 to December 2012. Prior to AT&T, Ms. Arnoldi was a partner in the Communications & High Technology Industry Group at Accenture Ltd. from 2006 to 2008, serving in various other capacities from 1996 to 2008. | ||
Board of Directors |
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Charlene T. Begley | ||
Age: 51
Director Since: 2014
Other Public Company Boards: Hilton Worldwide Holdings Inc.; Red Hat, Inc.
Board Committees: Audit, Management Compensation
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 Chief Information Officer, as well as President and CEO of GEs Home and Business Solutions Office, from January 2010 to December 2013. Previously, Ms. Begley served as President and CEO of GEs Enterprise Solutions from 2007 to 2009. At GE, Ms. Begley served as President and CEO of GE Plastics and GE Transportation. She also led GEs Corporate Audit staff and served as CFO for GE Transportation and GE Plastics Europe and India. Ms. Begley is a member of the Hilton and Red Hat audit and nominating and governance committees. Ms. Begley served on the Board of WPP plc from December 2013 to June 2017. | ||||
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Steven D. Black | |||
Age: 65
Director Since: 2011
Other Public Company Boards: None
Board Committees: Management Compensation (Chair) and Nominating & Governance
Mr. Black has been Co-CEO of Bregal Investments, a private equity firm, since September 2012. He was the Vice Chairman of JP Morgan Chase & Co. from March 2010 to February 2011 and a member of the firms 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 Banks Global Equities business from 2000 to 2003 following a career at Citigroup and its predecessor firms. | ||||
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Adena T. Friedman | |||
Age: 48
Director Since: 2017
Other Public Company Boards: None
Board Committees: Finance
Ms. Friedman was appointed President and CEO and elected to the Board effective January 1, 2017. Previously, Ms. Friedman served as President and Chief Operating Officer 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 Nasdaqs management team for over a decade including as head of data products, head of corporate strategy and CFO. |
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Essa Kazim
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Age: 59 | ||||
Director Since: 2008 | ||||
Other Public Company Boards: None | ||||
Board Committees: Finance | ||||
H.E. Kazim has been Governor of the Dubai International Financial Center since January 2014. Since 2006, he has served as Chairman of Borse Dubai and Chairman of the Dubai Financial Market. H.E. Kazim began his career as a Senior Analyst in the Research and Statistics Department of the UAE Central Bank in 1988 and then he moved to the Dubai Department of Economic Development as Director of Planning and Development in 1993. He was then appointed Director General of the Dubai Financial Market from 1999-2006. H.E. Kazim is Deputy Chairman of the Supreme Legislation Committee in Dubai and a member of the Supreme Fiscal Committee of Dubai.
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Thomas A. Kloet
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Age: 59 | ||||
Director Since: 2015 | ||||
Other Public Company Boards: None | ||||
Board Committees: Audit (Chair), Nominating & Governance | ||||
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. He is also a member of the U.S. Commodity Futures Trading Commissions Market Risk Advisory Committee and was inducted into the FIA Hall of Fame in March 2015. Mr. Kloet is a Trustee of Northern Funds, which offers 44 portfolios, and Northern Institutional Funds, which offers 7 portfolios. Mr. Kloet also chairs the Boards of Nasdaqs U.S. exchange subsidiaries.
| ||||
|
John D. Rainey
| |||
Age: 47
| ||||
Director Since: 2017 | ||||
Other Public Company Boards: None | ||||
Board Committees: Audit, Finance (Chair) | ||||
Mr. Rainey joined PayPal Holdings, Inc., a technology platform and digital payments company, in August 2015 and now serves as the companys CFO and EVP of Global Customer Operations. From August 2015 to September 2016, he served as PayPals SVP, CFO, and from September 2016 to December 2017, he served as the companys EVP, CFO. Prior to joining PayPal, Mr. Rainey was EVP and CFO of United Airlines from April 2012 to August 2015. From October 2010 to April 2012, Mr. Rainey was SVP of Financial Planning and Analysis at United Airlines. Mr. Rainey served in various positions in finance at Continental Airlines prior to the merger of United and Continental. |
Board of Directors |
43 |
|
Michael R. Splinter | |||
Age: 67 | ||||
Director since: 2008 | ||||
Other Public Company Boards: Meyer Burger Technology Ltd; TSMC, Ltd. | ||||
Board Committees: Management Compensation, Nominating & Governance (Chair) | ||||
Mr. Splinter was elected Chairman of Nasdaqs Board effective May 10, 2017. He is a business and technology consultant and the co-founder of WISC Partners, a regional technology venture fund. He served as Executive Chairman of the Board of Directors of Applied Materials, a leading supplier of semiconductor equipment from 2009 until he retired in June 2015. At Applied Materials, he was also President and CEO. An engineer and technologist, Mr. Splinter is a 40-year veteran of the semiconductor industry. Prior to joining Applied Materials, Mr. Splinter was a long-time executive at Intel Corporation. Mr. Splinter was elected to the National Academy of Engineers in 2017. Mr. Splinter is a member of Meyer Burger Technologys compensation committee and TSMCs audit and compensation committees.
| ||||
|
Jacob Wallenberg | |||
Age: 62 | ||||
Director Since: N/A | ||||
Other Public Company Boards: ABB Ltd; Investor AB; Telefonaktiebolaget LM Ericsson | ||||
Board Committees: N/A | ||||
Mr. Wallenberg has been Chairman of the Board of Investor AB since 2005. Previously, he served as Vice Chairman of Investor AB from 1999 to 2005 and as a member of Investor ABs 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. Mr. Wallenberg is a member of the governance and nomination committee at ABB Ltd, the audit and risk and remuneration committees at Investor AB and the finance committee at Telefonaktiebolaget LM Ericsson. Mr. Wallenberg is currently on the Board of SAS AB, where he serves on the remuneration committee, but he is not standing for reelection at their Annual General Meeting on April 10, 2018.
| ||||
|
Lars R. Wedenborn | |||
Age: 59 | ||||
Director Since: 2008 | ||||
Other Public Company Boards: None | ||||
Board Committees: Audit | ||||
Mr. Wedenborn is CEO of FAM AB, which is wholly owned by the Wallenberg Foundations. He started his career as an auditor. From 1991 to 2000, he was Deputy Managing Director and CFO at Alfred Berg, a Scandinavian investment bank. He served with Investor AB, a Swedish industrial holding company, as EVP and CFO from 2000 to 2007. Mr. Wedenborn was a member of the Board of OMX AB prior to its acquisition by Nasdaq. Mr. Wedenborn was elected Chairman of the Nasdaq Nordic Ltd. Board in October 2009.
|
44 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Our Board has four
standing Committees:
» Audit Committee
» Finance Committee
» Management Compensation Committee
» Nominating & Governance Committee
|
Our Board has four standing Committees: an Audit Committee, a Finance Committee, a Management Compensation Committee and a Nominating & Governance Committee. Each of these Committees, other than the Finance Committee, is composed exclusively of directors determined by the Board to be independent. The Chair of each Committee reports to the Board in Chairmans Session or Executive Session on the topics discussed and actions taken at each meeting. The independent Board Chairman 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. A description of each standing Committee is included on the following pages.
| |
AUDIT COMMITTEE
Thomas A. Kloet (Chair) Melissa M. Arnoldi Charlene T. Begley John D. Rainey Lars R. Wedenborn
11 Meetings in 2017 |
Key Objectives:
» Oversees Nasdaqs financial reporting process on behalf of the Board.
» Appoints, retains, approves the compensation of and oversees the independent registered public accounting firm.
» Assists the Board by reviewing and discussing the quality and integrity of accounting, auditing 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 Nasdaqs ERM and regulatory programs.
» Reviews and approves or ratifies all related party transactions, as further described below under Certain Relationships and Related Transactions.
» Assists the Board in reviewing and discussing Nasdaqs Global Ethics and Corporate Compliance Program, SpeakUp! Program and confidential whistleblower process.
» Assists the Board in its oversight of the Internal Audit function.
» Reviews and recommends to the Board for approval the companys regular dividend payments.
» Updates the Board on discussions and decisions from the Audit Committee meetings.
2017 Highlights:
» Oversaw Nasdaqs financial reporting process and reviewed the disclosures in the companys quarterly earnings releases, quarterly reports on Form 10-Q and annual report on Form 10-K.
» Reviewed non-GAAP disclosures, impairment assessments and the impact or potential impact of changes in various accounting standards.
» Provided oversight on the performance of the Internal Audit function during the year. |
Board of Directors |
45 |
» Oversaw control remediation efforts by management.
» Reviewed and discussed the companys ERM program, including its governance structure, risk assessments and risk management practices and guidelines.
» Reviewed, approved and oversaw the companys Cybersecurity Strategic Plan.
» Received regular updates on information security initiatives, cybersecurity threats and new technology initiatives from the Chief Information Officer and Chief Information Security Officer.
» Reviewed key regulatory compliance matters.
» Provided oversight for the Global Ethics and Corporate Compliance Program and received regular updates on Nasdaqs SpeakUp! Program and confidential whistleblower process.
» Reviewed a report on Nasdaqs fraud management program.
» Evaluated the performance of the independent auditor and continued to review and approve all services provided and fees charged by such auditors.
» Reviewed and approved or ratified all related party transactions, as further described below under Certain Relationships and Related Transactions.
» Oversaw and discussed with management at every meeting key risks, including emerging and escalating risks.
» Held Executive Sessions individually with the external auditor, Internal Audit, the General Counsel and Chief Regulatory Officer, the CFO and the Chief Information Officer.
» Received informational reports from the external auditor on revenue recognition and disclosure requirements and other related critical audit matters.
Risk Oversight Role:
» Reviews the systems of internal controls, financial reporting and the Global Ethics and Corporate Compliance Program.
» Reviews the ERM program, including policy, structure and process.
Independence:
» Each member of the Audit Committee is independent as defined in Rule 10A-3 adopted pursuant to the Sarbanes-Oxley Act of 2002 and in the Listing Rules of The Nasdaq Stock Market. The Board determined that Messrs. Kloet, Rainey and Wedenborn and Ms. Begley are audit committee financial experts within the meaning of SEC regulations. Each also meets the financial sophistication standard of The Nasdaq Stock Market. |
Given our role as a key technology infrastructure provider, we focus extensively on technology and cybersecurity risk as well as the critical areas of financial reporting, enterprise risk, legal and regulatory matters, ethics and corporate compliance.
Thomas A. Kloet |
46 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Board of Directors |
47 |
48 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Board of Directors |
49 |
Item
|
May 2017 -
|
May 2016 -
|
||||||
Annual Retainer for Board Members (Other than the Chairman and Lead Independent Director, if any)
|
|
$75,000
|
|
|
$75,000
|
| ||
Annual Retainer for Board Chairman
|
|
$240,000
|
|
|
$240,000
|
| ||
Annual Retainer for Lead Independent Director
|
|
N/A
|
|
|
$150,000
|
| ||
Annual Equity Award for All Board Members (Grant Date Market Value)
|
|
$200,000
|
|
|
$200,000
|
| ||
Annual Audit Committee and Management Compensation Committee Chair Compensation
|
|
$30,000
|
|
|
$30,000
|
| ||
Annual Audit Committee and Management Compensation Committee Member Compensation
|
|
$10,000
|
|
|
$10,000
|
| ||
Annual Nominating & Governance Committee Chair Compensation
|
|
$20,000
|
|
|
$20,000
|
| ||
Annual Nominating & Governance Committee Member Compensation
|
|
$5,000
|
|
|
$5,000
|
| ||
Annual Finance Committee Chair Compensation
|
|
$20,000
|
|
|
N/A
|
| ||
Annual Finance Committee Member Compensation
|
|
$5,000
|
|
|
N/A
|
| ||
50 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
2017 Director Compensation Table
Name1
|
Fees Earned or Paid in Cash ($)2
|
Stock Awards
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
Change in Earnings ($)
|
All Other Compensation ($)
|
Total ($)
| ||||||||||||||||||||||||||||
Melissa M. Arnoldi
|
| $278,786 | | | | | $278,786 | ||||||||||||||||||||||||||||
Charlene T. Begley
|
$95,000 | $195,699 | | | | | $290,699 | ||||||||||||||||||||||||||||
Steven D. Black
|
| $303,281 | | | | | $303,281 | ||||||||||||||||||||||||||||
Börje E. Ekholm
|
| | | | | | | ||||||||||||||||||||||||||||
Glenn H. Hutchins
|
| $293,482 | | | | | $293,482 | ||||||||||||||||||||||||||||
Essa Kazim
|
| $273,887 | | | | | $273,887 | ||||||||||||||||||||||||||||
Thomas A. Kloet6
|
$202,500 | $269,053 | | | | | $471,553 | ||||||||||||||||||||||||||||
Ellyn A. McColgan
|
| | | | | | | ||||||||||||||||||||||||||||
John D. Rainey
|
$62,500 | $197,050 | | | | | $259,550 | ||||||||||||||||||||||||||||
Michael R. Splinter
|
| $459,853 | | | | | $459,853 | ||||||||||||||||||||||||||||
Lars R. Wedenborn7
|
$80,192 | $195,699 | | | | | $275,891 | ||||||||||||||||||||||||||||
1 | Adena T. Friedman and Robert Greifeld are not included in this table as they are (or were, in the case of Mr. Greifeld) employees of Nasdaq and thus received no compensation for their service as directors. For information on the compensation received by Ms. Friedman as an employee of the company, see Compensation Discussion and Analysis and Executive Compensation Tables. |
2 | The differences in fees earned or paid in cash reported in this column largely reflect differences in each individual directors 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 in May and apply throughout the year. In addition, the difference in fees earned or paid also reflects individual Committee service. |
Board of Directors |
51 |
NAMED EXECUTIVE OFFICER COMPENSATION
Named Executive Officer Compensation |
53 |
54 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
55 |
Business Performance Highlights
We achieved strong financial and operational performance across many of our business segments in 2017 while continuing to diversify our business, invest significantly in future initiatives and integrate our recent acquisitions.
Achieved record net revenues of $2.43 billion for the full year ended December 31, 2017. | ||
| ||
Increased net revenues 7% year over year, led by 10% growth in Market Technology and a 9% increase in Information Services. | ||
| ||
Improved market share in our largest trading categories, multiply-listed U.S. options, U.S. equities and Nordic equities. | ||
| ||
Achieved and exceeded the initial $60 million synergies with respect to key 2016 acquisitions ahead of schedule. | ||
| ||
Led U.S. exchanges with 136 IPOs, representing 63% of all U.S. IPOs, and welcomed 268 total new listings on The Nasdaq Stock Market. | ||
| ||
Market Technology order intake totaled $292 million during 2017 while total order backlog set a new record of $847 million at December 31, 2017. | ||
| ||
Closed the acquisition of eVestment, a leading content and analytics provider used by asset managers, investment consultants and asset owners. | ||
| ||
Returned $446 million in value to stockholders through $203 million in repurchased stock and $243 million in paid dividends. | ||
| ||
|
Achieved 71.6% three-year cumulative TSR, significantly outperforming the S&P 500 and the Nasdaq Composite over this time period. | |
We design our executive compensation program to reward financial and operational performance, effective strategic leadership and achievement of business unit goals and objectives, which are key elements in driving stockholder value and sustainable growth. Our compensation program is grounded in best practices and ethical and responsible conduct.
KEY GOVERNANCE FEATURES OF EXECUTIVE COMPENSATION PROGRAM
The following table summarizes the specific features of our executive compensation program. We believe our executive compensation practices drive performance and serve our stockholders long-term interests.
56 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
|
|
What We DO
|
|
Maintain robust stock ownership guidelines
|
Maintain a long-standing incentive clawback policy
|
Provide change in control protection that requires a double trigger
|
Conduct a comprehensive annual risk assessment of our compensation program
|
Conduct an annual executive talent review and discussion on succession planning
|
Pay for performance; 100% of annual incentives and annual long-term incentive grants are performance-based
|
Provide only limited perquisites, which provide nominal additional assistance to allow executives to focus on their duties
|
|
|
What We DONT Do
|
Provide ongoing supplemental executive retirement plans; all benefits have been frozen
|
Permit re-pricing of underwater stock options without stockholder approval
|
Accrue or pay dividends on unearned or unvested equity awards
|
|
Pay tax gross-ups on severance arrangements and perquisites
|
Award non-performance based stock options
|
|
Allow hedging or pledging of Nasdaq stock
|
Guarantee bonus payments for our NEOs
|
On an annual basis, the Management Compensation Committee reviews Nasdaqs compensation philosophy, programs and practices. | TOTAL REWARDS PHILOSOPHY
As the company made a pivot in its strategic direction, we assessed and renewed our robust performance-based compensation philosophy to ensure it is meeting the needs of not only the company but also the stockholders. On an annual basis, the Management Compensation Committee reviews Nasdaqs compensation philosophy, programs and practices. The following reflects our current total rewards philosophy. |
Named Executive Officer Compensation |
57 |
Nasdaqs total rewards program is designed to attract, retain and empower employees to act with integrity, use ingenuity, deliver insights, pursue possibilities and achieve great results to successfully execute the companys growth strategy.
Nasdaqs balanced total rewards program encourages decisions and behaviors that align with the short and long-term interests of the companys stockholders.
The building blocks of our total rewards program are designed to promote and support our strategy and:
» | Reinforce our cultural values of: Clients, Passion, Innovation, Integrity, Effectiveness and Resiliency. |
» | 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. |
» | Engage and excite current and future employees who possess the leading skills and competencies needed for us to achieve our strategy and objectives. |
Our philosophy is based on the following guiding principles. Each individual component of compensation is considered independently and is not based on a formula. Each component, however, is intended to be complementary to the overall compensation package awarded to the executives.
58 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
59 |
Each of these factors was initially weighted equally to develop a more refined list of companies for consideration. We then further reviewed each remaining company to determine its appropriateness for the final peer group with a particular focus on identifying meaningful talent peers. Certain companies were eliminated because of factors such as a significantly different market capitalization, limited competitive position for executive talent or limited global complexity relative to Nasdaq.
We believe the current peer group includes an accurate representation of Nasdaqs industry competitors and size-relevant, talent-focused comparators. In addition, we believe that year-over-year consistency in peer group usage is desirable for reviewing trends in market pay movement.
PEER GROUP
The peer group consists of the following companies.1
1 | This peer group differs from the peer group used for the performance graph included in Item 5 of our annual report on Form 10-K, which is for stock performance comparisons and includes industry-only competitors. |
2 | Bats Global Markets, Inc. was removed from the peer group after being acquired by CBOE Holdings, Inc. in February 2017. |
60 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
61 |
What We Pay and Why: Elements of Executive Compensation
Elements
|
What We Did
|
Objectives
|
Where
| |||||
FIXED | Base Salary |
» Fixed amount of compensation for service during the year
|
» Reward scope of responsibility, experience and individual performance |
Page 62 | ||||
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 63 | |||||
| ||||||||
AT-RISK | Long-Term Incentive Compensation |
» Award values are granted based on market competitive norms and individual performance
» 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
|
» Motivate and reward executives for outperforming peers over several years
» Ensure that executives have a significant stake in the long-term financial success of the company, aligned with the stockholder experience
» Promote longer-term retention
|
Page 68 | ||||
BENEFITS | Retirement, Health and Welfare |
» 401(k) plan with company match
» Competitive welfare benefits
» Frozen pension plan and frozen supplemental executive retirement plan
|
» Provide market-competitive benefits to attract and retain top talent
» Frozen plans reflect legacy arrangements
|
Page 72 | ||||
SEVERANCE | Severance Arrangements Termination Due to Change in Control (Double Trigger) |
» Severance and related benefits paid upon termination without cause or resignation for good reason following a change in control
» Accelerated equity vesting upon termination post-change in control
|
» Retention of executives through a change in control
» Preserve executive objectivity when considering transactions in the best interest of stockholders
» Assist in attracting top talent
» Equity provisions keep executives whole in situations where shares may no longer exist or awards cannot otherwise be replaced
|
Page 72 | ||||
| ||||||||
Severance Arrangements Other |
» Specified amounts under employment arrangements with some executive officers
» Discretionary guidelines, for involuntary terminations without cause
|
» Provide transition assistance if employment ends involuntarily
» Promote smooth succession planning upon retirement
» Assist in attracting top talent
» Allow the company to obtain release of employment-related claims
|
Page 72 | |||||
OTHER COMPENSATION | Limited Perquisites |
» Limited additional benefits provided to certain executives
|
» Provide nominal additional assistance that allows executives to focus on their duties
|
Page 73 | ||||
62 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Nasdaqs executive compensation program is designed to deliver pay in accordance with corporate, business unit and individual performance | PAY FOR PERFORMANCE
Nasdaqs executive compensation program is designed to deliver pay in accordance with corporate, business unit and individual performance. A large percentage of total target compensation is at-risk through long-term equity awards and annual cash incentive awards. These awards are linked to actual performance and include a substantial portion of equity. The mix of actual direct compensation for our NEOs in 2017 is shown below. |
BASE SALARY
We review base salaries on an annual basis. In addition, we may make adjustments to base salaries during the year in response to significant changes in an executives responsibilities or events that would impact the long-term retention of a key executive. Salaries are established at levels commensurate with each executives title, position and experience, recognizing that each executive is managing a component of a complex global company. |
Named Executive Officer Compensation |
63 |
The following table shows each NEOs base salary at December 31, 2017 and 2016. | ||||||
Named Executive Officer
|
Base Salary at December 31, 2017 ($)
|
Base Salary at December 31, 2016 ($)
|
||||
Adena T. Friedman
President and CEO
|
$1,000,000
|
|
$850,000
|
| ||
Michael Ptasznik
Executive Vice President, Corporate Strategy and Chief Financial Officer
|
$500,000
|
|
$500,000
|
| ||
Edward S. Knight
Executive Vice President, General Counsel and Chief Regulatory Officer
|
$500,000
|
|
$500,000
|
| ||
Bradley J. Peterson
Executive Vice President and Chief Information Officer
|
$550,000
|
|
$525,000
|
| ||
Thomas A. Wittman
Executive Vice President, Global Trading and Market Services
|
$550,000
|
|
$475,000
|
|
Under the terms of Ms. Friedmans employment agreement, her base salary for 2017 was $1,000,000, which was increased from her 2016 base salary in connection with her promotion to President and CEO.
In April 2017, Mr. Petersons base salary was increased from $525,000 to $550,000 based on performance-related factors and to align his compensation with our total rewards philosophy to reward, motivate and retain our top performers.
In April 2017, Mr. Wittmans base salary increased from $475,000 to $500,000 based on performance-related factors. In addition, in August 2017 his base salary increased from $500,000 to $550,000 to reflect the increased scope of his role after taking responsibility for all of Global Trading and Market Services.
ANNUAL INCENTIVE COMPENSATION
Annual performance-based cash incentives are an integral part of our executive compensation program. Our NEOs receive such awards through our ECIP.
Plan-Based Target Award Opportunities
Target annual cash incentive award opportunities are established for our NEOs based on an assessment of each officers position and responsibilities, the competitive market analysis and the companys retention objectives. |
64 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
The following table shows each NEOs target annual incentive opportunity in 2017 and 2016. |
Named Executive Officer
|
2017 Target Annual Incentive Opportunity ($)
|
2016 Target Annual Incentive Opportunity ($)
| ||||||||
Adena T. Friedman
|
$2,000,000
|
$1,500,000
| ||||||||
Michael Ptasznik
|
$750,000
|
$750,000
| ||||||||
Edward S. Knight
|
$700,000
|
$700,000
| ||||||||
Bradley J. Peterson
|
$825,000
|
$800,000
| ||||||||
Thomas A. Wittman
|
$825,000
|
$725,000
|
For 2017, Ms. Friedmans target annual incentive compensation was increased from $1,500,000 to $2,000,000 associated with her promotion to President and CEO.
In April 2017, Mr. Petersons target annual incentive compensation was increased from $800,000 to $825,000 based on his high level of performance and competitive market positioning.
In April 2017, Mr. Wittmans target annual incentive compensation was increased from $725,000 to $750,000 based on his high level of performance and competitive market positioning. In addition, in August 2017 his target annual incentive compensation was increased from $750,000 to $825,000 in recognition of the increased scope of his role after assuming responsibility for all of Global Trading and Market Services.
Performance Goals
The annual cash incentive award payments for our executives 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 review and consider our President and CEOs recommendations and approve the goals for the coming year after identifying the objectives most critical to our future growth and most likely to hold executives accountable for the operations for which they are responsible.
The annual cash incentive awards are tied to results in the following areas:
» corporate objectives, including:
operating income (run rate), which measures business efficiency and profitability;
net revenues, which measure the ability to drive revenue growth; and
employee engagement, which measures overall employee satisfaction and motivation; and |
Named Executive Officer Compensation |
65 |
» business unit objectives, which are defined business unit-specific goals (financial and strategic) that contribute to the companys short and long-term performance.
Operating income (run rate) and net revenues are the companys primary measures of short-term business success and key drivers of long-term stockholder value. Targets for operating income (run rate) and net revenues are set at the beginning of each year, as part of the companys annual budgeting process and are subject to adjustment for transactions and other extraordinary events. The employee engagement objectives are established at the beginning of the year by the Management Compensation Committee and/or the Board to focus the executive team on certain enterprise initiatives.
Business unit objectives also are established at the beginning of the year and are subject to adjustment for transactions and other extraordinary events. The business unit objectives consist of financial and strategic objectives specific to the business unit. The Management Compensation Committee and/or the Board set the business unit objectives to reflect the key responsibilities of each executive and incent focus on particular objectives in 2017. In lieu of business unit objectives, our President and CEO had strategic objectives relating to the entire organization.
We set goals at levels where the maximum payout would be difficult to achieve and beyond budget assumptions. The following table shows each NEOs performance objectives for 2017 and the relative weighting of these objectives. |
The annual cash incentive award payments for our executives are based on the achievement of pre-established, quantifiable performance goals. |
Named Executive Officer
|
Corporate
|
Corporate Net
|
Employee
|
Business Unit
|
Nasdaq/Business
| |||||
Adena T. Friedman
|
50%
|
25%
|
5%
|
0%
|
20%
| |||||
Michael Ptasznik
|
45%
|
10%
|
5%
|
5%
|
35%
| |||||
Edward S. Knight
|
40%
|
10%
|
5%
|
5%
|
40%
| |||||
Bradley J. Peterson
|
40%
|
10%
|
5%
|
15%
|
30%
| |||||
Thomas A. Wittman
|
10%
|
10%
|
5%
|
50%
|
25%
|
Potential Payouts
Payouts are determined after the end of the year and are based on the sum of (i) actual performance under each corporate objective and (ii) actual performance against an executives business unit/strategic objectives. Each goal applicable to the NEOs for 2017 had a minimum, target and maximum performance level. |
66 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Scoring of each goal is based on actual goal achievement compared to the target. In 2017, payouts on each goal could vary between 0% and 200% of the target. However, certain non-financial goals that were not aligned with longer term strategic-value generation were funded in accordance with the achievement of the operating income (run rate) goal. This funding ensures that there is better alignment with the overall financial results of the company.
Payouts under the incentive compensation program also take into account ethical and responsible conduct, and awards are subject to negative adjustment at the full discretion of the Management Compensation Committee and/or the Board based on conduct.
Corporate Objectives Performance vs. Goals
The table below summarizes the 2017 corporate objectives.
Corporate Objective
|
Threshold (0%
|
Target (100% Payout)
|
Maximum (200%
|
Nasdaqs Results for
|
Payout Percentage of Target Incentive
| |||||
Operating Income (Run Rate)1 |
$1,116.7m | $1,186.7m | $1,231.7m | $1,196.5m | 122% | |||||
|
||||||||||
Net Revenues |
$2,323.9m | $2,413.9m | $2,478.9m | $2,395.8m | 80% | |||||
|
||||||||||
Employee Engagement2
|
Overall Senior Leadership Index: 60
|
Overall Senior Leadership Index: 70-71
|
Overall Senior Leadership Index: 77
|
77
|
200%
|
1 | Corporate operating income (run rate) excludes Nasdaq NEXT (i.e., our innovation investment program), foreign exchange impact, intra-year acquisitions and non-recurring expense items. Corporate net revenues exclude Nasdaq NEXT, foreign exchange impact and intra-year acquisitions. Non-GAAP expense items primarily include amortization expense of acquired intangible assets, merger and strategic initiatives costs and restructuring charges. As a result, these calculations differ from the U.S. GAAP calculations of operating income and revenues less transaction-based expenses reported in our annual report on Form 10-K. |
2 | In addition to the Overall Senior Leadership Index results, Messrs. Ptasznik, Knight, Peterson and Wittman were also scored on their Business Unit Leadership Index results. |
2017 Business Unit Financial and Strategic Objectives Performance vs. Goals
The Management Compensation Committee and/or the Board assessed each officers achievement of the business unit financial and strategic objectives in 2017, as described below. Specific metrics for these goals are not disclosed for competitive purposes. However, 100% of our NEO goals were defined with quantifiable performance metrics and were approved by the Management Compensation Committee. No discretion was applied to any goal scoring unless specially noted below.
Named Executive Officer Compensation |
67 |
Named Executive Officer
|
Goal
|
Goal
|
Score as a
| |||
Adena T. Friedman
|
Strategic Initiatives
|
20%
|
119%
| |||
Strategic Real Estate Initiatives
|
5%
|
200%
| ||||
| ||||||
Controller Function Roadmap Long-Term Initiatives
|
5%
|
200%
| ||||
| ||||||
Michael Ptasznik |
Revitalize R&D and Establish Venture Investing Programs
|
10%
|
200%
| |||
| ||||||
Risk Management1
|
10% | 122% | ||||
| ||||||
Corporate Strategy Initiatives
|
5%
|
200%
| ||||
| ||||||
Broaden Investor Base
|
5%
|
200%
| ||||
OGC Expense Run Rate
|
5%
|
142%
| ||||
| ||||||
Legal Business Unit Support & Project Delivery¹
|
15%
|
122%
| ||||
| ||||||
Edward S. Knight |
Risk Management and Mitigation¹
|
10%
|
122%
| |||
| ||||||
Revitalize the Attractiveness to Growth Companies to List on Nasdaq by Improving Market Structure
|
5%
|
200%
| ||||
| ||||||
Public Policy Influence
|
10%
|
175%
| ||||
Global Technology Expense Run Rate
|
15%
|
200%
| ||||
| ||||||
Bradley J. Peterson |
Business Unit Blended Research and Development / Innovation
|
10%
|
161%
| |||
| ||||||
Overall Systems Reliability¹
|
10%
|
122%
| ||||
| ||||||
Systems Resiliency Risk¹
|
10%
|
122%
| ||||
Global Equities, Derivatives & Trade Management Services Operating Income
|
15%
|
78%
| ||||
| ||||||
Strategic Initiatives
|
15%
|
156%
| ||||
| ||||||
Global Equities, Derivatives & Trade Management Services Revenues
|
15%
|
74%
| ||||
| ||||||
Thomas A. Wittman |
Cash Equities Market Share
|
5%
|
100%
| |||
| ||||||
Options Market Share
|
5%
|
158%
| ||||
| ||||||
ISE Integration
|
10%
|
200%
| ||||
| ||||||
Global Fixed Income and Commodities Trading and Clearing & Post-Trade Revenues
|
5%
|
100%
| ||||
| ||||||
Global Fixed Income and Commodities Trading and Clearing & Post-Trade Margin
|
5%
|
100%
|
1 | The maximum payout was funded at 122% of target based on operating income (run rate) results. |
Award Payouts
In early 2018, the Management Compensation Committee and/or the Board determined the final levels of achievement for each of the goals and approved payout amounts. There were no guaranteed minimum payouts for any of our NEOs.
68 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer
|
2017 ECIP Award Payout ($)
|
2016 ECIP Award Payout ($)
| |||||
Adena T. Friedman
|
$2,296,000
|
$2,175,750
| |||||
Michael Ptasznik
|
$1,071,375
|
$1,200,000
| |||||
Edward S. Knight1
|
$960,000
|
$1,132,300
| |||||
Bradley J. Peterson
|
$1,123,457
|
$1,327,600
| |||||
Thomas A. Wittman2
|
$950,000
|
$1,000,000
|
1 | In addition to Mr. Knights calculated award of $909,300, he also received an additional award of $50,700 to reflect his contributions to Project Revitalize, which were not fully reflected in the 5% weighting of that strategic goal. |
2 | In addition to Mr. Wittmans calculated award of $917,638, he also received an additional award of $32,362 for driving results within his control, despite lower than expected volumes in 2017. |
Global Exchange Peer Companies Used for Three-Year PSUs |
LONG-TERM INCENTIVE COMPENSATION | |
ASX Limited
BM&F Bovespa
Bolsa Mexicana de Valores
Bolsas Y Mercados Espanoles
CBOE Holdings, Inc.
CME Group Inc.
Deutsche Börse
Euronext
Hong Kong Stock Exchange
Intercontinental Exchange
Japan Exchange
London Stock Exchange Group
NEX Group
Singapore Exchange
TMX Group Ltd. |
Long-term incentive compensation for our executive officers consists entirely of performance-based equity awards. For officers at the EVP level or above, we grant PSUs based on relative TSR over a three-year performance period. Consistent with our pay for performance philosophy, this program represents 100% of the officers long-term stock-based compensation.
In 2017, each NEO received a grant of PSUs subject to a three-year cumulative performance period beginning on January 1, 2017 and ending on December 31, 2019. The shares earned, if any, vest at the end of the performance period. Performance is determined by comparing Nasdaqs TSR to two groups of companies, each weighted 50%.
One group consists of all S&P 500 companies and the other group consists of the peer companies on the left. The peer companies include other global exchanges with sizable market capitalizations.
The TSR results are measured at the beginning and end of the three-year performance period. Nasdaqs relative performance ranking against each of these groups will determine the final number of shares delivered to each individual. The maximum payout will be 200% of the target number of PSUs granted if Nasdaq ranks at the 85th percentile or above of both groups. However, if Nasdaqs 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.
Below is a table showing the amount of shares a grantee may receive based upon different levels of achievement against each of the groups. For each group, the resulting shares earned will be calculated by multiplying the relevant percentage from the table below by one-half of the target award amount. | |
Named Executive Officer Compensation |
69 |
Percentile Rank of Nasdaqs 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.
Award Determination
In setting Ms. Friedmans 2017 equity award target, the Management Compensation Committee focused on motivating performance, with significant upside and downside based on relative performance. Historical awards, newness to the role and the retention value of Ms. Friedmans outstanding equity were taken into account 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 individuals contributions, was aligned with competitive market levels and was appropriate for retention purposes.
The target amount and target face value of the PSUs awarded to each of the NEOs under this program is set forth in the table below. The 2017 awards were approved on March 28, 2017 and granted on March 31, 2017, which was the date of Nasdaqs annual employee equity grant. |
Named Executive Officer
|
Target TSR
PSUs (#)
|
Target Grant Date Face Value ($)
| ||
Adena T. Friedman
|
86,393
|
$6,000,000
| ||
Michael Ptasznik
|
17,278
|
$1,200,000
| ||
Edward S. Knight
|
15,838
|
$1,100,000
| ||
Bradley J. Peterson
|
20,957
|
$1,455,500
| ||
Thomas A. Wittman
|
15,838
|
$1,100,000
|
70 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
One-Time President and CEO Option Award
In addition to the annual grant awarded to Ms. Friedman, the Management Compensation Committee and Board of Directors granted her a one-time, performance-based stock option award with a value of $4,000,000 to recognize her promotion to President and CEO and to provide strong motivation to deliver long-term stock price appreciation in alignment with stockholder interests. 100% of Ms. Friedmans option grant is performance-based, and the grant vests one-third per year over three years, contingent upon the achievement of performance metrics.
The performance criteria for the option grant are set forth in the table below.
| ||||||||
Vesting Date
|
Vesting Percent | Vesting Performance Requirement
| ||||||
December 31, 2017
|
|
33%
|
|
2017 fully diluted EPS must be at least 3% greater than 2016 EPS
| ||||
2018 fully diluted EPS must be at least 3% greater than 2016 EPS; and either:
| ||||||||
December 31, 2018 | 33% | 1.
|
2018 fully diluted EPS growth must be at least 3.0%; or
| |||||
2.
|
Average annual 2017 and 2018 fully diluted EPS growth must be at least 3.0%
| |||||||
2019 fully diluted EPS must be at least 3% greater than 2016 EPS; and either:
| ||||||||
December 31, 2019 | 34% | 1.
|
2019 fully diluted EPS growth must be at least 3.0%; or
| |||||
2.
|
Average annual 2017, 2018, and 2019 EPS growth must be at least 3.0%
| |||||||
Annual fully diluted EPS growth is determined based upon the percentage by which the fully diluted EPS of the company, as determined in accordance with U.S. GAAP for the fiscal year, exceeds the fully diluted EPS of the company, as determined in accordance with U.S. GAAP for the prior fiscal year.
2017 Vesting of One-Time President and CEO Option Award
On January 30, 2018, the Management Compensation Committee and the Board evaluated and approved the performance results for the vesting of the first one-third of the stock options granted to Ms. Friedman in January of 2017. The companys 2017 fully diluted EPS growth, negatively adjusted for a one-time after-tax, non-cash intangible asset impairment charge of $341 million related to the full write-off of the eSpeed trade name and a rebranding of our Fixed Income business, exceeded the performance requirement, which resulted in the approval of the vesting of one-third of the 2017 option award, or 89,605 options.
Settlement of 2015 PSU Grants Based on Relative TSR
On December 31, 2017, the Management Compensation Committee evaluated and approved the performance results for the PSUs granted to senior executives in 2015. |
Named Executive Officer Compensation |
71 |
These PSUs were subject to a three-year cumulative performance period beginning on January 1, 2015 and ending on December 31, 2017 and performance was determined by comparing Nasdaqs TSR to two groups of companies, each weighted 50%. One group consisted of all S&P 500 companies and the other group consisted of 16 peer companies. We measure our TSR performance relative to two different groups in order to align with the varied interests of our stockholders. | ||
The following table sets forth the 2015 PSU performance measure results. |
Equity Award
|
Cumulative TSR
|
Weighting
|
Performance Factors
|
Percentile Rank
|
||||||||
2015 Three-Year PSU Award |
71.6% |
50%
|
Based on Relative TSR Against the S&P 500
|
84%
|
||||||||
50%
|
Based on Relative TSR Against Peers
|
56%
|
Based on these results, the NEOs earned the number of PSUs set forth below as compared to the target amounts granted. |
Named Executive Officer
|
Target PSUs
|
PSUs Earned
|
||||||||
Adena T. Friedman
|
|
53,538
|
|
|
84,055
|
| ||||
Michael Ptasznik
|
|
|
|
|
|
| ||||
Edward S. Knight
|
|
21,415
|
|
|
33,622
|
| ||||
Bradley J. Peterson
|
|
24,984
|
|
|
39,225
|
| ||||
Thomas A. Wittman
|
|
17,846
|
|
|
28,018
|
|
Other 2017 Equity Grants
In recognition of the increased scope and criticality of his role after assuming leadership responsibility for all of Global Trading and Market Services, Mr. Wittman received a special one-time grant of RSUs with a face value of $1,000,000 in August 2017. The RSU grant vests 1/3 each year over a three-year period. |
General Equity Award Grant Practices
The Management Compensation Committee and the Board approve annual equity awards at their regular March meetings, which are scheduled well in advance without regard to material company news announcements. | ||
We believe that the current and expected expense and share utilization are reasonable and justified in light of the Management Compensation Committees goals of aligning the long-term interests of officers and employees with those of stockholders and rewarding officers for long-term relative TSR growth while retaining a strong management team. We actively monitor the expense and share utilization associated with annual grants, and are committed to making adjustments to grant practices when appropriate. |
72 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
73 |
74 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Under the guidelines, the covered executives are expected to own specified dollar amounts of Nasdaq common stock based on a multiple of their base salary, as set forth in the table below. |
Title
|
Value of Shares Owned
| |
President and CEO
|
6x base salary
| |
CFO
|
4x base salary
| |
EVPs
|
3x base salary
|
Individual holdings, shares jointly owned with immediate family members or held in trust, shares of restricted stock (including vested and unvested), shares underlying PSUs after completion of the performance period and shares purchased or held through Nasdaqs plans, such as the Nasdaq ESPP, count toward satisfying the guidelines. New executives and executives who incur a material change in their responsibilities are expected to meet the applicable level of ownership within four years of their start date or the date of the change in responsibilities. All of the NEOs who were required to be in compliance with the guidelines on December 31, 2017 were in compliance with the guidelines as of that date.
STOCK HOLDING GUIDELINES
We encourage our senior executives to retain equity grants until the applicable stock ownership level discussed above is reached. Under the stock ownership guidelines, these officers must hold the specified dollar amounts of stock through the end of their employment with Nasdaq. We feel that our guidelines provide proper alignment of the interests of our management and our stockholders and therefore, we do not have additional stock holding requirements beyond the stock ownership guidelines.
TRADING CONTROLS AND HEDGING AND PLEDGING POLICIES
We prohibit directors or executive officers from engaging in securities transactions that allow them either to insulate themselves, or profit, from a decline in Nasdaqs stock price (with the exception of selling shares outright). Specifically, these individuals may not enter into hedging transactions with respect to Nasdaqs common stock, including short sales and transactions in derivative securities. Finally, these individuals may not pledge, hypothecate or otherwise encumber their shares of Nasdaq common stock.
Nasdaq permits all employees, including the NEOs, to enter into plans established under Rule 10b5-1 of the Exchange Act to enable them to trade in our stock, including stock received through equity grants, during periods in which they might not otherwise be able to trade because material nonpublic information about Nasdaq has not been publicly released. These plans include specific instructions to a broker to trade on behalf of the employee if our stock price reaches a specified level or if certain other events occur and therefore, the employee no longer controls the decision to trade. |
Named Executive Officer Compensation |
75 |
INCENTIVE RECOUPMENT POLICY
The Board and Management Compensation Committee have adopted an incentive recoupment or clawback policy that is applicable to officers with the rank of EVP and above. The policy provides that the company may recoup any cash or equity incentive payments predicated upon the achievement of financial results or operating metrics that are subsequently determined to be incorrect on account of material errors, material omissions, fraud or misconduct.
TAX AND ACCOUNTING IMPLICATIONS OF EXECUTIVE COMPENSATION
The Management Compensation Committee considers income tax and other consequences of individual compensation elements when it is analyzing the overall level of compensation and the mix of compensation among individual elements.
Section 162(m) of the Internal Revenue Code of 1986, as amended, provided a limit of $1 million on the remuneration that may be deducted by a public company in any year in respect of the President and CEO and the three other most highly compensated executive officers (other than the principal financial officer). However, performance-based compensation was fully deductible if the plan under which the compensation was paid had been approved by the stockholders and met other requirements. We attempted to structure our compensation arrangements so that amounts paid are tax deductible to the extent feasible and consistent with our overall compensation objectives.
Section 162(m) was amended by the Tax Cuts and Jobs Act, which was enacted on December 22, 2017 and effective January 1, 2018. New Section 162(m) still provides a limit of $1 million on the remuneration that may be deducted by a public company; however, remuneration in any year in respect of the President and CEO, the principal financial officer and the three other most highly compensated executive officers is now considered. Also, under the new legislation, there is no exception for performance-based compensation, unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Given the limited guidance to date on this transition relief, the extent of the transition relief available to Nasdaq has not been entirely determined. Going forward, although performance-based criteria is no longer relevant in determining whether remuneration is deductible for tax purposes, the Management Compensation intends to continue to apply such criteria in structuring future compensation arrangements.
Depending upon the relevant circumstances at the time, the Management Compensation Committee may determine to award compensation that is not deductible. In making this determination, the Management Compensation Committee balances the purposes and needs of our executive compensation program against potential tax and other implications.
Generally, under U.S. GAAP, compensation is expensed as earned. We generally recognize compensation expense for equity awards on a straight-line basis over the requisite service period of the award. |
The Board and Management Compensation Committee have adopted an incentive recoupment or clawback policy that is applicable to officers with the rank of EVP and above. |
76 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
77 |
The following tables, narrative and footnotes present the compensation of the NEOs
during 2017 in the format mandated by the SEC.
2017 Summary Compensation Table
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
|
Option Awards ($)2
|
Non-Equity Incentive Plan Compensation ($)3
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)4
|
All Other Compensation ($)5
|
Total ($)
|
|||||||||||||||||||||||||||
Adena T. Friedman President and CEO
|
|
2017
|
|
|
$994,231
|
|
|
|
|
|
$7,047,077
|
|
|
$3,999,997
|
|
|
$2,296,000
|
|
|
$54,641
|
|
|
$68,634
|
|
|
$14,460,580
|
| |||||||||
|
2016
|
|
|
$850,000
|
|
|
|
|
|
$5,111,067
|
|
|
|
|
|
$2,175,750
|
|
|
$26,519
|
|
|
$30,642
|
|
|
$8,193,978
|
| ||||||||||
|
2015
|
|
|
$751,538
|
|
|
|
|
|
$3,428,038
|
|
|
|
|
|
$2,088,125
|
|
|
$5,792
|
|
|
$26,277
|
|
|
$6,299,770
|
| ||||||||||
Michael Ptasznik Executive Vice President, Corporate Strategy and Chief Financial Officer
|
2017 | $500,000 | | $1,409,366 | | $1,071,375 | | $65,029 | $3,045,770 | |||||||||||||||||||||||||||
|
2016
|
|
|
$221,154
|
|
|
|
|
|
$2,252,756
|
|
|
|
|
|
$1,200,000
|
|
|
|
|
|
$23,542
|
|
|
$3,697,452
|
| ||||||||||
Edward S. Knight Executive Vice President, General Counsel and Chief Regulatory Officer |
2017 | $500,000 | | $1,291,906 | | $960,000 | $46,835 | $22,025 | $2,820,766 | |||||||||||||||||||||||||||
Bradley J. Peterson Executive Vice President and Chief Information Officer
|
|
2017
|
|
$542,885 | | $1,709,462 | | $1,123,457 | | $38,884 | $3,414,688 | |||||||||||||||||||||||||
|
2016
|
|
|
$525,000
|
|
|
|
|
|
$1,788,841
|
|
|
|
|
|
$1,327,600
|
|
|
|
|
|
$34,873
|
|
|
$3,676,314
|
| ||||||||||
|
2015
|
|
|
$524,231
|
|
|
|
|
|
$1,599,726
|
|
|
|
|
|
$1,522,000
|
|
|
|
|
|
$20,400
|
|
|
$3,666,357
|
| ||||||||||
Thomas A. Wittman Executive Vice President, Global Trading and Market Services
|
2017 | $512,115 | | $2,255,492 | | $950,000 | $55,971 | $37,683 | $3,811,261 |
1 | The amounts reported in this column reflect the grant date fair value of the stock awards, including PSUs and RSUs, computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 13 to the companys audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. Since the 2017 three-year PSU award payouts are contingent on TSR-related performance-based vesting conditions, the grant date fair values were determined based on a Monte Carlo simulation model. |
The Monte Carlo simulation model takes into account expected price movement of Nasdaq stock as compared to peer companies. As a result of the companys pre-grant 2017 TSR performance relative to peer companies, the Monte Carlo simulation model assigned a significantly higher value to each 2017 three-year PSU than the closing price of Nasdaqs stock on the grant date. Therefore, the value reflected in the 2017 Summary Compensation Table does not reflect the target grant date face value shown in the Long-Term Stock-Based Compensation section of the Compensation Discussion and Analysis in this proxy statement, and there is no assurance that the target grant date face values or FASB ASC Topic 718 fair values will ever be realized. The table below summarizes the target grant date face value of PSU grants that the Management Compensation Committee and the Board approved for the NEOs compared to the FASB ASC Topic 718 fair value.
78 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
(Footnote 1 continued from the previous page)
Name
|
Year
|
Target PSUs (#)
|
Target Grant Date Face Value ($)
|
FASB ASC Topic 718 Fair Value ($)
| ||||||||||||||||
Adena T. Friedman
|
2017 | 86,393 | $ | 6,000,000 | $ | 7,047,077 | ||||||||||||||
Michael Ptasznik
|
2017 | 17,278 | $ | 1,200,000 | $ | 1,409,366 | ||||||||||||||
Edward S. Knight
|
2017 | 15,838 | $ | 1,100,000 | $ | 1,291,906 | ||||||||||||||
Bradley J. Peterson
|
2017 | 20,957 | $ | 1,455,500 | $ | 1,709,462 | ||||||||||||||
Thomas A. Wittman
|
2017 | 15,838 | $ | 1,100,000 | $ | 1,291,906 |
2 | The amounts reported in this column reflect the grant date fair value of the option awards computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 13 to the companys audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. |
3 | The amounts reported in this column reflect the cash awards made to the NEOs under the ECIP or other performance-based incentive compensation programs. |
4 | The amounts reported in this column reflect the actuarial increase in the present value of the NEOs benefits under all pension plans established by Nasdaq. Assumptions used in calculating the amounts include a 3.70% discount rate as of December 31, 2017, a 4.15% discount rate as of December 31, 2016, a 4.30% discount rate as of December 31, 2015, a 4.20% discount rate as of December 31, 2014, retirement at age 62 (which is the earliest age at which a participant may retire and receive unreduced benefits under the plans) and other assumptions used as described in note 12 to the companys audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. Since Mr. Knight is older than 62, his actual age was used to calculate the present value of his accumulated benefit. None of the NEOs received above-market or preferential earnings on deferred compensation in 2017, 2016 or 2015. |
5 | The following table sets forth the 2017 amounts reported in the All Other Compensation column by type. The incremental cost of personal use of the company car (including commutation) is calculated based on an allocation of the cost of the driver, tolls, fuel, maintenance and other related expenses. |
Name
|
Contribution to the 401(k) Plan ($)
|
Cost of Executive Health Exam ($)
|
Cost of Financial/ Tax Planning Services ($)
|
Incremental Cost of Personal Use of Company Car ($)
|
Matching Charitable Donations ($)
|
Relocation Expenses ($)
|
Total All Other Compensation ($)
| ||||||||||||||||||||||||||||
Adena T. Friedman
|
$ | 13,827 | $ | 4,825 | $ | 16,709 | $ | 24,273 | $ | 9,000 | | $ | 68,634 | ||||||||||||||||||||||
Michael Ptasznik
|
$ | 13,308 | $ | 4,825 | | | | $ | 46,896 | $ | 65,029 | ||||||||||||||||||||||||
Edward S. Knight
|
$ | 16,200 | $ | 4,825 | | | $ | 1,000 | | $ | 22,025 | ||||||||||||||||||||||||
Bradley J. Peterson
|
$ | 16,200 | $ | 4,825 | $ | 16,484 | | $ | 1,375 | | $ | 38,884 | |||||||||||||||||||||||
Thomas A. Wittman
|
$ | 16,200 | $ | 4,825 | $ | 16,658 | | | | $ | 37,683 |
Named Executive Officer Compensation |
79 |
2017 Grants of Plan-Based Awards Table
Estimated Future Payouts Under Non-Equity Incentive Plan Awards1
|
Estimated Future Payouts Under
|
All Other Awards: |
All Other Awards: |
Exercise or Base Price of |
Grant Date Fair Value | |||||||||||||||||||||||||||||||||||||||||
Name
|
Committee and/
|
Grant Date
|
Thres-
|
Target ($)
|
Maximum ($)
|
Thres-
|
Target (#)
|
Maxi-
|
Shares of
|
Underlying (#)3
|
Option ($/Sh)4
|
of Stock and Option
| ||||||||||||||||||||||||||||||||||
Adena T. Friedman |
|
3/1/17
|
|
|
3/1/17
|
|
|
|
$2,000,000
|
|
|
$4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
11/14/16
|
|
|
1/3/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
268,817
|
|
|
$66.68
|
|
|
$3,999,997
|
| |||||||||||||
|
3/28/17
|
|
|
3/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
86,393 |
|
|
172,786 |
|
|
|
|
|
|
|
|
|
|
|
$7,047,077 |
| |||||||||||||
Michael Ptasznik
|
|
3/1/17
|
|
|
3/1/17
|
|
|
|
$750,000
|
|
|
$1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
3/28/17
|
|
3/31/17 | | | | | 17,278 | 34,556 | | | | $1,409,366 | |||||||||||||||||||||||||||||||||
Edward S. Knight
|
|
3/1/17
|
|
|
3/1/17
|
|
|
|
$700,000
|
|
|
$1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
3/28/17
|
|
|
3/31/17
|
|
|
|
|
|
|
|
|
|
|
|
|
15,838
|
|
|
31,676
|
|
|
|
|
|
|
|
|
|
|
|
$1,291,906
|
| |||||||||||||
Bradley J. Peterson
|
|
3/1/17
|
|
|
3/1/17
|
|
|
|
$818,250
|
|
|
$1,636,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
3/28/17 | 3/31/17 | | | | | 20,957 | 41,914 | | | | $1,709,462 | |||||||||||||||||||||||||||||||||||
|
3/1/17 |
|
3/1/17 | | $775,688 | $1,551,376 | | | | | | | | |||||||||||||||||||||||||||||||||
Thomas A. Wittman
|
|
3/28/17
|
|
3/31/17 | | | | | 15,838 | 31,676 | | | | $1,291,906 | ||||||||||||||||||||||||||||||||
|
7/30/17
|
|
|
8/1/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,372
|
|
|
|
|
|
|
|
|
$963,586
|
|
1 | The amounts reported in these columns represent the possible range of payments under the ECIP or other performance-based incentive compensation programs. For information about the amounts actually earned by each named executive officer under the ECIP or other performance-based incentive compensation programs, see Executive Compensation Tables 2017 Summary Compensation Table. Amounts are considered earned in fiscal year 2017 although they were not paid until 2018. |
2 | The amounts reported in these columns represent the possible range of PSUs that each named executive officer may earn under the Equity Plan, depending on the achievement of performance goals established by the Management Compensation Committee and/or Board. |
3 | The amount reported in this column represents shares underlying performance-based options granted under the Equity Plan that vest in one-third annual installments contingent on Nasdaqs satisfaction of certain specified performance goals established by the Management Compensation Committee and/or Board for each of the fiscal years ending December 31, 2017, 2018 and 2019. On January 30, 2018, the Management Compensation Committee and Board determined that the performance goal for 2017 was met, resulting in the settlement of the first one-third of the grant. |
4 | The amount reported in this column represents the exercise price of the stock options reported in the previous column and is equal to the closing market price of our common stock on the date of grant. |
5 | The amounts reported in this column represent the grant date fair value of the total equity awards reported in the previous columns calculated pursuant to FASB ASC Topic 718 based upon the assumptions discussed in note 13 to the companys audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. For further information about the calculation of these amounts, see Executive Compensation Tables 2017 Summary Compensation Table on page 77. |
80 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
2017 Outstanding Equity Awards at Fiscal Year-End Table
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock that Have Not Vested (#)
|
Market Value of Shares or Units of Stock That Have Not Vested
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)
| |||||||||||||||||||||||||||
Adena T. Friedman |
|
89,605
|
|
| 179,212 | 1 | $66.68 | 1/3/27 | | | | | ||||||||||||||||||||||||
|
|
|
| | | | | | 54,7812 | $4,208,824 | ||||||||||||||||||||||||||
|
|
|
| | | | | | 86,3933 | $6,637,574 | ||||||||||||||||||||||||||
Michael Ptasznik |
|
|
|
| | | | 15,5554 | $1,195,091 | | | |||||||||||||||||||||||||
|
|
|
| | | | | | 8,2792 | $636,076 | ||||||||||||||||||||||||||
|
|
|
| | | | | | 17,2783 | $1,327,469 | ||||||||||||||||||||||||||
Edward S. Knight |
|
22,059 |
|
| | $19.75 | 3/4/20 | | | | | |||||||||||||||||||||||||
|
39,458
|
|
| | $25.07 | 12/17/18 | | | | | ||||||||||||||||||||||||||
|
25,496
|
|
| | $25.28 | 3/28/21 | | | | | ||||||||||||||||||||||||||
|
|
|
| | | | | | 16,4342 | $1,262,624 | ||||||||||||||||||||||||||
|
|
|
| | | | | | 15,8383 | $1,216,834 | ||||||||||||||||||||||||||
Bradley J. Peterson |
|
|
|
| | | | | | 19,1732 | $1,473,062 | |||||||||||||||||||||||||
|
|
|
| | | | | | 20,9573 | $1,610,126 | ||||||||||||||||||||||||||
Thomas A. Wittman |
|
|
|
| | | | 13,3725 | $1,027,371 | | | |||||||||||||||||||||||||
|
|
|
| | | | | | 15,0642 | $1,157,367 | ||||||||||||||||||||||||||
|
|
|
| | | | | | 15,8383 | $1,216,834 |
1 | These performance-based options will vest in one-half annual installments contingent on Nasdaqs satisfaction of certain specified performance goals established by the Management Compensation Committee and/or Board for each of the fiscal years ending December 31, 2018 and 2019. |
2 | This PSU award is subject to a three-year performance period ending on December 31, 2018. The amount reported is the target award amount, although the actual number of shares awarded could range from 0% to 200% of the target award amount, depending on the level of achievement of certain specified performance goals established by the Management Compensation Committee and/or Board. |
3 | This PSU award is subject to a three-year performance period ending on December 31, 2019. The amount reported is the target award amount, although the actual number of shares awarded could range from 0% to 200% of the target award amount, depending on the level of achievement of certain specified performance goals established by the Management Compensation Committee and/or Board. |
4 | These RSUs will vest as to one-half on each of July 11, 2018 and July 11, 2019. |
5 | These RSUs will vest as to one-third on each of August 1, 2018, August 1, 2019 and August 1, 2020. |
Named Executive Officer Compensation |
81 |
2017 Option Exercises and Stock Vested Table
Option Awards
|
Stock Awards
|
|||||||||||||
Name
|
Number of Shares
|
Value Realized on Exercise ($)1
|
Number of Shares
|
Value Realized on Vesting ($)2
|
||||||||||
Adena T. Friedman³
|
| | 138,775 | $10,421,587 | ||||||||||
Michael Ptasznik4
|
| | 7,777 | $553,722 | ||||||||||
Edward S. Knight5
|
| | 33,622 | $2,611,085 | ||||||||||
Bradley J. Peterson6
|
| | 39,225 | $3,046,214 | ||||||||||
Thomas A. Wittman7
|
| | 29,790 | $2,311,861 |
1 | The amounts reported in this column are calculated by multiplying the number of shares received upon exercise by the difference between the closing market price of our common stock on the date of exercise and the exercise price of the option. |
2 | The amounts reported in this column are calculated by multiplying the number of shares of stock that vested by the closing market price of our common stock on the vesting date. |
3 | The amount reported includes 70,187 shares that were withheld to pay taxes in connection with the vesting(s). |
4 | The amount reported includes 3,997 shares that were withheld to pay taxes in connection with the vesting(s). |
5 | The amount reported includes 15,482 shares that were withheld to pay taxes in connection with the vesting(s). |
6 | The amount reported includes 20,056 shares that were withheld to pay taxes in connection with the vesting(s). |
7 | The amount reported includes 12,648 shares that were withheld to pay taxes in connection with the vesting(s). |
Nasdaq maintains frozen non-contributory, defined-benefit pension plans and non-qualified supplemental executive retirement plans for certain senior executives. Future service and salary for all participants do not count toward an accrual of benefits under these plans. However, participants continue to receive credit for future service for vesting of the frozen accrued benefit. | Nasdaqs frozen retirement plans reflect legacy agreements. | |
Nasdaq also maintains a supplemental employer retirement contribution plan, which was designed to enhance retirement contributions for certain officers whose base salaries or total contributions to qualified plans exceeded certain IRS limitations. As of January 1, 2014, Nasdaq discontinued contributions to the supplemental employer retirement contribution plan. However, participants continue to receive interest on prior contributions to the plan. |
82 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Name1
|
Plan Name
|
Number of Years
|
Present Value
|
Payments During Last
| ||||||||
| ||||||||||||
Adena T. Friedman
|
Pension Plan
|
|
13.92
|
|
|
$400,859
|
|
| ||||
| ||||||||||||
Supplemental Executive Retirement Plan
|
|
13.92
|
|
|
|
|
| |||||
| ||||||||||||
Edward S. Knight
|
Pension Plan
|
|
7.83
|
|
|
$333,999
|
|
| ||||
| ||||||||||||
Supplemental Executive Retirement Plan
|
|
7.83
|
|
|
$3,310,551
|
|
| |||||
Thomas A. Wittman
|
Pension Plan
|
|
21.00
|
|
|
$477,944
|
|
| ||||
| ||||||||||||
Supplemental Executive Retirement Plan
|
|
21.00
|
|
|
|
|
| |||||
|
1 | Messrs. Ptasznik and Peterson are not participants in the pension plan or supplemental executive retirement plan. |
2 | Since the pension plan and supplemental executive retirement plan were frozen in 2007, the number of years of credited service for each named executive officer under those plans differs from such officers number of years of actual service with Nasdaq. As of December 31, 2017, Ms Friedman had 21.42 years of actual service with Nasdaq, while Mr. Wittman had 31.00 years and Mr. Knight had 18.50 years. Generally, participants in the pension plan became vested in retirement benefits under the plan after five years of service from the participants date of hire. Participants in the supplemental executive retirement plan generally became vested in retirement benefits under the plan after reaching age 55 and completing 10 years of service. As of December 31, 2017, Mr. Knight was vested in benefits payable under both the pension plan and the supplemental executive retirement plan, and Ms. Friedman and Mr. Wittman were vested in benefits payable under the pension plan. |
3 | The amounts reported comprise the actuarial present value of the named executive officers accumulated benefit under the pension plan and supplemental executive retirement plan as of December 31, 2017. Assumptions used in calculating the amounts include a 3.70% discount rate as of December 31, 2017, retirement at age 62 (which is the earliest age at which a participant may retire and receive unreduced benefits under the plans) and other assumptions used as described in note 12 to the companys audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. Since Mr. Knight is older than 62, his actual age was used to calculate the present value of his accumulated benefit. |
2017 Nonqualified Deferred Compensation Table
Name1
|
Executive
|
Registrant
|
Aggregate FY ($)2
|
Aggregate
|
Aggregate FYE ($)³
|
|||||||||
|
||||||||||||||
Edward S. Knight
|
|
|
|
$7,526
|
|
|
|
$133,342
|
| |||||
|
||||||||||||||
Thomas A. Wittman
|
|
|
|
$825
|
|
|
|
$14,615
|
| |||||
|
1 | Ms. Friedman, Mr. Ptasznik and Mr. Peterson are not participants in the supplemental employer retirement contribution plan. |
2 | The amounts reported in this column represent interest earned during 2017 on account balances. Interest is paid at an annual rate of 7% (which is the 10-year U.S. Treasury securities rate on the effective date of the supplemental employer retirement contribution plan plus an additional 1%). These amounts have not been included in the Summary Compensation Table for the fiscal year ended December 31, 2017 or for previous years. |
3 | The amounts reported in this column represent account balances at December 31, 2017. These amounts include contributions that the company previously made to the NEOs under the supplemental employer retirement contribution plan and interest earned on account balances. To the extent that the NEOs were considered NEOs in prior years proxy statements, the Supplemental ERC contributions for prior years were reported in the column All Other Compensation in the Summary Compensation Table found in our proxy statement for the annual meeting of stockholders. |
Named Executive Officer Compensation |
83 |
84 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
85 |
86 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
87 |
88 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
89 |
Named Executive Officer
|
Involuntary Termination Not for
|
Death ($)
|
Disability ($)
|
Resignation
|
Termination Due to Change in
| |||||||||||||||
Adena T. Friedman |
||||||||||||||||||||
Severance |
$3,200,000 | | | | $3,200,000 | |||||||||||||||
Pro-Rata Current Year Annual Incentive |
$2,000,000 | $2,000,000 | $2,000,000 | | $2,000,000 | |||||||||||||||
Stock Option Vesting |
| $909,501 | $909,501 | | $1,819,002 | |||||||||||||||
Continued Performance-Based Equity Vesting |
$4,113,325 | $8,322,149 | $4,113,325 | | $8,322,149 | |||||||||||||||
Equity Vesting |
| | | | | |||||||||||||||
Health & Welfare Benefits Continuation |
$40,767 | | | | $40,767 | |||||||||||||||
TOTAL |
$9,354,092 | $11,231,650 | $7,022,826 | | $15,381,918 | |||||||||||||||
Michael Ptasznik |
||||||||||||||||||||
Severance |
$1,500,000 | | | | $1,750,000 | |||||||||||||||
Pro-Rata Current Year Annual Incentive |
$750,000 | $750,000 | $750,000 | | $750,000 | |||||||||||||||
Continued Performance-Based Equity Vesting |
$636,076 | $1,963,544 | | | $1,963,544 | |||||||||||||||
Equity Vesting |
$1,195,091 | $597,507 | $597,507 | | $1,195,091 | |||||||||||||||
Health & Welfare Benefits Continuation |
$20,384 | | | | $40,767 | |||||||||||||||
Outplacement Services |
$9,000 | | | | $9,000 | |||||||||||||||
TOTAL |
$4,110,551 | $3,311,051 | $1,347,507 | | $5,708,402 | |||||||||||||||
Edward S. Knight |
||||||||||||||||||||
Severance |
$2,400,000 | | | | $2,400,000 | |||||||||||||||
Pro-Rata Current Year Annual Incentive |
$700,000 | $700,000 | $700,000 | $700,000 | $700,000 | |||||||||||||||
Continued Performance-Based Equity Vesting |
| $2,479,458 | $2,479,458 | $2,479,458 | $2,479,458 | |||||||||||||||
Equity Vesting |
| | | | | |||||||||||||||
Health & Welfare Benefits |
$40,767 | | | | $40,767 | |||||||||||||||
TOTAL |
$3,140,767 | $3,179,458 | $3,179,458 | $3,179,458 | $5,620,225 | |||||||||||||||
Bradley J. Peterson |
||||||||||||||||||||
Severance |
$1,587,500 | | | | $1,850,000 | |||||||||||||||
Pro-Rata Current Year Annual Incentive |
$825,000 | $825,000 | $825,000 | | $825,000 | |||||||||||||||
Continued Performance-Based Equity Vesting |
| $3,083,188 | $1,473,062 | | $3,083,188 | |||||||||||||||
Equity Vesting |
| | | | | |||||||||||||||
Health & Welfare Benefits |
$30,575 | | | | $40,767 | |||||||||||||||
TOTAL |
$2,443,075 | $3,908,188 | $2,298,062 | | $5,798,955 | |||||||||||||||
Thomas A. Wittman |
||||||||||||||||||||
Severance |
$1,650,000 | | | | $1,925,000 | |||||||||||||||
Pro-Rata Current Year Annual Incentive |
$825,000 | $825,000 | $825,000 | | $825,000 | |||||||||||||||
Continued Performance-Based Equity Vesting |
| $2,374,201 | | | $2,374,201 | |||||||||||||||
Equity Vesting |
| $342,431 | $342,431 | | $1,027,370 | |||||||||||||||
Health & Welfare Benefits |
$30,575 | | | | $40,767 | |||||||||||||||
Outplacement Services |
$9,000 | | | | $9,000 | |||||||||||||||
TOTAL |
$2,505,575 | $3,541,632 | $1,167,431 | | $6,192,338 |
CEO Pay Ratio
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation of our employees, the annual total
compensation of our principal executive officer, President and CEO Adena T. Friedman, and the ratio of these two amounts.
We have estimated the median of the 2017 annual
total compensation of our employees, excluding Ms. Friedman, to be $109,556. The 2017 annual total compensation of Ms. Friedman was $14,460,580. The ratio of the annualized total compensation of Ms. Friedman to the estimated median of the annual
total compensation of our employees was 132 to 1. We note that a substantial portion of Ms. Friedmans total compensation for 2017 was the one-time stock-option award she received in connection with her promotion to President and CEO, which had
a grant date fair value of approximately $3,999,997. Excluding the one-time stock option award, the ratio would have been 95 to 1.
Our CEO pay ratio is a reasonable estimate
calculated in a manner consistent with SEC rules. We identified our median employee by examining the 2017 actual total compensation (which consists of the employees base salary as of October 5, 2017, actual bonus paid in 2017 and grant date
value of actual equity awards granted in 2017) for all individuals, excluding Ms. Friedman, who were employed by Nasdaq as of October 5, 2017. We did not make any cost-of-living adjustments or full-time equivalent adjustments. After identifying the
median employee, we calculated total compensation for 2017 for this employee using the same methodology we used for our NEOs in the Summary Compensation Table.
We employed
4,412 full-time and part-time employees, including hourly employees, on October 5, 2017 (1,785 in the United States and 2,627 in jurisdictions outside of the United States). 355 employees who joined Nasdaq after October 5, 2017 due to the
acquisition of eVestment were not included in the total population. Also, consistent with the applicable rules, we excluded certain employees from our total employee population when determining our median employee. As permitted under the de minimis
exemption, we excluded all of our 25, 22, 48, 99 and 4 employees in Estonia, Latvia, Germany, the Netherlands and Spain, respectively, collectively representing approximately 4.5% of our workforce. We also excluded 11 employees who became our
employees due to the acquisition of Sybenetix in September 2017, as permitted by merger/acquisition exemption. Following the application of these exclusions, the total number of employees used in our median employee analysis was 4,203 (1,785 in the
United States and 2,418 in jurisdictions outside of the United States).
Named Executive Officer Compensation |
91 |
92 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
The company is seeking approval by the stockholders of an increase in the number of shares of common stock available for future awards under the Equity Plan by
5.5M shares
|
company is proposing to increase the number of shares available for awards under the Equity Plan. The company is seeking approval by the stockholders of an increase in the number of shares of common stock available for future awards under the Equity Plan by 5,500,000 shares, bringing the total number of shares available for awards under the Equity Plan since the Equity Plans inception to 47,200,000 shares. The number of shares authorized for issuance under the plan was last increased in 2014, when 5,500,000 shares were added to the Equity Plan. The company also is seeking approval of the other modifications to the Equity Plan described above.
HISTORICAL AWARD INFORMATION
Common measures of a stock plans cost include burn rate and overhang. The burn rate, or equity run rate, refers to how fast a company uses the supply of shares authorized for issuance under its stock plan. Over the last two years, the company has maintained an average equity run rate of approximately 0.8% of shares of common stock outstanding per year. Overhang measures the degree to which our stockholders ownership has been diluted by stock-based compensation awarded under our Equity Plan (existing overhang) and is also calculated including shares that may be awarded under our Equity Plan in the future (total overhang).
The following table shows the values for our key equity metrics over the past two years. | |
Key Equity Metrics
|
2017
|
2016
| ||
Equity Run Rate¹
|
0.84% | 0.75% | ||
Existing Overhang2
|
2.33% | 3.43% | ||
Total Overhang3
|
5.80% | 7.48% |
1 Equity run rate is calculated by dividing the number of shares subject to equity awards granted (at target) during the year by the weighted-average basic number of shares outstanding during the year.
2 Existing overhang is calculated by dividing the number of shares subject to equity awards outstanding at the end of the fiscal year by the number of weighted average basic shares outstanding at the end of fiscal year.
3 Total overhang is calculated by dividing (a) the sum of (x) the number of shares subject to equity awards outstanding at the end of the year and (y) the number of shares available for future grants at the end of the year, by (b) the number of weighted average basic shares outstanding at the end of the year. |
NUMBER OF SHARES REQUESTED | ||||
When determining the number of shares to add to the Equity Plan, the Management Compensation Committee and Board reviewed and considered, among other things, the potential impact on stockholders as measured by run rate and overhang, projected future share usage and projected forfeitures of awards, including the following information: | ||||
» Assuming stockholder approval of the Equity Plan, approximately 11,392,080 shares (approximately 5,892,080 of which were available as of the record date) will be available for future award grants. We expect this amount to last for up to five years of awards. This estimate is based on historical equity usage and plan designs. While we believe this modeling provides a reasonable estimate of how long such a share reserve would last, there are a number of factors that could impact our future share usage. |
Named Executive Officer Compensation |
93 |
94 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
95 |
96 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
97 |
98 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
99 |
100 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Name and Position
|
Number of Stock Options Awarded
| |||||||
Adena T. Friedman, President and CEO
|
|
826,828
|
| |||||
Michael Ptasznik, Executive Vice President, Corporate Strategy and Chief Financial Officer
|
|
|
| |||||
Edward S. Knight, Executive Vice President, General Counsel and Chief Regulatory Officer
|
|
430,069
|
| |||||
Bradley J. Peterson, Executive Vice President and Chief Information Officer
|
|
|
| |||||
Thomas M. Wittman, Executive Vice President, Global Trading and Market Services
|
|
26,116
|
| |||||
Robert Greifeld, Former Executive Officer
|
|
3,860,000
|
| |||||
Hardwick Simmons, Former Executive Officer
|
|
2,000,000
|
| |||||
All Current Executive Officers
|
|
1,476,318
|
| |||||
All Current Non-Employee Directors
|
|
|
| |||||
Jacob Wallenberg, Nominee for Director
|
|
|
| |||||
All Non-Executive Employees
|
|
30,483,872
|
| |||||
NEW EQUITY PLAN BENEFITS
The Committee has discretionary authority to grant awards pursuant to the Equity Plan and there is no provision for automatic grants. Therefore, future benefits that would be received under the Equity Plan by executive officers and other employees under the Equity Plan currently are not determinable.
SHARES AVAILABLE FOR ISSUANCE UNDER EQUITY PLANS
The following table sets forth information regarding outstanding options and shares reserved for future issuance under all of Nasdaqs compensation plans as of December 31, 2017.
Plan Category
|
Number of shares to be issued upon exercise of outstanding options, warrants and rights (a)1
|
Weighted-average exercise price and rights (b)
|
Number of shares remaining for future issuance under equity
| |||||||||
Equity compensation plans approved by stockholders
|
|
571,380
|
|
|
43.84
|
|
|
7,891,4262
|
| |||
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
| |||
Total
|
|
571,380
|
|
|
43.84
|
|
|
7,891,4262
|
|
1 | The amounts in this column include only the number of shares to be issued upon exercise of outstanding options, warrants and rights. At December 31, 2017, we also had 3,331,462 shares to be issued upon vesting of outstanding RSUs and PSUs. |
2 | This amount includes 5,801,663 shares of common stock that may be awarded pursuant to the Equity Plan and 2,089,763 shares of common stock that may be issued pursuant to the ESPP. |
Named Executive Officer Compensation |
101 |
102 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Named Executive Officer Compensation |
103 |
AUDIT COMMITTEE MATTERS
Audit Committee Matters |
105 |
106 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Audit Committee Matters |
107 |
Based on its review, the Audit Committee has retained Ernst & Young LLP and believes its continued retention is in the best interests of Nasdaq and its stockholders.
AUDIT FEES AND ALL OTHER FEES
The table below shows the amount of fees Nasdaq paid to Ernst & Young LLP for fiscal years 2017 and 2016, including expenses.
Item
|
2017
|
2016
|
||||||
Audit fees1
|
$6,721,570 | $6,801,227 | ||||||
Audit-related fees2
|
$942,500 | $948,905 | ||||||
Audit and audit-related fees
|
$7,664,070 | $7,750,132 | ||||||
Tax fees
|
$47,389 | $84,079 | ||||||
All other fees3
|
$1,616.475 | $733,549 | ||||||
TOTAL4
|
$9,327,934 | $8,567,760 |
1 | Audit services were provided globally in 2017 and 2016. Fees related to audits of international subsidiaries are translated into U.S. dollars. |
2 | The 2017 and 2016 audit-related fees primarily include due diligence on strategic initiatives, including mergers and acquisitions, as well as other attestation reports issued. |
3 | The 2017 and 2016 other fees primarily relate to the Swedish Financial Supervisory Authoritys listing requirements for companies applying for a listing on Nasdaq Stockholm AB. The validation of the company is required to be performed by an external accounting firm. The fees are collected from the listing company by us and paid to Ernst & Young LLP on behalf of the listing company. |
4 | Fees exclude services provided to certain separate non-profit entities and services provided in relation to Nasdaqs role as administrator for the Unlisted Trading Privileges Plan. |
Audit fees primarily represent fees for the audit of Nasdaqs annual financial statements included in our annual report on Form 10-K, the review of Nasdaqs quarterly reports on Form 10-Q, statutory audits of subsidiaries as required by statutes and regulations, accounting consultations on matters addressed during the audit or interim reviews, comfort letters and consents and internal control attestation and reporting requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Audit-related fees primarily represent fees for consultations associated with strategic initiatives, including mergers and acquisitions.
As outlined in the Audit Committee charter, the Audit Committee is responsible for the appointment, retention, approval of compensation and oversight of the services provided by Nasdaqs independent registered public accounting firm. The Audit Committee pre-approves both audit and non-audit services performed by the independent registered public accounting firm, and Nasdaqs Audit Committee pre-approved all such services in 2017 and 2016. These responsibilities and activities satisfy the auditor oversight requirements of the Sarbanes-Oxley Act.
Managing the relationship with the companys independent registered public accounting firm is a significant responsibility of the Audit Committee. We invite representatives of Ernst & Young LLP to attend Audit Committee meetings, and they actively participate. We also meet regularly in Executive Session with those representatives. This regular communication helps ensure the efficiency and quality of the external audit services. Nasdaqs Audit Committee
Audit Committee Matters |
109 |
OTHER ITEMS
Other Items |
111 |
Other Items
Proposal 5 Shareholder Right to Act by Written Consent
Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with applicable law and consistent with giving shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with applicable law.
This proposal topic also won majority shareholder support at 13 major companies in a single year. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent.
This proposal topic also won impressive 45%-support at the Nasdaq 2016 annual meeting. Plus this 45%-vote would have been still higher (possibly 51%) if small shareholders had the same access to corporate governance information as large shareholders.
This proposal is more important at Nasdaq because NDAQ shareholders do not have the full right to call a special meeting that is available under state law. Written consent would give shareholders greater standing to have input in improving the makeup of our Board of Directors after the 2018 annual meeting. For instance our Chairman and Lead Director were inside-related directors and thus not independent. Independence is a highly valuable attribute in a Chairman and a Lead Director.
Please vote to improve management accountability to shareholders:
Shareholder Right to Act by Written Consent - Proposal 5
112 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Other Items |
113 |
114 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Other Items |
115 |
Name of Beneficial Owner
|
Common Stock Beneficially Owned
|
Percent of Class
|
||||||
Borse Dubai Limited1 Level 7, Precinct Building 5, Gate District, DIFC, Dubai UAE
|
|
29,780,515
|
|
|
17.9%
|
| ||
Investor AB2 Innax AB, Arsenalsgatan 8C, S-103 32, Stockholm, Sweden V7
|
|
19,394,142
|
|
|
11.6%
|
| ||
Massachusetts Financial Services Company3 111 Huntington Avenue, Boston, MA 02199
|
|
14,235,200
|
|
|
8.5%
|
| ||
The Vanguard Group, Inc.4 100 Vanguard Blvd., Malvern, PA 19355
|
|
11,825,546
|
|
|
7.1%
|
| ||
BlackRock, Inc.5 55 East 52nd Street, New York, NY 10055
|
|
9,043,188
|
|
|
5.4%
|
| ||
Melissa M. Arnoldi
|
|
|
|
|
*
|
| ||
Charlene T. Begley6
|
|
4,612
|
|
|
*
|
| ||
Steven D. Black7
|
|
26,556
|
|
|
*
|
| ||
Adena T. Friedman8
|
|
307,074
|
|
|
*
|
| ||
Essa Kazim9
|
|
28,226
|
|
|
*
|
| ||
Thomas A. Kloet10
|
|
7,512
|
|
|
*
|
| ||
John D. Rainey
|
|
|
|
|
*
|
| ||
Michael R. Splinter11
|
|
44,808
|
|
|
*
|
| ||
Jacob Wallenberg12
|
|
|
|
|
*
|
| ||
Lars R. Wedenborn13
|
|
25,000
|
|
|
*
|
| ||
Edward S. Knight14
|
|
134,182
|
|
|
*
|
| ||
Bradley J. Peterson15
|
|
23,045
|
|
|
*
|
| ||
Michael Ptasznik16
|
|
3,780
|
|
|
*
|
| ||
Thomas A. Wittman17
|
|
64,792
|
|
|
*
|
| ||
All Directors and Executive Officers of Nasdaq as a Group (18 Persons)
|
|
734,202
|
|
|
0.4%
|
|
* | Represents less than 1%. |
1 | As of the record date, based solely on information included in an amendment to Schedule 13D, filed March 27, 2012, Borse Dubai had shared voting and dispositive power over 29,780,515 shares. Borse Dubai is a majority-owned subsidiary of Investment Corporation of Dubai and therefore, each of Borse Dubai and Investment Corporation of Dubai may be deemed to be the beneficial owner of the 29,780,515 shares held by Borse Dubai. Borse Dubai and Nasdaq have entered into an agreement that limits Borse Dubais voting power to 4.35% of Nasdaqs total outstanding shares. All of the shares held by Borse Dubai are pledged as security for outstanding indebtedness. |
2 | As of the record date, based solely on information included in a Form 4, filed May 25, 2012, Innax AB, which was formerly named Patricia Holding AB, had sole voting and dispositive power over 19,394,142 shares. Innax AB is 100% owned and controlled by Investor AB and therefore, each of Innax AB and Investor AB may be deemed to be the beneficial owner of the 19,394,142 shares held by Innax AB. |
3 | As of the record date, based solely on information included in a Schedule 13G/A, filed February 9, 2018, Massachusetts Financial Services Company indicated that it has beneficial ownership of and sole dispositive power with respect to 14,235,200 shares and sole voting power with respect to 13,383,339 shares. |
116 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
4 | As of the record date, based solely on information included in a Schedule 13G/A, filed February 9, 2018, The Vanguard Group, Inc. indicated that it has beneficial ownership of 11,825,546 shares, sole voting power with respect to 162,274 shares, shared voting power with respect to 24,396 shares, sole dispositive power with respect to 11,645,370 shares and shared dispositive power with respect to 180,176 shares. The Schedule 13G/A includes shares beneficially owned by the following wholly owned subsidiaries of The Vanguard Group, Inc.: Vanguard Fiduciary Trust Company, as a result of its serving as investment manager of collective trust accounts (126,962 shares); and Vanguard Investments Australia, Ltd., as a result of its serving as investment manager of Australian investment offerings (87,708 shares). |
5 | As of the record date, based solely on information included in a Schedule 13G/A, filed January 23, 2018, BlackRock, Inc. indicated that it has beneficial ownership of and sole dispositive power with respect to 9,043,188 shares and sole voting power with respect to 8,037,939 shares as a result of being a parent company or control person of the following subsidiaries: BlackRock Life Limited; BlackRock International Limited; BlackRock Advisors, LLC; BlackRock Capital Management, Inc.; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A.; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; BlackRock (Singapore) Limited; and BlackRock Fund Managers Ltd. |
6 | Represents 4,612 vested shares of restricted stock. |
7 | Represents 26,556 vested shares of restricted stock. |
8 | Represents (i) 89,605 vested options, (ii) 81,584 vested shares of restricted stock, (iii) 101,434 vested shares underlying PSUs and (iv) 34,451 shares granted under the Equity Plan or purchased pursuant to the ESPP when Ms. Friedman was previously an employee of Nasdaq. |
9 | Represents 28,226 vested shares of restricted stock. Excludes shares of Nasdaq common stock owned by Borse Dubai. H.E. Kazim, who is Chairman of Borse Dubai, disclaims beneficial ownership of such shares. |
10 | Represents (i) 5,512 vested shares of restricted stock and (ii) 2,000 shares acquired through open market purchases. |
11 | Represents 44,808 vested shares of restricted stock. |
12 | Excludes shares of Nasdaq common stock owned by Investor AB. Mr. Wallenberg, who is Chairman of Investor AB, disclaims beneficial ownership of such shares. |
13 | Represents (i) 15,000 shares held by a pension insurance fund in the name of FAM AB, which is Mr. Wedenborns employer and (ii) 10,000 shares held by a pension insurance fund in the name of Investor AB, which is Mr. Wedenborns former employer. |
14 | Represents (i) 73,813 vested options, (ii) 59,994 vested shares underlying PSUs and (iii) 375 shares of stock purchased pursuant to the ESPP. |
15 | Represents (i) 13,141 vested shares of restricted stock, (ii) 8,741 vested shares underlying PSUs and (iii) 1,163 shares of stock purchased pursuant to the ESPP. |
16 | Represents 3,780 vested shares of restricted stock. |
17 | Represents (i) 18,312 vested shares of restricted stock, (ii) 44,901 vested shares underlying PSUs and (iii) 1,579 shares of stock purchased pursuant to the ESPP. |
Other Items |
117 |
Nasdaqs current executive officers are listed below.
Name
|
Age
|
Position
| ||
Adena T. Friedman
|
48
|
President and CEO
| ||
P.C. Nelson Griggs
|
47
|
EVP, Listing Services
| ||
Edward S. Knight
|
67
|
EVP, General Counsel and Chief Regulatory Officer
| ||
Lars Ottersgård
|
53
|
EVP, Market Technology
| ||
Bradley J. Peterson
|
58
|
EVP and Chief Information Officer
| ||
Michael Ptasznik
|
50
|
EVP, Corporate Strategy and CFO
| ||
Bjørn Sibbern
|
44
|
EVP, Information Services
| ||
Stacie Swanstrom
|
48
|
EVP, Corporate Solutions
| ||
Thomas A. Wittman
|
53
|
EVP, Global Trading and Market Services
| ||
Ann M. Dennison
|
47
|
SVP, Controller and Principal Accounting Officer
|
Adena T. 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. Ms. Friedman rejoined Nasdaq in 2014 as President, after serving as CFO and Managing Director at The Carlyle Group, a global alternative asset manager, from March 2011 to June 2014. Prior to joining Carlyle, Ms. Friedman was a key member of Nasdaqs management team for over a decade including as head of data products, head of corporate strategy and CFO. | . | |
P.C. Nelson Griggs has served as EVP, Listing Services since October 2014. Mr. Griggs is also President of The Nasdaq Stock Market. Previously, Mr. Griggs was SVP, New Listings from July 2012 through October 2014; SVP, Listings Asia Sales from April 2011 through June 2012 and VP, Listings from July 2007 through March 2011. Mr. Griggs joined Nasdaq in 2001 and has served in a variety of other roles within the Listing Services business. Prior to joining Nasdaq, Mr. Griggs worked at Fidelity Investments and a San Francisco based startup company. | ||
Edward S. Knight has served as EVP and General Counsel since October 2000 and Chief Regulatory Officer since January 2006. Previously, Mr. Knight served as EVP and Chief Legal Officer of the Financial Industry Regulatory Authority from July 1999 to October 2000. Prior to joining the Financial Industry Regulatory Authority, Mr. Knight served as General Counsel of the U.S. Department of the Treasury from September 1994 to June 1999. Mr. Knight also serves as a director of Nasdaq Dubai. | ||
Lars Ottersgård has served as EVP, Market Technology since October 2014. Previously, Mr. Ottersgård was SVP, Market Technology from 2008 to October 2014. Mr. Ottersgård joined |
118 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Other Items |
119 |
» | whether the related person transaction aligns with Nasdaqs culture of integrity and potential reputational risk implications. |
The following section describes transactions since the beginning of the fiscal year ended
December 31, 2017, in which Nasdaq or any of its subsidiaries was a party, in which the amount involved exceeded $120,000 and in which a related person had, or will have, a direct or indirect material interest. In accordance with our policy,
all of the transactions discussed below, other than those that received pre-approval as discussed above, have been reviewed and approved or ratified by the Audit Committee of our Board.
BORSE DUBAI
As of the record date, Borse Dubai owned approximately 17.9% of Nasdaqs common stock. Nasdaq is
obligated by the terms of a stockholders agreement with Borse Dubai to nominate and generally use best efforts to cause the election to the Nasdaq Board of one director designated by Borse Dubai, subject to certain conditions. Essa Kazim, the
Chairman of Borse Dubai, has been designated by Borse Dubai as its nominee with respect to the 2018 Annual Meeting.
Nasdaq is party to several commercial agreements with
Borse Dubai and/or its affiliates that were negotiated on an arms-length basis and entered into in the ordinary course of business. Under these agreements, during the fiscal year ended December 31, 2017, Borse Dubai or its affiliates paid
Nasdaq approximately $2.3 million for market technology products and services. In addition, in consideration for a release by Borse Dubai of certain potential contractual claims, Nasdaq began issuing a credit to Borse Dubai starting in the
first quarter of 2017 for approximately $5 million to be applied toward certain technology services provided by Nasdaq.
INVESTOR AB
As of the record date, Investor AB owned approximately 11.6% of Nasdaqs common stock. Nasdaq is obligated by the terms of a stockholders agreement with Investor AB to nominate
and generally use best efforts to cause the election to the Nasdaq Board of one director designated by Investor AB, subject to certain conditions. Jacob Wallenberg, the Chairman of Investor AB, has been designated by Investor AB as its nominee with
respect to the 2018 Annual Meeting. During the fiscal year ended December 31, 2017, Investor AB or its subsidiaries (i.e., entities that are majority-owned) paid Nasdaq approximately $0.5 million, primarily for listing services and
corporate solutions in the ordinary course of business.
OTHER GREATER THAN 5% STOCKHOLDERS
As of
the record date, The Vanguard Group, Inc. owned approximately 7.1% of Nasdaqs common stock. During the fiscal year ended December 31, 2017, Vanguard or its affiliates paid us approximately $1.6 million primarily for transaction
services and data products in the ordinary course of business.
As of the record date, BlackRock, Inc. owned approximately 5.4% of Nasdaqs common stock. During the
fiscal year ended December 31, 2017, BlackRock or its affiliates paid us approximately $7.7 million primarily for index licensing services in the ordinary course of business.
Other Items |
121 |
122 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Other Items |
123 |
nominee by the deadline provided in the materials you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.
Discretionary Items. The ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm is a discretionary item. Banks, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
Non-Discretionary Items. All of the other proposals in this proxy statement are non-discretionary items. Banks, brokers and other nominees that do not receive voting instructions from beneficial owners may not vote on these proposals, resulting in a broker non-vote.
If you hold your shares through a bank, broker or other nominee, it is important that you cast your vote if you want it to count on all of the matters to be considered at the Annual Meeting.
6. What proposals are to be voted on at the 2018 Annual Meeting of Stockholders, and what are the voting standards?
Proposal
|
Nasdaq Boards
|
Voting Standard
|
Effect of Abstentions and Broker Non-Votes
| |||
1. Election of ten directors (Non-Discretionary Item)
|
FOR EACH NOMINEE
|
Majority of votes cast
|
Not counted as votes cast and therefore have no effect
| |||
2. Advisory vote to approve the companys executive compensation (Non-Discretionary Item)
|
FOR |
Majority of the votes present in person or represented by proxy |
Abstentions have the effect of a vote against the proposal; broker non-votes have no effect | |||
3. Approval of the Equity Plan, as amended and restated (Non-Discretionary Item)
|
FOR |
Majority of the votes present in person or represented by proxy |
Abstentions have the effect of a vote against the proposal; broker non-votes have no effect | |||
4. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (Discretionary Item)
|
FOR |
Majority of the votes present in person or represented by proxy |
Abstentions have the effect of a vote against the proposal; there will not be broker non-votes | |||
5. Stockholder proposal shareholder right to act by written consent (Non-Discretionary Item)
|
AGAINST |
Majority of the votes present in person or represented by proxy |
Abstentions have the effect of a vote against the proposal; broker non-votes have no effect |
The proxy provides that each stockholder may vote his or her Nasdaq shares For, Against or Abstain on individual nominees and each of the other proposals. Whichever method you select to transmit your instructions, the proxy holders will vote your shares as provided by those instructions. If you provide a proxy without specific voting instructions, the proxy holders will vote your Nasdaq shares in accordance with the Board recommendations noted above.
124 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Other Items |
125 |
126 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Stockholders and other interested parties are invited to contact the Board by writing us at: AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan C. Conley, SVP and Corporate Secretary, 805 King Farm Boulevard, Rockville, Maryland 20850
ANNEXES
Annexes |
129 |
130 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Annexes |
131 |
estimated impact associated with the enactment of this act. The decrease in tax expense primarily relates to the remeasurement of our net U.S. deferred tax liability at the lower U.S. federal corporate income tax rate. The estimate may be refined in the future as new information becomes available. |
> | Excess tax benefits related to employee share-based compensation of $40 million for the year ended December 31, 2017 was recorded as a result of the adoption of new accounting guidance on January 1, 2017. This guidance requires all income tax effects of share-based awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled on a prospective basis, as opposed to stockholders equity where it was previously recorded, and will be a recurring item going forward. This item is subject to volatility and will vary based on the timing of the vesting of employee share-based compensation arrangements and fluctuation in our stock price. |
The following table represents reconciliations between U.S. GAAP net income attributable to Nasdaq and diluted EPS and non-GAAP net income attributable to Nasdaq and diluted EPS.
Year Ended December 31, 2017
|
Year Ended December 31, 2016
|
|||||||||||||||||||
Net Income
|
Diluted Earnings
|
Net Income
|
Diluted Earnings
|
|||||||||||||||||
(in millions, except share and per share amounts)
|
||||||||||||||||||||
U.S. GAAP net income attributable to Nasdaq and diluted earnings per share
|
$734 | $4.33 | $108 | $0.64 | ||||||||||||||||
Amortization expense of acquired intangible assets
|
92 | 0.54 | 82 | 0.49 | ||||||||||||||||
Merger and strategic initiatives
|
44 | 0.26 | 76 | 0.45 | ||||||||||||||||
Extinguishment of debt
|
10 | 0.06 | | | ||||||||||||||||
Restructuring charges
|
| | 41 | 0.24 | ||||||||||||||||
Asset impairment charge
|
| | 578 | 3.42 | ||||||||||||||||
Executive compensation
|
| | 12 | 0.07 | ||||||||||||||||
Regulatory matter
|
1 | 0.01 | 6 | 0.04 | ||||||||||||||||
Sublease loss reserve
|
2 | 0.01 | (1) | (0.01) | ||||||||||||||||
Other
|
2 | 0.01 | 6 | 0.04 | ||||||||||||||||
Adjustment to the income tax provision to reflect non-GAAP adjustments and other tax items
|
(70) | (0.41) | (287) | (1.70) | ||||||||||||||||
Impact of newly enacted U.S. tax legislation
|
(87) | (0.51) | | | ||||||||||||||||
Excess tax benefits related to employee share-based compensation
|
(40) | (0.24) | | | ||||||||||||||||
Total non-GAAP adjustments, net of tax |
(46) | (0.27) | 513 | 3.04 | ||||||||||||||||
Non-GAAP net income attributable to Nasdaq and diluted earnings per share |
$688 | $4.06 | $621 | $3.68 | ||||||||||||||||
Weighted-average common shares outstanding for diluted earnings per share |
169,585,031 | 168,800,997 |
132 |
Notice of 2018 Annual Meeting of Stockholders and Proxy Statement |
Nasdaq, Inc. Equity Incentive Plan
(as amended and restated April 24, 2018)
133 | ||||
133 | ||||
139 | ||||
140 | ||||
142 | ||||
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147 | ||||
149 | ||||
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160 | ||||
160 |
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Annexes |
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Annexes |
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Annexes |
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Annexes |
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Annexes |
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Annexes |
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Annexes |
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Annexes |
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OUR VALUES We put Clients First We act with Integrity We are Passionate We lead Innovation We are Effective We are Resilient
NASDAQ, INC. ONE LIBERTY PLAZA 49TH FLOOR NEW YORK, NY 10006 ATTN: EDWARD DITMIRE |
| |
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. | ||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SHAREHOLDER MEETING REGISTRATION: To vote and/or attend the meeting, go to the Register for Meeting link at www.proxyvote.com. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||||||||||||
E40724-P00754 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
NASDAQ, INC. |
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The Board of Directors recommends you vote FOR each of the nominees listed in Proposal 1. | ||||||||||||||||||||||||||||
1. | Election of 10 Directors | For | Against | Abstain | ||||||||||||||||||||||||
1a.
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Melissa M. Arnoldi
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☐
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☐
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☐
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The Board of Directors recommends you vote FOR Proposal 2.
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For | Against | Abstain | ||||||||||||||||||||
1b. | Charlene T. Begley | ☐ | ☐ | ☐ | 2. | Advisory vote to approve the companys executive compensation | ☐ | ☐ | ☐ | |||||||||||||||||||
1c. |
Steven D. Black |
☐ |
☐ |
☐ |
The Board of Directors recommends you vote FOR Proposal 3.
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For |
Against |
Abstain |
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1d. | Adena T. Friedman | ☐ | ☐ | ☐ | 3. | Approval of the Nasdaq, Inc. Equity Incentive Plan, as amended and restated | ☐ | ☐ | ☐ | |||||||||||||||||||
1e. |
Essa Kazim |
☐ |
☐ |
☐ |
The Board of Directors recommends you vote FOR Proposal 4. |
For |
Against |
Abstain |
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1f. |
Thomas A. Kloet |
☐ |
☐ |
☐ |
4. |
Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 |
☐ |
☐ |
☐ |
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1g. |
John D. Rainey |
☐ |
☐ |
☐ |
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1h. |
Michael R. Splinter |
☐ |
☐ |
☐ |
The Board of Directors recommends you vote AGAINST Proposal 5. |
For |
Against |
Abstain |
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1i. | Jacob Wallenberg | ☐ | ☐ | ☐ |
5. |
A Stockholder Proposal Entitled Shareholder Right to Act by Written Consent |
☐ |
☐ |
☐ |
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1j. | Lars R. Wedenborn | ☐ | ☐ | ☐ |
NOTE: To transact such other business as may properly come before the annual meeting or any adjournment or postponement of the meeting. |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING:
The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
E40725-P00754
NASDAQ, INC. Annual Meeting of Stockholders April 24, 2018 at 8:30 AM, EDT
This proxy is solicited by the Board of Directors
The stockholder(s) hereby appoint(s) Edward S. Knight and Joan C. Conley, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of Nasdaq, Inc. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 8:30 AM, EDT on April 24, 2018, at Nasdaq MarketSite, 4 Times Square, New York, NY 10036 and any adjournment or postponement thereof. Directions: Available at http://ir.nasdaq.com/annual-meeting-info.cfm.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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