Board Oversight of Risk
| The Board is responsible for overseeing our Enterprise risk management processes. The Board is responsible for overseeing our general risk management strategy, the risk mitigation strategies employed by management,
Information security Operational risks relating to internal processes, people or systems, including adequacy of resources,information technology Compliance, environmental, legal and the significantregulatory risks facing us, including competition, reputation and technology risks. The Board stays apprised of particular risk management matters in accordance with its general oversight responsibilities. The Board has delegated to the Committees (as defined below) oversight over the following specific areas and all Committees report to the full Board on a routine basis and when a matter rises to the level of a material or enterprise level risk. For more information about Committee responsibilities, see “Committees of the Board” below. | | Committee
| Primary Areas of Risk Oversight
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| Cboe Global Markets 2021 Proxy Statement | 19 | Audit
| Adequacy and effectiveness of internal controls and procedures
Financial reporting and taxation
| Compensation
| Compensation policies and procedures
| Finance and Strategy
| Credit and capital structure
Strategic challenges with business partners
| Nominating and Governance
| Corporate governance practices
| Risk
| Enterprise risk management
Information security
Operational risks relating to internal processes, people or systems, including information technology
Compliance, environmental, legal and regulatory risks
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| Cboe Global Markets 2020 Proxy Statement
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In addition to our Board, our management is responsible for daily risk management. To help achieve this goal, we have adopted an enterprise risk management framework that is supported by a three lines of defense approach, which involve the Business, Risk Department, Enterprise Risk Management Committee, Compliance Department, Internal Audit Department, and the Board and Committees. We believe the following division of risk management responsibilities is an effective approach for addressing the enterprise risks that we face. | | Line of Defense | Description | First | Our Business managers and associates, which are responsible for the performance, supervision and/or monitoring of our policies and control procedures | Second | Compliance, Risk, and Information Security Departments, which provide independent oversight of the first line, by assessing risk, advising management on policies, procedures, and controls, monitoring and reporting on any identified deficiencies or control enhancements Enterprise Risk Management Committee, Compliance Department,composed of representatives of each of our departments, which meets periodically to review an established matrix of identified risks to evaluate the level of potential risks facing us and to identify any new risks Enterprise Risk Management Committee, along with our Chief Risk Officer, provide information and recommendations to the Risk Committee as necessary | Third | Internal Audit Department, which provides additional independent assurance that significant processes and the Boardrelated controls are designed and Committees. We believe the following division of risk management responsibilities is an effective approach for addressing the enterprise risks that we face. | operating effectively | Line of Defense
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Board Oversight of Information Security The Board recognizes that our business depends on the confidentiality, integrity, availability, performance, security, and reliability of our data and technology systems and devotes time and attention to the oversight of cybersecurity and information security risk. In particular, the Board and Risk Committee each receives updates and reports on information security from senior management, including from the Company’s Chief Compliance Officer, Chief Risk Officer, and Chief Information Security Officer. More specifically, the Risk Committee receives presentations from senior management throughout the year, including on a quarterly basis, on cybersecurity, including architecture and resiliency, incident management, business continuity and disaster recovery, significant information technology changes, data privacy, physical security, and information related to third-party assessments conducted by leading information security providers of the Company’s information security program. The Risk Committee also receives quarterly reports regarding the overall status of the Company’s information security strategy and program, including adequacy of staffing and resources, and reviews and approves any changes to the related information security charter. Further, summaries of the proceedings from prior Risk Committee meetings are provided to the Board on a routine basis, including on a quarterly basis. 20 | Cboe Global Markets 2021 Proxy Statement | Description
| First
| Our Business managers and associates, which are responsible for the performance, supervision and/or monitoring of our policies and control procedures
| Second
| Compliance and Risk Departments, which provide independent oversight of the first line, by assessing risk, advising management on policies, procedures, and controls, monitoring and reporting on any identified deficiencies or control enhancements
Enterprise Risk Management Committee, composed of representatives
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Board Oversight of COVID-19 Global Pandemic The Board also oversaw risk in the wake of the COVID-19 global pandemic. Starting in early 2020, the Board held additional informational and special meetings to monitor developments around COVID-19 and to facilitate frequent communications with management. These Board meetings focused on updates regarding impacts to business continuity, associates, customers, regulators, trading behaviors and volumes, open outcry trading, market disruptions, demand for our products, market data, critical vendors, technology equipment suppliers, and data and disaster recovery centers. In addition, the Committees also monitored developments around COVID-19, in particular, the Audit Committee focused on adequacy and effectiveness of internal controls and procedures, the Compensation Committee focused on compensation matters and associate well-being and engagement, the Finance and Strategy Committee focused on liquidity and capital structure, and the Risk Committee focused on potential information security risks. Board and Committee Meeting Attendance There were 12 meetings of the Board during 2020. Other than Mr. English due to health complications, each of our departments, which meets periodically to review an established matrix of identified risks to evaluate the level of potential risks facing us and to identify any new risks Enterprise Risk Management Committee, along with our Chief Risk Officer, provide information and recommendations to the Risk Committee as necessary
| Third
| Internal Audit Department, which provides additional independent assurance that significant processes and related controls are designed and operating effectively
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Board Oversight of Information Security
The Board recognizes that our business depends on the confidentiality, integrity, availability, performance, security and reliability of our data and technology systems and devotes time and attention to the oversight of cybersecurity and information security risk. In particular, the Board and Risk Committee each receives updates and reports on information security from management, including from the Company’s Chief Compliance Officer, Chief Risk Officer and Chief Information Security Officer. More specifically, the Risk Committee receives presentations throughout the year on cybersecurity, including architecture and resiliency, incident management, business continuity and disaster recovery, significant information technology changes, data privacy, physical security and information related to third-party assessments of the Company’s information security program. The Risk Committee also receives quarterly reports regarding the overall status of the Company’s information security strategy and program, including adequacy of staffing and resources, and reviews and approves any changes to the related information security charter.
Board and Committee Meeting Attendance
There were 6 meetings of the Board during 2019. Each director attended at least 75% of the aggregate number of meetings of the Board and meetings of Committees of which the director was a member during 2020.
Independent Directors Meetings Periodically, the independent directors meet separately in executive session without management. The Lead Director presides over these meetings. The independent directors met in executive session 6 times during 2020. Annual Meeting Attendance We encourage members of the Board to attend our annual meeting of stockholders. All of our current directors, who were then-serving on the Board, attended the 2020 Annual Meeting of Stockholders. Meetings of the Board and its Committees are being held in conjunction with the Annual Meeting. We expect all director nominees will attend the Annual Meeting. Committees of the Board Overview Our Board has the following standing committees (each, a “Committee” and collectively, the “Committees”): the ATS Oversight Committee, the Audit Committee, the Compensation Committee, the Executive Committee, the Finance and Strategy Committee, the Nominating and Governance Committee, and the Risk Committee. | Cboe Global Markets 2021 Proxy Statement | 21 |
Other than the members of the Executive Committee required to be on such Committee pursuant to our Bylaws, each of the members of the Committees was recommended by the Nominating and Governance Committee for approval by the Board for service on that Committee. Each of the Committees has a charter and the Audit Committee, Compensation Committee, and Nominating and Governance Committee charters are available on the Corporate Governance page of our Investor Relations section of our website at: http://ir.Cboe.com. The following table is a listing of the composition of our standing Committees during 2020 and as of March 18, 2021, including the number of meetings of each Committee during 2020. The ATS Oversight Committee was formed on November 20, 2020. | | | | | | | | Director | ATS Oversight | Audit | Compensation | Executive | Finance and Strategy | Nominating and Governance | Risk | Number of meetings | 2 | 10 | 7 | — | 6 | 9 | 5 | Edward T. Tilly (1) | | | | | | | | Eugene S. Sunshine (1) | | | | | | (2) | | Frank E. English, Jr. (3) | | | (4) | | (4) | (4) | | William M. Farrow, III | | | | | | | | Edward J. Fitzpatrick | | | | | | | | Ivan K. Fong | | | | | | | (5) | Janet P. Froetscher | | | | | | | | Jill R. Goodman | | | | | | | | Alexander J. Matturri, Jr. | | (5) | | | | | | Jennifer J. McPeek | (6) | (7) | | | | | | Roderick A. Palmore | | | | | | | | James E. Parisi | (6) | (8) | | (2) | | | | Joseph P. Ratterman | (6) | | | | | | | Michael L. Richter | | | | | | | | Jill E. Sommers | | | | | (4) | (2) | | Carole E. Stone (3) | | (4,8) | | (4) | | (4) | (4) | Fredric J. Tomczyk | | | (2) | | | | |
= Chair = Member (1) | The Chairman, Mr. Tilly, and the Lead Director, Mr. Sunshine, are both members of the Executive Committee. Mr. Tilly is an invited guest to the meetings of each of the other standing Committees, other than the ATS Oversight Committee. Mr. Sunshine is an invited guest to the meetings of each of the other standing Committees. |
(2) | Joined the Committee on May 12, 2020. |
(3) | Mr. English and Ms. Stone stepped down as members of the Board and meetings of Committees of whichin connection with the director was a member during 2019. | Cboe Global Markets 2020 Proxy Statement
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Independent Directors Meetings
Periodically, the independent directors meet separately in executive session without management. The Lead Director presides over these meetings. The independent directors met in executive session 5 times during 2019.
Annual Meeting Attendance
We encourage members of the Board to attend our annual meeting of stockholders. All of our current directors attended the 2019 Annual Meeting of Stockholders. MeetingsStockholder on May 12, 2020.
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22 | Cboe Global Markets 2021 Proxy Statement | |
(4) | Stepped down as a member of the Board andCommittee on May 12, 2020. |
(5) | Joined the Committee on December 17, 2020. |
(6) | Joined the Committee upon its Committees are being held in conjunction withformation on November 20, 2020. |
(7) | Joined the Annual Meeting. We expect all director nominees will attend the Annual Meeting.Committees of the Board
Overview
Our Board has the following six standing committees (each, a “Committee” and collectively, the “Committees”):
the Audit Committee,
the Compensation Committee,
the Executive Committee,
the Finance and Strategy Committee,
the Nominating and Governance Committee; and
the Risk Committee.
Other than the members of the Executive Committee required to be on such Committee pursuant to our Bylaws, each of the members of the Committees was recommended by the Nominating and Governance Committee for approval by the Board for service on that Committee. Each of the Committees has a charter, which is available on the Corporate Governance page of our Investor Relations section of our website at: http://ir.Cboe.com.
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| Cboe Global Markets 2020 Proxy Statement
| August 14, 2020. |
The following table is a listing of the composition of our standing Committees during 2019 and as of March 19,
(8) | Effective May 12, 2020, including the number of meetings of each Committee during 2019. | | | | | | | | Finance and | | Nominating and | | | Director | | Audit | | Compensation | | Executive | | Strategy | | Governance | | Risk | Number of meetings | | 11 | | 6 | | — | | 5 | | 6 | | 6 | Edward T. Tilly(1) | | | | | | | | | | | | | | | | | | Eugene S. Sunshine(1) | | | | | | | | | | | | | | | | | | Frank E. English, Jr. | | | | | | | | | | | | | | | | William M. Farrow, III | | | | | | | | | | | | | | | | Edward J. Fitzpatrick | | | | | | | | | | | | | | | | Janet P. Froetscher | | | | | | | | | | | | | | | | Jill R. Goodman | | | | | | | | | | | | | | | | Roderick A. Palmore | | | | | | | | | | | | | | | | James E. Parisi | | | | | | | | | | | | | | | | | Joseph P. Ratterman | | | | | | | | | | | | | | | | | | Michael L. Richter | | | | | | | | | | | | | | | | | Jill E. Sommers | | | | | | | | | | | | | | | | | | Carole E. Stone | | | | | | | | | | | | | | | Fredric J. Tomczyk | | | | | | | | | | | (2) | | | | | | |
= Chair = Member
| (1)
| | The Chairman and Lead Director are both members of the Executive Committee and invited guests to the meetings of each of the other standing Committees.
|
| (2)
| | Joined the Committee on July 30, 2019.
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In addition, in early 2019 an ad hoc Special Committee of the Board (the “Special Committee”) was formed in connection with an incident involving a suspected theft of computer servers and networking devices. The Special Committee was dissolved in late 2019 following the completion of its investigation into the matter. The Special Committee met 8 times during 2019 and consisted of 7 directors, Mr. Sunshine, Chair, and Messrs. Farrow, Fitzpatrick and Palmore and Mses. Goodman, Sommers and Stone, all of whom are independent under BZX and Nasdaq listing rules, as well as under Rule 10A‑3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Audit Committee
The Audit Committee consists of 4 directors, all of whom are independent under BZX and Nasdaq listing rules, as well as under Rule 10A‑3 of the Exchange Act. The Audit Committee consists exclusively of directors who are financially literate. In addition, Mr. Parisi has been designated as our audit committee financial expert and meets the SEC definition of that position.
The Audit Committee’s responsibilities include:
engaging our independent auditor and overseeing its compensation, work and performance,
reviewing and discussing the annual and quarterly financial statements and related press releases with management and the independent auditor, and
reviewing transactions with related persons for potential conflict of interest situations.
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The Audit Committee also meets with our independent auditor in executive session without management present and our independent auditor may communicate directly, as needed, with membersbecame Chair of the Audit Committee and the Board at large.
Compensation Committee
The Compensation Committee consists of 4 directors, all of whom are independent under BZXMs. Stone stepped down as Chair and Nasdaq listing rules. The Compensation Committee has primary responsibility to approve or make recommendations to the Board for:
all elements and amounts of compensation for the executive officers, including any performance goals,
reviewing succession plans relating to the CEO and our other executive officers,
the adoption, amendment and termination of cash and equity-based incentive compensation plans,
approving any employment agreements, severance agreements or change in control agreements with executive officers, and
the level and form of non-employee director compensation and benefits.
Nominating and Governance Committee
Overview
The Nominating and Governance Committee consists of 5 directors, all of whom are independent under BZX and Nasdaq listing rules. The Nominating and Governance Committee’s responsibilities include making recommendations to the Board on:
persons for election as director,
a director to serve as Chairmanmember of the Board and an independent director to serve as Lead Director,Audit Committee.
|
Audit Committee The Audit Committee consists of 5 directors, all of whom are independent under BZX listing rules, as well as under Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee consists exclusively of directors who are financially literate. In addition, Mr. Parisi has been designated as our audit committee financial expert and meets the SEC definition of that position. The Audit Committee’s responsibilities include: engaging our independent auditor and overseeing its compensation, work, and performance, reviewing and discussing the annual and quarterly financial statements and related press releases with management and the independent auditor, and reviewing transactions with related persons for potential conflict of interest situations. The Audit Committee also meets with our independent auditor in executive session without management present and our independent auditor may communicate directly, as needed, with members of the Audit Committee and the Board at large. Compensation Committee The Compensation Committee consists of 4 directors, all of whom are independent under BZX listing rules. The Compensation Committee has primary responsibility to approve or make recommendations to the Board for: all elements and amounts of compensation for the executive officers, including any performance goals, reviewing succession plans relating to the CEO and our other executive officers, the adoption, amendment and termination of cash and equity-based incentive compensation plans, approving any employment agreements, severance agreements, or change in control agreements with executive officers, oversee the policies and strategies relating to talent, leadership, and culture, including diversity and inclusion, and the level and form of non-employee director compensation and benefits. Nominating and Governance Committee Overview The Nominating and Governance Committee consists of 5 directors, all of whom are independent under BZX listing rules. The Nominating and Governance Committee’s responsibilities include making recommendations to the Board on: persons for election as director, | Cboe Global Markets 2021 Proxy Statement | any stockholder proposals and nominations for director,23
the appropriate structure, operations and composition of the Board and its Committees,
the Board and Committee annual self-evaluation process, and
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a director to serve as Chairman of the Board and an independent director to serve as Lead Director, any stockholder proposals and nominations for director, the appropriate structure, operations and composition of the Board and its Committees, the Board and Committee annual self-evaluation process, and the contents of the Corporate Governance Guidelines, Code of Business Conduct and Ethics, and other corporate governance policies and programs. The Nominating and Governance Committee is also responsible for overseeing environmental, social, and governance (“ESG”). For additional information, see “Corporate Governance—Corporate Social Responsibility”. Criteria for Directors We believe that each of the individuals serving on our Board has the necessary skills, qualifications and experiences to address the challenges and opportunities we face. The Nominating and Governance Committee is responsible for considering and recommending to the Board nominees for election as director, including considering each incumbent director’s continued service on the Board. The Committee annually reviews the skills and characteristics required of all directors in the context of the current composition of the Board, our operating requirements, targeted skills and experiences, and the long-term interests of our stockholders. In evaluating incumbent and new potential director candidates, the 18
| Cboe Global Markets 2020 Proxy Statement
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Committee takes into consideration many factors, including the individual’s educational and professional background, whether the individual has any special experience in a relevant area, personal accomplishments, and cultural experiences. In addition, the Committee may consider such other factors it deems appropriate when conducting its assessment of director candidates. Diversity While we do not currently have a formal diversity policy, our Corporate Governance Guidelines provide that the Nominating and Governance Committee will seek to recommend to the Board candidates for director with a diverse range of experiences, qualifications, and skills in order to provide varied insights and competent guidance regarding our operations, with a goal of having a Board that reflects diverse backgrounds, experience, and viewpoints. We believe that we benefit from having directors with a diversity of skills, characteristics, backgrounds, and cultural experiences. Identifying and Evaluating New Directors The Nominating and Governance Committee utilizes a variety of methods to identify, recruit, and evaluate potential new director candidates. The Committee considers various potential candidates for director, considering the criteria discussed above and qualifications of the individual candidate. Board nominees can be identified by current directors, management, third-party professional search firms, stockholders, or other persons. Prior to a potential new director’s nomination, the director candidate is planned to meet separately with the Chairman of the Board, the Chair of the Nominating and Governance Committee, and the independent Lead Director, who will each consider the potential director’s candidacy. New director candidates may also meet separately with other members of the Board. In addition, a background check is completed before a final recommendation is made to the Board. After a review and evaluation of a potential new director based on the criteria discussed above, the Nominating and Governance Committee will decide whether to recommend to the Board the candidate’s appointment as a director or nominee for election as a director, and the Board will decide whether to approve the candidate’s appointment as a director or a nominee. 24 | Cboe Global Markets 2021 Proxy Statement | |
Onboarding New Directors New directors participate in a robust all-day orientation program to familiarize themselves with the company and management. Our orientation program for new directors includes a discussion of a broad range of topics, including the background of the company, the Board and its governance model, subsidiary governance, regulatory oversight, strategy and business operations, financial statements and capital structure, the management team, key industry and competitive factors, the legal and ethical responsibilities of the Board, and other matters crucial to the ability of a new director to fulfill his or her responsibilities. Retirement Our Corporate Governance Guidelines provide that once an individual serving on our Board reaches age 71, the Board shall begin to discuss the retirement plan with respect to such director. The Board expects that no director shall be elected or reelected as a director once he or she reaches age 73. Any director who turns 73 while serving as a director may continue to serve for the remainder of their current term. | Cboe Global Markets 20202021 Proxy Statement | 1925
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Annual Board and Committee Self-Evaluations The Board believes that a robust annual evaluation process is a critical part of its governance practices. The Nominating and Governance Committee is responsible for establishing and overseeing the Board’s and Committees’ annual self-evaluations to determine whether the Board and the Committees are functioning effectively and to identify potential areas of improvement. The annual self-evaluation process includes the following: Stage in Process | Board of Directors | Committees | Determine Discussion Topics ↓
| Nominating and Governance Committee determines specific topics and subject areas to discuss with each director, such as roles, responsibilities, structure, skills, experience, background, composition, and effectiveness
| Nominating and Governance Committee determines and distributes to each Committee a list of specific topics and subject areas to facilitate discussion about each Committee’s roles and responsibilities, structure, charter, policies, composition, and effectiveness
| Discussions ↓
| Chair of Nominating and Governance Committee and Lead Director interview each director in one-on-ones to discuss Board’s performance
| Chair of each Committee facilitates discussion of Committee’s performance in executive session and in one-on-ones
| Feedback ↓
| Chair of Nominating and Governance Committee and Lead Director report results of discussions and recommendations to Nominating and Governance Committee for its consideration
| Chair of each Committee reports results of Committee self-evaluation and recommendations to Nominating and Governance Committee for its consideration
| Reviews ↓
| Nominating and Governance Committee reviews results from Board and Committee self-evaluations and provides summary of assessments and recommendations to full Board
Board discusses results and, if necessary, provides additional recommendations
| Feedback Incorporated | Changes and enhancements, if any, are implemented to governance policies and practices
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In addition to the annual evaluation process, the Board and Committees meet in regular executive sessions, which provides the directors with opportunities to reflect and provide feedback on an ongoing basis to determine whether the Board and the Committees are functioning effectively and to identify potential areas of improvement. 2026
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Stockholder Nominations The Nominating and Governance Committee will consider stockholder recommendations for candidates for our Board and will consider those candidates using the same criteria applied to candidates suggested by management. Stockholders may recommend candidates for our Board by contacting the Corporate Secretary of Cboe Global Markets, Inc. at 400 South LaSalle Street, Chicago, Illinois 60605. In addition, stockholders may formally nominate candidates for our Board to be considered at an annual meeting of stockholders through the process described below under the heading “Stockholder Proposals.”“Other Items—Stockholder Proposals”. ATS Oversight Committee The ATS Oversight Committee, formed on November 20, 2020, is responsible for, among other things, overseeing the business and operations of BIDS Trading’s U.S. equities businesses, overseeing the adequacy and effectiveness of the information and other barriers established to maintain the separation of BIDS Trading’s U.S. equities businesses from Cboe Global Markets’ registered national exchange businesses, and helping to ensure that specified functions of those BIDS Trading’s U.S. equities businesses are independent of and not integrated with or otherwise linked to Cboe Global Markets’ registered national exchange businesses. Executive Committee The Executive Committee has the authority to exercise the powers and authority of the Board when the convening of the Board is not practicable, except as limited by its charter, the Company’s Bylaws and applicable law. Finance and Strategy Committee The Finance and Strategy Committee’s responsibilities include approving or making recommendations to the Board regarding the budget, capital allocation, strategic plans, and acquisition or investment opportunities. Risk Committee The Risk Committee is generally responsible for, among other things, overseeing the risk assessment and risk management of the Company, including risk related to cybersecurity, information technology, and the Company’s compliance with laws, regulations, and its policies. Compensation Committee Interlocks and Insider Participation No member of the Compensation Committee is a current or former officer or employee of ours. In addition, there are no compensation committee interlocks with other entities with respect to any member of the Compensation Committee. | Cboe Global Markets 2021 Proxy Statement | 27 |
Stockholder Engagement Cboe Global Markets and its Board are committed to fostering long-term and institution-wide relationships with stockholders and maintaining their trust and goodwill. As a result, each year we interact with stockholders through a variety of engagement activities. These engagements routinely cover strategy and performance, corporate governance, executive compensation, and other current and emerging issues to help ensure that our Board and management understand and address the issues that are important to our stockholders. Our key stockholder engagement activities in 20192020 included attending virtual investor and industry conferences, participating in informational fireside chats, conducting telephonic investor road shows, in major U.S. cities and hosting meetings at our corporate headquarters.telephonic meetings. Some of these conferences also featured webcasts and replays of the presentations so that our stockholders could listen remotely. In 2019,2020, we engaged with holders of approximately 4135 percent of our common stock outstanding. | Cboe Global MarketsIn 2020 Proxy Statement
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In 2019 and early 2020,2021, we also conducted an outreach specifically focused on corporate governance, executive compensation, and proxy season trends and issues, targeting our top stockholders that represented approximately 48 45 percent of our common stock outstanding and engaged with holders of approximately 3220 percent of our common stock outstanding. Through these discussions we gained valuable feedback, and this feedback was shared with the Board and its relevant Committees. We also took steps to address any areas of improvement, including by incorporating some of the disclosure suggestions into this Proxy Statement.
In addition, our quarterly earnings calls are open to the general public and feature a live webcast. Communications with Directors As provided in our Corporate Governance Guidelines, stockholders and other interested parties may communicate directly with our independent directors or the entire Board. Our policy and procedures regarding these communications are located in the Investor Relations section of our website at http://ir.Cboe.com. CORPORATE SOCIAL RESPONSIBILITY The Board of Directors recognizes that operating in a socially responsible manner helps promote the long-term interests of our stockholders, organization, associates, industry, and community. Our guiding principles help us deliver on our corporate mission and strategy, including good citizenship.
We believe that being a good citizen means that we hold ourselves accountable for the integrity of the markets and to the communities we serve, seek to help resolve conflicts and build consensus, inform those impacted before taking action, lead by example, and serve as part of the solution. We also seek to be good citizens to the communities we serve by being committed to being environmentally conscious. Additionally, being good citizens also means that we strive to support our associates and better serve our industry and community through our human capital development, volunteerism and policies. 28 | Cboe Global Markets 2021 Proxy Statement | |
Additional information on our approach to ESG can be found in the 2019 Cboe Global Markets, Inc. Environmental, Social and GovernanceESG Report located in the Corporate Social Responsibility section of our website at http:https://www.Cboe.com/aboutCboe,markets.cboe.com/about/corporate-social-responsibility, which does not form a part of this Proxy Statement. Further, our 2020 Annual Report to Stockholders included in this mailing, which includes a copy of our Annual Report on Form 10-K for the year ended December 31, 2020, also contains relevant additional information under “Part I—Item 1. Business—Human Capital Management”. See also herein “Corporate Governance—Board Structure—Board Oversight of Human Capital”. 22
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director compensation Compensation Philosophy and Summary Our director compensation program provides director fees that are generally designed to be paid at competitive levels that are near the median of director fees of our peer group, which is discussed in further detail below in the “Executive Compensation — Compensation—Compensation Discussion and Analysis” section. This allows us to attract and retain individuals with the skills, qualifications, and experiences required to sit on our Board. Annually, the Compensation Committee reviews a competitive market data analysis for non-employee director compensation produced by Meridian Compensation Partners, LLC (“Meridian”), our independent compensation consultant, and recommends changes to our director compensation program, if any, to the Board for approval. For 2019,2020, our director compensation program consisted of a mix of: cash and stock retainers, committee meeting attendance fees, committee chair retainers, and an additional Lead Director retainer. 20192020 Elements of Director Compensation Program
The compensation of our non-employee directors is based upon a compensation year beginning and ending in May at the time of our Annual Meeting of Stockholders. The following table reflects the amount paid with respect to each component of our director compensation program for the Board term ending with the 20192020 Annual Meeting of Stockholders and for the Board term ending with the Annual Meeting in 2020:2021: Annual Fees | May 2018 — May 2019 | | May 2019 — May 2020 | May 2019 — May 2020 | | May 2020 — May 2021 | Cash retainer | $ | 90,000 | | $ | 90,000 | $ | 90,000 | | $ | 90,000 | Stock retainer, value based on closing price on date of grant | $ | 120,000 | | $ | 130,000 | $ | 130,000 | | $ | 145,000 | Committee chair cash retainer | | | | | | | | | | | ATS Oversight | | $ | — | | $ | 20,000 | Audit | $ | 25,000 | | $ | 25,000 | $ | 25,000 | | $ | 25,000 | Compensation | $ | 15,000 | | $ | 15,000 | $ | 15,000 | | $ | 15,000 | Finance and Strategy | $ | 15,000 | | $ | 15,000 | $ | 15,000 | | $ | 15,000 | Nominating and Governance | $ | 15,000 | | $ | 15,000 | $ | 15,000 | | $ | 15,000 | Risk | $ | 20,000 | | $ | 20,000 | $ | 20,000 | | $ | 20,000 | Lead Director cash retainer, in addition to above cash and stock retainers | $ | 50,000 | | $ | 50,000 | $ | 50,000 | | $ | 50,000 | Meeting Fees | | | | | | | | | | | Committee meeting attendance fee per meeting attended | $ | 1,500 | | $ | 1,500 | $ | 1,500 | | $ | 1,500 | Lead Director meeting attendance fee per Committee meeting attended for the Company and for each subsidiary board of directors or committee meeting attended | $ | 1,500 | | $ | 1,500 | $ | 1,500 | | $ | 1,500 |
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In early 2019,2020, the Board increased the stock retainer to more closely align with our peer group compensation median. The Board adjusted the stock retainer, and not the cash retainer, to better align with our peer group’s pay mix and to further align our directors’ interests with our stockholders. In addition, the SpecialThe ATS Oversight Committee chair did not receive an additional committee chairreceived a pro rata cash retainer however, the members received an attendance fee per meeting attended of $1,500.in 2020. | Cboe Global Markets 2020 Proxy Statement
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2019 Director Compensation
The compensation of our non-employee directors for the year ended December 31, 20192020 for their service is shown in the following table. | | Fees Earned or | | Stock | | | | | | | Fees Earned or | | Stock | | All other | | | | Name | | Paid in Cash | | Awards(1) | Total | | Paid in Cash | | Awards(1) | | Compensation(2) | | Total | Eugene S. Sunshine (2)(3) | | $ | 245,000 | | $ | 130,089 | $ | 375,089 | | $ | 255,500 | | $ | 145,088 | | $ | 11,900 | | $ | 412,488 | Frank E. English, Jr.(4) | | $ | 121,500 | | $ | 130,089 | $ | 251,589 | | $ | 55,500 | | $ | — | | $ | — | | $ | 55,000 | William M. Farrow, III | | $ | 143,000 | | $ | 130,089 | $ | 273,089 | | $ | 132,500 | | $ | 145,088 | | $ | — | | $ | 277,588 | Edward J. Fitzpatrick | | $ | 129,000 | | $ | 130,089 | $ | 259,089 | | $ | 123,000 | | $ | 145,088 | | $ | — | | $ | 268,088 | Ivan K. Fong (5) | | | $ | 13,500 | | $ | 58,022 | | $ | — | | $ | 71,522 | Janet P. Froetscher | | $ | 120,000 | | $ | 130,089 | $ | 250,089 | | $ | 121,500 | | $ | 145,088 | | $ | 5,500 | | $ | 272,088 | Jill R. Goodman | | $ | 133,500 | | $ | 130,089 | $ | 263,589 | | $ | 127,500 | | $ | 145,088 | | $ | — | | $ | 272,588 | Alexander J. Matturri, Jr. (5) | | | $ | 13,500 | | $ | 58,022 | | $ | — | | $ | 71,522 | Jennifer J. McPeek (5) | | | $ | 50,569 | | $ | 108,119 | | $ | — | | $ | 158,688 | Roderick A. Palmore | | $ | 133,500 | | $ | 130,089 | $ | 263,589 | | $ | 127,500 | | $ | 145,088 | | $ | — | | $ | 272,588 | James E. Parisi (3) | | $ | 178,500 | | $ | 130,089 | $ | 308,589 | | James E. Parisi (6) | | | $ | 197,250 | | $ | 145,088 | | $ | 10,000 | | $ | 352,338 | Joseph P. Ratterman | | $ | 102,000 | | $ | 130,089 | $ | 232,089 | | $ | 102,000 | | $ | 145,088 | | $ | — | | $ | 251,568 | Michael L. Richter | | $ | 117,000 | | $ | 130,089 | $ | 247,089 | | $ | 112,500 | | $ | 145,088 | | $ | 10,330 | | $ | 267,918 | Jill E. Sommers (4) | | $ | 280,000 | | $ | 130,089 | $ | 410,089 | | Carole E. Stone | | $ | 154,000 | | $ | 130,089 | $ | 284,089 | | Fredric J. Tomczyk (5) | | $ | 42,000 | | $ | 102,751 | $ | 144,751 | | Jill E. Sommers (7) | | | $ | 261,000 | | $ | 145,088 | | $ | — | | $ | 406,088 | Carole E. Stone (4) | | | $ | 74,000 | | $ | — | | $ | — | | $ | 74,000 | Fredric J. Tomczyk | | | $ | 105,000 | | $ | 145,088 | | $ | — | | $ | 250,088 |
(1) | (1)
| | The non-employee directors then-serving on the Board and Mr. Tomczyk received an equity grant of restricted stock on May 16, 201912, 2020, other than Ms. McPeek who received an equity grant of restricted stock on August 14, 2020 and July 31, 2019, respectively.Messrs. Fong and Matturri who each received an equity grant of restricted stock on December 17, 2020. The equity grant vestsgrants vest on the earlier of the one year anniversaryanniversary of the grant date or the completion of their final year of director service. Each of thesethe listed directors who received an equity grant holds 1,2361,482 shares, other than Mr. TomczykMs. McPeek who holds 9401,225 shares and Messrs. Fong and Matturri who each holds 648 shares, of unvested restricted stock as of December 31, 2019.2020. |
(2) | (2) Amounts shown in the All Other Compensation column represent matching gifts made to qualified non-profit organizations on behalf of non-employee directors and do not represent total charitable contributions made by them during the year. Amounts represent those provided through our Matching Gift Program that is available to full-time employees with typically at least one year of service and non-employee directors. During 2020, we matched eligible gifts from a minimum of $50 to an aggregate maximum gift of $10,000 per employee or non-employee director, per calendar year. In addition, in 2020, we matched at a rate of 1.5x eligible gifts from a minimum of $50 to $1,000 per employee or non-employee director, per calendar year to organizations that (i) support social justice and/or improve the lives of those in Black communities or (ii) provide services to COVID-19 global pandemic relief efforts. |
(3) | | The amount shown in the Fees Earned or Paid in Cash column for Mr. Sunshine also includes fees of $39,000$28,500 for attending subsidiary Boardboard of Directorsdirectors or Committee meetings. |
| Cboe Global Markets 2021 Proxy Statement | 31 |
(4) | (3) Mr. English and Ms. Stone left the Board and Committees in connection with the 2020 Annual Meeting of Stockholders on May 12, 2020. The amounts shown in the Fees Earned or Paid in Cash column reflect the remaining cash retainers and Committee meeting fees while on the Board. |
(5) | Ms. McPeek and Messrs. Fong and Matturri who joined the Board on August 14, 2020 and December 17, 2020, respectively, also received the same compensation and equity as described above for all other directors, but on a pro-rata basis for the portion of time served in 2020. |
(6) | The amount shown in the Fees Earned or Paid in Cash column for Mr. Parisi also includes fees of $60,000 for his service as a member of the Boardsboards of Directorsdirectors of CFE and SEF. |
(7) | (4)
| | The amount shown in the Fees Earned or Paid in Cash column for Ms. Sommers also includes fees of $161,500$160,500 for her service as a member of the Boardsboards of Directorsdirectors of our securities exchanges, CFE, and SEF. |
| (5)
| | Mr. Tomczyk, who joined the Board of Directors on July 30, 2019, also received the same compensation and equity as described above for all other directors, but on a pro-rata basis for the portion of time served in 2019.
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| Cboe Global Markets 2020 Proxy Statement
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Director Stock Ownership and Holding Guidelines The Compensation Committee has adopted stock ownership and holding guidelines, which provide that each non-employee director should own stock equal to five times the cash annual retainer for directors within five years of joining the Board or within four years of May 2019 for directors then-serving when the guidelines were updated in May 2019. The updates to the guidelines are discussed in further detail below in the “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Program Practices — Compensation Refinements” section. For purposes of this ownership and holding requirement, (a) shares owned outright or in trust and (b) restricted stock, including shares that have been granted but are unvested, are included. In addition, each non-employee director is required to hold all of their shares until the guidelines are met, except for sales of shares to pay taxes with respect to the vesting or exercising of equity grants. Other than Mr. Parisi, and Ms. Sommers, Ms. McPeek, and Mr. Tomczyk,Messrs. Fong and Matturri, who were first elected to our Board in 2018, 2019 and, 2019,with respect to the last three, 2020, respectively, each of the non-employee incumbent directors has met the ownership requirement as of December 31, 2019. 2020. Director Hedging and Pledging Policies Under our Insider Trading Policy, our directors are prohibited from entering into transactions involving options to purchase or sell our common stock or other derivatives related to our common stock. Our Insider Trading Policy also prohibits directors from entering into any pledges or margin loans on shares of our common stock. None of the directors have existing hedges, pledges or margin loans on shares of our common stock. 32 | Cboe Global Markets 20202021 Proxy Statement | 25
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executive Compensation PROPOSAL 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION In accordance with Section 14A of the Exchange Act, the Board is providing our stockholders with an advisory vote to approve executive compensation. This advisory vote, commonly known as a “say-on-pay” vote, is a non-binding vote to approve the compensation paid to our named executive officers as disclosed in this proxy statement in accordance with SEC rules. The Board has adopted a policy of providing for annual “say-on-pay” votes in accordance with the results of our last stockholder advisory vote. As discussed in the “Compensation Discussion and Analysis” section, our executive compensation program is designed to meet the following objectives: attract and retain talented and dedicated executives,
motivate our executives to achieve corporate goals that create value for our stockholders, and
align the compensation of our executive officers with stockholder returns.
The Compensation Committee has implemented the following best practices applicable to our executive officers in order to achieve these objectives: a high proportion of total compensation is in the form of performance-based compensation with limits on all incentive award payouts,
incentive awards include financial measures and a relative stock price performance goal, stock ownership and holding guidelines,
double trigger change in control provisions in equity awards and for severance benefits in an employment agreementagreements and the Executive Severance Plan,
prohibition on hedging,
prohibition on pledging,
elimination of tax gross-up payments in the event of a change in control, and
clawbacks of incentive compensation.
We believe that the compensation paid to the named executive officers is appropriate to align their interests with those of our stockholders to generate stockholder returns. Accordingly, the Board recommends that our stockholders vote in favor of the say-on-pay vote as set forth in the following non-binding resolution: RESOLVED, that our stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in this Proxy Statement, including under the heading “Compensation Discussion and Analysis,” the accompanying compensation tables and the corresponding narrative discussion. As this is an advisory vote, the outcome of the vote is not binding on us with respect to executive compensation decisions, including those relating to our named executive officers. Our Compensation Committee and Board value the opinions of our stockholders. The Compensation Committee and Board will consider the results of the say-on-pay vote and evaluate whether any actions should be taken in the future. 26
| Cboe Global Markets 20202021 Proxy Statement | 33 |
Non-binding approval of our executive compensation program requires that a majority of the shares cast on this matter be cast in favor of the proposal. Abstentions and broker non-votes will not be counted as votes cast and therefore will not affect the vote. The Board recommends that the stockholders vote FOR approval, in a non-binding resolution, of the compensation paid to our executive officers. COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis section is intended to provide our stockholders with an understanding of our compensation practices and philosophy, material elements of our executive compensation program, and the decisions made in 20192020 with respect to the total compensation awarded to, earned by, or paid to each of the following 20192020 “named executive officers” or “NEOs”: Name | Title* | Edward T. Tilly | Chairman, President and Chief Executive Officer | Christopher A. Isaacson | Executive Vice President and Chief Operating Officer | Brian N. Schell | Executive Vice President, Chief Financial Officer and Treasurer | Mark S. HemsleyDavid Howson
| Executive Vice President, President Europe (1) | Bryan Harkins | Executive Vice President, Head of Markets Division |
* | Titles are as of December 31, 2020. |
*Titles are as of December 31, 2019.
34 | (1)
| | Mr. Hemsley resigned as Executive Vice President effective December 31, 2019 and his last day with the Company was February 28, 2020.
|
| Cboe Global Markets 20202021 Proxy Statement | 27
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This Compensation Discussion and Analysis section is organized as follows: Executive Summary
The design of our executive compensation program, including compensation practices and independent oversight, is intended to align management’s interests with those of our stockholders and pay for our performance. Compensation awarded in 2019 reflects another year of solid results and the completion of our successful integration with Bats.
28
| Cboe Global Markets 20202021 Proxy Statement | 35 |
Executive Summary Principal Components of 2020 Executive Compensation | | | Base Salary (16% of CEO’s target pay mix) | | Fixed level of cash compensation based on performance, expertise, experience, and market value | | Target annual incentive is based on percentage of base salary | | Annual Incentive Bonus (26% of CEO’s target pay mix) | | Provides variable cash compensation payout opportunities to the extent pre-established EBITDA and net revenue corporate and individual performance goals are met over one-year performance period | | Individual performance goals include, among others, ESG related goals such as attracting, engaging, developing and retaining key talent, communicating with investors, promoting a culture of inclusion, succession planning, and overseeing a pipeline of diverse talent | | Payouts range 0% to 200% of executive’s target bonus opportunity | | Long-Term Equity Awards -Restricted Stock Units (29% of CEO’s target pay mix) | | Provides compensation in the form of Company shares to the extent three-year graded service period is met | | Aligns interests of our executives with those of our stockholders and encourages retention | | -Performance Share Units (29% of CEO’s target pay mix) | | Provides variable compensation in the form of Company shares to the extent pre-established relative total stockholder return (“TSR”) and earnings per share (“EPS”) goals are met over a 3-year period | | Aligns the interests of our executives with stockholders, provides significant incentive for retention, and motivates our executives to focus on our long-term growth and increased stockholder value | | Payouts range 0% to 200% of executive’s target number of PSUs |
Performance Affecting Fiscal 2020 Annual Incentive Pay Outcomes | | | 2020 Adjusted Net Revenues1 | | 2020 Adjusted EBITDA1 | $1,213 Million | | $865 Million | | | | 96% of Target Earned | | 124% of Target Earned |
Performance Affecting 2018-2020 PSU Pay Outcomes | | | 3-Year Adjusted EPS1 | | 3-Year Relative TSR | $15.02 | | 14th Percentile | | | | 200% of Target PSUs Earned | | 0% of Target PSUs Earned |
1 Adjusted revenues less cost of revenues (“net revenues”), adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”), and 3-year adjusted EPS are non-GAAP measures used by the Company and reconciliations to GAAP measures are provided in Appendix A. 36 | Cboe Global Markets 2021 Proxy Statement | |
Compensation Governance Practices What we do |
| What we don’t do | Mitigate compensation risk
Enforce robust mandatory stock ownership and holding guidelines
Utilize independent compensation consultant
Maintain a Compensation Committee that is composed solely of independent directors
Active engagement with stockholders
Maintain double trigger change in control provisions in equity awards and for severance benefits in an employment agreementagreements and the Executive Severance Plan
Provide clawback provisions for cash incentive and equity incentive awards for executives
Impose maximum caps and limits on short- and long-term incentive award payouts
| | Ä No hedging of Company stock by executives
Ä No pledging of Company stock by executives
Ä No tax gross-ups upon a change in control or otherwise
Ä No excessive use of employment contracts
Ä No payouts for below threshold level for corporate performance
Ä No excessive perquisites
Ä No guaranteed annual incentive payments
|
2019 Compensation Program Overview
The following is a brief summary of our 2019 executive compensation program.
Market-competitive base salary.
High proportion of named executive officers’ total compensation was composed of performance-based compensation.
Annual cash incentive was based on corporate performance (weighted 75%) measured against pre-established adjusted EBITDA, net revenue and synergies goals and individual performance (weighted 25%) measured against pre-established individual strategic goals.
Individual performance component contains, among other goals, ESG related goals such as attracting, engaging, developing and retaining key talent, communicating with investors, culture of inclusion, pay parity, succession planning and overseeing a pipeline of diverse talent.
Long-term incentive, other than a special one-time grant to Mr. Harkins, was comprised of 50% time-based restricted stock units (“RSUs”) and 50% performance-based restricted stock units (“PSUs”), with performance contingent on achievement of relative total shareholder return and earnings per share goals.
Special one-time grant of RSUs to Mr. Harkins that vests in full upon the third anniversary of the grant, assuming continued employment until that date.
Market competitive retirement, medical, life and disability arrangements that are generally available to all employees.
| Cboe Global Markets 2020 Proxy Statement
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|
2019 Business Highlights
Cboe Global Markets and its Board of Directors are committed to a corporate mission and strategy designed to create long-term stockholder value. Our mission isstrategy to lead the industry in defining the markets of today and tomorrow through: | (1)
| | relentless innovation to expand our diverse offering for investors around the world,
|
| (2)
| | leading-edge technology to connect customers to global markets and
|
| (3)
| | seamless solutions to enhance the customer experience through insights, education, data, analytics and more.
|
More specifically, our strategy to help achieve such mission is to:
| (1) | | grow existingbuild upon core proprietary products,
|
| (2) | | expand our customer base, leverage leading proprietary trading technology, |
| (3) | | develop and offer unique products, services and models, diversify business mix with growth of non-transactional revenue, |
| (4) | | continue to enhance our leading-edge technologybroaden geographic reach, and
|
| (5) | | form strategic alliances that leverage and complement our core business. expand product lines across asset classes. |
The following is a brief summary of our 20192020 business highlights as they relate to the ongoing commitment of our team and the Board to this strategy and the key performance metrics used in our performance-based compensation program. Financial Results
| o | | Net revenues1 of $1,254 million for 2020, up 10% from $1,137 million for 2019, down 7% from record $1,217 million for 2018. 2019. |
| o | | Diluted EPS of $4.27 for 2020, up 28% from $3.34 for 2019, down 11% from $3.76 for 2018,2019. |
Business Results | o | Launched mini VIX futures and adjusted diluted EPSoptions on S&P 500 ESG Index. |
| o | Acquired and integrating information solutions companies Hanweck, FT Options, and Trade Alert, in furtherance of $4.73 for 2019, down 6% from adjusted diluted EPS of $5.02 for 2018.2the Company’s strategy to increase non-transactional revenue. |
| o
| | Adjusted EBITDA of $784 million for 2019, down 7% from adjusted EBITDA of $840 million for 2018.2
|
Integration
| o
| | Exited 2019 with three-year realized synergies of $45 million, primarily seen in compensation and benefits and professional fees and outside services.
| | o
| | On October 7, 2019, completed the final step in multi-exchange technology migration.
|
Business Segment Results
| o
| | Launched Monday expiring options on XSP, our mini-SPX contract, added SPX expirations related to the 2020 presidential election and launched futures on AMERIBOR.
|
| o
| | Began to permit direct access to CFE and Cboe Options from Trading Permit Holders in Spain and Switzerland.
|
1Revenues less cost of revenues (“net revenues”).
2Adjusted diluted EPS and adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) are non-GAAP measures used by the Company and reconciliations to GAAP measures are provided in Appendix A.
30
| Cboe Global Markets 20202021 Proxy Statement | 37 |
| o
| | Redeployed our customer outreach efforts to further penetrate global market participants by realigning our sales team with specialists targeting asset managers, hedge funds, U.S. insurance companies and pension funds.
|
| o | | Cboe Europe deepened its presence in Europe by opening a new trade reportingAcquired MATCHNow, BIDS Trading, and trading venue in Amsterdam. EuroCCP to expand geographic reach and diversify product capabilities. |
| o | | Cboe Europe also launched Cboe Closing Cross,Started process to develop pan-European derivatives for a post-close trading service. planned launch in 2021. |
Navigating COVID-19 Global Pandemic | o | | Introduced a smallCapitalized on increased engagement among retail broker distribution program forinvestors, such that total options volume and total U.S. equities marketvolume reached new all-time highs in 2020.
|
| o | Successfully transitioned open outcry trading to all electronic trading when open outcry trading was temporarily suspended; then reopened the trading floor with a modified layout and stringent safety protocols in place. |
| o | Provided frequent communications to directors, employees, customers, regulators, critical vendors, technology equipment suppliers, data at discounted rates, order book priority for retail investorsand disaster recovery centers, and other service providers. |
| o | Continued to operate our business and achieved solid results in 2020, while successfully shifting all global employees (except those deemed essential) to work from home on EDGX,a temporary basis and a new lead market maker incentive program for the Cboe Listed ETP Marketplace. implementing travel restrictions. |
We believe that the performance of the Company demonstrates that management is keenly focused on driving the Company for sustainable long-term growth and diversifying the Company’s business, while obtaining short-term results. Our business continued to generate strong cash flows from operations and we were able to enhance stockholder returnsreturn $520 million to stockholders through dividends and share repurchases while retaining the flexibility to pursue new growth opportunities. To that end, in 2019:2020: in keeping with our goal of consistent and sustainable dividend growth, we increased our quarterly dividend by 16%17% to $0.36$0.42 per share and paid cash dividends of $150$171 million in 2019; 2020; and
we paid down $350 million of outstanding debt; and we repurchased 1.43.5 million of our outstanding shares of common stock under a share repurchase program for a total of $157$349 million.
As a result ofDespite these business highlights andsolid results in 2020, capital allocation decisions, and successfully navigating the COVID-19 global pandemic, as of December 31, 2019,2020, we achieved total stockholder returns, including reinvested dividends, of approximately:
24% in 2019;
-21% over the past year; 68%-22% over the past three years; and
101%53% over the past five years; and
387% over the past ten years. Executive Compensation Program Practices Compensation Philosophy and Summary Our executive compensation program is designed to attract and retain talented and dedicated executives who are instrumental in our achievement of key strategic business objectives. To meet these objectives, the Compensation Committee designed and implemented a program that pays a substantial portion of executive compensation based on corporate and individual performance. The Compensation Committee believes that our executive compensation program plays a vital role in contributing to the achievement of key strategic business objectives that ultimately drive long-term business success. Accordingly, we designed our executive compensation program to focus our 38 | Cboe Global Markets 2021 Proxy Statement | |
executives on achieving critical corporate financial and strategic goals, while taking steps to position the business for sustained growth in financial performance over time. | Cboe Global Markets 2020 Proxy Statement
| 31
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Our executive compensation program generally consists of the following elements, in addition to retirement, health, and healthwelfare benefits:
The following table lists the various components included in total compensation for our executive officers and each element’s purpose. Later sections provide additional details regarding each component.
| Total Compensation ComponentCboe Global Markets 2021 Proxy Statement
| | Purpose
| Base salary
| | Provides a fixed amount of compensation based on the market value of the position
| Annual incentive (bonus)
| | Provides variable cash compensation payout opportunities designed to reward each executive for the achievement of certain annual corporate and individual performance metrics measured against pre-established performance goals
| Long-term equity awards
| | Provide variable compensation in the form of equity, aligning the interests of our executives with stockholders, providing significant incentive for retention, and motivating our executives to focus on our long-term growth and increased stockholder value
| Benefits (retirement, medical, life and disability)
| | Provide competitive health, welfare and retirement benefits39
|
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| Cboe Global Markets 2020 Proxy Statement
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The following charts show the 20192020 total target compensation mix for the Chief Executive Officer and the other named executive officers as a group. For the Chief Executive Officer and the other named executive officers, the majority of 20192020 total target compensation is “at-risk” (i.e., linked to achievement of performance goals and/or the value is tied to our common stock price) and, further, the majority of “at-risk” pay is in the form of equity awards. Total target compensation is the sum of an executive officer’s 20192020 base salary, target annual incentive opportunity and target value for long-term equity awards (i.e., RSUs and PSUs). The following neither reflects the technology platform migration cash incentive award paid to Mr. Isaacson nor the special one-time long-term equity award granted to Mr. Harkins. Company’s Response to Stockholder Vote on Say‑on‑PaySay-on-Pay At the 20192020 Annual Meeting of Stockholders, our “say-on-pay” proposal received the support of over 96%93% of the votes cast for approval of our 20182019 executive compensation program as disclosed in our 20192020 Proxy Statement, and every year since going public in 2010, we have received over 85% stockholder support of our executive compensation programs. The Compensation Committee has reviewed the results of the stockholder vote on our 20182019 executive compensation program and considered such results supportive of our executive compensation program and the Compensation Committee’s measured approach to modifying our compensation practices to enhance their alignment with stockholder interests. In addition, the Compensation Committee has determined that the vote result did not warrant any large-scale changes to our executive compensation program; however, the Compensation Committee continues to take steps, as described below, to help ensure our compensation practices remain aligned with best practices and stockholder interests. Compensation Refinements The Board and Compensation Committee did not make any in-cycle changes to the annual incentive program or long-term equity awards in 2020 as a result of the COVID-19 global pandemic. 40 | Cboe Global Markets 2021 Proxy Statement | |
The Board and Compensation Committee determine actual annual incentive bonus payouts based on achieved results measured against pre-established corporate and individual performance goals. In addition to wideningAs a result of our successful integration of Bats and larger focus on individual performance, at the performance curve for certainbeginning of the pre-established corporate performance goals,2020 the Compensation Committee changed the threshold payout from 0% to 25% ofremoved the annual target incentive opportunity. | Cboe Global Markets 2020 Proxy Statement
| 33
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In May 2019, the Boardaward’s corporate performance synergy metric and Compensation Committee reviewed our stock ownershipredistributed its weighting to individual and holding guidelines, which provides that non-employee directors and executive officers should own certain amounts of Cboe common stock, and determined to increase the minimum ownership requirements. This change was madeother corporate performance metrics to better align with best practices and align the interests of our non-employee directors and executive officersexecutives with our business strategy and stockholders. The minimum ownership requirementsFor 2020, the metrics and weightings were updated as follows:
| | | 2019 Metrics | | 2020 Metrics | Position Individual Performance (weighted 25%)
| Previous Holding Requirements
| New Holding Requirements Individual Performance (weighted 30%)
| Chief Executive Officer Corporate Performance (weighted 75%)
| Five times base salary
| Six times base salary Corporate Performance (weighted 70%)
| | | Achievement of Adjusted Net Revenue | Achievement of Net Revenue | | Achievement of Adjusted EBITDA | Achievement of Adjusted EBITDA | | Achievement of Business Unit Performance | Achievement of Business Unit Performance | | Four times base salary
| Four times base salary
| Chief Operating Officer
| Four times base salary
| Four times base salary
| Other Executive Officers
| Two times base salary
| Three times base salary
| Non-Employee Directors
| Three times annual cash retainer
| Five times annual cash retainer
|
2019
2020 Target Annual Pay Opportunities The following chart shows the 20192020 total target compensation for each named executive officer. | | | | | | | | Target Long-Term | | | | | | | | | | Target Annual | | Equity Awards | | | | | | | | | | | | | | Target Long-Term | | | | | | | | | | Target Annual | | Equity Awards | | | | Named Executive Officer(1) | | Base Salary | | Incentive Bonus | | RSUs (2) | | PSUs (2) | | Total | | Base Salary | | Incentive Bonus | | RSUs (2) | | PSUs (2) | | Total | Edward T. Tilly | | $ | 1,265 | | $ | 2,087 | | $ | 2,150 | | $ | 2,150 | | $ | 7,652 | | $ | 1,265 | | $ | 2,087 | | $ | 2,350 | | $ | 2,350 | | $ | 8,052 | Christopher A. Isaacson (3) | | $ | 650 | | $ | 975 | | $ | 625 | | $ | 625 | | $ | 2,875 | | $ | 650 | | $ | 975 | | $ | 875 | | $ | 875 | | $ | 3,375 | Brian N. Schell | | $ | 521 | | $ | 729 | | $ | 650 | | $ | 650 | | $ | 2,550 | | $ | 525 | | $ | 735 | | $ | 750 | | $ | 750 | | $ | 2,760 | Mark S. Hemsley (4) | | $ | 644 | | $ | 741 | | $ | 425 | | $ | 425 | | $ | 2,235 | | David Howson (3) | | | $ | 575 | | $ | 633 | | $ | 325 | | $ | 325 | | $ | 1,858 | Bryan Harkins (5) | | $ | 500 | | $ | 500 | | $ | 300 | | $ | 300 | | $ | 1,600 | | $ | 500 | | $ | 500 | | $ | 325 | | $ | 325 | | $ | 1,650 |
(1) | (1)
| | All amounts are in thousands. |
(2) | (2)
| | Represents the target equity award value used to calculate the number of shares to grant. |
(3) | (3)
| | Does not include Mr. Isaacson’s technology platform migration cash incentive award.
|
| (4)
| | Mr. HemsleyHowson receives his cash compensation in British pounds. The amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.33,$1.37, which was the exchange rate as of December 31, 2019. 2020. |
| (5)
| | Does not include Mr. Harkins’ special one-time equity award.
|
This supplemental table is not required, but rather it is provided to demonstrate our named executive officers’ total target compensation opportunity for 2019.2020. Please refer to the Summary Compensation Table below for complete disclosure of the total compensation of our named executive officers reported in accordance with the SEC disclosure requirements. Executive Compensation Program Governance Cycle Throughout the year, the Board and the Compensation Committee are heavily involved in reviewing, monitoring, and approving, as applicable, the executive compensation program. compensation program. The Compensation Committee, composed of all independent directors, is responsible for reviewing the various components of the total compensation program for all executive officers. The Compensation Committee met 67 times in 2019.2020. The Compensation Committee either approves or makes recommendations to the Board regarding compensation related decisions. Messrs. Tilly, Isaacson, and Schell generally attended portions of the 2020 meetings of the Compensation Committee to provide information and assistance, other than when the Compensation Committee discussed the respective executive’s compensation. 34
| Cboe Global Markets 20202021 Proxy Statement | 41 |
While specific topics may vary from meeting to meeting, the following illustration describes the general annual cycle of the Board’s and Compensation Committee’s activities. Independent Compensation Consultant For 2019,2020, the Compensation Committee engaged Meridian as its independent compensation consultant to provide the Compensation Committee with advice and assistance related to the design of our executive compensation program. As described below in further detail, Meridian consultants regularly attend meetings of the Compensation Committee. In addition, Messrs. Tilly, Isaacson and Schell generally attended portions of the 2019 meetings of the Compensation Committee to provide information and assistance, other than when the Compensation Committee discussed the respective executive’s compensation. While specific topics may vary from meeting to meeting, the following illustration describes the general annual cycle of the Board’s and Compensation Committee’s activities.
Independent Compensation Consultant
Meridian our independent compensation consultant, reviews our executive compensation program and advises the Compensation Committee on best practices and plan design to help improve the Company’s program’s effectiveness and alignment with market practices. In addition, Meridian provides advice to the Compensation Committee on the Company’s compensation peer group and on the competitive positioning of the various components of the executive compensation program. Meridian consultants regularly attend meetings of the Compensation Committee. Meridian also meets with the Compensation Committee in executive session without management present and may communicate directly, as needed, with members of the Compensation Committee and the Board at large. Based on a review of its engagement of Meridian and consideration of factors set forth in SEC Nasdaq and BZX rules, the Compensation Committee determined that Meridian’s work did not raise any conflicts of interest and that it is independent from management. 42 | Cboe Global Markets 20202021 Proxy Statement | 35
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Tally Sheets When reviewing compensation for the named executive officers, the Compensation Committee may consider tally sheets that detail the various elements of compensation for each executive. These tally sheets, developed with the assistance of Meridian, are used to evaluate the appropriateness of theeach named executive officer’s total compensation package, to compare each executive’s total compensation opportunity with his or her actual payout, to assess the level of holding power in unvested equity awards, and to help ensure that the compensation appropriately reflects the executive compensation program’s focus on pay for performance and alignment with stockholder interests. Peer Group and Comparative Data For the 20192020 compensation decisions, the Compensation Committee used a single peer group from which to derive competitive market compensation data. The 25-company24-company peer group was composed of exchange holding companies, financial services firms, and technology-focused companies with corporate profiles similar to ours. TheBased on the then-available fiscal year 2019 data, the Company’s annual revenue, was slightly below the median of the peer group, gross profit was below the median of the peer group, market capitalization, was at the median of the peer group and number of employees fell below the median of the peer group. The Compensation Committee used thisthe market data derived from the peer group as points of reference, rather than as the sole determining factor in setting compensation for our named executive officers. | | Peer Group | Akamai Technologies, Inc. | London Stock Exchange Group plc | Broadridge Financial Solutions, Inc. | LPL Financial Holdings Inc. | Citrix Systems, Inc. | MarketAxess Holdings Inc. | CME Group Inc. | MSCI Inc. | Deutsche Borse AG | Nasdaq, Inc. | The Dun & Bradstreet CorporationEquifax Inc.
| SEI Investments Company | Equifax Inc.E*TRADE Financial Corporation
| SS&C Technologies Holdings, Inc. | E*TRADE Financial CorporationEuronet Worldwide, Inc.
| Stifel Financial Corp. | Euronet Worldwide, Inc.
| Synopsys, Inc.
| FactSet Research Systems Inc. | TransUnionSynopsys, Inc.
| Fortinet, Inc. | Verisk Analytics, Inc.TransUnion
| Intercontinental Exchange, Inc. | Virtu Financial,Verisk Analytics, Inc.
| Jack Henry & Associates, Inc. | Virtu Financial, Inc. |
Following the 20192020 compensation decisions, the Compensation Committee reviewed the peer group. The Committee reviewed the data provided by Meridian and compared our corporate performance to our peer group in the areas of revenues, gross profit, market capitalization, and number of employees. The Committee also considered business descriptions, complexity of business and other qualitative factors. The Committee approved one change to the peer group, removing The Dun & Bradstreet CorporationSS&C Technologies Holdings, Inc. because the company was acquired.company’s compensation programs and practices are not representative of typical market practice. The change decreased the number of peers from 2524 to 2423 companies. With respect to the updated peer group, the Company’s annual revenue is slightly below the median of the peer group, gross profit is below the median of the peer group, market capitalization is at the median of the peer group and number of employees falls below the median of the peer group. 36
| Cboe Global Markets 20202021 Proxy Statement | 43 |
20192020 Elements of Executive Compensation Program
Base Salary The base salary for our named executive officers is designed to be part of a competitive total compensation package when compared to our peer group. Base salary provides our named executive officers with a measure of certainty within their total compensation package and provides a baseline for their target payout opportunity under the annual incentive plan. In setting base salary, in addition to considering market benchmark data derived from our peer group, the Compensation Committee also considered for each named executive officer the following factors: For 2019,2020, the Compensation Committee approved or made recommendations to the Board regarding the base salaries for each of the named executive officers, with input in part from Mr. Tilly regarding the individual performances of Messrs. Isaacson, Schell, HemsleyHowson, and Harkins. Below are the base salary amounts at December 31, 20192020 and 20182019 for the named executive officers and the aggregate percent change. | | 2018 Base | | 2019 Base | | Percent | | | | | 2019 Base | | 2020 Base | | Percent | Named Executive Officer | | Salary (1) | | Salary (1) | | Change | | Salary (1) | | Salary (1) | | Change | Edward T. Tilly | | $ | 1,265 | | $ | 1,265 | | 0 | % | | $ | 1,265 | | $ | 1,265 | | 0 | % | Christopher A. Isaacson | | $ | 540 | | $ | 650 | | 20 | % | | $ | 650 | | $ | 650 | | 0 | % | Brian N. Schell | | $ | 521 | | $ | 521 | | 0 | % | | $ | 521 | | $ | 525 | | 1 | % | Mark S. Hemsley (2) | | $ | 619 | | $ | 644 | | 4 | % | | David Howson (2) | | | $ | 492 | | $ | 575 | | 17 | % | Bryan Harkins | | $ | 500 | | $ | 500 | | 0 | % | | $ | 500 | | $ | 500 | | 0 | % |
(2) | (2)
| | Mr. HemsleyHowson receives his cash compensation in British pounds and his base salary did not change. Any changespounds. The 2020 amounts reported were dueconverted to foreign currency fluctuations.U.S. dollars using a rate of £1.00 to $1.37, which was the exchange rate as of December 31, 2020. The 2019 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.33, which was the exchange rate as of December 31, 2019. The 2018 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.28, which was the exchange rate as of December 31, 2018. |
The base salary for Mr. IsaacsonHowson increased due to his assumption of additional responsibilities as Chief Operating Officer, the continued successful integration with Batsnew Executive Vice President, President Europe and to more closely align compensation with comparative peer group market data provided by Meridian. data. Annual Incentive Overview.Overview. The annual incentive, or bonus, component of the total compensation package paid to our named executive officers is designed to reward the achievement of key corporate and individual performance goals that drive our annual operating and financial results. 44 | Cboe Global Markets 20202021 Proxy Statement | 37
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The Compensation Committee established a target annual incentive opportunity for each of the named executive officers by considering market benchmark data derived from our peer group in addition toand the following factors: | | position, | individual performance, | position, experience,
| individual performance,
| experience,
| potential to influence our future success, and
| industry specific knowledge,
| total compensation.
| level of responsibility,
| |
The table below shows each named executive officer’s 20182019 and 20192020 target annual incentive opportunity, shown as a percentage of salary, and the change in percentage points. | | 2018 Target Annual | | 2019 Target Annual | | | | | | | | | Incentive | | Incentive | | | | | | | | | Opportunity as | | Opportunity as | | | | Change in | | | | | Percentage of | | Percentage of | | | | Percentage | | | | | | 2019 Target Annual | | 2020 Target Annual | | | | | | | | | Incentive | | Incentive | | | | | | | | | Opportunity as | | Opportunity as | | | | Change in | | | | | Percentage of | | Percentage of | | | | Percentage | | Named Executive Officer | | Base Salary | | Base Salary | | | | Points | | | Base Salary | | Base Salary | | | | Points | | Edward T. Tilly | | 165 | % | | 165 | % | | 0 | pts | | 165 | % | | 165 | % | | 0 | pts | Christopher A. Isaacson | | 150 | % | | 150 | % | | 0 | pts | | 150 | % | | 150 | % | | 0 | pts | Brian N. Schell | | 140 | % | | 140 | % | | 0 | pts | | 140 | % | | 140 | % | | 0 | pts | Mark S. Hemsley | | 110 | % | | 115 | % | | 5 | pts | | David Howson | | | 90 | % | | 110 | % | | 20 | pts | Bryan Harkins | | 100 | % | | 100 | % | | 0 | pts | | 100 | % | | 100 | % | | 0 | pts |
Mr. Hemsley’s
The target annual incentive opportunity for Mr. Howson increased due to his assumption of additional responsibilities, in managingincluding as the impact of Brexitnew Executive Vice President, President Europe, and to more closely align Mr. Hemsley’s target annual incentive opportunitycompensation with comparative peer group market practice.data. The Compensation Committee determines actual annual incentive bonus payouts based on achieved results measured against pre-established performance goals. The use of pre-established performance metrics and related goals creates an annual incentive plan that rewards our executive officers for strong performance, reduces payouts when performance does not meet target and eliminates payouts if performance does not meet threshold. In addition, the performance metrics and related goals create a structured, formulaic annual incentive plan—the executive officers know throughout the year what needs to be accomplished and what specific bonus dollar amounts can be earned at different performance levels. The following is a graphical depiction showing the formula used for determining annual incentive bonus payouts.
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| Cboe Global Markets 20202021 Proxy Statement | 45 |
As more fully described below, for the 20192020 annual incentive plan the Compensation Committee approved two types of performance metrics: (i) corporate performance metrics (weighted 75%70%) and (ii) individual performance metrics (weighted 25%30%). The Compensation Committee established goals at threshold, target, and maximum performance levels with respect to the corporate performance metrics. However, given the nature of the individual performance metrics, the Compensation Committee did not set a range of individual performance levels. Rather, the Compensation Committee determined each named executive officer’s payout (expressed as a percentage of target annual incentive award opportunity) based on the assessment of the executive officer’s actual performance measured against pre-established individual performance goals. The Company will pay no annual incentive bonus if actual performance is below threshold. The following chart shows the bonus payout opportunity for each named executive officer at various performance levels. | | | | | Target Annual | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | Opportunity as | | Annual Bonus Payout | | | | Base | | Percentage of | | Opportunity (1) | | | | | | | | Target Annual | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | Opportunity as | | Annual Bonus Payout | | | | Base | | Percentage of | | Opportunity (1) | Named Executive Officer | | Salary (1) | | Base Salary | | Threshold | | Target | | Maximum | | Salary (1) | | Base Salary | | Threshold | | Target | | Maximum | Edward T. Tilly | | $ | 1,265 | | 165 | % | | $ | 470 | | $ | 2,087 | | $ | 4,018 | | $ | 1,265 | | 165 | % | | $ | 365 | | $ | 2,087 | | $ | 4,175 | Christopher A. Isaacson | | $ | 650 | | 150 | % | | $ | 219 | | $ | 975 | | $ | 1,877 | | $ | 650 | | 150 | % | | $ | 171 | | $ | 975 | | $ | 1,950 | Brian N. Schell | | $ | 521 | | 140 | % | | $ | 164 | | $ | 729 | | $ | 1,404 | | $ | 525 | | 140 | % | | $ | 129 | | $ | 735 | | $ | 1,470 | Mark S. Hemsley (2) | | $ | 644 | | 115 | % | | $ | 157 | | $ | 741 | | $ | 1,444 | | David Howson (2) | | | $ | 575 | | 110 | % | | $ | 111 | | $ | 633 | | $ | 1,266 | Bryan Harkins | | $ | 500 | | 100 | % | | $ | 106 | | $ | 500 | | $ | 975 | | $ | 500 | | 100 | % | | $ | 88 | | $ | 500 | | $ | 1,000 |
(2) | (2)
| | Mr. HemsleyHowson receives his cash compensation in British pounds. The amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.33,$1.37, which was the exchange rate as of December 31, 2019. 2020. |
Corporate Performance.. For the 20192020 annual incentive plan, the Compensation Committee approved the following corporate performance metrics: (i) synergies, (ii)adjusted net revenue, (iii)(ii) adjusted EBITDA, and (iv)(iii) business unit performance. Given their corporate-wide responsibilities, business unit performance goals were not assigned to Messrs. Tilly or Isaacson. These performance metrics, in the aggregate, are weighted 75%70% of each named executive officer’s target annual incentive opportunity. The Compensation Committee approved these metrics for the following reasons: to align the interests of our executives with stockholders,
to focus our executives on the continued integration of Bats through cost savings, synergies and increasing revenues and earnings, to focus our executives on long-term growth by continuing to increase our revenue and earnings by increasing trading in our products, and
to allocate a larger weighting to adjusted EBITDA growth because executives are able to influence it to a larger degree than revenue growth, and to allocate different weightings of the corporate performance metrics based on whether an executive is a corporate or business unit leader, thereby driving the importance of certain metrics over which an executive has more impact. 46 | Cboe Global Markets 20202021 Proxy Statement | 39
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The following shows the corporate performance metrics and their relative weightings for 20192020 for the named executive officers. Named Executive Officer | Synergies | | Net Revenue | Adjusted EBITDA | | Business Unit Performance | | Adjusted Net Revenue | Adjusted EBITDA | | Business Unit Performance | Edward T. Tilly | 15 | % | | 10 | % | 40 | % | | 10 | % | | 25 | % | 45 | % | | — | % | Christopher A. Isaacson | 15 | % | | 10 | % | 40 | % | | 10 | % | | 25 | % | 45 | % | | — | % | Brian N. Schell | 15 | % | | 10 | % | 40 | % | | 10 | % | | 25 | % | 35 | % | | 10 | % | Mark S. Hemsley | 10 | % | | 10 | % | 10 | % | | 45 | % | | David Howson | | | 15 | % | 15 | % | | 40 | % | Bryan Harkins | 10 | % | | 10 | % | 10 | % | | 45 | % | | 15 | % | 15 | % | | 40 | % |
The Compensation Committee also established goals at threshold, target, and maximum performance levels and payouts with respect to the corporate performance metrics. The Compensation Committee used straight-line interpolation to determine amountspayouts for anyperformance results in between the threshold and target performance levels and in between the target and maximum performance levels. The percentage payout of target incentive opportunity for each of the metrics other than synergies, is 25% for threshold, 100% for target, and 200% for maximum. The percentage payout of target incentive opportunity for the achievement of synergies is 50% for threshold, 100% for target and 150% for maximum. With respect to allFor each named executive officersofficer, the following showstables below show the corporate performance metric threshold, target, and maximum goals, actual performances and percentage payouts of target for 2019. 2020. The tables below also show each officer’s 2020 Percentage Payout of Target based on achieved performance.
Messrs. Tilly’s and Isaacson’s 2020 Percentage Payout of Target As officers with corporate-wide responsibilities, Messrs. Tilly’s and Isaacson’s 2020 annual incentive awards were subject to achievement of adjusted net revenue and adjusted EBITDA for the Company performance goals. Corporate Performance Metrics | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Synergies | | $ | 33 | | $ | 44 | | $ | 66 | | $ | 45 | | 103% | Net Revenue | | $ | 1,125 | | $ | 1,250 | | $ | 1,375 | | $ | 1,137 | | 33% | Adjusted EBITDA (1) | | $ | 742 | | $ | 873 | | $ | 1,003 | | $ | 784 | | 50% |
Performance Metrics | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% | Adjusted EBITDA (Company) (1) | | 45% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% |
*In millions
(1) | Adjusted net revenue and adjusted EBITDA for the Company is aare non-GAAP measuremeasures used by the Company and a reconciliationreconciliations of actual performanceperformances to GAAP measures isare provided in Appendix A. |
Mr. Schell’s 2020 Percentage Payout of Target As the Executive Vice President, Chief Financial Officer and Treasurer and an officer with corporate wide responsibilities, Mr. Schell’s annual incentive award was subject to the achievement of adjusted net revenue and adjusted EBITDA for the Company and the finance, facilities and administrative | Cboe Global Markets 2021 Proxy Statement | 47 |
With respect to Messrs. Tilly and Isaacson, the following shows the business unit performance metric threshold, target and maximum goals, actual performance and percentage payout of target for 2019.
Business Unit Performance Metric | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Adjusted EBITDA (1) | | $ | 698 | | $ | 873 | | $ | 1,047 | | $ | 784 | | 70% |
*In millions
| (1)
| | Adjusted EBITDA for the Company is a non-GAAP measure used by the Company and a reconciliation of actual performance to GAAP measures is provided in Appendix A.
|
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| Cboe Global Markets 2020 Proxy Statement
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department budgetary goals. The specific goals for the department metrics are not disclosed for competitive purposes. | | | | | | | | | | | | | | | | | Performance Metrics | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% | Adjusted EBITDA (Company) (1) | | 35% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% | Finance, Facilities & Admin | | 10% | | $ | — (2) | | $ | — (2) | | $ | — (2) | | $ | — (2) | | 153% |
(1) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A |
(2) | Not disclosed for competitive purposes. |
Mr. Howson’s 2020 Percentage Payout of Target With respectAs leader of our European business unit, Mr. Howson’s annual incentive award was primarily subject to Mr. Hemsley, the former leaderachievement of the European business unit and also subject to adjusted net revenue and adjusted EBITDA for the following shows the business unitCompany performance metric weightings, threshold, target and maximum goals, actual performances and percentage payouts of target for 2019, in each case, other than actuals, as converted to U.S. dollars using a rate of £1.00 to $1.27, which was the budgeted exchange rate. goals.
Business Unit Performance Metrics | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Net Revenue (Europe) | | 15% | | $ | 79 | | $ | 93 | | $ | 107 | | $ | 88 | | 66% | Adjusted EBITDA (Europe) (1) | | 30% | | $ | 42 | | $ | 53 | | $ | 63 | | $ | 52 | | 91% |
Performance Metrics (1) | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Adjusted Net Revenue (Company) (2) | | 15% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% | Adjusted EBITDA (Company) (2) | | 15% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% | Adjusted Net Revenue (Europe) (3) | | 10% | | $ | 79 | | $ | 93 | | $ | 107 | | $ | 93 | | 98% | Adjusted EBITDA (Europe) (3) | | 30% | | $ | 41 | | $ | 51 | | $ | 62 | | $ | 58 | | 151% |
*In millions
(1) | European performance goals were converted to U.S. dollars using a rate of £1.00 to $1.28, which was the budgeted exchange rate. |
(2) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
(3) | Adjusted net revenue and adjusted EBITDA for the European business unit is aare non-GAAP measuremeasures used by the Company and a reconciliationreconciliations of actual performanceperformances to GAAP measures isare provided in Appendix A. |
With respect to Mr. Harkins,Harkins’ 2020 Percentage Payout of Target
As the leader of the markets business unit, Mr. Harkins’ annual incentive award was primarily subject to the following showsachievement of the markets business unit and also subject to adjusted net revenue and adjusted EBITDA for the Company performance goals. The markets business unit performance metric weightings, thresholds, targets and maximum goals, actual performances and percentage payoutsis 48 | Cboe Global Markets 2021 Proxy Statement | |
derived from the sum of the business unit performances of the options, futures, USNorth American (“NA”) equities, and global FX business units. | | | | | | | | | | | | | | | | | Business Unit Performance Metrics | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Options Net Revenue | | n/a | | $ | 540 | | $ | 635 | | $ | 730 | | $ | 564 | | n/a | Futures Net Revenue | | n/a | | $ | 126 | | $ | 149 | | $ | 171 | | $ | 131 | | n/a | US Equities Net Revenue | | n/a | | $ | 265 | | $ | 312 | | $ | 358 | | $ | 301 | | n/a | Global FX Net Revenue | | n/a | | $ | 51 | | $ | 60 | | $ | 68 | | $ | 53 | | n/a | Net Revenue (Markets) | | 15% | | $ | 981 | | $ | 1,155 | | $ | 1,328 | | $ | 1,049 | | 55% | Options Adjusted EBITDA (1) | | n/a | | $ | 372 | | $ | 466 | | $ | 559 | | $ | 394 | | n/a | Futures Adjusted EBITDA (1) | | n/a | | $ | 82 | | $ | 103 | | $ | 123 | | $ | 85 | | n/a | US Equities Adjusted EBITDA (1) | | n/a | | $ | 182 | | $ | 228 | | $ | 273 | | $ | 225 | | n/a | Global FX Adjusted EBITDA (1) | | n/a | | $ | 23 | | $ | 29 | | $ | 36 | | $ | 25 | | n/a | Adjusted EBITDA (Markets) (1) | | 30% | | $ | 660 | | $ | 825 | | $ | 990 | | $ | 729 | | 57% |
| | | | | | | | | | | | | | | | | Performance Metrics | | Weighting | | Threshold* | | Target* | | Maximum* | | Actual* | | Percentage Payout of Target | Adjusted Net Revenue (Company) (1) | | 15% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% | Adjusted EBITDA (Company) (1) | | 15% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% | Options Adjusted Net Revenue (2) | | n/a | | $ | 524 | | $ | 617 | | $ | 709 | | $ | 632 | | n/a | Futures Net Revenue | | n/a | | $ | 118 | | $ | 139 | | $ | 160 | | $ | 106 | | n/a | NA Equities Adjusted Net Revenue (2) | | n/a | | $ | 268 | | $ | 315 | | $ | 362 | | $ | 324 | | n/a | Global FX Net Revenue | | n/a | | $ | 48 | | $ | 56 | | $ | 65 | | $ | 58 | | n/a | Adjusted Net Revenue (Markets) (2) | | 10% | | $ | 958 | | $ | 1,127 | | $ | 1,296 | | $ | 1,120 | | 97% | Options Adjusted EBITDA (2) | | n/a | | $ | 355 | | $ | 444 | | $ | 533 | | $ | 476 | | n/a | Futures Adjusted EBITDA (2) | | n/a | | $ | 68 | | $ | 85 | | $ | 102 | | $ | 57 | | n/a | NA Equities Adjusted EBITDA (2) | | n/a | | $ | 184 | | $ | 230 | | $ | 276 | | $ | 247 | | n/a | Global FX Adjusted EBITDA (2) | | n/a | | $ | 23 | | $ | 29 | | $ | 35 | | $ | 32 | | n/a | Adjusted EBITDA (Markets) (2) | | 30% | | $ | 630 | | $ | 787 | | $ | 945 | | $ | 812 | | 116% |
*In millions, numbers may not foot due to rounding
* | (1)In millions, numbers may not foot due to rounding
|
(1) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
(2) | Adjusted net revenue and adjusted EBITDA for each respective business unit, is aas applicable, are non-GAAP measuremeasures used by the Company and a reconciliationreconciliations of actual performanceperformances to GAAP measures isare provided in Appendix A. |
The business unit performance metric for Mr. Schell was the finance, facilities and administrative department budgets and the percentage payout of target for 2019 was 118%. The specific goal for this metric is not disclosed for competitive purposes.
The achievement of synergies,adjusted net revenue, which is revenues less cost of revenues, adjusted EBITDA, and business unit performanceperformances are measured as of December 31, 2019. The target synergies, 2019 net revenues, adjusted EBITDA2020. Minor adjustments to the Options and Futures business unit performance projections were presented to and reviewed by the Board as part of the Company’s annual budgeting process. Adjustments to synergies from one year incremental run-rate synergies to three-year realized synergies and to certain of the functional support group business unit performance projectionsmetrics were further reviewed and approved in February 20202021 by the Board to better reflect organizational performance.budgeting. In February 2020, we publicly disclosed2021, the Board approved the actual performanceperformances of 2019 three-year realized synergies,adjusted net revenues, adjusted EBITDA, and European and Marketsmarkets business units. The actual adjusted net revenue and adjusted EBITDA results for the Company exclude our acquisitions completed in 2020 (MATCHNow, EuroCCP, TradeAlert, FT Options, and Hanweck). The actual adjusted net revenue and adjusted EBITDA results for the European business unit performances. | Cboe Global Markets 2020 Proxy Statement
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For 2019,our European derivatives. The actual adjusted net revenue and adjusted EBITDA results for the payout percentagemarkets business unit exclude our TradeAlert, FT Options, and Hanweck acquisitions from the options business unit and our MATCHNow acquisition from the NA equities business unit. The actual performance results exclude our 2020 acquisitions in order to allow for a more comparable measure of actual performance against the pre-established corporate performance of each named executive officer’s targetmetric goals, which were based on the 2020 annual incentive award opportunity ranged from 59%budget that was developed prior to, 74%. and does not include, the acquisitions.
Individual Performance.. For the 20192020 annual incentive plan, individual performance goals were 25%comprised 30% of each named executive officer’s target annual incentive opportunity. Based upon the level of achievement for each goal as provided by management,the individual performance goals, the Compensation Committee determined the payout percentage of target annual incentive award opportunity for individual performance for each named executive officer. | Cboe Global Markets 2021 Proxy Statement | 49 |
Early in 2019,2020, the Compensation Committee set the following corporate strategic goals and considered the following achieved performance in 2019:2020: | | | Goal | | Performance | Build a strong performance culture that attracts, engages, develops and retains key talent | | | Completed and analyzed employee engagement survey and started to implement organizational changes, such as managerunconscious bias trainings
Initiated employee Diversity and Inclusion Committee Held routine succession planning meetings to determine appropriate talent pipeline, including a focus on diverse talent | Deploy our core strengths for the benefit of index and product partners | | Continued product innovation with the launch of Monday expiringmini VIX futures and options on XSP, our mini-SPX contract, and futuresS&P 500 ESG Index
Launched target outcome indices on AMERIBORRussell 2000 Index Developed new benchmarks on MSCI Emerging Markets and EAFE indices
Opened a new trade reporting and trading venue in Amsterdam
Launched Cboe Closing Cross, a post-close trading service
Provided world class education on our products through Cboe Risk Management Conferencesvirtual conferences
| Mergers and acquisitions performance | | Reviewed mergers and acquisition performance and strategy leading to the sale
Acquired companies that accelerated diversification of a majority of the Company’s interests in Cboe Vestgeographic and asset class offerings | Broaden geographic reach | | Expanded international reach by permitting direct access to CFEPlanning launch of pan-European derivatives in 2021
Acquired companies that increased geographic presence in Canada and Cboe Options from Trading Permit Holders in Spain and Switzerland Europe |
The Compensation Committee received input from Mr. Tilly regarding the individual performances and recommendations regarding incentive compensation of the executive officers. The Compensation Committee, with input from the Board, also evaluated the individual performance of Mr. Tilly. 4250
| Cboe Global Markets 20202021 Proxy Statement | |
The table below shows Mr. Tilly’s individual goals and achieved performance highlights in 2019.2020. | | | Goal | | Performance | Manage the Company and its affiliates to achieve the corporate strategic goals listed above | | As discussed above and in “2019“2020 Business Highlights,” overall, substantially performed on targeted 20192020 strategic goals
| Manage internal and external communications with the investment community, government and the public to promote integrity of the markets and/or products | | Engaged with holders of approximately 4135% percent of our common stock outstanding at virtual investor and industry conferences, and by participating in informational fireside chats, conducting telephonic investor road shows, in major U.S. cities and hosting telephonic meetings at our corporate headquarters
Met with government officials ranging from U.S. Congressional representatives to SEC and CFTC officials
| Manage business continuity in key departments as roles are being defined | | Held routine succession planning meetings to determine appropriate talent pipeline and retention risk
Oversaw alignment of sales and coverage teams across regions and products
| Work with the Compensation Committee and the Board to enhanceexecute against the Company’s succession plan for all senior management positions with specific focus on the CEO and COO roles | | Held succession planning meetings with Compensation Committee
Identified and developed a successor talent bench across critical positions
| Embrace a culture of inclusion through pay parity analysis and developing a pipeline of diverse talent
| | Completed and analyzed pay parity study and adjusted compensation as necessary
Completed employee diversity study to determine potential areas for improvement
Held routine succession planning meetings to determine appropriate talent pipeline, including a focus on diverse talent
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| Cboe Global Markets 2020 Proxy Statement
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The table below shows Mr. Isaacson’s individual goals and achieved performance highlights in 2019.2020. | | | Goal | | Performance | Manage the Company and its affiliates to achieve the corporate strategic goals listed above | | As discussed above and in “2019“2020 Business Highlights,” overall, substantially performed on targeted 20192020 strategic goals
| Effectively communicate with the investment community and customers so as to cultivate a loyal stockholder base | | Engaged with holders of approximately 4135% percent of our common stock outstanding at virtual investor and industry conferences, and by participating in informational fireside chats, conducting telephonic investor road shows, in major U.S. cities and hosting telephonic meetings at our corporate headquarters
Continued open dialogue with customers | Manage the operation of the Company and its affiliates to ensure reliable and efficient service at a competitive cost | | Expense management is woven throughout the fabric of the companyCompany and led to a 3%1.3% decrease in operating expenses compared to 2018, including achievement of planned expense synergies2019
Seamless transition to work from integrationhome for global associate base without business disruption |
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Maintain a high level of systems performance during the migration to the Bats technology platformwhile driving innovation | | Successfully completed migrationOversaw successful transition of open outcry and hybrid options trading platforms on scheduleto all electronic trading due to COVID-19 global pandemic and eventual floor re-opening
Implemented VIX settlement enhancementsIntegrating our information solutions acquisitions, Hanweck, FT Options, and Trade Alert, as well as initiating the MATCHNow acquisition integration
100% uptime across 14 of our 16 markets, including all Cboe’s regulated exchanges globally in 2020, a year marked by unprecedented volatility, volume, and system messaging | Assess risks to the companyCompany and ensure they are monitored and minimized | | Reviewed and analyzed enterprise risk management program on a periodic basis with key Company leaders and the Risk Committee,
| Maintain high levels of customer interaction as integration with Bats is completed
| | Held including emerging risks due to COVID-19 global pandemic and numerous customer conference calls leading up to the C1 migration
Continued open dialogue with customers
All material customers switched over to the new C1 trading platformacquisitions
| Ensure recruitment, retention and rewarding of key, top performing talent and institutional knowledge by maintaining overall engagement, including during migration to the Bats technology platformintegration of any mergers and acquisition | | Held routine succession planning meetings to determine appropriate talent pipeline, including focus on retention of key talent through the integration of Bats and migration of the final C1 trading platform several acquisitions in 2020
MaintainedContinued to maintain high associate retention through multi-year integration
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Based on the above factors and its deliberations, the Compensation Committee determined the payout percentage for individual performance of each named executive officer’s target annual incentive award opportunity. Such individual performance payout percentages of targetpayouts ranged from 117%115% to 200%. 120% of target. 4452
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Actual Performance.Performance and Payouts. For 2019,2020, the following table shows the combined payout percentage for corporate and individual performance of each named executive officer’s target annual incentive award opportunity. The “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below reflects amounts paid under the annual incentive plan. | | 2019 Target Annual | | | | | | Incentive | | 2019 Percentage | | | | Opportunity as | | Payout of | | | | Percentage of | | Target Incentive | | | | | 2020 Target Annual | | | | | | Incentive | | 2020 Percentage | | | | Opportunity as | | Payout of | | | | Percentage of | | Target Incentive | Named Executive Officer | | Base Salary | | Opportunity | | Base Salary | | Opportunity | Edward T. Tilly | | 165% | | 80% | | 165% | | 116% | Christopher A. Isaacson | | 150% | | 95% | | 150% | | 116% | Brian N. Schell | | 140% | | 80% | | 140% | | 119% | Mark S. Hemsley | | 115% | | 85% | | David Howson | | | 110% | | 124% | Bryan Harkins | | 100% | | 73% | | 100% | | 112% |
Technology Platform Migration Cash Incentive Plan
Mr. Isaacson was eligible for additional cash incentive awards of up to $1,500,000 in the aggregate if he achieved the successful migrations of CFE, C2 and C1 to the Bats technology platform during the three-year period following our acquisition of Bats. This incentive was designed to reward Mr. Isaacson for the successful technology platform migrations because of their importance to Cboe’s long-term strategic plan and their potential impact on achieving financial results and expense synergy targets.
As a result of the successful migrations of CFE and C2 to the Bats technology platform on February 25, 2018 and May 14, 2018, respectively, the Compensation Committee awarded Mr. Isaacson two cash awards in the aggregate amount of $1,000,000. Further, as a result of the successful migration of C1 to the Bats technology platform on October 7, 2019, the Compensation Committee awarded Mr. Isaacson his final cash award in the amount of $500,000. The “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table reflects these cash awards paid to Mr. Isaacson.
Long-Term Incentive Plan Overview. The Compensation Committee strongly believes that a stock ownership culture enhances our long-term success. We have adopted the Second Amended and Restated Long-Term Incentive Plan, which was approved by stockholders at the 2016 Annual Meeting of Stockholders. Under the plan, the Compensation Committee may grant equity or cash awards, including restricted stock, restricted stock units, and options. Stock options were not featured in our long-term incentive program in 2019. 2020. The Compensation Committee believes that equity awards assist us in meeting the following goals: aligning the financial interests of our Board members and executive officers with the interests of our stockholders;
aligning our Board and executive compensation with that of our peers in terms of components and value;
providing competitive compensation to assist in retaining highly skilled and qualified Board members and executives; and deferring a significant portion of total compensation to the future, providing strong retentive value and linking the ultimate value of the award to our future stock price.
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In connection with our acquisition of Bats, the Company assumed the Bats Global Markets, Inc. 2009 Stock Option Plan (the “2009 Plan”), the Bats Global Markets, Inc. Third Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) and the Bats Global Markets, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”, and collectively, the “Bats Plans”). Restricted stock and stock options were granted to Bats’ employees under the Bats Plans and vest in equal annual installments over either three or four years. The stock options and some restricted stock granted under the Bats Plans are fully vested. Following Bats’ initial public offering, no new awards could be made under the 2009 Plan and 2012 Plan. No awards have been made under the Bats Plans subsequent to our acquisition of Bats. We will not grant any additional awards under the Bats Plans; however, there are still awards outstanding under these plans. Information on the outstanding awards and shares of common stock reserved under the Bats Plans is provided more fully below under “Equity Compensation Plan Information.”
2019 Grants. For 2019,2020, the Compensation Committee set each named executive officer’s 2020 target long-term incentive value based on comparative peer group market data and individual performance. Once the Compensation Committee set the target long-term incentive value for each named executive officer, one-half of the target value was granted in the form of time-based RSUs and one-half of the target value was granted in the form of PSUs.
Time-Based Restricted Stock Units. Time-based RSUs comprise 50% of the 2019each named executive officer’s 2020 total target long-term incentive award value and havevalue. These RSUs are subject to a three-year vesting period, with one-third of the RSUs vesting on each of the first, second, and third anniversaries of the grant date. The vesting of these awards is not subject to performance conditions. The Compensation Committee granted time-based RSUs to align the interests of management with those of our stockholders and to provide a retention incentive.
Performance-Based Restricted Stock Units. PSUs comprise the remaining 50% of the 2019each named executive officer’s 2020 total target long-term incentive award value. As described below, one-half of PSU grants are subject to the achievement of relative total stockholder return (“TSR”)TSR measured against pre-determined performance goals and one-half of PSU grants are subject to the achievement of earnings per share (“EPS”)EPS measured against pre-determined performance goals, both over a
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three-year performance period. The PSU grants cliff-vest following the completion of the three-year performance period.period, to the extent performance goals are achieved. | o | | Performance-Based Restricted Stock Units subject to Relative Total Stockholder Return (“PSUs-TSR”). 25% of the 20192020 total target long-term incentive award value is subject to the achievement of relative TSR measured against pre-determined performance goals over a three-year performance period. The number of PSUs-TSR that will vest at the end of the three-year performance period will vary from 0% to 200% of the target number of PSUs-TSR granted to each named executive officer, based on our TSR relative to the TSR for the S&P 500 Index during the three-year performance period. We calculate TSR as the increase in our stock price over the performance period plus reinvested dividends, divided by the stock price at the beginning of the performance period. The Compensation Committee selected the relative TSR performance metric to incent management to increase TSR for the benefit of stockholders, and believes that tying a portion of each executive’s compensation to TSR compared to a broad index encourages management to generate superior returns. |
| o | | Performance-Based Restricted Stock Units subject to Earnings Per Share (“PSUs-EPS”). 25% of the 20192020 total target long-term incentive award value is subject to the achievement of cumulative EPS measured against pre-determined performance goals over a three-year performance period. The number of PSUs-EPS that will vest at the end of the three-year performance period will vary from 0% to 200% of the target number of PSUs-EPS granted to each named executive officer, based on our cumulative EPS during the three-year |
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performance period, as adjusted for certain extraordinary, unusual or non-recurring items. The Compensation Committee selected the cumulative EPS performance metric to encourage management to continue growing the business and increasing trading and listings on our exchanges. Because of the operating leverage inherent in our business, the Compensation Committee believes that EPS growth over the next three years is an appropriate performance measure for these awards. |
PSUs-TSR and PSUs-EPS are equally weighted to encourage management to continue growing the business and increasing trading and listings on our exchanges. Because of the operating leverage inherent in our business, the Compensation Committee believes that EPS growth over the next three years is an appropriate performance measure for these awards. The Compensation Committee equally weighted PSUs-TSR and PSUs-EPS so that management will maintain an equal focus on enhancing Company TSR and profitably grow the Company to increase EPS.
The Company will settle vested RSUs and PSUs in shares of the Company’s common stock. For each vested RSU or PSU, the named executive officer will receive one share of our common stock. To receive shares earned under RSUs and PSUs, a named executive officer must be continuously employed during the applicable service period or performance period, subject to accelerationperiod. Vesting of RSUs and PSUs will be accelerated in the event of a change in control andfollowed by a qualified termination or in the event of a participant’s earlier death, disability or qualified retirement. The following table shows the target equity award value and number of time-based RSUs that were granted to each named executive officer on February 19, 2019.2020. The target equity award value and the closing share price on February 13, 201911, 2020 were used to calculate the number of shares that were granted on February 19, 2019.2020. Named Executive Officer | # of Shares | | Target Value of Stock | # of Shares | | Target Value of Stock | Edward T. Tilly | 22,632 | | $ | 2,150,000 | 19,058 | | $ | 2,350,000 | Christopher A. Isaacson | 6,579 | | $ | 625,000 | 7,096 | | $ | 875,000 | Brian N. Schell | 6,842 | | $ | 650,000 | 6,083 | | $ | 750,000 | Mark S. Hemsley | 4,474 | | $ | 425,000 | | David Howson | | 2,636 | | $ | 325,000 | Bryan Harkins | 3,158 | | $ | 300,000 | 2,636 | | $ | 325,000 |
The following table shows the target equity award value and number of PSUs (tied to TSR and EPS performance) that were granted to each named executive officer on February 19, 20192020 and the 54 | Cboe Global Markets 2021 Proxy Statement | |
number of PSUs that would be paid at achievement of threshold, target, and maximum performance goals. The target equity award value and the closing share price on February 13, 201911, 2020 were used to calculate the number of shares that were granted on February 19, 2019. With respect to Mr. Hemsley, the amounts do not reflect proration for the portion of the performance period completed at the time of termination.2020. | | | | # of Shares | | Target Value of Stock | | | | | | Threshold | | Target | | Maximum | | | | | | | | # of Shares | | Target Value of Stock | | | | | | Threshold | | Target | | Maximum | | | Named Executive Officer | | Performance Metric | | (50% Payout) | | (100% Payout) | | (200% Payout) | | Target Value of Stock | | Performance Metric | | (50% Payout) | | (100% Payout) | | (200% Payout) | | | Edward T. Tilly | | 2019-2021 TSR | | 5,658 | | 11,316 | | 22,632 | | | 2020-2022 TSR | | 4,765 | | 9,529 | | 19,058 | | $ | 1,175,000 | | | 2019-2021 EPS | | 5,658 | | 11,316 | | 22,632 | | | | | | 2020-2022 EPS | | 4,765 | | 9,529 | | 19,058 | | $ | 1,175,000 | Christopher A. Isaacson | | 2019-2021 TSR | | 1,645 | | 3,289 | | 6,578 | | $ | 312,500 | | 2020-2022 TSR | | 1,774 | | 3,548 | | 7,096 | | $ | 437,500 | | | 2019-2021 EPS | | 1,645 | | 3,289 | | 6,578 | | $ | 312,500 | | | | | 2020-2022 EPS | | 1,774 | | 3,548 | | 7,096 | | $ | 437,500 | Brian N. Schell | | 2019-2021 TSR | | 1,711 | | 3,421 | | 6,842 | | $ | 325,000 | | 2020-2022 TSR | | 1,521 | | 3,042 | | 6,083 | | $ | 375,000 | | | 2019-2021 EPS | | 1,711 | | 3,421 | | 6,842 | | $ | 325,000 | | Mark S. Hemsley | | 2019-2021 TSR | | 1,119 | | 2,237 | | 4,474 | | $ | 212,500 | | | | 2019-2021 EPS | | 1,119 | | 2,237 | | 4,474 | | $ | 212,500 | | | | | 2020-2022 EPS | | 1,521 | | 3,042 | | 6,083 | | $ | 375,000 | David Howson | | | 2020-2022 TSR | | 659 | | 1,318 | | 2,636 | | $ | 162,500 | | | | 2020-2022 EPS | | 659 | | 1,318 | | 2,636 | | $ | 162,500 | Bryan Harkins | | 2019-2021 TSR | | 790 | | 1,579 | | 3,158 | | $ | 150,000 | | 2020-2022 TSR | | 659 | | 1,318 | | 2,636 | | $ | 162,500 | | | 2019-2021 EPS | | 790 | | 1,579 | | 3,158 | | $ | 150,000 | | | | | 2020-2022 EPS | | 659 | | 1,318 | | 2,636 | | $ | 162,500 |
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The following table displays the threshold, target, and maximum performance goals for the PSU awards granted in 2019,2020, measured over the performance period frombeginning on January 1, 2019 through2020 and ending on December 31, 2021.2022. | | Threshold | | Target | | Maximum | | | | (50% Payout) | | (100% Payout) | | (200% Payout) | | | | | Threshold | | Target | | Maximum | | | | (50% Payout) | | (100% Payout) | | (200% Payout) | Relative TSR Compared to S&P 500 | | 20th Percentile | | 50th Percentile | | 80th Percentile | | 20th Percentile | | 50th Percentile | | 80th Percentile | Cumulative EPS | | $16.46 | | $17.94 | | $19.50 | | $15.36 | | $16.58 | | $17.88 |
For performance levels that fall between the goals shown above, the percentage of PSUs that vest will be determined by straight line interpolation, provided that no PSUs will vest if the performance does not equal or exceed the threshold amount. Pursuant to the terms of the equity award agreements, the vesting of all outstanding RSUs accelerated upon Mr. Hemsley’s qualified retirement. In addition, his outstanding PSUs will vest pro-rata based on the number of days in employment during the performance period and subject to attainment of the applicable performance goals through the full performance period.
2019 Special One-Time2018 PSU Grants Vested. . The Compensation Committee granted a special one-time equity award ("Special Grant") of 3,158 shares onOn February 19, 2019 to Mr. Harkins, with a target equity award value of $300,000. The target equity award value and the closing share price on February 13, 2019 were used to calculate the number of shares that were granted on February 19, 2019. These time-based RSUs cliff-vest in full on the third anniversary of the grant date. The vesting of this award is not subject to performance conditions.
The Company will settle vested Special Grant RSUs in shares of the Company's common stock. For each vested RSU, the named executive officer will receive one share of our common stock. To receive shares earned under RSUs, Mr. Harkins must be continuously employed during the applicable service period, subject to acceleration in the event of a change in control and qualified termination or in the event of a participant's earlier death, disability or qualified retirement.
The Compensation Committee granted the Special Grant RSUs to further align the interests of Mr. Harkins with stockholders, recognize past performance and provide an additional retention incentive.
2017 PSU Grants Vested. In early 2020,2018, the Compensation Committee determined, with respectapproved the grant of PSUs (“2018 PSUs”) to the 2017 grantsour named executive officers, except for Mr. Howson, who was not then an executive officer and did not receive a grant of 2018 PSUs. The 2018 PSUs were subject to the achievement of TSR and EPS measured against the pre-determined performance goal,goals, both over a three-year performance period frombeginning on January 1, 2017 through2018 and ending on December 31, 2019. 2020. In early 2021, the Compensation Committee determined that the following performance was achieved resulting in the indicated payout:
The TSR percentile attained was the 69th14th percentile, and so 164%which resulted in the vesting of 0% of the target number of PSUs-TSR vested forgranted to each applicable named executive officer. The 3- year adjusted EPS attained was $15.02 1, which resulted in the vesting of 200% of the target number of PSUs-EPS granted to each applicable named executive officer.
(1) | The 3-year adjusted EPS is a non-GAAP measure used by the Company and a reconciliation to a GAAP measure is provided in Appendix A. |
The specific performance goalgoals for the PSUs-TSR and PSUs-EPS for the 2017‑20192018-2020 performance period waswere previously disclosed in our proxy statement covering 20172018 compensation. Messrs. Schell and Harkins did not receive the 2017 grant of PSU awards. Certain details of the PSUs that vested based on achievement of 2017‑2019 TSR performance goal are as follows and do not include the dividend equivalent payments.
| | | | | | | | | | | | | # of Shares | | | | | | | | at Target | | # of Shares | Named Executive Officer | Grant Date | | Performance Metric | | (100% Payout) | | Vested | Edward T. Tilly | February 19, 2017 | | 2017-2019 TSR | | 18,657 | | 30,555 | Christopher A. Isaacson | February 28, 2017 | | 2017-2019 TSR | | 3,110 | | 5,094 | Mark S. Hemsley | February 28, 2017 | | 2017-2019 TSR | | 3,707 | | 6,071 |
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The table below shows the number of 2018 PSUs that vested at the conclusion of the applicable performance period for each applicable named executive officer and does not include dividend equivalent payments. | | | | | | | | | | | | | # of Shares | | | | | | | | at Target | | # of Shares | Named Executive Officer | | | Performance Metric | | (100% Payout) | | Vested | Edward T. Tilly | | | 2018-2020 TSR | | 7,025 | | 0 | | | | 2018-2020 EPS | | 7,025 | | 14,050 | Christopher A. Isaacson | | | 2018-2020 TSR | | 1,384 | | 0 | | | | 2018-2020 EPS | | 1,384 | | 2,768 | Brian N. Schell | | | 2018-2020 TSR | | 1,530 | | 0 | | | | 2018-2020 EPS | | 1,530 | | 3,060 | Bryan Harkins | | | 2018-2020 TSR | | 1,277 | | 0 | | | | 2018-2020 EPS | | 1,277 | | 2,554 |
Other Executive Compensation Program Considerations Stock Ownership and Holding Guidelines The Compensation Committee adopted stock ownership and holding guidelines, shown below, specifying the levels of stock ownership that each named executive officer must maintain while employed by us. For purposes of this ownership requirement, (a) shares owned outright or in trust and (b) restricted stock or stock units, including shares or units with time-based or performance conditions that have been granted but are unvested, are counted toward the guidelines. Each named executive officer has five years to meet the guidelines from the date that such officer was appointed to his or her position or within four years of May 2019 for named executive officers then-serving when the guidelines were updated in May 2019. Each named executive officer is required to hold all shares until the guidelines are met, except for sales of shares to pay taxes with respect to the vesting or exercising of equity grants. As of December 31, 2019,2020, each named executive officer has met the applicable holding requirement based on his position with us. | | | Named Executive Officer | | Holding Requirement | Edward T. Tilly | | Six times base salary | Christopher A. Isaacson | | Four times base salary | Brian N. Schell | | Three times base salary | Mark S. HemsleyDavid Howson
| | Three times base salary | Bryan Harkins | | Three times base salary |
Hedging Policy Our Insider Trading Policy prohibits our executive officers and all employees, except as set forth below, from entering into transactions involving options to purchase or sell our common stock or other derivatives related to our common stock. None of our executive officers has existing hedges on shares of our common stock. Employees, other than our executive officers, may enter into the following types of security transactions on our common stock through the purchase or sale of exchange-traded options, provided that they otherwise comply with the remainder of our Insider Trading Policy: covered calls (i.e., the writing of exchange-traded call options covering a number of shares less than or equal to the total number of unrestricted shares and vested shares owned by the call writer); and
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collars for hedging purposes (i.e., the sale of exchange-traded call options and the purchase of an equivalent number of put options, in each case, covering a number of shares less than or equal to the total number of unrestricted shares and vested shares owned by the holder). As one of the world’s largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world and owning the largest options exchange, we believe options are first and foremost incredibly useful and powerful risk mitigation tools that can help protect an investor’s financial portfolio. From buying puts to hedge the downside risk of owning a stock to writing covered calls to collect income, listed options strategies are protective tools employed by institutions, pension funds, and individual investors. As such, we believe that it is appropriate for our employees,employees, other than our executive officers, to engage in the above mentioned selected hedging transactions, because these strategies help empower our employees to preserve their investment capitalandprotecttheir financial future, while continuing to own our common stock and be invested in their workplace,
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employees are required to comply with our Insider Trading Policy and other policies, which may include trade monitoring, receiving certain pre-approvals, and observing blackout periods when purchasing or selling options,
employees must wait generally one year until a portion of their equity grants vest before they are able to purchase or sell options on the related vested common stock, the interests of our employees continue to be aligned with our stockholders through their continued ownership of our common stock and ability to retain their rights to voting and dividends as Cboe stockholders,
employees are able to collect income on their common stock from the sale of options without having to sell our stock, and
due to their continued ownership of our common stock, employees continue to be discouraged from excessive risk-taking that could negatively impact our business and stock price over time.
Pledging Policy Our Insider Trading Policy prohibits our executive officers and all employees from entering into any pledges or margin loans on shares of our common stock. None of our executive officers have existing pledges or margin loans on shares of our common stock. Clawbacks The Compensation Committee hasWe maintain a clawback policy for the clawback ofcovering cash incentive payments and long-term incentives based on the provisions of the Dodd-Frank Act. The policy provides that we will attempt to recover incentive amounts paid to executive officers in the event of a restatement of our financial statements due to any material noncompliance with any financial reporting requirement. The policy has a three-year look-back and applies to both current and former executives, regardless of such executive’s involvement in the noncompliance. The equity award agreements contain provisions applying the clawback policy to equity grants.
Employee Benefit Plans, Severance, Change in Control and Employment-Related Agreements We provide medical, life, and disability insurance coverage to all of our employees, including our named executive officers. In addition, for named executive officers and certain other employees, we provide participation in the Supplemental Executive Retirement Plan (“SERP”) and the Executive Retirement Plan (“ERP”), which are described more fully below under “Summary Compensation – Compensation—Non-Qualified Deferred Compensation Plans.”Plans”. We offer this coverage in order to provide a | Cboe Global Markets 2021 Proxy Statement | 57 |
competitive benefits program, a level of protection for catastrophic events, and income during retirement. The SERP and ERP plans are defined contribution plans, and we do not provide any defined benefit retirement plans to our executive officers or employees. Effective January 1, 2017, the Company froze the ERP to new executive officers and employees. As of December 31, 2019,2020, we had an employment agreement with Mr. Tilly, an offer letter and employment agreement with Mr. Howson, and an Executive Severance Plan for other executive officers in order to encourage retention, maintain a consistent management team to effectively run our operations, assist with separation proceedings, and allow executives to focus on our strategic business priorities. The employment agreementagreements with Mr.Messrs. Tilly and Howson and the Executive Severance Plan contain severance and change in control provisions and are described more fully below under “Severance, Change in Control and Employment-Related Agreements.”Agreements”. Any payments under the employment agreementagreements and the Executive Severance Plan upon a change in control will only occur if the named executive officer’s employment is terminated without cause or he or she resigns for good reason during a set period following the change in control, known as a double trigger provision. 50
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Tax and Accounting Considerations The Compensation Committee considers the tax and accounting implications of compensation to us and the tax implications to our named executive officers. Historically, to the extent possible, the Compensation Committee strove to provide compensation deductible under Section 162(m) of the Internal Revenue Code and, to that end, certified, as applicable, the level of attainment of the performance targets under the Second Amended and Restated Long-Term Incentive Plan annually in accordance with Section 162(m). Nonetheless, changes in tax laws or their interpretation and other outside factors may affect the deductibility of certain compensation payments. For example, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, limits the deductibility of compensation paid to our named executive officers to $1 million each year for taxable years beginning after December 31, 2017. Even though “performance-based” criteria is no longer relevant in determining whether compensation is deductible for tax purposes, the Compensation Committee plans to continue to apply such criteria in structuring future compensation arrangements. The Compensation Committee reserves the right to pay compensation that is not deductible for tax purposes when, in its judgment, such compensation is appropriate. Compensation Committee Report The Compensation Committee consists of Mr. Fitzpatrick, Chair, Mr. English, Ms. Froetscher, Mr. Parisi, and Mr. Parisi,Tomczyk, each of whom the Board has determined are independent under BZX and Nasdaq listing rules and our Corporate Governance Guidelines. The Compensation Committee has duties and powers as described in its written charter adopted by the Board. A copy of the charter can be found on our Investor Relations page at http://ir.Cboe.com. The Compensation Committee has reviewed and discussed with management the disclosures contained in the foregoing section entitled “Compensation Discussion and Analysis.”Analysis”. Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting. Compensation Committee Edward J. Fitzpatrick, Chair Frank E. English, Jr.
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Risk Assessment We believe that any potential risks arising from our employee compensation policies and practices are not likely to have a material adverse effect on us. With assistance from Meridian, the Compensation Committee reviewed and discussed a risk assessment of our compensation policies and practices for all employees for 2019,2020, including non-executive officers, in its oversight capacity. The Compensation Committee and management considered a number of factors, including the following factors, when reviewing potential risk from our employee compensation policies and practices: Our compensation program is designed to provide a mix of both fixed and variable incentive compensation.
The variable (“at-risk”) portions of compensation are designed to reward both annual and long-term performance. We believe that this design mitigates any incentive for short-term risk-taking that could be detrimental to the Company’s long-term best interests.
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Our senior executives are subject to stock ownership and holding guidelines, which we believe provide incentives for our executives to consider the long-term interests of the Company and our stockholders and discourage excessive risk-taking that could negatively impact our stock price over time.
We include clawback provisions in our executives’ cash incentive and equity incentive awards as a mechanism to recover compensation in the event of financial reporting wrongdoing.
We utilize an independent compensation consultant to provide the Compensation Committee with advice on best practices and the risks associated with various compensation policies.
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SUMMARY COMPENSATION 20192020 Summary Compensation Table
The table below sets forth, for the years indicated below, the compensation earned by our named executive officers. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Equity | | | | | | | | | | | | | | | | | | Stock | | Incentive Plan | | All Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Equity | | | | | | | | | | | | | | | | | | Stock | | Incentive Plan | | All Other | | | | Name and Principal Position | | Year | | Salary | | Bonus | | Awards(1) | | Compensation(2) | | Compensation(3) | | Total | | Year | | Salary | | Bonus | | Awards(1) | | Compensation(2) | | Compensation(3) | | Total | Edward T. Tilly | | 2019 | | $ | 1,265,000 | | $ | — | | $ | 4,336,178 | | $ | 1,669,800 | | $ | 941,807 | | $ | 8,212,785 | | 2020 | | $ | 1,265,000 | | $ | — | | $ | 4,700,084 | | $ | 2,413,017 | | $ | 684,310 | | $ | 9,062,411 | Chairman, President and | | 2018 | | $ | 1,265,000 | | $ | — | | $ | 3,237,079 | | $ | 3,219,374 | | $ | 731,684 | | $ | 8,453,137 | | 2019 | | $ | 1,265,000 | | $ | — | | $ | 4,336,178 | | $ | 1,669,800 | | $ | 941,807 | | $ | 8,212,785 | Chief Executive Officer | | 2017 | | $ | 1,150,000 | | $ | — | | $ | 6,070,988 | | $ | 2,461,058 | | $ | 737,887 | | $ | 10,419,933 | | 2018 | | $ | 1,265,000 | | $ | — | | $ | 3,237,079 | | $ | 3,219,374 | | $ | 731,684 | | $ | 8,453,137 | Christopher A. Isaacson | | 2019 | | $ | 650,000 | | $ | — | | $ | 1,260,406 | | $ | 1,430,575 | | $ | 201,031 | | $ | 3,542,012 | | 2020 | | $ | 650,000 | | $ | — | | $ | 1,750,016 | | $ | 1,126,832 | | $ | 137,366 | | $ | 3,664,214 | Executive Vice President | | 2018 | | $ | 540,000 | | $ | — | | $ | 637,761 | | $ | 2,236,384 | | $ | 147,587 | | $ | 3,561,732 | | 2019 | | $ | 650,000 | | $ | — | | $ | 1,260,406 | | $ | 1,430,575 | | $ | 201,031 | | $ | 3,542,012 | and Chief Operating Officer | | | | | | | | | | | | | | | | | | 2018 | | $ | 540,000 | | $ | — | | $ | 637,761 | | $ | 2,236,384 | | $ | 147,587 | | $ | 3,561,732 | Brian N. Schell | | 2019 | | $ | 521,000 | | $ | — | | $ | 1,310,893 | | $ | 581,376 | | $ | 142,845 | | $ | 2,556,114 | | 2020 | | $ | 525,000 | | $ | — | | $ | 1,500,313 | | $ | 870,136 | | $ | 101,763 | | $ | 2,997,212 | Executive Vice President, | | 2018 | | $ | 521,000 | | $ | — | | $ | 704,928 | | $ | 1,122,984 | | $ | 68,845 | | $ | 2,417,757 | | 2019 | | $ | 521,000 | | $ | — | | $ | 1,310,893 | | $ | 581,376 | | $ | 142,845 | | $ | 2,556,114 | Chief Financial Officer and | | | | | | | | | | | | | | | | | | 2018 | | $ | 521,000 | | $ | — | | $ | 704,928 | | $ | 1,122,984 | | $ | 68,845 | | $ | 2,417,757 | Treasurer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mark S. Hemsley | | 2019 | | $ | 643,574 | | $ | — | | $ | 857,196 | | $ | 629,312 | | $ | — | | $ | 2,130,082 | | David Howson | | | 2020 | | $ | 575,400 | | $ | — | | $ | 650,090 | | $ | 784,055 | | $ | — | | $ | 2,009,545 | Executive Vice President, | | 2018 | | $ | 619,379 | | $ | — | | $ | 588,566 | | $ | 1,175,272 | | $ | — | | $ | 2,383,217 | | | | | | | | | | | | | | | | | | | President Europe (4) | | 2017 | | $ | 544,377 | | $ | — | | | 1,245,474 | | $ | 741,816 | | $ | 13,500 | | $ | 2,545,167 | | | | | | | | | | | | | | | | | | | Bryan Harkins | | 2019 | | $ | 500,000 | | $ | — | | $ | 902,414 | | $ | 365,750 | | $ | 24,020 | | $ | 1,792,184 | | 2020 | | $ | 500,000 | | $ | — | | $ | 650,090 | | $ | 558,625 | | $ | 23,320 | | $ | 1,732,035 | Executive Vice President, | | | | | | | | | | | | | | | | | | 2019 | | $ | 500,000 | | $ | — | | $ | 902,414 | | $ | 365,750 | | $ | 24,020 | | $ | 1,792,184 | Head of Markets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | (1)
| | The amounts in the stock award column for 20192020 include the grant date aggregate fair value of the awards of RSUs granted on February19, 20192020 for service in 2019,2020, as computed in accordance with stock-based compensation accounting rules (Financial(Financial Standards Accounting Board ASC Topic 718) and for PSUs-TSR and PSUs-EPS, as computed in accordance with the Monte Carlo valuation model method. Assumptions used in the calculation of these amounts are included in the footnotes to our 2020 consolidated financial statements, which are included in our Annual Report on Form10‑K for the year ended December 31, 2020 filed with the SEC. |
Assumptions used in the calculation of these amounts are included in the footnotes to our 2019 consolidated financial statements, which are included in our Annual Report on Form 10‑K for the year ended December 31, 2019 filed with the SEC.
(2) | (2)
| | The amounts shown reflect awards to the named executive officers under our annual incentive plan. The amount shown for Mr.Isaacson also includes the achievement of the performance conditions with respect to two awards of $500,000 each in 2018 and one award of $500,000 in 2019 in recognition of his contributions to the successful migrations of CFE, C2, and C1 to Bats technology. For a discussion of our plans, please see “Compensation Discussion and Analysis—2019 Elements of Executive Compensation Program—Annual Incentive” and “—Technology Platform Migration Cash Incentive Plan” above. Annual incentive payments for services performed in 2017, 2018, 2019, and 20192020 by named executive officers were paid in early 2018, 2019, 2020, and 2020,2021, respectively. |
(3) | (3)
| | The amounts shown represent benefits that were, from time to time, made available to our executives, including retirement plan contributions. For more information on the amounts shown in this column for 2019,2020, please see the following “2019“2020 All Other Compensation Detail Table.Table” . |
60 | (4)Cboe Global Markets 2021 Proxy Statement
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(4) | Mr. Hemsley resigned as Executive Vice President effective December 31, 2019 and his last day with the Company was February 28, 2020. Information presented for Mr. Hemsley for 2017 is from February 28, 2017, the date that he joined the Company with our acquisition of Bats, to December 31, 2017. Mr. HemsleyHowson receives his cash compensation in British pounds. The 20192020 amounts reported were converted to U.S. dollars using a rate of £1.00£1.00 to $1.33,$1.37, which was the exchange rate as of December31, 2019. The 2018 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.28, which was the exchange rate as of December 31, 2018. The 2017 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.35, which was the exchange rate as of December 31, 2017. 2020. |
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2019 All Other Compensation Detail Table
| Qualified Defined | | Non-Qualified Defined | | | | | Matching Gift | | | | Qualified Defined | | Non-Qualified Defined | | | | | Matching Gift | Name | Contributions(1) | | Contributions(2) | | Insurance(3) | | Program (4) | Contributions(1) | | Contributions(2) | | Insurance(3) | | Program (4) | Edward T. Tilly | $ | 22,400 | | $ | 917,601 | | $ | 1,806 | | $ | — | $ | 22,800 | | $ | 652,204 | | $ | 1,806 | | $ | 7,500 | Christopher A. Isaacson | $ | 22,400 | | $ | 168,211 | | $ | 420 | | $ | 10,000 | $ | 22,800 | | $ | 103,646 | | $ | 420 | | $ | 10,500 | Brian N. Schell | $ | 22,400 | | $ | 109,119 | | $ | 966 | | $ | 10,000 | $ | 22,800 | | $ | 65,657 | | $ | 1,806 | | $ | 11,500 | Mark S. Hemsley | $ | — | | $ | — | | $ | — | | $ | — | | David Howson | | $ | — | | $ | — | | $ | — | | $ | — | Bryan Harkins | $ | 22,400 | | $ | — | | $ | 420 | | $ | 1,200 | $ | 22,800 | | $ | — | | $ | 420 | | $ | 100 |
(1) | (1)
| | The amounts shown are matching contributions to our qualified 401(k) plan, the Cboe Global Markets SMART Plan (“SMART Plan”), on behalf of each of the officers listed. In 2019,2020, we matched 200% of employee contributions up to 4% of the employee’s compensation, subject to statutory limitations. |
(2) | (2)
| | The amounts shown are our contributions to the non-qualified defined contribution plans on behalf of each named executive officer, including contributions, as applicable, made to the Supplemental Executive Retirement Plan and Executive Retirement Plan. We matched 200% of such employee’s contributions. These plans are described more fully below under “Non-Qualified Defined Contribution Plans.” Plans”. |
(3) | (3)
| | Represents the amount attributable to taxable life insurance in excess of $50,000. |
(4) | (4)
| | Amounts represent those provided through our Matching Gift Program that is available to all full-time employees with typically at least one year of service.service and our non-employee directors. During 2019,2020, we matched eligible gifts from a minimum of $50 to an aggregate maximum gift of $10,000 per employee or non-employee director, per calendar year. In addition, in 2020, we matched at a rate of 1.5x eligible gifts from a minimum of $50 to $1,000 per employee or non-employee director, per calendar year to organizations that (i) support social justice and/or improve the lives of those in Black communities or (ii) provide services to COVID-19 global pandemic relief efforts. Cboe will match donations to organizations that support COVID-19 global pandemic relief at the same rate.Amounts listedshown only represent matching gifts made to qualified non-profit organizations on behalf of the named executive officers and do not represent total charitable contributions made by them during the year. |
| Cboe Global Markets 2021 Proxy Statement | 61 |
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| Cboe Global Markets 2020 Proxy Statement
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20192020 Grants of Plan-Based Awards Table
The 20192020 grants of plan-based awards are as follows and are explained in more detail below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | Grant Date | | | | | | Estimated Future Payouts Under | | | | | | | | Number of | | Fair Value of | | | | | | Non-Equity Incentive Plan | | Estimated Future Payouts Under | | Shares of | | Stock and | | | | | | Awards | | Equity Incentive Plan Awards | | Stock or | | Option | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | Grant Date | | | | | | Estimated Future Payouts Under | | | | | | | | Number of | | Fair Value of | | | | | | Non-Equity Incentive Plan | | Estimated Future Payouts Under | | Shares of | | Stock and | | | | | | Awards | | Equity Incentive Plan Awards | | Stock or | | Option | Name | | Grant Date | | Threshold | | Target | | Maximum | | Threshold (#) | | Target (#) | | Maximum (#) | | Units (#) | | Awards | | Grant Date | | Threshold | | Target | | Maximum | | Threshold (#) | | Target (#) | | Maximum (#) | | Units (#) | | Awards | Edward T. Tilly | | n/a | | $ | 469,631 | | $ | 2,087,250 | | $ | 4,017,956 | | — | | — | | — | | — | | | — | | n/a | | $ | 365,269 | | $ | 2,087,250 | | $ | 4,174,500 | | — | | — | | — | | — | | | — | | | 2/19/2019 | | | — | | | — | | | — | | 5,658 | | 11,316 | | 22,632 | | — | | $ | 1,065,515 | | | | 2/19/2019 | | | — | | | — | | | — | | 5,658 | | 11,316 | | 22,632 | | — | | $ | 1,065,515 | | | | 2/19/2019 | | | — | | | — | | | — | | — | | — | | — | | 22,632 | | $ | 2,131,029 | | | | | 2/19/2020 | | | — | | | — | | | — | | 4,765 | | 9,529 | | 19,058 | | — | | $ | 1,147,673 | | | | 2/19/2020 | | | — | | | — | | | — | | 4,765 | | 9,529 | | 19,058 | | — | | $ | 1,147,673 | | | | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 19,058 | | $ | 2,295,346 | Christopher A. Isaacson | | n/a | | $ | 219,375 | | $ | 975,000 | | $ | 1,876,875 | | — | | — | | — | | — | | | — | | n/a | | $ | 170,625 | | $ | 975,000 | | $ | 1,950,000 | | — | | — | | — | | — | | | — | | | 2/19/2019 | | | — | | | — | | | — | | 1,645 | | 3,289 | | 6,578 | | — | | $ | 309,692 | | | | 2/19/2019 | | | — | | | — | | | — | | 1,645 | | 3,289 | | 6,578 | | — | | $ | 309,692 | | | | 2/19/2019 | | | — | | | — | | | — | | — | | — | | — | | 6,579 | | $ | 619,479 | | | | | 2/19/2020 | | | — | | | — | | | — | | 1,774 | | 3,548 | | 7,096 | | — | | $ | 427,321 | | | | 2/19/2020 | | | — | | | — | | | — | | 1,774 | | 3,548 | | 7,096 | | — | | $ | 427,321 | | | | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 7,096 | | $ | 854,642 | Brian N. Schell | | n/a | | $ | 164,115 | | $ | 729,400 | | $ | 1,404,095 | | — | | — | | — | | — | | | — | | n/a | | $ | 128,625 | | $ | 735,000 | | $ | 1,470,000 | | — | | — | | — | | — | | | — | | | 2/19/2019 | | | — | | | — | | | — | | 1,711 | | 3,421 | | 6,842 | | — | | $ | 322,121 | | | | 2/19/2019 | | | — | | | — | | | — | | 1,711 | | 3,421 | | 6,842 | | — | | $ | 322,121 | | | | 2/19/2019 | | | — | | | — | | | — | | — | | — | | — | | 6,842 | | $ | 644,243 | | Mark S. Hemsley(1) | | n/a | | $ | 157,378 | | $ | 740,600 | | $ | 1,444,170 | | — | | — | | — | | — | | | — | | | | 2/19/2019 | | | — | | | — | | | — | | 1,119 | | 2,237 | | 4,474 | | — | | $ | 210,636 | | | | 2/19/2019 | | | — | | | — | | | — | | 1,119 | | 2,237 | | 4,474 | | — | | $ | 210,636 | | | | 2/19/2019 | | | — | | | — | | | — | | — | | — | | — | | 4,474 | | $ | 421,272 | | | | | 2/19/2020 | | | — | | | — | | | — | | 1,521 | | 3,042 | | 6,083 | | — | | $ | 366,318 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 6,083 | | $ | 732,637 | David Howson (1) | | | n/a | | $ | 110,765 | | $ | 632,940 | | $ | 1,265,880 | | — | | — | | — | | — | | | — | | | | 2/19/2020 | | | — | | | — | | | — | | 659 | | 1,318 | | 2,636 | | — | | $ | 158,740 | | | | 2/19/2020 | | | — | | | — | | | — | | 659 | | 1,318 | | 2,636 | | — | | $ | 158,740 | | | | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 2,636 | | $ | 317,480 | Bryan Harkins | | n/a | | $ | 106,250 | | $ | 500,000 | | $ | 975,000 | | — | | — | | — | | — | | | — | | n/a | | $ | 87,500 | | $ | 500,000 | | $ | 1,000,000 | | — | | — | | — | | — | | | — | | | 2/19/2019 | | | — | | | — | | | — | | 790 | | 1,579 | | 3,158 | | — | | $ | 148,679 | | | | 2/19/2019 | | | — | | | — | | | — | | 790 | | 1,579 | | 3,158 | | — | | $ | 148,679 | | | | 2/19/2019 | | | — | | | — | | | — | | — | | — | | — | | 3,158 | | $ | 297,357 | | | | 2/19/2019 | (2) | | — | | | — | | | — | | — | | — | | — | | 3,158 | | $ | 297,357 | | | | | 2/19/2020 | | | — | | | — | | | — | | 659 | | 1,318 | | 2,636 | | — | | $ | 158,740 | | | | 2/19/2020 | | | — | | | — | | | — | | 659 | | 1,318 | | 2,636 | | — | | $ | 158,740 | | | | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 2,636 | | $ | 317,480 |
(1) | (1)
| | Mr. HemsleyHowson receives his cash compensation in British pounds. The amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.33,$1.37, which was the exchange rate as of December 31, 2019. 2020. |
| (2)
| | These equity incentive awards were made in restricted stock units that are not subject to performance conditions and will vest in whole on the third anniversary of the grant date.
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All of the equity incentive awards were made in restricted stock units, half of which are subject to performance conditions. Except as noted in the table above, the restricted stock unit awards that are not subject to performance conditions have a three-year vesting schedule under which one-third of 62 | Cboe Global Markets 2021 Proxy Statement | |
the shares granted will vest each year on the anniversary of the grant date. Dividend equivalent payments are made on these restricted stock units. Half of the restricted stock units subject to performance conditions, or 25% of the total restricted stock units, have a performance condition under which the number of units that will ultimately be awarded will vary from 0% to 200% of the original grant, based on our total stockholder return (calculated as the increase in our stock price over the performance period plus reinvested dividends, divided by the stock price at the beginning of the performance period) relative to the total stockholder returns for the S&P 500 Index during the performance period. The remaining half of the performance share units, or 25% of the total restricted stock units, have a performance condition under which the number of units that will ultimately be awarded will vary from 0% to 200% of the original grant, based on our cumulative earnings per share during the performance period. Dividend equivalent payments on these restricted stock units accrue and are paid out in shares upon vesting. The restricted stock units subject to performance conditions cliff-vest following the completion of the three-year performance period and are issued following the certificationdetermination of the achievement of the performance conditions. | Cboe Global Markets 20202021 Proxy Statement | 5563
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For all of the awards, vesting will accelerate upon death, disability, or the occurrence of a change in control and qualified termination. Vesting will also accelerate upon a qualified retirement, except that the restricted stock units subject to performance conditions accelerate pro-rata based on the number of days in employment during the performance period and subject to attainment of the applicable performance goals through the full performance period. Under certain scenarios, Mr. Tilly’s employment agreement provides that he will be entitled to full vesting of his restricted stock units subject to performance conditions. Mr. Tilly’s employment agreement is described more fully below under “Severance, Change in Control and Employment-Related Agreements.”Agreements”. Qualified retirement eligibility occurs once satisfying 65 years of age and 5 years of service for grants awarded before 2017 and once satisfying 55 years of age and 10 years of service for grants awarded in and after 2017. With respect to Mr. Hemsley, grants awarded before 2018 did not provide for qualified retirement eligibility, however, for grants awarded in and after 2018, qualified retirement eligibility occurs once satisfyingupon attaining 55 years of age and 10 years of service. Unless retirement eligible, unvested portions of the restricted stock units will be forfeited if the executive officer terminates employment with us prior to the applicable vesting date. The restricted stock units are subject to non-compete, non-solicitation, and confidentiality covenants. 56
| Cboe Global Markets 2020 Proxy Statement
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2019 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth outstanding equity awards held by each named executive officer at December 31, 20192020 based on the market value of our common stock on December 31, 2019.2020. | | | | | | | | | | | | Stock Awards | | | | | | Equity Incentive Plan Awards: | | Equity Incentive Plan Awards: | | | | | | Number of Unearned | | Market or Payout Value | | Number of Shares or | | Market Value of Shares | | Shares, Units or Other | | of Unearned Shares, Units | | Units of Stock That | | or Units of Stock | | Rights That Have | | or Other Rights That | Name | Have Not Vested (#) | | That Have Not Vested | | Not Yet Vested (#) | | Have Not Yet Vested | Edward T. Tilly | 6,219 | (1) | | $ | 746,280 | | | | | | | | 10,365 | (1) | | $ | 1,243,800 | | | | | | | | 9,366 | (2) | | $ | 1,123,920 | | | | | | | | 22,632 | (3) | | $ | 2,715,840 | | | | | | | | | | | | | | 18,657 | (4) | | $ | 2,238,840 | | | | | | | | 7,025 | (5) | | $ | 843,000 | | | | | | | | 7,025 | (6) | | $ | 843,000 | | | | | | | | 11,316 | (7) | | $ | 1,357,920 | | | | | | | | 11,316 | (8) | | $ | 1,357,920 | Christopher A. Isaacson (9) | 11,336 | (10) | | $ | 1,360,320 | | | | | | | | 1,111 | (11) | | $ | 133,320 | | | | | | | | 6,219 | (12) | | $ | 746,280 | | | | | | | | 1,037 | (13) | | $ | 124,440 | | | | | | | | 1,846 | (2) | | $ | 221,520 | | | | | | | | 6,579 | (3) | | $ | 789,480 | | | | | | | | | | | | | | 3,110 | (4) | | $ | 373,200 | | | | | | | | 1,384 | (5) | | $ | 166,080 | | | | | | | | 1,384 | (6) | | $ | 166,080 | | | | | | | | 3,289 | (7) | | $ | 394,680 | | | | | | | | 3,289 | (8) | | $ | 394,680 | Brian N. Schell (9) | 10,364 | (10) | | $ | 1,243,680 | | | | | | | | 1,334 | (11) | | $ | 160,080 | | | | | | | | 4,975 | (12) | | $ | 597,000 | | | | | | | | 2,073 | (13) | | $ | 248,760 | | | | | | | | 2,040 | (2) | | $ | 244,800 | | | | | | | | 6,842 | (3) | | $ | 821,040 | | | | | | | | | | | | | | 1,530 | (5) | | $ | 183,600 | | | | | | | | 1,530 | (6) | | $ | 183,600 | | | | | | | | 3,421 | (7) | | $ | 410,520 | | | | | | | | 3,421 | (8) | | $ | 410,520 | Mark S. Hemsley (9) | 8,097 | (10) | | $ | 971,640 | | | | | | | | 778 | (11) | | $ | 93,360 | | | | | | | | 7,413 | (12) | | $ | 889,560 | | | | | | | | 1,236 | (13) | | $ | 148,320 | | | | | | | | 1,704 | (2) | | $ | 204,480 | | | | | | | | 4,474 | (3) | | $ | 536,880 | | | | | | | | | | | | | | 3,707 | (4) | | $ | 444,840 | | | | | | | | 1,277 | (5) | | $ | 153,240 | | | | | | | | 1,277 | (6) | | $ | 153,240 | | | | | | | | 2,237 | (7) | | $ | 268,440 | | | | | | | | 2,237 | (8) | | $ | 268,440 | Bryan Harkins (9) | 11,336 | (10) | | $ | 1,360,320 | | | | | | | | 1,112 | (11) | | $ | 133,440 | | | | | | | | 6,219 | (12) | | $ | 746,280 | | | | | | | | 2,073 | (13) | | $ | 248,760 | | | | | | | | 1,703 | (2) | | $ | 204,360 | | | | | | | | 3,158 | (3) | | $ | 378,960 | | | | | | | | 3,158 | (14) | | $ | 378,960 | | | | | | | | | | | | | | 1,277 | (5) | | $ | 153,240 | | | | | | | | 1,277 | (6) | | $ | 153,240 | | | | | | | | 1,579 | (7) | | $ | 189,480 | | | | | | | | 1,579 | (8) | | $ | 189,480 |
64 | (1)Cboe Global Markets 2021 Proxy Statement
| | Grant of restricted stock units not subject to performance conditions on February 19, 2017. This portion of the restricted stock units vested on February 19, 2020.
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| | | | | | | | | | | | Stock Awards | | | | | | Equity Incentive Plan Awards: | | Equity Incentive Plan Awards: | | | | | | Number of Unearned | | Market or Payout Value | | Number of Shares or | | Market Value of Shares | | Shares, Units or Other | | of Unearned Shares, Units | | Units of Stock That | | or Units of Stock | | Rights That Have | | or Other Rights That | Name | Have Not Vested (#) | | That Have Not Vested | | Not Yet Vested (#) | | Have Not Yet Vested | Edward T. Tilly | 4,683 | (1) | | $ | 436,081 | | | | | | | | 15,088 | (2) | | $ | 1,404,995 | | | | | | | | 19,058 | (3) | | $ | 1,774,681 | | | | | | | | 0 | (4) | | $ | 0 | | | | | | | | 14,050 | (5) | | $ | 1,308,336 | | | | | | | | | | | | | | 11,316 | (6) | | $ | 1,053,746 | | | | | | | | 5,658 | (7) | | $ | 526,873 | | | | | | | | 9,529 | (8) | | $ | 887,340 | | | | | | | | 4,765 | (9) | | $ | 443,670 | Christopher A. Isaacson | 923 | (1) | | $ | 85,950 | | | | | | | | 4,386 | (2) | | $ | 408,424 | | | | | | | | 7,096 | (3) | | $ | 660,780 | | | | | | | | 0 | (4) | | $ | 0 | | | | | | | | 2,768 | (5) | | $ | 257,756 | | | | | | | | | | | | | | 3,289 | (6) | | $ | 306,272 | | | | | | | | 1,645 | (7) | | $ | 153,136 | | | | | | | | 3,548 | (8) | | $ | 330,390 | | | | | | | | 1,774 | (9) | | $ | 165,195 | Brian N. Schell | 1,020 | (1) | | $ | 94,982 | | | | | | | | 4,562 | (2) | | $ | 424,813 | | | | | | | | 6,083 | (3) | | $ | 566,449 | | | | | | | | 0 | (4) | | $ | 0 | | | | | | | | 3,060 | (5) | | $ | 284,947 | | | | | | | | | | | | | | 3,421 | (6) | | $ | 318,564 | | | | | | | | 1,711 | (7) | | $ | 159,282 | | | | | | | | 3,042 | (8) | | $ | 283,271 | | | | | | | | 1,521 | (9) | | $ | 141,636 | David Howson | 454 | (1) | | $ | 42,276 | | | | | | | | 1,482 | (2) | | $ | 138,004 | | | | | | | | 2,636 | (3) | | $ | 245,464 | | | | | | | | 4,105 | (10) | | $ | 382,258 | | | | | | | | | | | | | | 1,318 | (8) | | $ | 122,732 | | | | | | | | 659 | (9) | | $ | 61,366 | Bryan Harkins | 852 | (1) | | $ | 79,338 | | | | | | | | 2,106 | (2) | | $ | 196,111 | | | | | | | | 2,636 | (3) | | $ | 245,464 | | | | | | | | 3,158 | (10) | | $ | 294,073 | | | | | | | | 0 | (4) | | $ | 0 | | | | | | | | 2,554 | (5) | | $ | 237,828 | | | | | | | | | | | | | | 1,579 | (6) | | $ | 147,036 | | | | | | | | 790 | (7) | | $ | 73,518 | | | | | | | | 1,318 | (8) | | $ | 122,732 | | | | | | | | 659 | (9) | | $ | 61,366 |
(1) | (2)
| | Grant of restricted stock units not subject to performance conditions on February 19, 2018. This remaining portion of the restricted stock units vested one-half on February 19, 2020 and will vest one-half on February 19, 2021. |
| Cboe Global Markets 2021 Proxy Statement | 65 |
(2) | (3)
| | Grant of restricted stock units not subject to performance conditions on February 19, 2019. This remaining portion of the restricted stock units vested one-half on February 19, 2021 and will vest one-half on February 19, 2022. |
(3) | Grant of restricted stock units not subject to performance conditions on February 19, 2020. These restricted stock units vested one-third on February 19, 20202021 and will vest one-third on each of February 19, 20212022 and February 19, 2022.2023. |
(4) | Cboe Global Markets 2020 Proxy Statement
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| (4)
| | Grant of restricted stock units on February 19, 2017, with respect to Mr. Tilly, and on February 28, 2017, with respect to Messrs. Isaacson and Hemsley, subject to a performance condition of total stockholder return relative to the S&P 500 Index for the period from January 1, 2017 through December 31, 2019. Under Rule 402 of Regulation S-K, these awards are shown at the target performance amount. These restricted stock units were issued on February 10, 2020 upon certification of the achievement of the performance conditions. See “Compensation Discussion and Analysis—2019 Elements of Executive Compensation Program—Long-Term Incentive Plan—2017 PSU Grants Vested” for more details.
|
| (5)
| | Grant of restricted stock units on February 19, 2018 subject to an earnings per share performance condition for the period from January 1, 2018 through December 31, 2020. Under Rule 402 of Regulation S-K, these awards are shown at the target performance amount. These restricted stock units will be issued on or about February 19, 2021 upon certification of the achievement of the performance conditions.
|
| (6)
| | Grant of restricted stock units on February 19, 2018 subject to a performance condition of total stockholder return relative to the S&P 500 Index for the period from January 1, 2018 through December 31, 2020. Under Rule 402 of Regulation S-K, theseThese awards are shown at the targetactual performance amount. These restricted stock units will bewere issued on or about February 19,10, 2021 upon certificationdetermination of the achievement of the performance conditions. See “Compensation Discussion and Analysis—2020 Elements of Executive Compensation Program—Long-Term Incentive Plan—2018 PSU Grants Vested” for more details. |
(5) | (7) Grant of restricted stock units on February 19, 2018 subject to an earnings per share performance condition for the period from January 1, 2018 through December 31, 2020. These awards are shown at the actual performance amount. These restricted stock units were issued on February 10, 2021 upon determination of the achievement of the performance conditions. See “Compensation Discussion and Analysis—2020 Elements of Executive Compensation Program—Long-Term Incentive Plan—2018 PSU Grants Vested” for more details. |
(6) | | Grant of restricted stock units on February 19, 2019 subject to an earnings per share performance condition for the period from January 1, 2019 through December 31, 2021. Under RuleItem 402 of Regulation S-K, these awards are shown at the target performance amount. These restricted stock units will be issued on or about February 19, 2022 upon certificationdetermination of the achievement of the performance conditions. |
(7) | (8)
| | Grant of restricted stock units on February 19, 2019 subject to a performance condition of total stockholder return relative to the S&P 500 Index for the period from January 1, 2019 through December 31, 2021. Under RuleItem 402 of Regulation S-K, these awards are shown at the threshold performance amount. These restricted stock units will be issued on or about February 19, 2022 upon determination of the achievement of the performance conditions. |
(8) | Grant of restricted stock units on February 19, 2020 subject to an earnings per share performance condition for the period from January 1, 2020 through December 31, 2022. Under Item 402 of Regulation S-K, these awards are shown at the target performance amount. These restricted stock units will be issued on or about February 19, 20222023 upon certificationdetermination of the achievement of the performance conditions. |
(9) | (9)
| | Pursuant to the merger agreement, each award of restricted Bats common stock (“Bats restricted stock”) of the executive that was unvested immediately prior to the effective time of our acquisition of Bats (the “Effective Time”) was assumed by us and converted into an award of restricted shares of our common stock, subject to the same terms and conditions (including vesting schedule) that applied to the applicable Bats restricted stock immediately prior to the Effective Time (but taking into account any changes, including any acceleration of vesting of such Bats restricted stock, occurring by reason provided for in the merger agreement). The number of shares of our common stock subject to each such converted award of Bats restricted stock equals the number of shares of Bats common stock subject to the corresponding Bats restricted stock award multiplied by 0.4452.
|
| (10)
| | Grant of Bats restricted stock on January 13, 2016. This portion of the restricted stock vested on January 13, 2020.
|
| (11)
| | Grant of Bats restricted stock on January 13, 2017. This portion of the restricted stock vested on January 13, 2020.
|
| (12)
| | Grant of restricted stock units noton February 19, 2020 subject to a performance conditions on February 28, 2017.condition of total stockholder return relative to the S&P 500 Index for the period from January 1, 2020 through December 31, 2022. Under Item 402 of Regulation S-K, these awards are shown at the threshold performance amount. These restricted stock units vested in wholewill be issued on or about February 28, 2020. |
| (13)
| | Grant of restricted stock units not subject to performance conditions on February 28, 2017. This portion19, 2023 upon determination of the restricted stock units vested on February 28, 2020. achievement of the performance conditions. |
(10) | (14)
| | Grant of restricted stock units not subject to performance conditions on February 19, 2019. These restricted stock units will vest in whole on February 19, 2022. 2022. |
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| Cboe Global Markets 20202021 Proxy Statement | |
20192020 Option Exercises and Stock Vested Table
The following table sets forth the options exercised and equity awards that vested during 2019.2020. | | | | | | | | Option Awards | | Stock Awards | | | Number of Shares | | Value Realized on | | Number of Shares | | Value Realized on | | | | | | | | | | | | | Option Awards | | Stock Awards | | | Number of Shares | | Value Realized on | | Number of Shares | | Value Realized on | Name | Acquired on Exercise (#) | | Exercise | | Acquired on Vesting (#) | | Vesting | Acquired on Exercise (#) | | Exercise | | Acquired on Vesting (#) | | Vesting | Edward T. Tilly | — | | $ | — | | 69,938 | | $ | 6,578,654 | — | | $ | — | | 60,423 | | $ | 7,380,085 | Christopher A. Isaacson | 30,000 | | $ | 2,787,515 | | 17,839 | | $ | 1,728,416 | — | | $ | — | | 28,090 | | $ | 3,286,953 | Brian N. Schell | — | | $ | — | | 18,203 | | $ | 1,766,038 | — | | $ | — | | 22,046 | | $ | 2,547,247 | Mark S. Hemsley | 14,039 | | $ | 1,288,233 | | 18,702 | | $ | 1,923,376 | | David Howson | | — | | $ | — | | 4,104 | | $ | 478,045 | Bryan Harkins | — | | $ | — | | 20,876 | | $ | 2,063,818 | — | | $ | — | | 22,643 | | $ | 2,607,126 |
20192020 Non-Qualified Deferred Compensation Table
| | | | | | | | Executive | | Registrant | | Aggregate | | | | | | | | Contributions | | Contributions | | Earnings | | Aggregate | | Aggregate | | | | in Last | | in Last | | in Last | | Withdrawals/ | | Balance at | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | Registrant | | Aggregate | | | | | | | | | | | | Contributions | | Contributions | | Earnings | | Aggregate | | Aggregate | | | | | | in Last | | in Last | | in Last | | Withdrawals/ | | Balance at | Name (1) | | | | FY (2) | | FY (3) | | FY (4) | | Distributions | | Last FYE | | | | FY (2) | | FY (3) | | FY (4) | | Distributions | | Last FYE | Edward T. Tilly | | SERP | | $ | 168,175 | | $ | 336,350 | | $ | | 316,311 | | $ | — | | $ | 3,132,655 | | SERP | | $ | 105,992 | | $ | 211,984 | | $ | | 11,268 | | $ | — | | $ | 3,461,899 | | | ERP | | $ | — | | $ | 581,251 | | $ | | 57,481 | | $ | — | | $ | 2,960,027 | | | | | ERP | | $ | — | | $ | 440,220 | | $ | | 99,561 | | $ | — | | $ | 3,499,808 | Christopher A. Isaacson | | SERP | | $ | 1,051,317 | | $ | 168,211 | | $ | | 266,548 | | $ | — | | $ | 2,269,370 | | SERP | | $ | 647,788 | | $ | 103,646 | | $ | | 544,019 | | $ | — | | $ | 3,574,823 | Brian N. Schell | | SERP | | $ | 54,559 | | $ | 109,119 | | $ | | 41,962 | | $ | — | | $ | 263,897 | | SERP | | $ | 32,828 | | $ | 65,657 | | $ | | 68,972 | | $ | — | | $ | 426,435 | Bryan Harkins | | SERP | | $ | — | | $ | — | | $ | | — | | $ | — | | $ | — | | SERP | | $ | — | | $ | — | | $ | | — | | $ | — | | $ | — |
(1) | (1)
| | Executive and registrant contributions include contributions during 2019.2020. Messrs. Isaacson, Schell, and Harkins are not eligible to participate in the Executive Retirement Plan. Mr. Hemsley,Howson, as a U.K. based employee, was not eligible to participate in the Supplemental Executive Retirement Plan nor the Executive Retirement Plan. |
(2) | (2)
| | The amount of executive contributions made by each named executive officer and reported in this column is included in each named executive officer’s compensation reported in the 2020 Summary Compensation Table under the column labeled “Salary.” “Salary”. |
(3) | (3)
| | The amount of registrant contributions reported in this column for each named executive officer is also included in his or her compensation reported in the 2020 Summary Compensation Table under the column labeled “All Other Compensation.” Compensation”. |
(4) | (4)
| | Earnings are based upon the investment fund selected by the named executive officer for each plan. |
Non-Qualified Defined Contribution Plans We do not have a defined benefit retirement plan. We currently have two non-qualified defined contribution plans in which the named executive officers may, as applicable, participate: the Supplemental Executive Retirement Plan and the Executive Retirement Plan. The investment options for these plans only include investment options that are available under the qualified plan. The SERP is designed for employees whose level of compensation exceeds the IRS defined annual compensation limit ($280,000285,000 for 2019)2020). Under the SERP, we match deferral contributions made by the employee under the SERP with respect to compensation in excess of the IRS compensation limit. These contributions mirror those under the 401(k) plan. In 2019,2020, we matched employee contributions | Cboe Global Markets 2021 Proxy Statement | 67 |
up to 4% of the employee’s compensation, subject to statutory limitations. We matched 200% of such contributions. Mr. Hemsley,Howson, as a U.K. based employee, was not eligible to participate in the SERP. | Cboe Global Markets 2020 Proxy Statement
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Mr. Tilly is eligible to participate in the ERP. Our 20192020 contribution to the ERP was 6% of each participant’s base salary and annual incentive, and, in the future, we expect to make further contributions consistent with this formula. Effective January 1, 2017, the ERP is frozen to new executive officers and employees. Messrs. Isaacson, Schell, HemsleyHowson, and Harkins are not eligible to participate in the ERP. In 2019,2020, Mr. Tilly participated in the age-based component of the ERP. In addition to the contribution to the ERP described in the preceding paragraph, under the age-based component, we contribute to each eligible employee’s account an amount equal to a percentage of the employee’s base salary and cash incentive, based on such employee’s age at the start of the year, as set forth in the table below. | | | | | | | Contribution | | | Contribution
| Age of Participant | | Percentage | Under 45 | | 1 | % | 45 to 49 | | 3 | % | 50 to 54 | | 6 | % | 55 to 59 | | 9 | % | 60 to 64 | | 11 | % | 65 and over | | None | |
All of our contributions to non-qualified defined contribution plans vest 20% for each year of continuous service, identical to the qualified 401(k) plan. All of our participating named executive officers other than Mr. Hemsley, are fully vested in the plans. 6068
| Cboe Global Markets 20202021 Proxy Statement | |
SEVERANCE, CHANGE IN CONTROL AND EMPLOYMENT-RELATED AGREEMENTS As of December 31, 2019,2020, we had an employment agreement with Mr. Tilly, an offer letter and employment agreement with Mr. Howson, and the rest of theother named executive officers are covered by the Executive Severance Plan. The material terms of the agreementagreements and the plan are discussed below. Mr. Tilly’s Employment Agreement Under the Employment Agreement, as amended and restated on May 16, 2019February 11, 2020 (the “2019 Employment“Employment Agreement”), Mr. Tilly serves as our Chairman, President and CEO. The 2019 Employment Agreement was scheduled to expire on December 31, 2020, and thereafter would be automatically renewed for successive one-year terms unless either the Company or Mr. Tilly gave notice not to renew the agreement at least 180 days prior to the expiration of the then current term. On February 11, 2020, Mr. Tilly entered into a new Employment Agreement replacing the 2019 Employment Agreement (the “2020 Employment Agreement” and, together with the 2019 Employment Agreement, the “Employment Agreements”), under which Mr. Tilly will continue to serve as our Chairman, President and CEO. The 2020 Employment Agreement is scheduled to expire on December 31, 2022, and thereafter will be automatically renewed for successive one-year terms (each, a “Renewal Period”) unless either the Company or Mr. Tilly gives notice not to renew the agreement at least 180 days prior to the expiration of the then current term.
The 2019 Employment Agreement provided and the 2020 Employment Agreement provides for an annual base salary of at least $1,265,000. Mr. Tilly is also eligible to receive cash and equity incentive awards, each in the sole discretion of the Board. Mr. Tilly is entitled to participate in all of our employee benefit and fringe benefit plans that are generally available to similarly situated members of senior management. Pursuant to the Employment Agreements,Agreement, Mr. Tilly agreed to certain non-compete and non-solicit provisions during the employment term and for two years thereafter, as well as indefinite confidentiality obligations. Under the Employment Agreements,Agreement, upon a termination of employment by the Company without cause or by Mr. Tilly for good reason, or if Mr. Tilly’s employment is terminated due to death or disability, Mr. Tilly (or his estate, as applicable) will be entitled to receive the following (collectively, the “Benefits”): (i) accrued but unpaid base salary through the date of termination; (ii) a pro-rated bonus equal to the bonus that Mr. Tilly would have received for the calendar year in which termination occurs, based on target performance, pro-rated for the portion of the calendar year worked; (iii) a lump sum cash severance payment in an amount equal to the sum of (A) two times the annual base salary in effect on the date of termination and (B) two times the target bonus for the year of termination; (iv) a lump sum cash payment in an amount equal to the aggregate amount of all employer contributions Mr. Tilly would have received had his employment continued for a period of two years under the SMART Plan, the SERP and the ERP; and (v) Company-paid premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or an amount equal to Mr. Tilly’s COBRA premiums, sufficient to cover full family health care for a period of 18 months following the termination of employment and, at the end of such period, reimbursement of premiums for six additional months of coverage under a comparable individual health policy. Mr. Tilly would also receive these Benefits if he is terminated without cause or resigns for good reason within 24 months after a change in control, except that he will be reimbursed for 18 months of individual health coverage following the expiration of his COBRA period, rather than six months. | Cboe Global Markets 2020 Proxy Statement
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In addition to the Benefits, under the 2020 Employment Agreement, upon a termination of employment by the Company without cause or by Mr. Tilly for good reason, Mr. Tilly (or his estate, as applicable) will be also entitled to receive full vesting of outstanding performance based restricted stock units based on the level of actual performance achieved. The 2020 Employment Agreement also provides that upon a voluntary termination of employment by Mr. Tilly without good reason, Mr. Tilly (or his estate, as applicable) will be entitled to receive the following: (i) accrued but unpaid base salary through the date of termination; (ii) if not already paid prior to termination, bonus equal to the bonus that Mr. Tilly would have received for the calendar year prior to which termination occurs, based on actual performance; (iii) if termination is on or after January 1, 2023, full vesting of outstanding performance based restricted stock units granted prior to | Cboe Global Markets 2021 Proxy Statement | 69 |
January 1, 2023, based on the level of actual performance achieved; and (iv) if termination is after the completion of a Renewal Period, full vesting of outstanding performance based restricted stock units granted during such Renewal Period, based on the level of actual applicable performance achieved. Mr. Howson’s Offer Letter and Employment Agreement We entered into an offer letter agreement with Mr. Howson, dated December 19, 2019 (the “Offer Letter Agreement”), pursuant to which he indicated his intent to continue employment with us following a promotion in exchange for the compensation specified therein. Under Mr. Howson’s Offer Letter Agreement, Mr. Howson would serve as our President, Cboe Europe Limited, effective January 1, 2020. Mr. Howson’s Offer Letter Agreement provides for an initial annual base salary of 420,000 GBP and an initial target annual bonus of 462,000 GBP. Mr. Howson’s Offer Letter Agreement also provides that Mr. Howson will be eligible for an initial target annual equity incentive award having a grant date value of $650,000. Mr. Howson continues to be eligible for the severance and other change in control benefits under his employment agreement with Bats Global Markets Holdings, Inc., a wholly owned subsidiary of the Company, dated December 17, 2015 (the “Howson Employment Agreement”). The Howson Employment Agreement expired on December 31, 2018, and thereafter automatically renews for successive one-year terms unless either the Company or Mr. Howson gives notice not to renew the agreement at least 90 days prior to the expiration of the then current term. Under the Howson Employment Agreement, upon a termination of Mr. Howson’s employment by us without cause or by the executive for good reason, the terminated executive is entitled to: (i) one times his annual base salary; (ii) an amount equal to one times his target bonus; (iii) reimbursement for insurance premiums payable over twelve (12) months; and (iv) his pro rata bonus as of the date of termination based on actual performance. Upon a voluntary termination of Mr. Howson’s employment without good reason, he is entitled to one times his annual base salary during such time that we elect to enforce his covenant not to compete. Mr. Howson is entitled to certain severance compensation and benefits upon a change in control. The Howson Employment Agreement provides that if, within the 24-month period occurring immediately after a change in control, the executive is terminated by us without cause or terminates his employment for good reason, he is entitled to: (i) two times his annual base salary; (ii) an amount equal to two times his target annual bonus; (iii) reimbursement for twelve (12) months of insurance premiums payable in a lump sum; (iv) his pro rata bonus as of the date of termination based on target performance; and (v) accelerated vesting of all outstanding equity awards. If Mr. Howson retires, dies, becomes disabled, or his employment is terminated for cause, the executive will not receive any cash severance benefits (except for any accrued obligations and the payment of the executive’s pro rata bonus based on actual performance as of the date of termination due to the executive's death or disability). Mr. Howson may choose to continue medical and dental benefits through COBRA or his insurance at his own cost. Under the Howson Employment Agreement, we are required to provide him with the minimum statutory notice requirements of the Employment Rights Act which are applicable to the work carried out by Mr. Howson in the UK. Executive Severance Plan Except as disclosed herein, the other named executive officers do not have employment agreements; however, the Compensation Committee believes it is appropriate to provide an Executive Severance Plan to encourage retention, maintain a consistent management team to effectively run our operations, and allow executives to focus on our strategic business priorities. As of December 31, 2019,2020, the plan participants covered Messrs. Isaacson, Schell, Hemsley, Harkins, and other officers. 70 | Cboe Global Markets 2021 Proxy Statement | |
Under the plan, an executivea participant who experiences an involuntary termination (as defined in the plan, which includes termination by us without cause and by the executive for good reason) is entitled to receive the following severance benefits: the executive’sparticipant’s accrued salary, unpaid expenses, accrued and unpaid vacation days through the date of termination, and any unpaid bonus earned in any year prior to the year in which the executive’sparticipant’s employment terminates,
an amount equal to a pro-rated bonus for the year of employment termination, based on target performance for such year,
a severance payment in an amount equal to the sum of the executive’sparticipant’s base salary and target annual bonus, and
COBRA premiums for 18 months.
Under the terms of the plan, if the executive’sparticipant’s employment is terminated either by us for cause, or by the executiveparticipant other than for good reason (each as defined in the plan), we will pay the executiveparticipant any unpaid bonus and accrued benefits. If the executiveparticipant is terminated in connection with a change in control, which includes a termination without cause or a resignation for good reason that occurs within a period beginning six months before a change in control and ending two years after, such executiveparticipant will receive the severance benefits listed above. The plan also provides that we will require any successor to expressly assume and agree to maintain the plan. To help align with best practices, on February 11, 2021, the Board approved an amendment and restatement of the Executive Severance Plan, which included the following changes: (i) designating the Chief Executive Officer of the Company to determine from time to time the executive vice president (“EVP”) and senior vice president (“SVP”) participants in the plan; (ii) establishing a severance multiplier for SVPs and all other participants (other than EVPs) in the plan of one times the sum of a participant’s annual base salary and target annual bonus; (iii) increasing the severance multiplier in the event a participant is terminated in connection with a change in control for EVP participants in the plan to two times the sum of a participant’s annual base salary and target annual bonus; (iv) establishing a severance multiplier in the event a participant is terminated in connection with a change in control for SVPs and all other participants (other than EVPs) in the plan of one and a half times the sum of a participant’s annual base salary and target annual bonus; (v) establishing company-paid premiums for COBRA for SVPs and all other participants (other than EVPs) in the plan of twelve (12) months; (vi) increasing company-paid premiums for COBRA in the event a participant is terminated in connection with a change in control for EVP participants in the plan to twenty-four (24) months; and (vii) establishing company-paid premiums for COBRA in the event a participant is terminated in connection with a change in control for SVPs and all other participants (other than EVPs) in the plan of eighteen (18) months. As of February 11, 2021, the plan participants covered Messrs. Isaacson, Schell, Harkins, and other officers. 62
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Severance Payments The following table shows the potential additional payment to each officer pursuant to, for Mr. Tilly his employment agreement, for Mr. Howson his offer letter and employment agreement, and for the other named executive officers, the Executive Severance Plan, each discussed above, upon the termination of the executive’s employment by us without cause or by the executive for good reason (including following a change in control), upon the executive’s death or disability, qualified retirement (if eligible), and by the executive without good reason. The amounts shown assume that the termination or event occurred on December 31, 2019.2020. Mr. HemsleyHowson receives his cash compensation in British pounds. The amounts reported below were converted to U.S. dollars using a rate of £1.00 to $1.33$1.37, which was the exchange rate as of December 31, 2019. 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash | | Stock Vesting | | | | | | | | Name | | | | Salary | | Incentive(6) | | Acceleration (7) | | | Other(8) | | Total | Edward T. Tilly | | (1) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 10,093,940 | | | $ | 1,917,673 | | $ | 20,803,363 | | | (2) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 12,470,520 | | | $ | 1,923,977 | | $ | 23,186,247 | | | (3) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 12,470,520 | | | $ | 1,917,673 | | $ | 23,179,943 | | | (4) | | $ | 0 | | $ | 0 | | $ | 10,093,940 | | | $ | 0 | | $ | 10,093,940 | | | (5) | | $ | 0 | | $ | 0 | | $ | 10,093,940 | | | $ | 0 | | $ | 10,093,940 | Christopher A. Isaacson | | (1) | | $ | 650,000 | | $ | 1,950,000 | | $ | 373,200 | | | $ | 34,519 | | $ | 3,007,719 | | | (2) | | $ | 650,000 | | $ | 1,950,000 | | $ | 4,870,122 | | | $ | 34,519 | | $ | 7,504,641 | | | (3) | | $ | 0 | | $ | 0 | | $ | 4,870,122 | | | $ | 0 | | $ | 4,870,122 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 373,200 | | | $ | 0 | | $ | 373,200 | Brian N. Schell | | (1) | | $ | 521,000 | | $ | 1,458,800 | | $ | 0 | | | $ | 32,745 | | $ | 2,012,545 | | | (2) | | $ | 521,000 | | $ | 1,458,800 | | $ | 4,503,591 | | | $ | 32,745 | | $ | 6,516,136 | | | (3) | | $ | 0 | | $ | 0 | | $ | 4,503,591 | | | $ | 0 | | $ | 4,503,591 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | Mark S. Hemsley | | (1) | | $ | 643,574 | | $ | 1,480,220 | | $ | 1,568,710 | | | $ | 0 | | $ | 3,692,504 | | | (2) | | $ | 643,574 | | $ | 1,480,220 | | $ | 4,132,447 | | | $ | 0 | | $ | 6,256,241 | | | (3) | | $ | 0 | | $ | 0 | | $ | 4,132,447 | | | $ | 0 | | $ | 4,132,447 | | | (4) | | $ | 0 | | $ | 0 | | $ | 1,568,710 | | | $ | 0 | | $ | 1,568,710 | | | (5) | | $ | 0 | | $ | 0 | | $ | 1,568,710 | | | $ | 0 | | $ | 1,568,710 | Bryan Harkins | | (1) | | $ | 500,000 | | $ | 1,000,000 | | $ | 0 | | | $ | 34,519 | | $ | 1,534,519 | | | (2) | | $ | 500,000 | | $ | 1,000,000 | | $ | 4,136,442 | | | $ | 34,519 | | $ | 5,670,961 | | | (3) | | $ | 0 | | $ | 0 | | $ | 4,136,442 | | | $ | 0 | | $ | 4,136,442 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 |
72 | Cboe Global Markets 2021 Proxy Statement | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Cash | | Stock Vesting | | | | | | | | Name | | | | Salary | | Incentive(6) | | Acceleration(7) | | | Other(8) | | Total | Edward T. Tilly | | (1) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,378,146 | | $ | 18,976,161 | | | (2) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,392,215 | | $ | 18,990,230 | | | (3) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,378,146 | | $ | 18,976,161 | | | (4) | | $ | 0 | | $ | 0 | | $ | 6,920,647 | | | $ | 0 | | $ | 6,920,647 | | | (5) | | $ | 0 | | $ | 0 | | $ | 6,920,647 | | | $ | 0 | | $ | 6,920,647 | Christopher A. Isaacson | | (1) | | $ | 650,000 | | $ | 1,950,000 | | $ | 257,756 | | | $ | 34,519 | | $ | 2,892,275 | | | (2) | | $ | 650,000 | | $ | 1,950,000 | | $ | 2,686,233 | | | $ | 34,519 | | $ | 5,320,752 | | | (3) | | $ | 0 | | $ | 0 | | $ | 2,686,233 | | | $ | 0 | | $ | 2,686,233 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 257,756 | | | $ | 0 | | $ | 257,756 | Brian N. Schell | | (1) | | $ | 525,000 | | $ | 1,470,000 | | $ | 284,947 | | | $ | 32,745 | | $ | 2,312,692 | | | (2) | | $ | 525,000 | | $ | 1,470,000 | | $ | 2,574,861 | | | $ | 32,745 | | $ | 4,602,606 | | | (3) | | $ | 0 | | $ | 0 | | $ | 2,574,861 | | | $ | 0 | | $ | 2,574,861 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 284,947 | | | $ | 0 | | $ | 284,947 | David Howson | | (1) | | $ | 575,400 | | $ | 1,568,110 | | $ | 0 | | | $ | 8,412 | | $ | 2,151,922 | | | (2) | | $ | 1,150,800 | | $ | 2,352,165 | | $ | 1,053,467 | | | $ | 8,412 | | $ | 4,564,844 | | | (3) | | $ | 0 | | $ | 784,055 | | $ | 1,053,467 | | | $ | 0 | | $ | 1,837,522 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 575,400 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 575,400 | Bryan Harkins | | (1) | | $ | 500,000 | | $ | 1,000,000 | | $ | 237,828 | | | $ | 34,519 | | $ | 1,772,347 | | | (2) | | $ | 500,000 | | $ | 1,000,000 | | $ | 1,592,352 | | | $ | 34,519 | | $ | 3,126,871 | | | (3) | | $ | 0 | | $ | 0 | | $ | 1,592,352 | | | $ | 0 | | $ | 1,592,352 | | | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | | | (5) | | $ | 0 | | $ | 0 | | $ | 237,828 | | | $ | 0 | | $ | 237,828 |
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(1) | (1)
| | Represents amounts to be paid in connection with a termination of the executive’s employment by us without cause or by the executive for good reason. |
(2) | (2)
| | Represents amounts to be paid in connection with a termination of the executive’s employment by us without cause or by the executive for good reason following a change in control. |
(3) | (3)
| | Represents amounts to be paid in connection with death or disability. |
(4) | (4)
| | Represents amounts to be paid in connection with a qualified retirement. As of December 31, 2020, Messrs. Isaacson, Schell, Howson, and Harkins have not satisfied the retirement requirements of 55 years of age and 10 years of service. On March 1, 2021, Mr. Schell satisfied the retirement requirements of 55 years of age and 10 years of service. |
(5) | (5)
| | Represents amounts to be paid in connection with a termination of the executive’s employment by the executive without good reason. |
(6) | (6)
| | The amounts shown represent, in the aggregate, any unpaid bonus earned in any year prior to the year in which the executive’s employment terminates, a pro-rated target bonus amount, a pro-rated actual bonus amount with respect to Mr. Howson, and a bonus payment in an amount equal to one or two times target bonus, as applicable. |
(7) | (7)
| | If a retirement-eligible executive terminates for any reason, other than death or disability or a termination of the executive’s employment by us without cause or by the executive for good reason following a change in control, they are assumed to have taken a retirement. Amounts for Messrs.Mr. Tilly and Hemsley in rows 1, 4 and 5 include acceleration of vesting of certain equity awards, including full or pro-rata vesting of PSU awards, because eachhe has satisfied, as of December 31, 2020, the retirement requirements of 55 years of age and 10 years of service. Amounts for Mr.Messrs. Tilly, Isaacson, Schell and Harkins in rows 1 and 5 assume satisfaction of the performance period for the 20172018 PSU awards as of December 31, 2019,2020, which were certified and issued subsequent to the end of 2019.2020. The amounts shown are based on the market value of our common stock on December 31, 20192020 and amounts that include PSU awards are shown at the target performance amount, other than 2018 PSU awards, which are shown at actual performance amount. |
(8) | Cboe Global Markets 2020 Proxy Statement
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| (8)
| | The amounts shown represent amounts contributed on behalf of the executive under our qualified and non-qualified defined contribution plans in connection with such executive’s termination and estimated COBRA premium costs (based upon total monthly premiums as of December 31, 2019)2020) for 18 months of coverage.coverage or 24 months, in the case of a change in control. The reimbursement payable to Mr. Tilly at the end of the COBRA continuation period for an additional 6 months of medical insurance coverage (additional 18 months if termination is within 18 months of a change in control) is not included. All of the participating named executive officers other than Mr. Hemsley, are fully vested in our qualified and non-qualified defined contribution plans, so there is no acceleration of vesting on these events.events. |
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PAY RATIO As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees (other than Mr. Tilly, our Chairman, President and Chief Executive Officer) and the annual total compensation of Mr. Tilly. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. For 2019,2020, the median of the annual total compensation of all employees of the Company (other than our CEO) was $166,086$177,330 and the annual total compensation of our CEO was $8,212,785,$9,062,411, as reported in the “Total” column of our 20192020 Summary Compensation Table above. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 4951 to 1. We identified the median employee by reviewing the annual total compensation of all full-time, part-time, and temporary employees employed by us on November 15, 20192020 as reflected in our payroll records. Annual total compensation included salary, commissions, bonus, value of equity grants, and value of benefits received. In making this determination, we used our employee population size of 783944 employees as of November 15, 2019,2020, which excluded, under the non-U.S. de minimis exception to the pay ratio rule, all of our associates in Ecuador (approximately 13), Canada (approximately 5), Singapore (approximately 3), and Hong Kong (approximately 1), out of a total of 796973 employees, or 1.6%97%. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for calculating total compensation for each of our named executive officers as set forth in the 20192020 Summary Compensation Table above. 64
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EQUITY COMPENSATION PLAN INFORMATION The following is information about our equity compensation plans as of December 31, 2019.2020. | | | | | | | | | | | | | | | | | | Number of securities | | | | Number of securities | | | | remaining available for | | | | to be issued upon | | | | future issuance under | | | | exercise of | | Weighted-average | | equity compensation plans | | | | outstanding options, | | exercise price of | | (excluding securities | | | | warrants and | | outstanding options, | | reflected in column | | | | | | | | | | | | | | | | | | | | | Number of securities | | | | Number of securities | | | | remaining available for | | | | to be issued upon | | | | future issuance under | | | | exercise of | | Weighted-average | | equity compensation plans | | | | outstanding options, | | exercise price of | | (excluding securities | | | | warrants and | | outstanding options, | | reflected in column | Plan Category | | rights(a) | | warrants and rights(b) | | (a))(c) | | rights(a) | | warrants and rights(b) | | (a))(c) | Equity compensation plans approved by security holders | | N/A | (1) | | N/A | (1) | | 4,592,713(2) | | N/A | (1) | | N/A | (1) | | 4,345,708(2) | Equity compensation plans not approved by security holders | | — | | | — | | | — | | — | | | — | | | — | Total | | — | (1) | | — | (1) | | 4,592,713(2) | | — | (1) | | — | (1) | | 4,345,708(2) |
(1) | (1)
| | The Company has grants of unvested restricted stock and restricted stock units covering a total of 500,936464,748 shares of our common stock as of December 31, 20192020 under the Second Amended and Restated Long-Term Incentive Plan. |
(2) | (2)
| | Consists, as of December 31, 2019,2020, of 3,870,0653,653,276 shares of our common stock available for future issuance under the Second Amended and Restated Long-Term Incentive Plan and 722,648692,432 shares of our common stock available for future issuance under the Employee Stock Purchase Plan. |
In connection with our acquisition of Bats, the Company assumed the Bats Plans. No awards were made under the Bats Plans subsequent to our acquisition of Bats. On March 1, 2017, we reserved 1,305,918 shares of our common stock for issuance under the Bats Plans. As of December 31, 2019, 10,834 shares of our common stock were covered by outstanding and unexercised options granted under the Bats Plans, which awards had a weighted average exercise price of $18.59 and all of which were exercisable as of December 31, 2019. Additionally, as of December 31, 2019, 67,325 shares of our common stock were covered by outstanding restricted stock awards granted under the Bats Plans. These shares are not included in the table above. We will not grant any future awards under the Bats Plans.
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AUDIT MATTERS PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM General Following a competitive request for proposal process, on August 9, 2019, the Audit Committee approved the dismissal of Deloitte & Touche LLP (“Deloitte”) as the Company’sKPMG, an independent registered public accounting firm, effective following the conclusion of the audits for the Company’s and its subsidiaries’ fiscal year ending December 31, 2019. On the same day, the Audit Committee approved the engagement of KPMGserved as the Company’sour independent registered public accounting firm for the fiscal year ending December 31, 2020.
The reports of Deloitte on the Company's consolidated financial statements for the years ended December 31, 20192020, and 2018 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modifiedour Audit Committee has again selected KPMG to serve as to uncertainty, audit scope, orour independent registered public accounting principles. Duringfirm for the years ended December 31, 2019 and 2018, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused them to make reference thereto in their reports. During the years ended December 31, 2019 and 2018, there were no "reportable events" requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K.
During the years ended December 31, 2019 and 2018, neither the Company nor anyone on its behalf consulted KPMG regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed; or on the type of audit opinion that might be rendered on the consolidated financial statements of the Company, and neither a written report nor oral advice was provided to the Company that KPMG concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
2021 fiscal year. Representatives of Deloitte and KPMG will be present at the Annual Meeting, will have the opportunity to make a statement if they so desire, and will be available to respond to appropriate questions. Although stockholder ratification is not required by our Bylaws or otherwise, the Board, as a matter of good corporate governance, is requesting that stockholders ratify the selection of KPMG as our independent registered public accounting firm for the 20202021 fiscal year. If stockholders do not ratify KPMG, the Audit Committee will reconsider its appointment. The ratification of the appointment of KPMG as our independent registered public accounting firm for the 20202021 fiscal year requires that a majority of the shares cast on this matter be cast in favor of the proposal. Your broker is permitted to vote your shares of common stock on this matter even when you have not given voting instructions. Abstentions will not be counted as votes cast and therefore will not affect the vote. The Board and the Audit Committee recommend that stockholders vote FOR ratification of the appointment of KPMG as our independent registered public accounting firm for the 20202021 fiscal year. Former Independent Registered Public Accounting Firm Following a competitive request for proposal process, on August 9, 2019, the Audit Committee approved the dismissal of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm, effective following the conclusion of the audits for us and our subsidiaries’ fiscal year ending December 31, 2019. On the same day, the Audit Committee approved the engagement of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020. The reports of Deloitte on our consolidated financial statements for the year ended December 31, 2019 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles. During the year ended December 31, 2019, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused them to make reference thereto in their reports. During the year ended December 31, 2019, there were no “reportable events” requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K. We provided Deloitte with a copy of the Current Report on Form 8-K (the “Form 8-K”), which was later filed with the SEC on August 14, 2019, and requested that Deloitte provide us with a letter addressed to the SEC stating whether or not Deloitte agreed with the disclosure contained in the Form 8-K or, if not, stating the respects in which it did not agree. We received the requested letter from Deloitte and a copy of Deloitte’s letter was filed as Exhibit 16.1 to the Form 8-K. 66
| Cboe Global Markets 20202021 Proxy Statement | 77 |
Independent Registered Public Accounting Firm Fees for KPMG Accounting Fees
KPMG served as our independent registered public accounting firm for the year ended December 31, 2020 and is serving in such capacity for the 2021 fiscal year. The following table presents fees billed to us by Deloitte forKPMG in the years ended December 31, 20192020 and 2018:2019: | | | | | | | | | 2019 | | 2018 | | | | | | | | | | | | 2020 | | 2019 | Audit Fees | $ | 2,928,489 | | $ | 2,411,095 | $ | 2,760,545 | | $ | — | Audit-Related Fees | | 26,594 | | | 370,527 | | 232,820 | | | — | Tax Fees | | 341,428 | | | 293,999 | | 49,325 | | | 176,998 | All Other Fees | | — | | | — | | — | | | — | Total | $ | 3,296,511 | | $ | 3,075,621 | $ | 3,042,690 | | $ | 176,998 |
Audit Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by KPMG for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, quarterly reviews of our unaudited condensed consolidated financial statements, and audits of various domestic and international subsidiaries. Audit-Related Fees consist of the aggregate fees billed, or expected to be billed, for assurance and related services rendered by KPMG, including services rendered in connection with certain regulatory requirements of our subsidiaries. Tax Fees consist of the aggregate fees billed, or expected to be billed, for tax consulting services rendered by KPMG in various jurisdictions in which we operate. KPMG did not serve as our independent registered public accounting firm for the year ended December 31, 2019 and therefore the fees billed for services rendered by KPMG with respect to the 2019 fiscal year were not required to be pre-approved by the Audit Committee. Independent Registered Public Accounting Firm Fees for Deloitte Deloitte served as our independent registered public accounting firm for the year ended December 31, 2019. The following table presents fees billed to us by KPMG in the years ended December 31, 2020 and 2019: | | | | | | | | 2020 | | 2019 | Audit Fees | $ | 1,339,090 | | $ | 2,928,489 | Audit-Related Fees | | 29,000 | | | 26,594 | Tax Fees | | 421,614 | | | 341,428 | All Other Fees | | — | | | — | Total | $ | 1,789,704 | | $ | 3,296,511 |
Audit Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, quarterly reviews of our unaudited condensed consolidated financial statements, and audits of various domestic and international subsidiaries. Audit-Related Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte for assurance and auditrelated services, related to auditincluding services rendered in connection with certain regulatory requirements of the Cboe Political Action Committee, services related to due diligence activities including our acquisition of Bats and other assurance services.subsidiaries. Tax Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte Tax LLP and Deloitte LLP, affiliates of Deloitte, for tax compliance, tax advice, tax planning, and the preparation of federal and state tax filings. 78 | Cboe Global Markets 2021 Proxy Statement | |
Pre-Approval Policies and Procedures The Audit Committee of the Board has adopted policies and procedures for the pre-approval of services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. Such policies and procedures provide that the Audit Committee shall pre-approve all auditing and permitted non-audit services (including the fees and terms thereof). As permitted under the Sarbanes-Oxley Act of 2002 and its pre-approval policies and procedures, the Audit Committee has delegated certain pre-approval authority to its Chair and a majority of the Audit Committee members, one of which must be the Chair. The ChairAudit Committee member or members to whom such authority is delegated must then report any pre-approval decisions to the Audit Committee at the next scheduled Audit Committee meeting. REPORT OF THE AUDIT COMMITTEE The Audit Committee assists the Board in its oversight of the integrity of our consolidated financial statements, compliance with legal and regulatory requirements and the performance of the internal audit function. Management is responsible for our internal control over financial reporting and financial reporting process. Deloitte,KPMG, our independent registered public accounting firm for fiscal year 2019,2020, is responsible for performing an independent audit of our consolidated financial statements and for issuing a report on these consolidated financial statements and on the effectiveness of our internal control over financial reporting. In this context, the Audit Committee hereby reports as follows: The Audit Committee has reviewed and discussed with management and DeloitteKPMG the audited consolidated financial statements.
The Audit Committee has discussed with DeloitteKPMG the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and the SEC.
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The Audit Committee has received the written disclosures and the letter from DeloitteKPMG required by applicable requirements of the PCAOB regarding its communications with the Audit Committee concerning independence and has discussed with DeloitteKPMG its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our Annual Report on Form 10‑K10-K for the year ended December 31, 20192020 for filing with the SEC. We selected KPMG as the Company’sour independent registered public accounting firm for fiscal year 2020.2021. The Board is recommending that stockholders ratify that selection at the Annual Meeting. See “Proposal 3—Ratification of Appointment of Independent Registered Public Accounting Firm” for more information. Audit Committee CaroleJames E. Stone,Parisi, Chair
William M. Farrow III James E. ParisiAlexander J. Matturri, Jr.
Jennifer J. McPeek Michael L. Richter 68
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OTHER ITEMS BENEFICIAL OWNERSHIP OF MANAGEMENT AND DIRECTORS The following table lists the shares of our common stock that were beneficially owned as of March 19, 2020,18, 2021, or as of the date otherwise indicated below, and the percentage of our common stock beneficially owned, based on 109,719,823107,125,123 shares outstanding on March 19, 2020,18, 2021, by each of: our directors and nominees,
our named executive officers,
our directors and nominees, named executive officers, and other executive officers as a group, and
beneficial owners of more than 5% of our common stock.
| | | | | | | | | Number of | | Percent of | | | | | Shares of | | Voting | | | | | | | | | | | | | Number of | | Percent of | | | | | Shares of | | Voting | | Name | | Common Stock(1) | | Common Stock | | | Common Stock(1) | | Common Stock | | Edward T. Tilly (2) | | 205,972 | | * | | | 230,623 | | * | | Christopher A. Isaacson | | 59,558 | | * | | | 64,738 | | * | | Brian N. Schell(3) | | 21,389 | | * | | | 42,058 | | * | | Mark A. Hemsley (3) | | 93,931 | | * | | | David Howson | | | 15,461 | | * | | Bryan Harkins | | 40,127 | | * | | | 35,753 | | * | | Frank E. English, Jr. | | 4,373 | | * | | | William M. Farrow III | | 5,110 | | * | | | 6,592 | | * | | Edward J. Fitzpatrick | | 9,773 | | * | | | 11,255 | | * | | Ivan K. Fong | | | 648 | | | | Janet P. Froetscher | | 12,405 | | * | | | 13,887 | | * | | Jill R. Goodman | | 12,558 | | * | | | 14,040 | | * | | Alexander J. Matturri, Jr. | | | 648 | | * | | Jennifer J. McPeek | | | 2,225 | | * | | Roderick A. Palmore | | 20,105 | | * | | | 21,587 | | * | | James E. Parisi | | 2,344 | | * | | | 3,826 | | * | | Joseph P. Ratterman (4) | | 34,857 | | * | | | 36,339 | | * | | Michael L. Richter | | 21,925 | | * | | | 22,171 | | * | | Jill E. Sommers | | 2,344 | | * | | | 3,826 | | * | | Carole E. Stone | | 13,819 | | * | | | Eugene S. Sunshine | | 20,405 | | * | | | 21,887 | | * | | Fredric J. Tomczyk | | 2,940 | | * | | | 9,652 | | * | | All serving directors, nominees, NEOs and other executive officers as a group (22 persons) (5) | | 623,043 | | * | | | The Vanguard Group(6) | | 12,049,946 | | 10.98 | % | | T. Rowe Price Associates, Inc.(7) | | 12,028,620 | | 10.96 | % | | BlackRock, Inc.(8) | | 9,450,519 | | 8.61 | % | | All serving directors, nominees, NEOs and other executive officers as a group (23 persons) (5) | | | 595,303 | | * | | The Vanguard Group (6) | | | 11,510,947 | | 10.7 | % | T. Rowe Price Associates, Inc. (7) | | | 10,356,063 | | 9.7 | % | BlackRock, Inc. (8) | | | 8,884,798 | | 8.3 | % |
* Less than 1%. 80 | Cboe Global Markets 20202021 Proxy Statement | 69
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(1) | (1)
| | Amounts include 1,236 1,482 shares, and 9401,225 shares with respect to Mr. Tomczyk,Ms. McPeek and 648 shares with respect of Messrs. Fong and Matturri, of unvested restricted common stock granted to each non-employee director pursuant to the Second Amended and Restated Long-Term Incentive Plan. The number of shares of unvested restricted common stock held by all directors as a group is 15,772.18,823. The restricted stock units granted to our executives, which do not entitle the holder to voting rights and are described in the “Executive Compensation—Summary Compensation” section of this proxy statement, are not included in this table. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of a security if that person has the right to acquire beneficial ownership of such security within 60 days. As such, amounts also include shares of common stock that the named executive officers and the other executive officers who are not named executive officers have or will have the right to acquire pursuant to presently exercisable employee stock options, or stock options that will become exercisable or restricted stock units that will become vested within 60 days following March 19, 2020. 18, 2021. |
(2) | (2)
| | Amount includes 51,056 48,363 shares of common stock that Mr. Tilly has the right to acquire and be issued within 60 days following March 19, 202018, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. |
(3) | (3)
| | As of December 31, 2019. Amount also includes 9,885 15,286 shares of common stock that Mr. Hemsley hadSchell has the right to acquire and be issued within 60 days following December 31, 2019 March 18, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. On March 1, 2021, Mr. Schell satisfied the retirement requirements of 55 years of age and 10 years of service.
|
(4) | (4)
| | Consists of 3,7991,482 shares of common stock held of record by Mr. Ratterman and 31,05834,857 shares of common stock held of record by the Joseph P. and Sandra M. Ratterman Trust. Joseph P. Ratterman and Sandra M. Ratterman, as Trustees of the Joseph P. and Sandra M. Ratterman Trust dated September 15, 2008, or their Successors in Trust, may be deemed to share voting power and dispositive power over the shares held by the Trust. |
(5) | (5)
| | Amount includes 9601,292 shares of common stock that other executive officers have the right to acquire and be issued within 60 days following March 19, 202018, 2021 upon the vesting of restricted stock units.units and 6,535 shares of common stock that other executive officers have the right to acquire and be issued within 60 days following March 18, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. |
(6) | (6)
| | Based on information set forth in a Schedule 13G/A filed with the SEC on February 12, 2020.10, 2021. The Schedule 13G/A reports that, as of December 31, 2019,2020, The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, has sole voting power with respect to 168,717 shares of common stock and sole dispositive power with respect to 11,853,22911,027,303 shares of common stock. In addition, The Vanguard Group has shared voting power with respect to 39,474186,110 shares of common stock and shared dispositive power with respect to 196,717483,644 shares of common stock. |
(7) | (7)
| | Based on information set forth in a Schedule 13G/A filed with the SEC on February 14, 2020.16, 2021. The Schedule 13G/A reports that, as of December 31, 2019,2020, T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, MD 21202, has sole voting power with respect to 3,504,6263,835,455 shares of common stock and sole dispositive power with respect to 12,028,62010,356,063 shares of common stock. |
(8) | (8)
| | Based on information set forth in a Schedule 13G/A filed with the SEC on February 5, 2020.January 29, 2021. The Schedule 13G/A reports that, as of December 31, 2019,2020, BlackRock Inc., 55 East 52nd Street New York, NY 10055, has sole voting power with respect to 8,489,2497,927,772 shares of common stock and sole dispositive power with respect to 9,450,5198,884,798 shares of common stock. |
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires that our executive officers, directors and persons who own more than 10% of our common stock file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater-than-10% stockholders, if any, are required by regulation to furnish us with copies of all Forms 3, 4 and 5 that they file.
Based on our review of the copies of those forms, any amendments that we have received and written representations from our executive officers and directors, we believe that all executive officers and directors and the owners of more than 10% of our common stock complied with all of the filing requirements applicable to them with respect to transactions during the year ended December 31, 2019, except for the inadvertent omission of 13,694 shares of common stock from Mr. Harkins’ timely filed Form 3 on March 6, 2018, which shares were reported on an amended Form 3 filed on May 20, 2019.
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Our Audit Committee has responsibility for reviewing and approving all related party transactions. The Committee has adopted a related-party transactions approval policy. Under this policy, transactions between us and any executive officer, director or holder of more than 5% of our common stock, or any immediate family member of such person, must be approved or ratified by the Committee in accordance with the terms of the policy. Except as noted below, since January 1, 2019,2020, there were no transactions in which Cboe Global Markets or any of its subsidiaries was a party, in which the amount involved exceeded $120,000 and in which a director, a director nominee, an executive officer, a security holder known to own more than 5% of our common stock, or an immediate family member of any of the foregoing had, or will have, a direct or indirect material interest. Thomas Sexton, who serves as the Chief Executive Officer and President of the National Futures Association (“NFA”), is the brother of Patrick Sexton, our Executive Vice President, General Counsel and Corporate Secretary. TheThrough December 31, 2020, the NFA performs manyperformed regulatory functions on behalf of CFE our subsidiary, pursuant to a regulatory services agreement with CFE. Starting January 1, 2021, these regulatory functions were moved in-house from the NFA. The Company paid the NFA approximately $740,000$730,000 in fiscal year 20192020 for the performance of such services. Mr. Sexton recuses himself from matters relating to the NFA. The Company has long-term business relationships with several providers of market indices and some of those providers may be or may have been affiliated with members of the Board. For example, Mr. Matturri, a member of the Board, is the retired Chief Executive Officer of S&P, and as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Company is party to a license with S&P pursuant to which the Company has the exclusive right to offer exchange-listed options contracts in the United States on the S&P 500 Index, the S&P 100 Index, and the S&P Select Sector Indices through December 31, 2033, with an exclusive license to trade options on the S&P 500 Index through December 31, 2032. The Company believes that such relationships involved terms no less favorable to the Company than those that it believes would have been obtained in the absence of such affiliation. INCORPORATION BY REFERENCE To the extent that this Proxy Statement is incorporated by reference into any other filing by Cboe Global Markets with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, the information contained in the section of this proxy statement entitled “Report of the Audit Committee” (to the extent permitted by the rules of the SEC) shall not be deemed to be “soliciting material” and will not be deemed incorporated, unless specifically provided otherwise in such filing. The information contained in the “Compensation Committee Report” shall not be deemed to be “soliciting material” and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, other than Cboe Global Markets’ Annual Report on Form 10‑K,10-K, except to the extent specifically provided otherwise in such filing. | Cboe Global Markets 2020 Proxy Statement
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STOCKHOLDER PROPOSALS Any stockholder who, in accordance with SEC rules, wishes to present a proposal for inclusion in the proxy materials to be distributed in connection with next year’s annual meeting must timely submit the proposal to the Corporate Secretary, Cboe Global Markets, Inc., 400 South LaSalle Street, Chicago, Illinois 60605. Stockholder proposals for inclusion in our proxy statement for the 2021 Annual Meeting of Stockholders must be received on or before December 3, 20202, 2021 and must comply in all other respects with applicable SEC rules. 82 | Cboe Global Markets 2021 Proxy Statement | |
Any stockholder who wishes to propose any business or nominate a person for election to the Board to be considered by the stockholders at the 20212022 Annual Meeting of Stockholders, which proposal or nomination would not be included in the Company’s proxy statement, must notify the Corporate Secretary of Cboe Global Markets, Inc. in writing and provide the specified information described in our Bylaws concerning the proposed business or nominee. The notice must be delivered to or mailed to the address set forth in the preceding paragraph and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the date of the Annual Meeting. As a result, any notice given by a stockholder pursuant to these provisions of our Bylaws (and not pursuant to the SEC rules relating to stockholder proposals for inclusion in the proxy materials) must be received no earlier than 5:00 p.m., Eastern time, on January 12, 202113, 2022 and no later than 5:00 p.m., Eastern time, on February 11, 2021,12, 2022, unless our annual meeting date occurs more than 30 days before or more than 70 days after May 12, 2021,13, 2022, in which case the stockholder’s notice must be received not later than 5:00 p.m., Eastern time, on the tenth day following the day on which public announcement is first made of the date of the annual meeting. The requirements for such notice are set forth in our Bylaws, a copy of which can be obtained upon request directed to the Corporate Secretary at the address set forth above. VOTING INSTRUCTIONS Why did I receive these proxy materials? Our Board is asking for your proxy in connection with the Annual Meeting. By giving us your proxy, you authorize the proxyholders (Edward T. Tilly and Patrick Sexton) to vote your shares at the Annual Meeting according to the instructions that you provide. If the Annual Meeting is adjourned or postponed, your proxy will be used to vote your shares when the meeting reconvenes. Our 20192020 Annual Report to Stockholders, which includes a copy of our Annual Report on Form 10‑K10-K for the year ended December 31, 20192020 (excluding exhibits), as filed with the Securities and Exchange Commission (the “SEC”), is being mailed to stockholders with this Proxy Statement. Who can vote at the Annual Meeting? You are entitled to vote your shares of our common stock if you were a stockholder at the close of business on March 19, 2020,18, 2021, the record date for the Annual Meeting. On that date, there were 109,703,100107,106,300 shares of our common stock outstanding and 16,72318,823 unvested restricted shares of our common stock outstanding, which have been granted to our employees and directors and have voting rights at the Annual Meeting. Therefore, there are 109,719,823107,125,123 shares of voting common stock outstanding, each of which entitles the holder to one vote for each matter to be voted on at the Annual Meeting. Our outstanding common stock is held by approximately 155147 stockholders of record as of March 19, 2020.18, 2021. A list of stockholders of record will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the Annual Meeting at our principal executive offices at 400 South LaSalle Street, Chicago, Illinois, 60605, and online during the Annual Meeting live audio webcast. 72
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Who is and is not a stockholder of record? If you hold shares of common stock registered in your name at our transfer agent, Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), you are a stockholder of record. | Cboe Global Markets 2021 Proxy Statement | 83 |
If you hold shares of common stock indirectly through a broker, bank, or similar institution, or are an employee or director who holds shares of restricted stock at Fidelity, you are not a stockholder of record, but instead hold in “street name.”name”. Please see the information under the heading “If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares?” for important information. If you are a stockholder of record, Broadridge is sending these proxy materials to you directly. If you hold shares in street name, these materials are being provided to you either by the broker, bank, or similar institution through which you hold your shares. What do I need to do to attend the Annual Meeting? This year’sThe Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live audio webcast. The live audio webcast of the Annual Meeting will also be available for listening to the general public, but participation in the Annual Meeting, including voting shares and submitting questions, will be limited to stockholders. You are entitled to participate in the Annual Meeting only if you were a stockholder at the close of business on March 19, 2020,18, 2021, the record date for the Annual Meeting, or if you hold a valid proxy to vote at the Annual Meeting.
If you were a stockholder of record as of the close of business on March 19, 2020,18, 2021, or you hold a valid proxy for the Annual Meeting, you will be able to attend the Annual Meeting via live audio webcast, vote your shares, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CBOE2020.CBOE2021. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. If you were not a stockholder of record, but you hold shares in street name and you want to attend the Annual Meeting via live audio webcast, vote your shares, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CBOE2020,CBOE2021, you must obtain, from the broker, bank, or other organization that holds your shares, the information required, including a 16-digit control number, and you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you are not a stockholder or if you have lost your 16-digit control number, you will be able to listen to the live audio webcast of the Annual Meeting by visiting www.virtualshareholdermeeting.com/CBOE2020,CBOE2021, but you will not be able to vote or submit your questions during the meeting. The Annual Meeting will begin promptly at 9:00 a.m., Central time. We encourage you to access the meeting prior to the start time. Online access will open at 8:45 a.m., Central time, and you should allow ample time to log in to the meeting live audio webcast and test your computer audio system. We recommend that you carefully review the procedures needed to gain admission in advance. If you do not comply with the procedures described here for attending the Annual Meeting via live audio webcast, you will not be able to participate online. Please contact Investor Relations at investorrelations@Cboe.com or (312) 786‑5600786-7136 in advance of the Annual Meeting if you have questions about attending the Annual Meeting. 84 | Cboe Global Markets 20202021 Proxy Statement | 73
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If I am unable to attend the live audio webcast of the Annual Meeting, may I listen at a later date? Yes, an audio replay of the Annual Meeting will be posted and publicly available on the Events and Presentations page of our Investor Relations website at http://ir.Cboe.com. This audio replay will cover the entire Annual Meeting, including each stockholder question addressed during the Annual Meeting. What if during the check-in period or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting live audio webcast? During online check-in and continuing through the length of the virtual Annual Meeting, we will have technicians standing by to assist you with any technical difficulties you may have accessing the live audio webcast. If you encounter any difficulties accessing the Annual Meeting during the check-in or at meeting time, please call (800) 586-1548 (U.S.) or (303) 562-9288 (International). Why is the Annual Meeting being conducted as a virtual meeting via live audio webcast? Our guiding principal of “good citizenship” defines Cboe’s role, as a provider of capital markets and as a global corporate citizen. Amidst the coronavirus outbreak (COVID-19), we are mindful of our responsibility to do all that we can reasonably do to guard against this virus. Thus, as a precaution regarding the coronavirus outbreak and supporting the health and well-being of our partners and stockholders, this year’s Annual Meeting will be a completely virtual meeting of stockholders and there will be no physical meeting location. In addition, weWe believe a virtual meeting format for the Annual Meeting may facilitate stockholder attendance, dialogue, and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. We will be able to engage with all stockholders as opposed to just those who can afford to travel to an in-person meeting. The virtual format will also allow stockholders to submit questions and comments during the meeting.
We are utilizing technology from Broadridge, a leading virtual meeting solution. The platform is expected to accommodate most, if not all, stockholders. Both we and Broadridge will test the platform technology before going “live” for the Annual Meeting. How do I submit questions or comments for the Annual Meeting? Stockholders can submit questions or comments online during the Annual Meeting via live audio webcast by visiting www.virtualshareholdermeeting.com/CBOE2020.CBOE2021. We will answer timely submitted questions or comments on a matter to be voted on at the Annual Meeting before voting is closed on the matter. Then, we will address appropriate general questions or comments from stockholders regarding the Company. Questions or comments received during the Annual Meeting will be presented as submitted, uncensored and unedited, except that we may omit certain personal details for data protection issues or we may edit profanity or other inappropriate language. Questions or comments regarding general economic, political, or other views that are not directly related to the business of the meeting, that are of an individual concern to a stockholder or that are not an appropriate subject matter for general discussion, are not pertinent to the meeting and therefore will not be presented. If we receive substantially similar questions, we may group those questions together and provide a single response to avoid repetition. 74
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How do I vote? You may cast your vote in one of four ways: By Internet before the Annual Meeting.The web address for Internet voting is www.proxyvote.com and is also on the enclosed proxy card. Internet voting is available 24 hours a day.
By Internet during the Annual Meeting.You may vote online during the Annual Meeting (see “What do I need to do to attend the Annual Meeting?”). However, even if you plan to participate in the Annual Meeting via live audio webcast, we recommend that you also vote by Internet as described above so that your votes will be counted if you later decide not to participate in the Annual Meeting.
By Telephone.The number for telephone voting is 1‑800‑690‑69031-800-690-6903 and is also on the enclosed proxy card. Telephone voting is available 24 hours a day.
By Mail.Mark the enclosed proxy card, sign and date it, and return it in the pre-paid envelope we have provided.
If you choose to vote by Internet before or during the Annual Meeting or by telephone, then you do not need to return the proxy card. To be valid, your vote by Internet before the Annual Meeting or telephone must be received by 11:59 p.m., Eastern Timetime, on May 11, 202012, 2021 for shares held directly, the deadline specified on the proxy card. If you vote by Internet before the Annual Meeting or telephone and subsequently obtain a legal proxy from your account representative, then your prior vote will be revoked regardless of whether you vote that legal proxy. The Internet and telephone voting procedures are designed to authenticate stockholders’ identities, allow stockholders to give their voting instructions, and confirm that stockholders’ instructions have been recorded properly. Stockholders voting by Internet or telephone should understand that, while we do not charge any fees for voting by Internet or telephone, there may nevertheless be costs that must be borne by you. May I change my vote? If you are a stockholder of record, you may revoke your proxy or change your vote at any time before it is voted at the Annual Meeting by: submitting a new proxy by telephone or through the Internet, after the date of the earlier voted proxy,
returning a signed proxy card dated later than your last proxy,
submitting a written revocation to the Corporate Secretary of Cboe Global Markets, Inc. at 400 South LaSalle Street, Chicago, Illinois 60605, or
voting online during the Annual Meeting.
If you are a stockholder of record and need a new proxy card, to change your vote or otherwise, please contact the Corporate Secretary at the address above or via email at CorporateSecretary@Cboe.com. If your bank, broker, or other nominee holds your shares in “street name,” you may revoke your proxy or change your vote only by following the separate instructions provided by your bank, broker, or nominee. 86 | Cboe Global Markets 20202021 Proxy Statement | 75
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If I submit a proxy by Internet, telephone or mail, how will my shares be voted? If you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, your shares of common stock will be voted in accordance with your instructions. If you sign, date, and return your proxy card but do not give voting instructions, your shares of common stock will be voted as follows: FOR the election of each of our director nominees,
FOR the advisory vote to approve the compensation paid to our executive officers,
FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for our 20202021 fiscal year, and
otherwise in accordance with the judgment of the persons voting the proxy on any other matter properly brought before the Annual Meeting.
In addition, if you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, and any other matters are properly presented at the Annual Meeting, your shares of common stock will be voted in accordance with the judgment of the persons voting the proxy on such matters. We are not aware of any other matters that will be considered at the Annual Meeting. If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares? Under the rules of various securities exchanges, brokers that have not received voting instructions from their customers 10 days prior to the meeting date may vote their customers’ shares in the brokers’ discretion on the proposal regarding the ratification of the appointment of KPMG as our independent registered public accounting firm for our 20202021 fiscal year, because the rules of the exchanges currently deem this a “discretionary” matter. Absent instruction, brokers will not be able to vote on any of the other matters included in this Proxy Statement. If brokers exercise their discretion in voting on the proposal regarding the ratification of KPMG, a “broker non-vote” will occur as to the other matters presented for a vote at the Annual Meeting, unless you provide voting instructions. What vote is required for adoption or approval of each matter? Election of Directors. You may vote FOR or AGAINST each of the director nominees or you may ABSTAIN. Each nominee must receive the affirmative vote of a majority of the votes cast with respect to his or her election in order to be elected. Each nominee has tendered his or her resignation, contingent on failing to receive a majority of the votes cast in this election and acceptance by the Board. In the event any director fails to receive a majority of votes cast, the Nominating and Governance Committee will consider and make a recommendation to the Board as to whether to accept the resignation. Advisory Vote to Approve Executive Compensation. You may vote FOR or AGAINST the advisory proposal to approve our executive compensation or you may ABSTAIN. A majority of the shares of common stock cast must be voted FOR approval of the advisory proposal in order for it to pass. Votes cast FOR or AGAINST with respect to the proposal will be counted as shares cast on the proposal. Ratification of the Appointment of our Independent Registered Public Accounting Firm. You may vote FOR or AGAINST the ratification of the appointment of our independent registered public accounting firm or you may ABSTAIN. A majority of the shares of common stock cast must be voted FOR ratification in order for it to pass. Votes cast FOR or AGAINST with respect to this matter will be counted as shares cast on the matter. 76
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Abstentions and Broker Non-Votes. Abstentions and broker non-votes will not be considered a vote cast either for or against any of the matters being presented in this proxy statement. If you do not provide your broker with voting instructions, the broker cannot vote your shares on any matter other than the ratification of the appointment of our independent registered public accounting firm. A “broker non-vote” occurs when your broker submits a proxy for the meeting with respect to discretionary matters, but does not vote on non-discretionary matters because you did not provide voting instructions on these matters. In the case of a discretionary matter (i.e., the ratification of the appointment of our independent registered public accounting firm), your broker is permitted to vote your shares of common stock even when you have not given voting instructions (as described above under “If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares?”). How many votes are required to transact business at the Annual Meeting? A quorum is required to transact business at the Annual Meeting. The holders of a majority of the outstanding shares of our common stock as of March 19, 2020,18, 2021, present or represented by proxy and entitled to vote, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes are treated as present for quorum purposes. What happens if the meeting is postponed or adjourned? Your proxy will remain valid and may be voted at the postponed or adjourned meeting. You will be able to change or revoke your proxy until it is voted. How do I obtain more information about Cboe Global Markets, Inc.? A copy of our 20192020 Annual Report to Stockholders, which includes our Annual Report on Form 10‑K,10-K, is enclosed with this Proxy Statement. The 20192020 Annual Report, our Annual Report on Form 10‑K10-K for the fiscal year ended December 31, 20192020 filed with the SEC, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and,and the charters for our Audit, Compensation, and Nominating and Governance Committees are available on our website at http://ir.Cboe.com. In addition, we intend to disclose any future amendments to certain provisions of our Code of Business Conduct and Ethics, or any waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions on our website at http://ir.Cboe.com. These documents may also be obtained, free of charge, by writing to: Cboe Global Markets, Inc., 400 South LaSalle Street, Chicago, Illinois 60605, Attn: Investor Relations; or by sending an e-mail to: investorrelations@Cboe.com. These documents, as well as other information about us, are also available on our website at http://ir.Cboe.com. Information on our website does not form a part of this Proxy Statement. How do I sign up for electronic delivery of proxy materials? This Proxy Statement and our 20192020 Annual Report to Stockholders are available on our website at http://ir.Cboe.com. If you would like to help reduce our costs of printing and mailing future materials, you can consent to access these documents in the future over the Internet rather than receiving printed copies in the mail. 88 | Cboe Global Markets 20202021 Proxy Statement | 77
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If you are a stockholder of record, you may sign up for this service by contacting our transfer agent in writing at Broadridge, 51 Mercedes Way, Edgewood, NY 11717 or calling (866) 540-7095. If you hold shares of common stock in “street name,” you can contact your account representative at the broker, bank, or similar institution through which you hold your shares for information regarding electronic delivery of future materials. Your consent to electronic delivery will remain in effect until you revoke it. Who pays the expenses of this proxy solicitation? The Company will pay the expenses of the preparation of our proxy materials and the solicitation of proxies by the Company for the Annual Meeting. Certain of our directors, officers or employees may make solicitations in person, telephonically, electronically, or by other means of communication. We have also engaged Morrow Sodali LLC to assist in the solicitation and distribution of proxies. Our directors, officers, and employees will receive no additional compensation for any such solicitation, and we will pay Morrow Sodali LLC a fee of $8,500 for its services, as well as reimbursements for certain expenses. We will request that banks, brokerage houses, and other custodians, nominees, and fiduciaries forward all of our solicitation materials to the beneficial owners of the shares that they hold of record. We will reimburse these record holders for customary clerical and mailing expenses incurred by them in forwarding these materials to customers. If you have any questions about the Annual Meeting or need additional copies of this Proxy Statement or additional proxy cards, please contact Morrow Sodali LLC at 470 West Avenue, Stamford, Connecticut 06902. Banks and brokerage firms may call (203) 658‑9400658-9400 and stockholders may call toll-free at (800) 662-5200. Who will count the vote? The Company has engaged Broadridge to serve as the inspector of elections for the Annual Meeting. As inspector of elections, Broadridge will tabulate the voting results. What does it mean if I get more than one proxy or voting instruction card? If your shares are registered in more than one name or in more than one account, you will receive more than one card. This may occur if you hold common stock in multiple accounts, such as with different brokers in street name and as the record holder with Broadridge. Please complete and return all of the proxy or voting instruction cards that you receive (or vote by telephone or through the Internet all of the shares on all of the proxy or voting instruction cards received) to ensure that all of your shares are voted. 78
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APPENDIX APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES In addition to disclosing results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Cboe Global Markets, Inc. has disclosed certain non-GAAP measures of operating performance in this Proxy Statement. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. The non-GAAP measures provided in this Proxy Statement are adjusted dilutednet revenues, adjusted EBITDA, 3-year adjusted EPS, Options, North American Equities and European Equities segments adjusted EBITDAnet revenues, and Options, Futures, USNorth American Equities, Global FX and European equitiesEquities segments adjusted EBITDAs. Management believes that the non-GAAP financial measures presented in this Proxy Statement provide the appropriate means to determine compensation payouts under our annual incentive plan. The Company also believes that providing a discussion of these metrics provides management and investors an additional perspective on the Company’s financial and operational performance and trends. | | | | Twelve Months Ended | (in millions, except per share amounts) | December 31, 2018 | Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | $ | 422.1 | Non-GAAP adjustments | | | Acquisition-related expenses (1) | | 30.0 | Amortization of acquired intangible assets (2) | | 160.6 | Change in redemption value of noncontrolling interests | | 1.3 | Change in fair value of contingent consideration | | 0.1 | Tax provision re-measurements | | (0.4) | Total Non-GAAP adjustments | | 191.6 | Income tax expense related to the items above | | (49.4) | Net income allocated to participating securities - effect on reconciling items | | (0.9) | Adjusted net income allocated to common stockholders | $ | 563.4 | | | | Reconciliation of Diluted EPS to Non-GAAP | | | Diluted earnings per common share | $ | 3.76 | Per share impact of non-GAAP adjustments noted above | | 1.26 | Adjusted diluted earnings per common share | $ | 5.02 |
| | | | Twelve Months Ended | (in millions) | December 31, 2020 | Reconciliation of Net Revenue to Non-GAAP | | | Net revenues | $ | 1,254.3 | Non-GAAP adjustments | | | Acquisition revenues less cost of revenues | | (41.4) | Adjusted Net Revenue | $ | 1,212.9 |
| | | | | | Twelve Months Ended | (in millions) | | December 31, 2020 | Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA | | | Net income allocated to common stockholders | | $ | 467.0 | Interest | | | 37.6 | Income tax provision | | | 192.2 | Depreciation and amortization | | | 158.5 | EBITDA | | $ | 855.3 | | | | | Non-GAAP adjustments not included in above line items | | | | Acquisition-related expenses | | | 45.2 | Provision for notes receivable | | | 6.7 | Bargain purchase gain (1) | | | (32.6) | Acquisition EBITDA | | | (9.4) | Adjusted EBITDA | | $ | 865.2 |
(1) | (1)
| | This amount includes professional fees and outside services, severance, and other costs related to the company’s acquisition of Bats.
|
| (2)
| | This amount represents the amortizationbargain purchase gain related to the acquisition of acquired intangible assets for Bats. EuroCCP on July 1, 2020. |
90 | Cboe Global Markets 20202021 Proxy Statement | 79
|
| | | | Twelve Months Ended
| (in millions, except per share amounts)
| December 31, 2019
| Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP
| | | Net income allocated to common stockholders
| $
| 372.7 | Non-GAAP adjustments
| | | Acquisition-related expenses (1)
| | 48.5 | Amortization of acquired intangible assets (2)
| | 138.5 | Provision for notes receivable (3)
| | 23.4 | Change in redemption value of noncontrolling interests
| | 0.5 | Tax provision re-measurements
| | —
| Total Non-GAAP adjustments
| | 210.4 | Impairment charges attributed to noncontrolling interest
| | (3.6) | Income tax expense related to the items above
| | (50.7) | Net income allocated to participating securities - effect on reconciling items
| | (0.7) | Adjusted net income allocated to common stockholders
| $
| 528.6 | | | | Reconciliation of Diluted EPS to Non-GAAP
| | | Diluted earnings per common share
| $
| 3.34 | Per share impact of non-GAAP adjustments noted above
| | 1.39 | Adjusted diluted earnings per common share
| $
| 4.73 |
| | | | Thirty Six Months Ended | (in millions, except per share amounts) | December 31, 2020 | Reconciliation of 3-Year Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | $ | 1,261.8 | Non-GAAP adjustments | | | Acquisition-related expenses (1) | | 123.7 | Amortization of acquired intangible assets (2) | | 423.8 | Provision for notes receivable (3) | | 30.1 | Bargain purchase gain | | (32.6) | Change in redemption value of noncontrolling interests | | 1.8 | Change in contingent consideration | | 0.1 | Total Non-GAAP adjustments | | 546.9 | Income tax expense related to the items above | | (138.1) | Tax provision re-measurements | | 3.7 | Impairment charges attributed to noncontrolling interests | | (3.6) | Net income allocated to participating securities - effect on reconciling items | | (2.2) | Adjusted 3-year net income allocated to common stockholders | $ | 1,668.5 | | | | Reconciliation of 3-Year Diluted EPS to Non-GAAP | | | Diluted earnings per common share | $ | 11.37 | Per share impact of non-GAAP adjustments noted above | | 3.65 | 3-year Adjusted diluted earnings per common share | $ | 15.02 |
(1) | (1)
| | This amount includes professional fees and outside services, severance, facilities expenses, impairment charges and other costs related to the company’s acquisitions. |
(2) | (2)
| | This amount represents the amortization of acquired intangible assets related to the company’s acquisitions. |
(3) | (3)
| | This amount represents the provision for notes receivable, recorded in other expenses on the consolidated statements of income, associated with the funding for the development of the consolidated audit trail (“CAT”). |
| | | | | | Twelve Months Ended
| (in millions)
| | December 31, 2018
| Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA
| | | Net income allocated to common stockholders
| | $
| 422.1 | Interest
| | | 38.2 | Income tax provision
| | | 146.0 | Depreciation and amortization
| | | 204.0 | EBITDA
| | $
| 810.3 | | | | | Non-GAAP adjustments not included in above line items
| | | | Acquisition-related expenses
| | | 30.0 | Change in fair value of contingent consideration
| | | 0.1 | Adjusted EBITDA
| | $
| 840.1 |
80
| Cboe Global Markets 20202021 Proxy Statement | 91 |
| | | | Twelve Months Ended | (in millions) | December 31, 2020 | Reconciliation of Options Segment Net Revenues to Non-GAAP | | | Net revenues | $ | 649.7 | Non-GAAP adjustments | | | Acquisition revenues less cost of revenues | | (17.3) | Options Segment Adjusted Net Revenues | $ | 632.4 |
| | | | | | | (in millions) | | Twelve Months Ended December 31, 2020 | Reconciliation of Options Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | | $ | 278.6 | Interest | | | — | Income tax provision | | | 151.8 | Depreciation and amortization | | | 30.9 | EBITDA | | | 461.3 | Acquisition-related costs | | | 12.9 | Provision for notes receivable | | | 1.7 | Net income allocated to participating securities | | | 0.7 | Acquisition EBITDA | | | (1.0) | Options Segment Adjusted EBITDA | | $ | 475.6 | | | |
| | | | Twelve Months Ended | (in millions) | December 31, 2020 | Reconciliation of North American Equities Segment Net Revenues to Non-GAAP | | | Net revenues | $ | 326.6 | Non-GAAP adjustments | | | Acquisition revenues less cost of revenues | | (2.9) | North American Equities Segment Adjusted Net Revenues | $ | 323.7 |
| | | | | | | (in millions) | | Twelve Months Ended December 31, 2020 | Reconciliation of North American Equities Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | | $ | 132.0 | Interest | | | — | Income tax provision | | | 27.3 | Depreciation and amortization | | | 68.7 | EBITDA | | | 228.0 | Acquisition-related costs | | | 15.1 | Provision for notes receivable | | | 5.0 | Net income allocated to participating securities | | | 0.3 | Acquisition EBITDA | | | (1.8) | North American Equities Segment Adjusted EBITDA | | $ | 246.6 |
| | | | | | Twelve Months Ended
| (in millions)
| | December 31, 2019
| Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA
| | | Net income allocated to common stockholders
| | $
| 372.7 | Interest
| | | 35.9 | Income tax provision
| | | 130.6 | Depreciation and amortization
| | | 176.6 | EBITDA
| | $
| 715.8 | | | | | Non-GAAP adjustments not included in above line items
| | | | Acquisition-related expenses
| | | 48.5 | Provision for notes receivable
| | | 23.4 | Impairment charges attributable to noncontrolling interest
| | | (3.6) | Adjusted EBITDA
| | $
| 784.1 |
92 | | | | | | | (in millions)
| | Twelve Months Ended
December 31, 2019
| Reconciliation of Options segment net income allocated to common stockholders to non-GAAP
| | | Net income (loss) allocated to common stockholders
| | $
| 202.7 | Interest
| | | —
| Income tax provision
| | | 124.8 | Depreciation and amortization
| | | 38.5 | EBITDA
| | | 366.0 | Acquisition-related costs
| | | 20.5 | Provision for notes receivable
| | | 6.1 | Options Segment Adjusted EBITDA
| | $
| 392.6 |
| | | | | | | (in millions)
| | Twelve Months Ended
December 31, 2019
| Reconciliation of US Equities segment net income allocated to common stockholders to non-GAAP
| | | Net income (loss) allocated to common stockholders
| | $
| 111.8 | Interest
| | | —
| Income tax provision
| | | 20.2 | Depreciation and amortization
| | | 76.0 | EBITDA
| | | 208.0 | Provision for notes receivable
| | | 17.3 | US Equities Segment Adjusted EBITDA
| | $
| 225.3 |
| Cboe Global Markets 20202021 Proxy Statement | 81
|
| | | | (in millions) | | Twelve Months Ended December 31, 2020 | Reconciliation of Futures Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | | $ | 25.4 | Interest | | | — | Income tax provision | | | 28.3 | Depreciation and amortization | | | 3.2 | EBITDA | | | 56.9 | Acquisition-related costs | | | — | Futures Segment Adjusted EBITDA | | $ | 56.9 |
| | | | (in millions) | | Twelve Months Ended December 31, 2020 | Reconciliation of Global FX Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income allocated to common stockholders | | $ | 5.8 | Interest | | | — | Income tax provision | | | — | Depreciation and amortization | | | 26.6 | EBITDA | | | 32.4 | Acquisition-related costs | | | — | Global FX Segment Adjusted EBITDA | | $ | 32.4 |
| | | | Twelve Months Ended | (in millions) | December 31, 2020 | Reconciliation of European Equities Segment Net Revenues to Non-GAAP | | | Net revenues | $ | 114.4 | Non-GAAP adjustments | | | Acquisition revenues less cost of revenues | | (21.1) | European Equities Segment Adjusted Net Revenues | $ | 93.2 |
| | | | | | | (in millions) | | Twelve Months Ended December 31, 2020 | Reconciliation of European Equities Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | Net income (loss) allocated to common stockholders | | $ | 46.7 | Interest | | | 6.9 | Income tax provision | | | 12.4 | Depreciation and amortization | | | 29.1 | EBITDA | | | 95.1 | Bargain purchase gain | | | (32.0) | Net income allocated to participating securities | | | 0.1 | Acquisition EBITDA | | | (6.4) | European derivatives development related expenses | | | 1.6 | European Equities Segment Adjusted EBITDA | | $ | 58.4 |
| Cboe Global Markets 2021 Proxy Statement | | | | | | | (in millions)
| | Twelve Months Ended
December 31, 2019
| Reconciliation of Futures segment net income allocated to common stockholders to non-GAAP
| | | Net income (loss) allocated to common stockholders
| | $
| 45.5 | Interest
| | | —
| Income tax provision
| | | 37.4 | Depreciation and amortization
| | | 2.5 | EBITDA
| | | 85.4 | Acquisition-related costs
| | | —
| Futures Segment Adjusted EBITDA
| | $
| 85.4 | | | | | | | 93 |
v
| | | | (in millions)
| | Twelve Months Ended
December 31, 2019
| Reconciliation of Global FX segment net income allocated to common stockholders to non-GAAP
| | | Net income (loss) allocated to common stockholders
| | $
| (5.0) | Interest
| | | —
| Income tax provision
| | | 0.1 | Depreciation and amortization
| | | 29.9 | EBITDA
| | | 25.0 | Acquisition-related costs
| | | 0.3 | Global FX Segment Adjusted EBITDA
| | $
| 25.3 |
| | | | | | | (in millions)
| | Twelve Months Ended
December 31, 2019
| Reconciliation of European Equities segment net income allocated to common stockholders to non-GAAP
| | | Net income (loss) allocated to common stockholders
| | $
| 18.3 | Interest
| | | (0.4) | Income tax provision
| | | 3.2 | Depreciation and amortization
| | | 28.7 | EBITDA
| | | 49.8 | Acquisition-related costs
| | | 1.7 | European Equities Segment Adjusted EBITDA
| | $
| 51.5 |
82
| Cboe Global Markets 2020 Proxy Statement
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84
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