DEF 14A 1 d513979ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant X

Filed by a Party other than the Registrant

Check the appropriate box:

 

    Preliminary Proxy Statement
    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
X     Definitive Proxy Statement
    Definitive Additional Materials
    Soliciting Material Pursuant to §240.14a-12

Nasdaq, Inc.

(Name of Registrant as Specified In its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

X     No fee required.
    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)    Title of each class of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11

(set forth the amount on which the filing fee is calculated and state how it was determined):

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)    Amount Previously Paid:
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LOGO

Tuesday, April 24, 2018 8:30 a.m. (EDT) Nasdaq MarketSite Four Times Square New York, NY 10036
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT


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LOGO

OUR VISION Reimagining markets to realize the potential of tomorrow. OUR MISSION We bring together ingenuity, integrity, and insights to deliver markets that accelerate economic progress and empower people to achieve their greatest ambitions.


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LOGO

Letter from Our Board of Directors
3 MARCH 14, 2018
Dear Fellow Stockholders,
Thank you for your interest in Nasdaq and for trusting us to oversee and grow your investment in our business. In 2017, we have worked to create value for our stockholders and to position Nasdaq for continued success over the long term.
LEADERSHIP TRANSITION One of the Board’s most important responsibilities is to oversee the CEO succession process and to ensure a successful and orderly leadership transition. Following years of planning, on January 1, 2017, Adena T. Friedman became the President and CEO of Nasdaq. In May 2017, the Board elected Michael R. Splinter, the retired Chairman and former CEO of Applied Materials, as Board Chairman. The leadership transition arrived at an important time for Nasdaq as we began to refocus our business for the future.
STRATEGIC PIVOT Early in 2017, with the full support of the Board, our management team initiated a comprehensive review of Nasdaq’s strategy and businesses that resulted in a strategic pivot for the organization. The new corporate strategy is designed to focus our resources on the greatest growth opportunities while retaining our goal of double-digit total stockholder return.
As a result, we intend to increase investment in: our Market Technology segment, including our market infrastructure and regulatory technology businesses; our Information Services segment, including our data analytics capabilities; and a select number of smaller growth businesses, including Nasdaq Private Market. We intend to maintain our investments in
our core businesses, notably our foundational trading and listings businesses. Finally, we intend to review areas that are not critical to our core. In these areas, we expect to target resiliency and efficiency versus growth, and thus free up and redirect our resources toward greater opportunities.
Our financial results were strong in 2017, with full-year net revenue1 at a record $2.43 billion. 2017 GAAP diluted EPS was $4.33, compared to $0.64 in 2016, while 2017 non- GAAP diluted EPS2 was $4.06, a 10% increase compared to the prior year.
The new corporate strategy is designed to focus our resources on the greatest growth opportunities while retaining our goal of double- digit total stockholder return.
$4.33 2017 GAAP diluted EPS 1 Represents revenues less transaction-based expenses. 2 Refer to Annex A for our reconciliations of U.S. GAAP to non-GAAP net income and diluted EPS.


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

LOGO

Our financial results were strong in 2017, with full-year net revenues at a record $2.43 billion.

 

We are pleased to have nominated Jacob Wallenberg, Chairman of Investor AB, to the Board.    

CAPITAL ALLOCATION

 

A fundamental objective of the strategic pivot is to optimize our capital allocation decisions to be consistent with market opportunities. The Board works closely with management in planning and executing such efforts. In 2017, the company made two key acquisitions (eVestment and Sybenetix) and explored strategic alternatives for certain existing businesses in a way that was consistent with our new strategic direction. As a result of this review, we have entered into a definitive agreement to sell the public relations (Public Relations Solutions) and webcasting and webhosting (Digital Media Services) products and services within our Corporate Solutions business. The closing of this transaction, which is subject to regulatory approvals and customary closing conditions, is expected in the second quarter of 2018.

 

   

In addition to investments and divestitures, the Board and management remain focused on investment in organic growth opportunities, de-leveraging the balance sheet and returning capital to stockholders. These efforts include share buybacks and growing our dividend as earnings and cash flow increase.

 

   

INDUSTRY LEADERSHIP

 

With a new administration in Washington, in 2017 we elevated our voice on important issues critical to market operation, market structure and our listed companies. This effort, with the Board’s support, resulted in the development of a detailed blueprint, entitled The Promise of Market Reform: Reigniting America's Economic Engine, which is available at http://business.nasdaq.com/revitalize, reaffirming our commitment to capital markets reform and detailing specific proposals to promote legislative and policy reforms around market structure, proxy statements, litigation, taxes, long-termism and the Financial CHOICE Act, which was passed by the House of Representatives in June 2017.

 

   

BOARD COMPOSITION AND GOVERNANCE FOCUS

 

Refreshing the Board with new perspectives and ideas is critical to a successful and strategic board of directors. In 2017, we welcomed Melissa M. Arnoldi, President of


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Letter from Our Board of Directors  

 

   5

 

We intend to increase investment in: our Market Technology segment, including our market infrastructure and regulatory technology businesses; our Information Services segment, including our data analytics capabilities; and a select number of smaller growth businesses, including Nasdaq Private Market.

 

Technology & Operations at AT&T Communications, and John D. Rainey, CFO and EVP of Global Customer Operations at PayPal Holdings, Inc., to the Board. We continue to evaluate our Board composition to ensure the Board is comprised of talented, skilled and ethical directors to represent the long-term interest of stockholders and are pleased to have nominated Jacob Wallenberg, Chairman of Investor AB, to the Board. Mr. Wallenberg will stand for election at our Annual Meeting on April 24, 2018. We also continue to strive for various types of diversity on the Board, with the Board now including three female members.

 

In addition to the strategic and capital allocation priorities discussed earlier, we also continue to focus our attention on the important issues of: executive compensation; board structure and composition; corporate culture, diversity and human capital; our environmental, social and governance policies; information and cybersecurity initiatives; and enterprise risk management.

 

As we make decisions in the boardroom, a priority for the Board is to hear from and engage with you, our stockholders. We accomplish this through ongoing outreach and engagement. Please continue to share your opinions and suggestions with us. You can submit your views by writing to us at: AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan Conley, SVP and Corporate Secretary, 805 King Farm Blvd., Rockville, MD 20850.

 

We thank you for the trust you have placed in us and for your continued support of Nasdaq. The Board is committed to working on your behalf to ensure Nasdaq’s continued ability to optimize and execute our new strategy for the ultimate benefit of stockholders.

 

The Board of Directors of Nasdaq, Inc.

 

Melissa M. Arnoldi

Charlene T. Begley

Steven D. Black

Adena T. Friedman

Essa Kazim

Thomas A. Kloet

John D. Rainey

Michael R. Splinter

Lars R. Wedenborn

   

Please continue to share your opinions and suggestions with us. You can submit your views by writing to us at:

AskBoard@nasdaq.com or Nasdaq Board of Directors c/o Joan Conley, SVP and Corporate Secretary, 805 King Farm Blvd., Rockville, MD 20850.


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LOGO

 

Adena T.
Friedman
Michael R.
Splinter


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Letter from Our President and CEO  

 

   7

 

MARCH 14, 2018

Dear Stockholders,

As I look back at the past year, it strikes me that 2017 will be viewed as pivotal for Nasdaq. We continued to execute against our near-term goals, posting strong operating and financial results, but at the same time we looked firmly to the future, developing a long-term strategy that leverages our core strengths and channels our resources to those areas that will position us best in the years to come.

Everything we accomplish at Nasdaq is the result of our constant focus on understanding and satisfying the needs of our clients. My first year as CEO has allowed me to spend time visiting our clients and offices across the globe, and I have been impressed at every turn. Our team’s talent and dedication to clients extend to all levels of the organization. We have instilled a partnership approach to everything we do for our clients, working tirelessly to understand the dynamics and evolution of their respective businesses. All of our employees contribute in important ways to Nasdaq’s corporate vision: to reimagine markets to realize the potential of tomorrow. Our employees take great pride in our role in promoting global economic growth through the creation and operation of advanced capital markets. We succeed when our clients succeed.

As we deliver for our clients, Nasdaq is committed to sustainable business practices and community support. We measure and report our environmental, social, and governance performance because we believe it directly contributes to long-term value. Nasdaq’s volunteerism and philanthropy programs have grown exponentially over the last few years, attracting new talent to the company and enhancing internal job satisfaction. We have also embarked on specific programs to improve our sustainable footprint, focusing on LEED green building standards, energy efficiency, recycling, and waste reduction campaigns.

Our values - putting clients first, acting with integrity, and leading with innovation - are instilled throughout the organization, starting at the top with our Board of Directors. Michael R. Splinter, an independent director who has served on the Board since 2008, was elected Chairman this past year. We also had the good fortune to add two new Board members, Melissa M. Arnoldi and John D. Rainey. Our Board brings invaluable diversity of backgrounds and thinking, all with the same ambition to further Nasdaq’s mission globally on behalf of our stockholders. To that end, Jacob Wallenberg, Chairman of Investor AB, will stand for election to the Board at our Annual Meeting in April.

The challenge for any organization in today’s environment is the ability to look to the future while at the same time keeping a close eye on the present. In this, Nasdaq has done well, remaining focused throughout the year on the three near-term execution priorities we laid out at the beginning of 2017, while also developing our strategy for the future.

EXECUTING ON OUR COMMITMENT TO THE CAPITAL MARKETS

Nasdaq’s first execution priority was enhancing our competitive position, which resulted in improved market share in our largest trading revenue categories, U.S. equities, U.S. options and European equities. This came during a year that saw the Nasdaq Composite reach new highs as the lengthy bull market continued to advance. In addition, Nasdaq maintained its

Our values – putting clients first, acting with integrity, and leading with innovation – are instilled throughout the organization, starting at the top with our Board of Directors.

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

63%

of U.S. IPOs won

108

New listings on our

Nordic and Baltic

exchanges and

Nasdaq First North

11

Listing transfers in

the U.S.

 

LOGO

in total market value

switching from the

New York Stock

Exchange to Nasdaq

since 2005

leadership in global listings, having won 63% of U.S. IPOs in 2017 and winning a record-breaking 108 new listings on our Nordic and Baltic exchanges and Nasdaq First North. We also welcomed 11 listing transfers in the U.S., representing approximately $217.8 billion in market capitalization. These included storied brands such as PepsiCo and Principal Financial. This was a significant milestone as we have now surpassed over $1 trillion in total market value switching from the New York Stock Exchange to Nasdaq since 2005.

Our second execution priority for the year was completing the integration of our 2016 acquisitions, which included International Securities Exchange, Nasdaq Canada and Boardvantage. We achieved our initial synergy targets in just 12 months and identified still more savings, maintaining strong relationships with clients as the integrations progressed.

The year’s final execution priority was the commercialization of our disruptive technologies, which include blockchain, cloud computing and machine learning. This was demonstrated by the strong support from clients for our cloud-enabled Nasdaq Financial Framework and the successful launch of Analytics Hub, which leverages machine learning to deliver unique trading insights.

The end result of execution should always be performance, and our ability to deliver on these three priorities yielded a strong year from a financial perspective, with Nasdaq’s full-year net revenues rising in 2017 to $2.4 billion.

We also turned decisively to the future. Early in the year, we took to the next level our leadership role in policy discussions on the future of the U.S. capital markets, a critical issue for many clients. We developed a blueprint, entitled The Promise of Market Reform: Reigniting America’s Economic Engine, outlining our views on how to make real progress in reconstructing the regulatory framework of our capital markets, modernizing market structure and promoting long-term thinking. We were pleased to see support for many of our proposals from our clients, regulators and lawmakers.

In addition to addressing policy matters, we initiated a thorough analysis of Nasdaq itself and how we want to position ourselves for the future. One of my first actions as CEO was to conduct a strategic review of Nasdaq’s businesses in the context of our core strengths, competitive advantages and the remarkable pace of change we see. This review resulted in a decision to focus on those businesses that offer the largest growth opportunities, which include Market Technology and information Services, and deploy resources where they can generate the most value for our clients and our stockholders. We stand at the center of today’s capital markets, and we are focusing the organization so that we can leverage our unique technology and market structure expertise to reimagine the markets of the future.

TRANSFORMING ECONOMIES

Driving Nasdaq’s new strategic direction is the understanding that we are operating in a new environment today, characterized by technological advances that seem likely to rewrite the future we all might have imagined just a few years ago. In fact, our new brand campaign launched this past year is “Rewrite Tomorrow,” acknowledging and embracing this future, a future we like to think about in terms of four key trends that stand to greatly impact how we serve clients going forward.

 


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   9

 

The end result of execution should always be performance, and our ability to deliver on our three 2017 execution priorities yielded a strong year from a financial perspective, with Nasdaq’s full-year net revenues rising in 2017 to $2.4 billion.

 

The first is the marketplace economy, a natural evolution of commerce in which two-sided market mechanisms are applied to the purchase and sale of non-financial assets. We are already working with clients that wish to create auction mechanics or continuous markets for such assets, and we believe the desire to give consumers the power to negotiate price will only continue to grow. This bid-and-ask of the future represents a tremendous long-term opportunity for Nasdaq.

 

The second trend we see is the renewed role of investment banks as critical pillars of our financial system. Now recovered from the financial crisis, these banks have demonstrated a willingness to work with partners like Nasdaq in developing the financial technologies of tomorrow. Our Ocean initiative, through which Nasdaq technology powers the internal trading venues of banks, is a great example of such a partnership in action.

 

Third is the virtual explosion in data that has occurred in recent years, coupled with remarkable advances in machine learning and artificial intelligence. Machine learning can add structure to this data, allowing it to be used in making trading decisions and protecting the integrity of our capital markets. Today, we are actively implementing these technologies in Nasdaq’s surveillance and data analytics offerings.

 

The final key trend we see is the changing investment management landscape, which not only includes the well-discussed shift from active to passive management but also the importance of private company investment, the growth of quantitative and other data-driven strategies and the increasing competitiveness of the asset management space as a whole.

 

With this new environment top of mind and our new strategy in place, Nasdaq moved decisively this past year and made two acquisitions, both consistent with these key trends. We acquired eVestment, a leading data, content and analytics platform serving institutional investors, and Sybenetix, a leading surveillance provider that combines behavioral analytics and cognitive computing with deep financial markets expertise. In addition, our strategy prompted us to explore strategic alternatives for our Public Relations Solutions and Digital Media Services businesses, which culminated in an agreement to sell those assets to West Corporation, announced in January 2018. The transaction is subject to regulatory approvals and customary closing conditions.

 

In terms of our disruptive technologies, Nasdaq also continues to innovate. Our pioneering work in blockchain, for example, has resulted in new projects that include testing a platform for mutual fund trading processing and record-keeping with Skandinaviska Enskilda Banken AB in Sweden as well as a proxy voting solution

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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Moving forward through

2018 and beyond, we will

continue to be guided by our

new strategic direction and

our evolving understanding

of the future.

with Strate (Pty) Ltd in South Africa. We continue to find a myriad of use-cases for blockchain technology across the capital markets ecosystem, specifically where an immutable record of transfers in ownership and inventory management are paramount.

Nasdaq is also investing in the future of its core markets and global market technology offerings with the Nasdaq Financial Framework. This is a multi-year project to re-architect our market infrastructure technology across the entire trade life-cycle, to create a seamlessly integrated solution using a micro-services architecture. The framework leverages the efficiency and security of the cloud, and offers new fintech capabilities – notably blockchain and advanced data management – across the fabric of the platform. We already have very strong demand for the Nasdaq Financial Framework core platform among our traditional exchange and broker dealer clients, as well as new, non-financial markets. Clients are drawn to its flexibility and cloud-based architecture, coupled with the data management and the future-proofing of an integrated blockchain solution. And we are just beginning to execute on the potential of this new platform to transform the global markets economy.

OUR PATH FORWARD

The successes of the past year were significant for Nasdaq from both an operating and a strategic perspective and I am proud of the progress we have made.

Moving forward through 2018 and beyond, we will continue to be guided by our new strategic direction and our evolving understanding of the future. We know this future is coming, and now is the time to build the infrastructure that will support it, ensuring safety, transparency and fairness. If we do so, we can secure a future in which all market participants are able to join in the enormous economic opportunities ahead with the end goal of creating a more dynamic economy.

For our stockholders, we remain committed to executing this vision while focusing on efficiency and strict capital discipline. Entering my second year as CEO, I could not be more excited about the years to come. We have the unique skills, experience and vision to continue generating tremendous value for our clients and stockholders as well as the drive to keep innovating and disrupting as we have since Nasdaq launched the world’s first electronic stock market nearly five decades ago.

Adena T. Friedman

President and Chief Executive Officer

Nasdaq, Inc.

 


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11

 

Notice of 2018 Annual Meeting of Stockholders

TO THE STOCKHOLDERS OF NASDAQ, INC.

You are receiving this proxy statement because you were a stockholder at the close of business on the record date of February 26, 2018 and are entitled to vote at the 2018 Annual Meeting of Stockholders. Our Board of Directors is soliciting the accompanying proxy for use at the Annual Meeting. The Annual Meeting will be held to:

 

» elect ten directors for a one-year term;

 

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

 

» approve the Nasdaq, Inc. Equity Incentive Plan, as amended and restated;

 

» ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018;

 

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

 

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

In accordance with rules of the SEC, instead of mailing printed copies of our proxy materials to each stockholder of record, we are furnishing the proxy materials for the 2018 Annual Meeting by providing access to these documents on the internet. A notice of internet availability of proxy materials is being mailed to our stockholders. We first mailed or delivered this notice on or about March 14, 2018. The notice of internet availability contains instructions for accessing and reviewing our proxy materials and submitting a proxy over the internet. Our proxy materials were made available at www. proxyvote.com on the date that we first mailed or delivered the notice of internet availability. The notice also will tell you how to request our proxy materials in printed form or by e-mail, at no charge. The notice contains a control number that you will need to submit a proxy to vote your shares.

If you plan to attend the meeting in New York, you will need to request an admission ticket in advance and present a valid form of photo identification and proof of ownership of our common stock as of the record date as detailed on page 122 of the proxy statement.

By Order of the Board of Directors,

Adena T. Friedman

President and CEO

New York, New York

March 14, 2018

 

Tuesday, April 24, 2018

 

8:30 a.m. (EDT)

 

   
 

Nasdaq MarketSite

 

Four Times Square

 

New York, NY 10036

 

   
HOW TO VOTE  
Your vote is important. You are eligible to vote if you were a stockholder of record at the close of business on February 26, 2018.  

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

 

 

 

LOGO

 

By Internet Using Your Tablet or Smart Phone

 

Scan this QR code 24/7 to vote with your mobile device

 

 

LOGO

 

By Phone

 

Call +1 800 690 6903 in the U.S. or Canada to vote your shares

 

 

LOGO

 

By Internet Using Your Computer

 

Visit 24/7

www.proxyvote.com

 

 

LOGO

 

By Mail

Cast your ballot, sign your proxy card and return by free post

 

 

LOGO

 

Attend the Annual Meeting

 

Vote in person

 

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

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

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Acronyms and Certain Defined Terms

 

COBRA

 

  

Consolidated Omnibus Budget Reconciliation Act

 

ECIP

 

  

Executive Corporate Incentive Plan

 

EPS

 

  

Earnings Per Share

 

Equity Plan

 

  

Nasdaq’s Equity Incentive Plan

 

ERM

 

  

Enterprise Risk Management

 

ESG

 

  

Environmental, Social and Governance

 

ESPP

 

  

Employee Stock Purchase Plan

 

Exchange Act

 

  

Securities Exchange Act of 1934, as amended

 

FASB ASC Topic 718

 

  

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

 

GAAP

 

  

Generally Accepted Accounting Principles

 

H.E.

 

  

His Excellency

 

IPO

 

  

Initial Public Offering

 

NEO

 

  

Named Executive Officer

 

PCAOB

 

  

Public Company Accounting Oversight Board

 

PSUs

 

  

Performance Share Units

 

RSUs

 

  

Restricted Stock Units

 

SEC

 

  

U.S. Securities and Exchange Commission

 

S&P

 

  

Standard & Poor’s

 

TSR

 

  

Total Stockholder Return

 


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13

 

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Proxy Summary

     Voting Matters and Board Recommendations      15  
    

Performance Highlights

     16  
    

Director Nominees

     17  
    

Engaging with Our Stockholders

     20  
    

Executive Compensation Highlights

     22  
    

Corporate Governance Highlights

     23  

Corporate Governance

    

Corporate Governance Framework

     25  
    

Corporate Responsibility, Corporate Culture and Focus on Entrepreneurship

     32  
    

Stockholder Communication with Directors

     34  

Board of Directors

    

Proposal 1: Election of Directors

     37  
    

Board Committees

     44  
    

Director Compensation

     49  

Named Executive

     Proposal 2: Approval of the Company’s Executive Compensation on an Advisory Basis      53  

Officer Compensation

    

Compensation Discussion and Analysis

     54  
    

Business Performance Highlights

     55  
    

Decision-Making Framework

     55  
    

What We Pay and Why: Elements of Executive Compensation

     61  
    

Risk Mitigation and Other Pay Practices

     73  
    

Management Compensation Committee Report

     76  
    

Management Compensation Committee Interlocks and Insider Participation

     76  
    

Executive Compensation Tables

     77  
    

2017 Summary Compensation Table

     77  
    

2017 Grants of Plan-Based Awards Table

     79  
    

2017 Outstanding Equity Awards at Fiscal Year-End Table

     80  
    

2017 Option Exercises and Stock Vested Table

     81  
    

Retirement Plans

     81  
    

2017 Pension Benefits Table

     82  
    

2017 Nonqualified Deferred Compensation Table

     82  
    

Employment Agreements

     83  
    

Potential Payments upon Termination or Change in Control

     84  
    

CEO Pay Ratio

     90  
    

Proposal 3: Approval of the Equity Plan, as Amended and Restated

     91  

Audit Committee Matters

    

Audit Committee Report

     105  
    

Annual Evaluation and 2018 Selection of Independent Auditors

     106  
    

Proposal 4: Ratification of the Appointment of Ernst & Young LLP as Our Independent

Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018

     109  

Other Items

    

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

     111  
    

Other Business

     113  
    

Section 16(a) Beneficial Ownership Reporting Compliance

     114  
    

Security Ownership of Certain Beneficial Owners and Management

     114  
    

Executive Officers

     117  
    

Certain Relationships and Related Transactions

     119  
    

Questions and Answers About our Annual Meeting

     121  

Annexes

    

Annex A: Non-GAAP Financial Measures

     129  
    

Annex B: Proposed Amended and Restated Equity Plan

     132  


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LOGO

 

PROXY SUMMARY


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Proxy Summary  

 

15

 

Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in voting your shares. You should read the entire proxy statement, as well as our 2017 annual report on Form 10-K, carefully before voting.

Voting Matters and Board Recommendations

 

    Proposal       

 

Nasdaq Board’s

Recommendation

 

    
   

 

Proposal 1. Election of Directors (Page 37)

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

 

       FOR EACH NOMINEE                         
   

 

Proposal 2. Approval of the Company’s Executive Compensation on an Advisory Basis (Page 53)

The company seeks a non-binding advisory vote to approve the compensation of its NEOs as described in the Compensation Discussion and Analysis section beginning on page 54. The Board values stockholders’ opinions and the Management Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

       FOR     
   

 

Proposal 3. Approval of the Equity Plan, as Amended and Restated (Page 91)

The Board and Management Compensation Committee believe that the Equity Plan is an essential component of the company’s robust, performance-based executive compensation program and therefore ask stockholders to approve an increase in the number of shares available under the plan, an extension of the term of the plan and other technical and administrative revisions.

 

       FOR     
   

 

Proposal 4. Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 (Page 109)

The Board and Audit Committee believe that the retention of Ernst & Young LLP to serve as the company’s independent auditor for 2018 is in the best interests of the company and its stockholders.

 

       FOR     
   

 

Proposal 5. Stockholder Proposal – Shareholder Right to Act by Written Consent (Page 111)

As in 2015 and 2017, the Board believes that the stockholder proposal to allow stockholder action by written consent is inappropriate, unnecessary and not in the best interests of Nasdaq and its stockholders.

 

       AGAINST     


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Performance Highlights

Nasdaq delivered excellent results for stockholders in 2017 as we refined our strategic direction and continued to position ourselves as a financial technology leader.

 

 

 

LOGO    3-Year cumulative TSR,1 significantly outperforming both the S&P 500 and Nasdaq Composite

 

 

 

LOGO  

LOGO

  LOGO   LOGO
Initial synergy target for our 2016 acquisitions, which we achieved and exceeded in 2017   1-Year TSR1   Returned to stockholders in repurchased stock and dividends over the last three years   2017 GAAP diluted EPS, compared to $0.64 in 2016; 2017 non-GAAP diluted EPS was $4.06, a 10% increase compared to the prior year

 

 

 

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


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Proxy Summary  

 

17

 

Director Nominees

 

             

    

Name

    

  

    

Age

   Director
Since
  

    

Principal Occupation

  

    

Independent  

 

 

Current Committee Memberships

 

  

    

Other    

Public Co.    

Boards    

    

             

    

AC    

    

  

FC    

  

MCC    

  

NGC    

  
     

  Melissa M. Arnoldi

 

  Non-Industry; Public

 

   45

 

   2017

 

  

President of Technology & Operations, AT&T Communications

 

  

🌑

 

 

🌑    

 

                 

0    

 

     

  Charlene T. Begley

 

  Non-Industry; Public

 

   51

 

   2014

 

  

Retired SVP & Chief Information Officer, General Electric Company

 

  

🌑

 

 

🌑    

 

       

🌑    

 

       

2    

 

     

  Steven D. Black

 

  Non-Industry; Public

 

   65    2011    Co-CEO, Bregal Investments    🌑             Chair        🌑        0    
     

  Adena T. Friedman

 

  Staff

 

   48    2017    President and CEO, Nasdaq, Inc.             🌑                   0    
     

  Essa Kazim

 

  Non-Industry

 

   59    2008   

Governor, Dubai International Financial Center; Chairman, Borse Dubai and Dubai Financial Market

 

   🌑        🌑                   0    
     

  Thomas A. Kloet

 

  Non-Industry; Public

 

   59    2015   

Retired CEO & Executive Director, TMX Group Limited

 

   🌑   Chair                  🌑        0    
     

  John D. Rainey

 

  Non-Industry; Issuer

 

   47    2017   

CFO and EVP of Global Customer Operations, Paypal Holdings, Inc.

 

   🌑   🌑         Chair                  0    
     

  Michael R. Splinter1

 

  Non-Industry; Public

 

   67    2008    Retired Chairman and CEO, Applied Materials, Inc.    🌑             🌑         Chair        2    
     

  Jacob Wallenberg

 

  Non-Industry; Public

 

   62    N/A    Chairman, Investor AB    🌑                       32     
     

  Lars R. Wedenborn

 

  Non-Industry

 

   59    2008    CEO, FAM AB    🌑   🌑                     1    
                         
         

  Number of Meetings Held in 2017

 

 

11    

 

  

3    

 

  

6    

 

  

9    

 

    

 

1  Mr. Splinter is serving as Chairman of the Board from May 2017 through the 2018 Annual Meeting of Stockholders.

 

2  Mr. Wallenberg also is currently on the Board of SAS AB, but he is not standing for reelection at their Annual General Meeting on April 10, 2018.

 

AC: Audit Committee

 

FC: Finance Committee

 

MCC: Management Compensation Committee

 

NGC: Nominating & Governance Committee


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LOGO

Our Board1 Director Qualifications 80% 30% 80% 80% 80% 100% 100% 8 Capital Markets 3 Cybersecurity 8 FinTech 8 Mergers & Acquisitions 8 Public Company Board & Corporate Governance 10 Risk Management 10 Strategic Acumen & Leadership Director Tenure 0-2 years 3-5 years 6-10 years 4 40% with 2 years 4 or less 60% with 5 years or less 100% with 10 years or less Average - 4.7 years Diversity of Background 80% 30% 30% 30% 40% 2 4 8 Current & Former CEOs or Chairmen 3 Current & Former Exchange Operators 3 Women 3 Born Outside the U.S. 4 Work Outside the U.S. Director Age 45 56.2 67 Average Age 1 Statistics in this chart are calculated with respect to the ten Board nominees listed on the prior page.


Table of Contents

LOGO

 

John D. Rainey
Thomas A. Kloet
Adena T. Friedman
Michael R. Splinter
Charlene T. Begley
Steven D. Black
Lars R. Wedenborn
Essa Kazim
Melissa M. Arnoldi


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20

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

We value our stockholders’ perspectives and maintain a vigorous stockholder engagement program.

Engaging with Our Stockholders

We value our stockholders’ perspectives and maintain a vigorous stockholder engagement program. During 2017, we conducted outreach to a cross-section of stockholders owning approximately 75% of our outstanding shares. In 2017, our key stockholder engagement activities included 11 investor (non-deal) road shows in 8 countries, 21 investor conferences and our 2017 Annual Meeting of Stockholders. We also conducted quarterly outreach to the governance teams at many of our top institutional holders.

Ongoing communication with our stockholders helps the Board and senior management gain useful feedback on a wide range of subjects and better understand the issues that matter most to our stockholders. Nasdaq views accountability to stockholders as both a mark of good governance and a critical component of our success. Management regularly confers with investors and actively solicits feedback on a variety of topics including those listed below.

WHAT WE HEARD/WHAT WE DID

 

LOGO


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Proxy Summary  

 

21

 

ANNUAL STOCKHOLDER OUTREACH CYCLE

 

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

     We conduct quarterly outreach to the governance teams at many of our top institutional holders.

 

 

 

LOGO

 

 

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

 

»  Publish annual communications to stockholders: proxy statement and Form 10-K

 

»  Conduct Annual Meeting

 

»  Engage with investors through industry conferences, non-deal roadshows and meetings

 

»  Webcasts of most conference presentations are available to all investors, including retail

       

 

»  Post Annual Meeting results on Nasdaq website

 

»  Review results and feedback from Annual Meeting with institutional holders

 

»  Share investor feedback with the entire Board

 

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

 

»  Engage with investors through industry conferences, non-deal roadshows and meetings

 

»  Webcasts of most conference presentations are available to all investors, including retail

  

 

 

 

 

    

  

 

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

 

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

 

»  Engage with investors through industry conferences, non-deal roadshows and meetings

 

»  Conduct annual perception study

 

»  Webcasts of most conference presentations are available to all investors, including retail

  

 

 

 

 

    

 

 

 

 

    

 

 

 

 

   

  

 

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

 

»  Share investor feedback with the entire Board

 

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

 

»  Engage with investors through industry conferences, non-deal roadshows and meetings

 

»  Webcasts of most conference presentations are available to all investors, including retail

                                                                                                                                                                                           


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Executive Compensation Highlights

Compensation decisions made for 2017 were aligned with Nasdaq’s strong financial and operational performance and reflected continued emphasis on variable, at-risk compensation paid out over the long-term. Compensation decisions are intended to reinforce our focus on performance and sustained, profitable growth.

 

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

 

 

89% of our NEOs’ total direct compensation was performance-based or “at risk” in 2017; 65% of our NEOs’ total direct compensation was equity-based compensation. Total direct compensation includes base salary, annual cash incentive awards and equity awards.

 

 

Annual incentives are based on achievement of rigorous performance goals.

 

 

In 2017, payouts of annual incentives reflected our achievement of performance goals relating to corporate net revenues and corporate operating income (run rate), in addition to accomplishment of strategic objectives and business unit financial results. The resulting payouts to NEOs ranged from 115%-143% of targeted amounts.

 

 

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

 

 

Our main long-term incentive program for NEOs consists entirely of PSUs based on TSR relative to other companies, including the S&P 500 companies and a group of peer companies. Over the three-year period from January 1, 2015 through December 31, 2017, Nasdaq’s cumulative TSR was 71.6%, which was at the 84th percentile of S&P companies and the 56th percentile of peer companies. This TSR performance resulted in performance vesting of PSUs at 157% of target shares.

 

 

Our compensation program is grounded in best practices.

 

 

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

 

 

Our executive compensation program does not encourage excessive risk-taking

 

 

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

 

Questions and Answers

about Our Annual Meeting

Beginning on page 121, you will find answers to frequently asked questions about proxy materials, voting, our Annual Meeting and company filings and reports. We also created an Annual Meeting Information page on our Investor Relations website, which allows our stockholders to easily access the company’s proxy materials, vote through the internet, submit questions in advance of the 2018 Annual Meeting of Stockholders, access the webcast of the meeting and learn more about our company. Come visit us at http://ir.nasdaq.com/annual-meeting-info.cfm.

 


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23

 

Corporate Governance Highlights

 

We are committed to strong corporate governance, as it promotes the long-term interests of stockholders, supports Board and management accountability and builds public trust in the company. The Corporate Governance section beginning on page 25 describes our governance framework, which includes the following highlights. Statistics about the Board of Directors in this chart are calculated with respect to the ten nominees for election at the 2018 Annual Meeting.      New in 2018:

ESG Statements

 

LOGO


Table of Contents

LOGO

 

CORPORATE GOVERNANCE


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Corporate Governance  

 

25

 

Corporate Governance

Corporate Governance Framework

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

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

 

»

rigorous engagement in the corporate strategic framework for long-term value creation;

 

»

overseeing capital allocation;

 

»

identifying risks and overseeing risk management, including information security and cybersecurity;

 

»

fostering a culture of integrity;

 

»

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

 

»

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

 

»

ensuring corporate awareness and contribution to the global communities in which we serve and work.

BOARD’S ROLE IN LONG-TERM STRATEGIC PLANNING

The Board takes an active role with management to formulate and review Nasdaq’s long-term corporate strategy. In 2017, with the full participation and support of the Board, Nasdaq undertook a comprehensive review of its existing strategic framework. As a result of the review, we have reoriented our vision, mission and strategy to embrace our strengths to focus more effectively on our clients and their evolving needs. For further discussion of our 2017 strategic review, see “Item 1. Business–2017 Strategic Review” in our annual report on Form 10-K for the fiscal year ended December 31, 2017.

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

Our goal is to align the interests of directors, management and stockholders and comply with or exceed the requirements of The Nasdaq Stock Market and applicable law.

      Our Strategic

    Operating Model

 

LOGO

 

  🌑 Providing transparency & analytics to users

Information Services

Corporate Solutions

 

  🌑 Delivering best-in-class markets and connectivity

Market Services

Listing Services

 

  🌑 Offering dynamic & flexible PaaS customer solutions

Market Technology

 


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26

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

1

ISS Governance

QuickScore

Best Possible Score

on a scale of 1 to 10

The Nominating & Governance Committee regularly oversees and plans for director succession and refreshment of the Board to ensure a mix of skills, experience, tenure and diversity that promotes and supports the company’s long-term strategy.

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

BOARD REFRESHMENT

The Nominating & Governance Committee regularly oversees and plans for director succession and refreshment of the Board to ensure a mix of skills, experience, tenure and diversity that promotes and supports the company’s long-term strategy. In doing so, the Nominating & Governance Committee takes into consideration the corporate strategy and the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director qualifications.

Since January 2017, three new directors have joined the Board: Melissa M. Arnoldi, Adena T. Friedman and John D. Rainey. The average age of these new directors is 47 years old, and all three are senior executives at public companies. All three also are first-time directors of a public company.

In addition, the Board has nominated Jacob Wallenberg, who is the Chairman of the Board of Investor AB and who has significant experience as a director of publicly traded companies, for election to the Board at the 2018 Annual Meeting.

SUCCESSION PLANNING FOR NASDAQ LEADERSHIP

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

RISK OVERSIGHT

The Board’s role in risk oversight is consistent with the company’s leadership structure, with management having day-to-day responsibility for assessing and managing the company’s risk exposure and the Board having ultimate responsibility for overseeing risk management with a focus on the most significant risks facing the company. The Board is assisted in meeting this responsibility by several Board Committees as described below under “Board Committees.” Furthermore, directors meet on a regular basis, both

 


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27

 

in Chairman’s Session with the CEO present and in Executive Session without the presence of management, to discuss matters, including matters pertaining to risk.

The Board sets the company’s risk appetite (i.e., the boundaries within which Nasdaq’s management operates while achieving corporate objectives). In addition, Nasdaq’s Board reviews and approves the company’s ERM Policy, which mandates ERM requirements and defines employees’ risk management roles and responsibilities.

Per the ERM Policy, Nasdaq employs an ERM approach that manages risk within the approved risk appetite through objective and consistent identification, assessment, monitoring and measurement of significant risks across the company.

Nasdaq classifies risks into the following four broad categories.

 

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

 

» Financial Risk. Risk to the company’s financial position or ability to operate due to investment decisions and financial risk management practices in particular as it relates to market, credit, capital and liquidity risks.

 

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

 

» Legal and Regulatory Risk. Exposure to civil and criminal consequences – including regulatory penalties, fines, forfeiture and litigation - while conducting business operations.

Nasdaq’s management has day-to-day responsibility for: (i) identifying risks and assessing them in relation to Nasdaq’s strategies and objectives, (ii) implementing suitable risk mitigation plans, processes and controls and (iii) appropriately managing risks in a manner that serves the best interests of Nasdaq, its stockholders and other stakeholders. Nasdaq’s Global Risk Management Committee, which is composed of senior executives, assists the Board of Directors in its risk oversight role, ensuring that the ERM framework is appropriate and functioning as intended and the level of risk assumed by the Company is consistent with Nasdaq’s strategy and risk appetite. Nasdaq also has other limited-scope management risk committees that address specific risks, geographic areas and/or subsidiaries. These management risk committees, which include representatives from business units and support functions, monitor current and emerging risks within their purview to ensure an appropriate level of risk. Together, the various management risk committees facilitate timely escalation of issues to the Global Risk Management Committee, which escalates critical issues to the Board.

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

BOARD LEADERSHIP STRUCTURE

In accordance with our Corporate Governance Guidelines, Nasdaq separates the roles of Chairman of the Board and President and CEO. We believe that this separation of

The Board’s role in risk oversight is consistent with the company’s leadership structure, with management having day-to-day responsibility for assessing and managing the company’s risk exposure and the Board having ultimate responsibility for overseeing risk management with a focus on the most significant risks facing the company.

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

We believe that the separation of the roles of Chairman of the Board and President and CEO and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, management development, succession planning, executive compensation and company performance.   

roles and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, management development, succession planning, executive compensation and company performance.

 

Nasdaq’s President and CEO, Adena T. Friedman, who has over 20 years’ experience in the securities industry, is responsible for the strategic direction, day-to-day leadership and performance of Nasdaq. The Chairman of Nasdaq’s Board, Michael R. Splinter, an independent director who brings to the Board the perspective of a technology CEO, provides guidance to the President and CEO, presides over meetings and Executive Sessions of the Board and serves as a primary liaison between the President and CEO and other directors.

 

Throughout 2017, Mr. Splinter, who is an independent director of the company, served as either Lead Independent Director or Chairman. Mr. Splinter became Lead Independent Director on January 1, 2017 at the same time that Ms. Friedman succeeded Robert Greifeld as CEO of the company and Mr. Greifeld became Chairman. Mr. Greifeld did not stand for re-election at the 2017 Annual Meeting; immediately following the Meeting, the Board elected Mr. Splinter to serve as Chairman through the 2018 Annual Meeting.

  

 

BOARD DIVERSITY

 

30%

   30%    30%    40%

of our Board nominees

are female

  

We have been committed

to gender balance in the

boardroom and are a

member of the 30% Club

  

of our Board

nominees were born

outside the U.S.

  

of our Board

nominees work

outside the U.S.

 

  

BOARD INDEPENDENCE

 

»  Substantial majority of independent directors. Nine of our ten director nominees are independent of the company and management.

 

»  Executive Sessions of independent directors. At each Board meeting, independent directors have the opportunity to meet in Executive Session without company management present. In 2017, the Board met 9 times in Executive Session.

 

»  Independent advisors. Each Committee has the authority and budget to retain independent advisors. In 2017, the Nominating & Governance Committee retained such independent advisors to assist with the annual Board assessment and director recruitment.

 

BOARD COMMITTEE INDEPENDENCE AND EXPERTISE

 

»  Committee independence. All Board Committees, with the exception of the Finance Committee, are composed exclusively of independent directors, as required by the Listing Rules of The Nasdaq Stock Market.


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29

 

» Executive Sessions of independent directors. At each Committee meeting, members of the Audit Committee, Finance Committee, Management Compensation Committee and Nominating & Governance Committee have the opportunity to meet in Executive Session.

 

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

PROGRESSIVE STOCKHOLDER RIGHTS

 

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

 

» Proxy access. We implemented proxy access at 3%/3 years by amending our By-Laws to allow a stockholder (or group of stockholders) that complies with certain customary requirements to nominate candidates for service on the Board and have those candidates included in Nasdaq’s proxy materials

 

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

 

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

MEETINGS AND MEETING ATTENDANCE

The Board held 11 meetings during the year ended December 31, 2017, and the Board met in Executive Session without management present during 9 of those meetings. None of the current directors attended fewer than 91% of the meetings of the Board and those Committees on which the director served during the 2017 fiscal year. Nasdaq’s policy is to encourage all directors to attend annual and special meetings of our stockholders. All of the current members of the Board who were directors at the time of the Annual Meeting held on May 10, 2017, attended the Annual Meeting.

DIRECTOR ORIENTATION AND CONTINUING EDUCATION

Our comprehensive and robust orientation programs familiarize new directors with Nasdaq’s businesses, strategies and policies. We also provide in-person or telephonic tutorials to educate Board members on emerging and evolving initiatives and strategies. Our directors receive frequent updates on recent developments, press coverage and current events that relate to our strategy and business.

Directors regularly attend continuing education programs at external organizations and universities to enhance the skills and knowledge used to perform their duties on the Board and relevant Committees.

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

Nasdaq’s Board: By

the Numbers in 2017

11

Meetings held by the Board

9

Times the Board met in

Executive Session without

management present

40

Total Board and

Committee meetings

100%

of the current members of the

Board who were directors at

the time of the Annual Meeting

held on May 10, 2017, attended

the Annual Meeting

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

BOARD AND COMMITTEE EVALUATIONS / INDIVIDUAL DIRECTOR ASSESSMENT

The Board Assessment Process

 

LOGO


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31

 

CODE OF ETHICS: BOARD AND EMPLOYEES

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

The Nasdaq Code of Ethics is subject to annual review by our Board. As part of the 2017 updates to the Code of Ethics, we enhanced coverage of our commitment to diversity and inclusion in our workforce, managing compliance in our supply chain, and our commitment to protecting personal data and privacy. We also added content to the Code of Ethics to help employees with ethical decision making and identification of conflicts of interest. Other revisions reflected updates to company policies, regulatory developments and other improvements identified as part of the annual review process.

Our Global Ethics and Corporate Compliance Program is based on industry-leading practices and is designed to meet or exceed available standards, including those promulgated by U.S. and European regulators in the jurisdictions in which we operate. Pillars of the program include structural elements, such as policies, risk assessment, monitoring, training and communications, and key risk areas, including anti-bribery and corruption, data privacy and antitrust and competition. The Global Ethics and Corporate Compliance Program is reinforced by executive leadership including coverage of ethics during employee town halls and participation in our ongoing Ethics in Action webinar series.

Nasdaq is committed to providing employees the ability to report concerns or seek guidance on ethics and compliance matters without fear of retaliation. In 2016 we launched our SpeakUp! Program which enhanced existing policies and procedures to ensure that Nasdaq employees and other stakeholders have channels to raise issues, seek guidance and report potential violations of our Code of Ethics or other company policies. The program is administered within the Legal and Regulatory Group and implemented by cross-functional teams representing all areas of the company. Oversight is provided by the Global Compliance Council.

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

 

We embrace good governance by holding ourselves to the highest ethical standards in all of our interactions.

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

GOVERNANCE DOCUMENTS

 

LOGO

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

 

LOGO

 

of voluntary employee

donations are matched by

Nasdaq to eligible non-profits

of their choice.

 

40%

 

of the Nasdaq workforce

participated in the GoodWorks

program in 2017

  

Corporate Responsibility, Corporate Culture and Focus on Entrepreneurship

 

CORPORATE RESPONSIBILITY

 

Nasdaq is committed to integrating sustainability into our everyday actions to help create long-term value for our stockholders and the communities in which we operate. We aim to operate the company responsibly while managing risks and using our resources wisely.

 

We exemplify this commitment by practicing sustainability, advocating volunteerism, empowering philanthropy and actively partnering with our employees, customers, clients and partners on ESG initiatives.

 

Integrating Sustainability Into Our Everyday Actions

 

We understand the importance of environmental sustainability and have undertaken meaningful efforts to responsibly manage our environmental footprint over the past several years. Our recent efforts include:

 

»  selecting office locations near public transportation, when possible; in addition, electric car charging stations are available near many of the office buildings where we are tenants;

 

»  selecting office locations near public transportation, when possible; in addition, electric car charging stations are available near many of the office buildings where we are tenants;

 

»  offering employees pre-tax public transportation passes, allowances or subsidies in many locations;


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33

 

» selecting, designing and building office space that aligns with LEED Green Building Standards, or local country standards, when possible; in 2017, we were awarded the LEED Green Building Standards Platinum Award for our Philadelphia office space;

 

» deploying energy efficient equipment and fixtures to reduce energy consumption;

 

» working with landlords to ensure effective recycling and waste reduction programs;

 

» reviewing our business continuity policies to ensure the safety of our employees, facilities and critical business functions in the case of natural disasters;

 

» increasing employee awareness worldwide on our environmental sustainability commitment and programs;

 

» releasing our Environmental Practices Statement in early 2018; and

 

» strengthening our commitment to supply chain sustainability through our Supplier Code of Ethics.

Advocating Volunteerism and Empowering Philanthropy

Through the employee giving and volunteering program, “Nasdaq GoodWorks,” Nasdaq provides full and part-time employees with 16 hours of paid time off to volunteer in their local communities. For any Nasdaq employee or Nasdaq contractor, Nasdaq also matches up to $1,000 of voluntary employee donations to eligible non-profits of their choice. In 2017, 40% of the Nasdaq workforce participated in the GoodWorks program, generating more than $600,000 in charitable impact.

Actively Partnering with Our Employees, Customers, Clients and Partners on ESG Initiatives

As an integral part of our business, we strive to assist issuers and the public to increase their awareness on sustainability and ESG topics through webinars, MarketSite events and broadcasts and our ESG Reporting Guide for European Issuers. Our achievements in this area include the following:

 

» through our Information Services segment, we combine data, expertise and technology to create index products for sustainable investing;

 

» we actively support the United Nations Sustainable Development Goals via our membership in the U.N. Global Compact; and

 

» Nasdaq was again selected for inclusion in the Dow Jones Sustainability Index for North America, and we actively support listed companies in their pursuit of similar distinctions.

CORPORATE CULTURE

We support diversity and inclusion throughout our company. Our commitment to diversity and inclusion is further demonstrated by:

 

» formal anti-discrimination and anti-harassment policies;

 

» public commitments on gender equality through the Parity Pledge, the United Nations Woman’s Empowerment Principles and membership in the 30% Club;

 

» early adoption of the United Nations’ Standards of Conduct for Business designed to help businesses promote equality for lesbian, gay, bisexual, transgender and intersex people in the workplace and beyond;

Internally, diversity and

inclusion are furthered by

strong participation in our

Women’s Initiative at Nasdaq,

which promotes professional

growth for women, and Out

Proud Employees of Nasdaq,

which represents LGBT

employees, families and allies.

 


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34

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

477

Original programs developed

since September 2015

10,871

Entrepreneurs benefitted

across the globe

49%

of the Center’s

entrepreneurs are women

»  a Code of Ethics that sets forth the corporate values and ethical principles to guide employee conduct;

 

»  privacy policies designed to protect privacy and personal data, including an Information Protection and Privacy Practices Statement adopted in early 2018;

 

»  a SpeakUp! Program that enables all employees to voice concerns and seek guidance on any matter in a non-retaliatory manner; and

 

»  a Human Right Practices Statement adopted in early 2018.

 

Internally, diversity and inclusion are furthered by strong participation in our Women’s Initiative at Nasdaq, which promotes professional growth for women, and Out Proud Employees of Nasdaq, which represents LGBT employees, families and allies.

 

FOCUS ON ENTREPRENEURSHIP

 

The Nasdaq Entrepreneurial Center is a separate, non-profit organization established with the support of the Nasdaq Educational Foundation. The Center’s mission is to deliver resources and mentoring to enable entrepreneurs across the globe to realize their potential. Since launching in September 2015, the Center has developed 477 original programs that have benefitted 10,871 entrepreneurs across the globe. In keeping with a commitment to advancing inclusivity, the Center is proud that 49% of its entrepreneurs are women. To achieve these milestones, the Center has partnered with universities and thought leaders around the world, including Wilson Sonsini Goodrich & Rosati, KPMG, Lehigh University and The University of Melbourne. In addition to its own entrepreneurial education and original research, the Center supports a wide variety of like-minded organizations, including non-profits, accelerators, investors, universities and government agencies, with curriculum and joint programming to serve local and international audiences.

 

The Nasdaq Educational Foundation is also a separate, non-profit organization. The Foundation’s mission is to connect the business, capital and innovative ideas that advance global economies. In 2017, the Foundation also supported academic programs on entrepreneurship at the Massachusetts Institute of Technology, Fordham University and Columbia University.

  

 

Stockholder Communication with Directors

 

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

  
 


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LOGO

 

We are a business based on integrity — nothing else matters if we don’t have integrity.
Adena T. Friedman


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LOGO

 

BOARD OF DIRECTORS


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37

 

Board of Directors

Proposal 1: Election of Directors

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

Pursuant to our Amended and Restated Certificate of Incorporation and By-Laws and based on our governance needs, the Board may determine the total number of directors. The Board is authorized to have ten directors following our 2018 Annual Meeting.

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

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

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

DIRECTOR NOMINATION PROCESS

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

The Board of Directors

unanimously recommends

a vote FOR each of the

nominees for director.

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

The average Board

tenure of Nasdaq’s

director nominees is

4🌑7

years

The range of tenure is

0-10

years

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

We also are obligated by the terms of a stockholders’ agreement dated December 16, 2010 between Nasdaq and Investor AB to nominate and generally use best efforts to cause the election to the Nasdaq board of one individual designated by Investor AB, subject to certain conditions. Mr. Wallenberg is the individual designated by Investor AB as its nominee.

DIRECTOR INDEPENDENCE

Nasdaq’s common stock is currently listed on The Nasdaq Stock Market and Nasdaq Dubai. In order to qualify as independent under the Listing Rules of The Nasdaq Stock Market, a director must satisfy a two-part test. First, the director must not fall into any of several categories that would automatically disqualify the director from being deemed independent. Second, no director qualifies as independent unless the Board affirmatively determines that the director has no direct or indirect relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Under the Nasdaq Dubai Business Rules and the Markets Rules of the Dubai Financial Services Authority, a director is considered independent if the Board determines the director to be independent in character and judgment and to have no commercial or other relationships or circumstances that are likely to affect, or could appear to impair, the director’s judgment in a manner other than in the best interests of the company.

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

None of the director nominees are party to any arrangement with any person or entity other than the company relating to compensation or other payments in connection with the director’s or nominee’s candidacy or service as a director, other than arrangements that existed prior to the director’s or nominee’s candidacy.

DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE

In evaluating the suitability of individual Board nominees, the Nominating & Governance Committee takes into account many factors, including a general and diverse understanding of the global economy, capital markets, finance, technology and other disciplines relevant to the success of a large publicly-traded financial technology company; a general understanding of Nasdaq’s business and technology; the classification requirements under our By-Laws; the individual’s educational and professional background and personal accomplishments; and factors such as diversity, gender, age and geography.

The Committee evaluates each individual candidate in the context of the Board as a whole, with the objective of maintaining a group of directors that can further the success of Nasdaq’s business, while representing the interests of stockholders, employees and the

 


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39

 

communities in which the company operates. In determining whether to recommend a Board member for re-election, the Nominating & Governance Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the Board and the most recent Board and director assessment.

The Board and the Nominating & Governance Committee believe all director nominees exhibit the characteristics below.

 

LOGO

OUR DIRECTOR NOMINEES

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

In evaluating the suitability of individual Board nominees, the Nominating & Governance Committee takes into account:

 

» a general and diverse understanding of the global economy, capital markets, finance, technology and other disciplines relevant to the success of a large publicly-traded financial technology company;

 

» a general understanding of Nasdaq’s business and technology;

 

» the classification requirements under our By-Laws;

 

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

 

» factors such as diversity, gender, age and geography.
 


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40

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

 

LOGO

 

 

LOGO  

Melissa M. Arnoldi                                                  LOGO

 

Age: 45

 

Director Since: 2017

 

Other Public Company Boards: None

 

Board Committees: Audit

 

Ms. Arnoldi has been President of Technology & Operations at AT&T Communications, a wholly owned subsidiary of AT&T Inc., a telecommunications company, since August 2017. Ms. Arnoldi has served in various capacities at AT&T since 2008 including: President of Technology Development at AT&T Services, Inc. from September 2016 to August 2017; SVP, Technology Solutions & Business Strategy, from December 2014 to September 2016; VP, IT Strategy & Business Integration, from December 2012 to December 2014; and AVP, IT from January 2008 to December 2012. Prior to AT&T, Ms. Arnoldi was a partner in the Communications & High Technology Industry Group at Accenture Ltd. from 2006 to 2008, serving in various other capacities from 1996 to 2008.

 
 
 
 
 


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41

 

LOGO     

 

 

        

 

  Charlene T. Begley                                                                LOGO
   

Age: 51

 

Director Since: 2014

 

Other Public Company Boards: Hilton Worldwide Holdings Inc.; Red Hat, Inc.

 

Board Committees: Audit, Management Compensation

 

Ms. Begley served in various capacities for the General Electric Company, a diversified infrastructure and financial services company, from 1988 to 2013. Ms. Begley served in a dual role as SVP and Chief Information Officer, as well as President and CEO of GE’s Home and Business Solutions Office, from January 2010 to December 2013. Previously, Ms. Begley served as President and CEO of GE’s Enterprise Solutions from 2007 to 2009. At GE, Ms. Begley served as President and CEO of GE Plastics and GE Transportation. She also led GE’s Corporate Audit staff and served as CFO for GE Transportation and GE Plastics Europe and India. Ms. Begley is a member of the Hilton and Red Hat audit and nominating and governance committees. Ms. Begley served on the Board of WPP plc from December 2013 to June 2017.

 

LOGO     

 

     

 

Steven D. Black                                                                                           LOGO

   

Age: 65

 

Director Since: 2011

 

Other Public Company Boards: None

 

Board Committees: Management Compensation (Chair) and Nominating & Governance

 

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

 

LOGO

 

   

 

Adena T. Friedman                                                                 LOGO

   

Age: 48

 

Director Since: 2017

 

Other Public Company Boards: None

 

Board Committees: Finance

 

Ms. Friedman was appointed President and CEO and elected to the Board effective January 1, 2017. Previously, Ms. Friedman served as President and Chief Operating Officer from December 2015 to December 2016 and President from June 2014 to December 2015. Ms. Friedman served as CFO and Managing Director at The Carlyle Group, a global alternative asset manager, from March 2011 to June 2014. Prior to joining Carlyle, Ms. Friedman was a key member of Nasdaq’s management team for over a decade including as head of data products, head of corporate strategy and CFO.


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

LOGO

 

     

Essa Kazim                                                                                           LOGO

 

   

Age: 59

   

 

Director Since: 2008

   

 

Other Public Company Boards: None

   

 

Board Committees: Finance

   

 

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

 

 

LOGO

 

     

 

Thomas A. Kloet                                                                     LOGO

 

   

Age: 59

   

 

Director Since: 2015

   

 

Other Public Company Boards: None

   

 

Board Committees: Audit (Chair), Nominating & Governance

   

 

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

 

 

LOGO

   

 

John D. Rainey                                                                                   LOGO

 

   

Age: 47

 

   

Director Since: 2017

   

 

Other Public Company Boards: None

   

 

Board Committees: Audit, Finance (Chair)

   

 

Mr. Rainey joined PayPal Holdings, Inc., a technology platform and digital payments company, in August 2015 and now serves as the company’s CFO and EVP of Global Customer Operations. From August 2015 to September 2016, he served as PayPal’s SVP, CFO, and from September 2016 to December 2017, he served as the company’s EVP, CFO. Prior to joining PayPal, Mr. Rainey was EVP and CFO of United Airlines from April 2012 to August 2015. From October 2010 to April 2012, Mr. Rainey was SVP of Financial Planning and Analysis at United Airlines. Mr. Rainey served in various positions in finance at Continental Airlines prior to the merger of United and Continental.


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43

 

 

LOGO

 

      Michael R. Splinter                                                                LOGO
   

 

Age: 67

   

 

Director since: 2008

   

 

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

   

 

Board Committees: Management Compensation, Nominating & Governance (Chair)

   

 

Mr. Splinter was elected Chairman of Nasdaq’s Board effective May 10, 2017. He is a business and technology consultant and the co-founder of WISC Partners, a regional technology venture fund. He served as Executive Chairman of the Board of Directors of Applied Materials, a leading supplier of semiconductor equipment from 2009 until he retired in June 2015. At Applied Materials, he was also President and CEO. An engineer and technologist, Mr. Splinter is a 40-year veteran of the semiconductor industry. Prior to joining Applied Materials, Mr. Splinter was a long-time executive at Intel Corporation. Mr. Splinter was elected to the National Academy of Engineers in 2017. Mr. Splinter is a member of Meyer Burger Technology’s compensation committee and TSMC’s audit and compensation committees.

 

LOGO

 

      Jacob Wallenberg                                                                                              LOGO
   

 

Age: 62

   

 

Director Since: N/A

   

 

Other Public Company Boards: ABB Ltd; Investor AB; Telefonaktiebolaget LM Ericsson

   

 

Board Committees: N/A

   

 

Mr. Wallenberg has been Chairman of the Board of Investor AB since 2005. Previously, he served as Vice Chairman of Investor AB from 1999 to 2005 and as a member of Investor AB’s Board since 1998. Mr. Wallenberg was the President and CEO of Skandinaviska Enskilda Banken AB in 1997 and the Chairman of its Board of Directors from 1998 to 2005. Mr. Wallenberg also was EVP and CFO of Investor AB from 1990 to 1993. Mr. Wallenberg is a member of the governance and nomination committee at ABB Ltd, the audit and risk and remuneration committees at Investor AB and the finance committee at Telefonaktiebolaget LM Ericsson. Mr. Wallenberg is currently on the Board of SAS AB, where he serves on the remuneration committee, but he is not standing for reelection at their Annual General Meeting on April 10, 2018.

 

LOGO

 

    Lars R. Wedenborn                                                                            LOGO
   

 

Age: 59

   

 

Director Since: 2008

   

 

Other Public Company Boards: None

   

 

Board Committees: Audit

   

 

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

 

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Our Board has four

 

standing Committees:

 

»  Audit Committee

 

»  Finance Committee

 

»  Management Compensation Committee

 

»  Nominating & Governance Committee

 

 

Board Committees

 

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

 

 

AUDIT COMMITTEE

 

Thomas A. Kloet (Chair)

Melissa M. Arnoldi

Charlene T. Begley

John D. Rainey

Lars R. Wedenborn

 

11

Meetings in 2017

 

 

Key Objectives:

 

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

 

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

 

»  Assists the Board by reviewing and discussing the quality and integrity of accounting, auditing and financial reporting practices at Nasdaq, including assessing the staffing of employees in these functions.

 

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

 

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

 

»  Assists the Board in reviewing and discussing Nasdaq’s Global Ethics and Corporate Compliance Program, SpeakUp! Program and confidential whistleblower process.

 

»  Assists the Board in its oversight of the Internal Audit function.

 

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

 

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

 

2017 Highlights:

 

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

 

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

 

»  Provided oversight on the performance of the Internal Audit function during the year.


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45

 

»   Oversaw control remediation efforts by management.

 

»   Reviewed and discussed the company’s ERM program, including its governance structure, risk assessments and risk management practices and guidelines.

 

»   Reviewed, approved and oversaw the company’s Cybersecurity Strategic Plan.

 

»   Received regular updates on information security initiatives, cybersecurity threats and new technology initiatives from the Chief Information Officer and Chief Information Security Officer.

 

»   Reviewed key regulatory compliance matters.

 

»   Provided oversight for the Global Ethics and Corporate Compliance Program and received regular updates on Nasdaq’s SpeakUp! Program and confidential whistleblower process.

 

»   Reviewed a report on Nasdaq’s fraud management program.

 

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

 

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

 

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

 

»   Held Executive Sessions individually with the external auditor, Internal Audit, the General Counsel and Chief Regulatory Officer, the CFO and the Chief Information Officer.

 

»   Received informational reports from the external auditor on revenue recognition and disclosure requirements and other related critical audit matters.

 

Risk Oversight Role:

 

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

 

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

 

Independence:

 

»   Each member of the Audit Committee is independent as defined in Rule 10A-3 adopted pursuant to the Sarbanes-Oxley Act of 2002 and in the Listing Rules of The Nasdaq Stock Market. The Board determined that Messrs. Kloet, Rainey and Wedenborn and Ms. Begley are “audit committee financial experts” within the meaning of SEC regulations. Each also meets the “financial sophistication” standard of The Nasdaq Stock Market.

   

LOGO

 

Given our role as a key technology infrastructure provider, we focus extensively on technology and cybersecurity risk as well as the critical areas of financial reporting, enterprise risk, legal and regulatory matters, ethics and corporate compliance.

 

LOGO                         Thomas A.  Kloet


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

FINANCE COMMITTEE

John D. Rainey (Chair)

Adena T. Friedman

Essa Kazim

3

Meetings in 2017

 

 

LOGO

Overseeing the company’s capital plan for the benefit of stockholders is the primary focus of the Finance Committee.”

 

LOGO   

 

John D. Rainey

Key Objectives:

 

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

 

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

 

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

 

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

2017 Highlights:

 

» Conducted a comprehensive review of the Capital Allocation Plan for ultimate Board approval.

 

» Reviewed and approved certain financing transactions in connection with the acquisition of eVestment.

 

» Reviewed and approved the refinancing of the company’s revolving credit facility and the implementation of a commercial paper program.

Risk Oversight Role:

 

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

 

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


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47

 

Key Objectives:

 

» Establishes and annually reviews the executive compensation philosophy.

 

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

 

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

 

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

2017 Highlights:

 

» Extensive focus on development of executive talent and succession planning.

 

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

 

» Together with the Nominating & Governance Committee, led the annual performance evaluation of the President and CEO.

Risk Oversight Role:

 

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

 

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

Independence:

 

» Each member of the Management Compensation Committee is independent and meets the additional eligibility requirements set forth in the Listing Rules of The Nasdaq Stock Market.

MANAGEMENT

COMPENSATION

COMMITTEE

Steven D. Black (Chair)

Charlene T. Begley

Michael R. Splinter

6

Meetings in 2017

 

LOGO

Our approach is to oversee and ensure that the company’s executive compensation program relies heavily on metrics that link performance and value creation, while discouraging excessive risk.”

 

LOGO   

 

Steven D. Black

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

NOMINATING &

GOVERNANCE

COMMITTEE

Michael Splinter (Chair)

Steven D. Black

Thomas A. Kloet

9

Meetings in 2017

 

LOGO

In 2017, we continued our focus on board diversity and refreshment, including reviewing director skills, qualifications and expertise to ensure we have the right mix of directors to support Nasdaq’s long-term strategy.

 

LOGO   

 

Michael R. Splinter

Key Objectives:

 

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

 

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

 

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

 

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

 

» Identifies and considers emerging corporate governance issue and trends.

 

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

 

» Monitors company compliance with corporate governance requirements and policies.

 

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

 

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

2017 Highlights:

 

» Considered stockholder feedback and input on governance topics and evolving governance issues, trends and policies, including ESG and the stockholder proposal on right to act by written consent.

 

» Focused on the ongoing and continual Board refreshment process.

 

» In connection with the Board review of the strategic pivot of the organization, discussed the qualifications and skills necessary for future director nominees.

 

» Conducted the annual Board and Committee effectiveness assessment, developed action plans based on the results and monitored follow-up items.

Risk Oversight Role:

 

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

 

» Monitors independence of the Board.

Independence:

 

» Each member of the Nominating & Governance Committee is independent, as required by the Listing Rules of The Nasdaq Stock Market.
 


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Director Compensation

 

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

    

 

 

Item

 

  

May 2017 -
May 2018

 

    

May 2016 -
May 2017

 

 
                   

 

Annual Retainer for Board Members (Other than the Chairman and Lead Independent Director, if any)

 

    

 

$75,000

 

 

 

    

 

$75,000

 

 

 

                   

 

Annual Retainer for Board Chairman

 

    

 

$240,000

 

 

 

    

 

$240,000

 

 

 

                   

 

Annual Retainer for Lead Independent Director

 

    

 

N/A

 

 

 

    

 

$150,000

 

 

 

                   

 

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

 

    

 

$200,000

 

 

 

    

 

$200,000

 

 

 

                   

 

Annual Audit Committee and Management Compensation Committee Chair Compensation

 

    

 

$30,000

 

 

 

    

 

$30,000

 

 

 

                   

 

Annual Audit Committee and Management Compensation Committee Member Compensation

 

    

 

$10,000

 

 

 

    

 

$10,000

 

 

 

                   

 

Annual Nominating & Governance Committee Chair Compensation

 

    

 

$20,000

 

 

 

    

 

$20,000

 

 

 

                   

 

Annual Nominating & Governance Committee Member Compensation

 

    

 

$5,000

 

 

 

    

 

$5,000

 

 

 

                   

 

Annual Finance Committee Chair Compensation

 

    

 

$20,000

 

 

 

    

 

N/A

 

 

 

                   

 

Annual Finance Committee Member Compensation

 

    

 

$5,000

 

 

 

    

 

N/A

 

 

 

                   

 

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

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

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

    

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Under our stock ownership guidelines, non-employee directors must maintain a minimum ownership level in Nasdaq common stock of five times the annual cash retainer for Board members.

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

STOCK OWNERSHIP GUIDELINES

Under our stock ownership guidelines, non-employee directors must maintain a minimum ownership level in Nasdaq common stock of five times the annual cash retainer for Board members. Shares owned outright, through shared ownership and in the form of vested and unvested restricted stock, are taken into consideration in determining compliance with these stock ownership guidelines. Exceptions to this policy may be necessary or appropriate in individual situations and the Chairman of the Board may approve such exceptions from time to time. New directors have until four years after their initial election to the Board to obtain the minimum ownership level. All of the directors were in compliance with the guidelines as of December 31, 2017.

 

 

 

2017 Director Compensation Table

 

Name1

 

  

Fees Earned or

Paid in Cash ($)2

 

  

Stock Awards
($)3,4,5

 

  

Option Awards ($)

 

  

Non-Equity

Incentive Plan

Compensation ($)

 

  

Change in
Pension Value
and Nonqualified
Deferred
Compensation

Earnings ($)

 

  

All Other

Compensation ($)

 

  

Total ($) 

 

                                                                              

Melissa M. Arnoldi

 

              $278,786                                    $278,786 
                                                                              

Charlene T. Begley

 

       $95,000        $195,699                                    $290,699 
                                                                              

Steven D. Black

 

              $303,281                                    $303,281 
                                                                              

Börje E. Ekholm

 

                                                 – 
                                                                              

Glenn H. Hutchins

 

              $293,482                                    $293,482 
                                                                              

Essa Kazim

 

              $273,887                                    $273,887 
                                                                              

Thomas A. Kloet6

 

       $202,500        $269,053                                    $471,553 
                                                                              

Ellyn A. McColgan

 

                                                 – 
                                                                              

John D. Rainey

 

       $62,500        $197,050                                    $259,550 
                                                                              

Michael R. Splinter

 

              $459,853                                    $459,853 
                                                                              

Lars R. Wedenborn7

 

       $80,192        $195,699                                    $275,891 
                                                                              

 

1 

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

 

2 

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


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51

 

3 

The amounts reported in this column reflect the grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 13 to the company’s audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. The differences in the amounts reported among non-employee directors primarily reflect differences in each individual director’s election to receive the annual retainer and Committee service fees in cash or RSUs.

 

4 

These stock awards, which were awarded on May 10, 2017 to all the non-employee directors elected to the Board on that date, represent the annual equity award and any portion of annual retainer or Committee service fees that the director elected to receive in equity. Each non-employee director received the annual equity award, which consisted of 2,996 RSUs with a grant date fair value of $199,983. Mr. Splinter elected to receive his Chairman retainer in equity so he received an additional 3,595 RSUs with a grant date fair value of $239,966. Directors Arnoldi, Black, Hutchins, Kazim and Kloet elected to receive all of their annual retainers in equity, so they each received an additional 1,123 RSUs with a grant date fair value of $74,960. In addition, individual Directors received the following amounts for Committee service fees: Ms. Arnoldi (149 RSUs with a grant date fair value of $9,946); Mr. Black (524 RSUs with a grant date fair value of $34,977); Mr. Hutchins (374 RSUs with a grant date fair value of $24,965); H.E. Kazim (74 RSUs with a grant date fair value of $4,940); and Mr. Splinter (449 RSUs with a grant date fair value of $29,971). Following his election to the Board, Mr. Rainey received a stock award on July 31, 2017, representing the annual equity award, which consisted of 2,689 RSUs with a grant date fair value of $199,981.

 

5  The aggregate number of unvested and vested shares and units of restricted stock beneficially owned by each non-employee director as of December 31, 2017 is summarized in the following table.

 

   Director

 

  

Number of Unvested Restricted
Shares and Units

 

  

Number of Vested Restricted
Shares and Units

 

                       

Melissa M. Arnoldi

 

       4,268       
                       

Charlene T. Begley

 

       2,996        8,629
                       

Steven D. Black

 

       4,643        26,556
                       

Börje E. Ekholm

 

              39,646
                       

Glenn H. Hutchins

 

              38,288
                       

Essa Kazim

 

       4,193        28,226
                       

Thomas A. Kloet

 

       4,119        5,512
                       

Ellyn A. McColgan

 

              11,622
                       

John D. Rainey

 

       2,689       
                       

Michael R. Splinter

 

       7,040        44,808
                       

Lars R. Wedenborn

 

       2,996       
                       

 

6 

Fees Earned or Paid in Cash to Mr. Kloet include fees of $72,500 for his service as a director of Nasdaq, Inc., consisting of $37,500 of annual retainer for the 2016-2017 compensation year and $35,000 of Committee Chair and Member fees for the 2017-2018 compensation year. Fees Earned or Paid in Cash to Mr. Kloet also include fees of $130,000 for his service as Chairman of the Boards of our U.S. exchange subsidiaries and their Regulatory Oversight Committees. Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash. Mr. Kloet directs most of the fees for his service as a director to a 501(c)(3) charity of his choice.

 

7 

Fees Earned or Paid in Cash to Mr. Wedenborn include fees for his service both as a director of Nasdaq, Inc. ($47,500) and as Chairman of the Board of Nasdaq Nordic Ltd ($32,692 (29,000)). The latter amount was converted to U.S. dollars from euros at an exchange rate of $1.1273 per euro, which was the average exchange rate for 2017. Fees earned for Board and Committee service for our exchange subsidiaries are paid only in cash.

All of the directors were in compliance with the stock ownership guidelines as of December 31, 2017.

 


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LOGO

 

NAMED EXECUTIVE OFFICER COMPENSATION


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53

 

Named Executive Officer Compensation

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

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

We urge stockholders to read the Compensation Discussion and Analysis below as well as the executive compensation tables and narrative beginning on page 54. The Compensation Discussion and Analysis describes our executive compensation program and the decisions made by our Management Compensation Committee in 2017 in more detail. The compensation tables provide detailed information on the compensation of our NEOs. The Board and the Management Compensation Committee believe that the compensation program for our NEOs has been effective in meeting the core principles described in the Compensation Discussion and Analysis in this proxy statement and has contributed to the company’s long-term success.

In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2018 Annual Meeting of Stockholders.

RESOLVED, that the stockholders of Nasdaq, Inc. approve, on an advisory basis, the compensation of Nasdaq’s NEOs, as disclosed in the proxy statement for Nasdaq’s 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the executive compensation tables and other related tables and narrative disclosure.

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

The Board has adopted a policy providing for annual stockholder advisory votes to approve the company’s executive compensation. Under the current version of the policy, the next advisory vote to approve executive compensation will occur at the 2019 Annual Meeting of Stockholders.

 

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

 


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54

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

     

Compensation Discussion and Analysis

 

  
         

This Compensation Discussion and Analysis provides a summary of our executive compensation philosophy and programs and describes the compensation decisions we have made under these programs and the factors considered in making those decisions. This Compensation Discussion and Analysis and the Executive Compensation Tables focus on the compensation of our NEOs for 2017.

 

        
        
LOGO   

Business Performance

Highlights

 

        55  

LOGO

 

      Key Governance Features of Executive Compensation Program      55  
  

Decision-Making

Framework

   Total Rewards Philosophy      56  
      Say on Pay Results      58  
LOGO       Compensation Determinations      58  
      Competitive Positioning      58  
      Peer Group      59  
      President and CEO’s Role in the Executive Compensation Process      60  
      Role of Compensation Consultants      60  
      Tally Sheets      60  
        

LOGO

 

  

What We Pay and Why:

Elements of Executive

Compensation

   Pay for Performance      62  
LOGO       Base Salary      62  
      Annual Incentive Compensation      63  
      Long-Term Incentive Compensation      68  
      Benefits      72  
      Severance      72  
      Other      73  
        

LOGO

 

LOGO   

Risk Mitigation and

Other Pay Practices

   Risk Assessment of Compensation Program      73  
      Stock Ownership Guidelines      73  
      Stock Holding Guidelines      74  
      Trading Controls and Hedging and Pledging Policies      74  
      Incentive Recoupment Policy      75  
      Tax and Accounting Implications of Executive Compensation      75  
                    


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55

 

Business Performance Highlights

We achieved strong financial and operational performance across many of our business segments in 2017 while continuing to diversify our business, invest significantly in future initiatives and integrate our recent acquisitions.

 

      
LOGO    Achieved record net revenues of $2.43 billion for the full year ended December 31, 2017.

 

LOGO

LOGO    Increased net revenues 7% year over year, led by 10% growth in Market Technology and a 9% increase in Information Services.

 

LOGO

LOGO    Improved market share in our largest trading categories, multiply-listed U.S. options, U.S. equities and Nordic equities.

 

LOGO

LOGO    Achieved and exceeded the initial $60 million synergies with respect to key 2016 acquisitions ahead of schedule.

 

LOGO

LOGO    Led U.S. exchanges with 136 IPOs, representing 63% of all U.S. IPOs, and welcomed 268 total new listings on The Nasdaq Stock Market.

 

LOGO

LOGO    Market Technology order intake totaled $292 million during 2017 while total order backlog set a new record of $847 million at December 31, 2017.

 

LOGO

LOGO    Closed the acquisition of eVestment, a leading content and analytics provider used by asset managers, investment consultants and asset owners.

 

LOGO

LOGO    Returned $446 million in value to stockholders through $203 million in repurchased stock and $243 million in paid dividends.

 

LOGO

LOGO

 

   Achieved 71.6% three-year cumulative TSR, significantly outperforming the S&P 500 and the Nasdaq Composite over this time period.
      

Decision-Making Framework

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

KEY GOVERNANCE FEATURES OF EXECUTIVE COMPENSATION PROGRAM

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


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

 

LOGO

LOGO

 

 

 

What We DO

 

 

LOGO

 

Maintain robust stock ownership guidelines

 

LOGO

 

Maintain a long-standing incentive “clawback” policy

 

LOGO

 

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

 

LOGO

 

Conduct a comprehensive annual risk assessment of our compensation program

 

LOGO

 

Conduct an annual executive talent review and discussion on succession planning

 

LOGO

 

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

 

LOGO

 

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

 

 

LOGO

 

 

LOGO

 

 

 

What We DON’T Do

 

LOGO

 

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

 

LOGO

 

Permit re-pricing of underwater stock options without stockholder approval

 

LOGO

 

Accrue or pay dividends on unearned or unvested equity awards

 

 

LOGO

 

Pay tax gross-ups on severance arrangements and perquisites

 

LOGO

 

Award non-performance based stock options

 

 

LOGO

 

Allow hedging or pledging of Nasdaq stock

 

LOGO

 

Guarantee bonus payments for our NEOs

 

 

 

 

LOGO

 

On an annual basis, the Management Compensation Committee reviews Nasdaq’s compensation philosophy, programs and practices.     

TOTAL REWARDS PHILOSOPHY

 

As the company made a pivot in its strategic direction, we assessed and renewed our robust performance-based compensation philosophy to ensure it is meeting the needs of not only the company but also the stockholders. On an annual basis, the Management Compensation Committee reviews Nasdaq’s compensation philosophy, programs and practices. The following reflects our current total rewards philosophy.


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57

 

Nasdaq’s total rewards program is designed to attract, retain and empower employees to act with integrity, use ingenuity, deliver insights, pursue possibilities and achieve great results to successfully execute the company’s growth strategy.

Nasdaq’s balanced total rewards program encourages decisions and behaviors that align with the short and long-term interests of the company’s stockholders.

The building blocks of our total rewards program are designed to promote and support our strategy and:

 

»

Reinforce our cultural values of: Clients, Passion, Innovation, Integrity, Effectiveness and Resiliency.

 

 

»

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

 

 

»

Retain our most talented employees in a highly dynamic, competitive talent market.

 

 

»

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

 

Our philosophy is based on the following guiding principles. Each individual component of compensation is considered independently and is not based on a formula. Each component, however, is intended to be complementary to the overall compensation package awarded to the executives.

 

LOGO


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58

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

At our 2017 Annual Meeting

    of Stockholders, over

98%

of the votes cast were in favor

of the advisory vote to approve

    executive compensation.

Screening Criteria Used To Select Peer Companies

 

LOGO

SAY ON PAY RESULTS

Each year we carefully consider the results of our Say on Pay advisory vote from the prior year. At our 2017 Annual Meeting of Stockholders, over 98% of the votes cast were in favor of the advisory vote to approve executive compensation. In 2017 we retained the core elements of our executive compensation program, policies and decisions and believe that our programs continue to appropriately motivate and reward our senior management.

In addition to the perspective provided by the Say on Pay results, we also carefully solicit and consider feedback from our stockholders on executive compensation, corporate governance and other issues throughout the year. For further information on our stockholder engagement, see “Engaging with Our Stockholders” on page 20.

COMPENSATION DETERMINATIONS

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

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

COMPETITIVE POSITIONING

To evaluate the external competitiveness of our executive compensation program, we compare certain elements of the program to similar elements used by peer companies. In setting 2017 compensation levels, the Management Compensation Committee used a comprehensive peer group, consisting of 21 companies, to conduct a competitive market analysis of the compensation program for our NEOs. We believe using and disclosing a peer group supports good governance and provides valuable input into compensation levels and program design.

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

 


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

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

PEER GROUP

The peer group consists of the following companies.1

 

LOGO

 

 

 

1 

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

 

2 

Bats Global Markets, Inc. was removed from the peer group after being acquired by CBOE Holdings, Inc. in February 2017.


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Each executive is evaluated individually based on skills, knowledge, performance, growth potential and, in the Management Compensation Committee’s business judgment, the value he or she brings to the organization and Nasdaq’s retention risk.

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

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

PRESIDENT AND CEO’S ROLE IN THE EXECUTIVE COMPENSATION PROCESS

Our President and CEO regularly attends Management Compensation Committee meetings at the invitation of the Management Compensation Committee and provides her perspective to the Management Compensation Committee regarding executive compensation matters generally and the specific performance of the other executive officers.

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

ROLE OF COMPENSATION CONSULTANTS

In 2017, our Human Resources Department engaged Meridian Compensation Partners to assist staff in gathering data, reviewing best practices and making recommendations to the Management Compensation Committee about our executive compensation program. Meridian does not provide any other services to Nasdaq other than executive compensation consulting. Meridian does not directly advise the Management Compensation Committee or attend meetings. In 2017, we paid Meridian $33,820 in fees for competitive market data for executives and outside directors and $115,040 in fees for other executive compensation services. However, Meridian does not determine or recommend the amount or form of executive or director compensation.

TALLY SHEETS

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

 


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61

 

What We Pay and Why: Elements of Executive Compensation

 

    

Elements

 

  

     What We Did

 

  

     Objectives

 

  

Where
Described in
More Detail

 

 
FIXED    Base Salary   

 

»   Fixed amount of compensation for service during the year

 

  

»   Reward scope of responsibility, experience and individual performance

   Page 62
 
   Annual Incentive Compensation   

 

»   At-risk compensation, dependent on goal achievement

 

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

 

  

 

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

 

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

 

   Page 63
  

 

AT-RISK    Long-Term Incentive Compensation   

 

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

 

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

 

  

 

»   Motivate and reward executives for outperforming peers over several years

 

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

 

»   Promote longer-term retention

 

   Page 68
 
BENEFITS    Retirement, Health and Welfare   

 

»   401(k) plan with company match

 

»   Competitive welfare benefits

 

»   Frozen pension plan and frozen supplemental executive retirement plan

 

  

 

»   Provide market-competitive benefits to attract and retain top talent

 

»   Frozen plans reflect legacy arrangements

 

   Page 72
 
SEVERANCE    Severance Arrangements – Termination Due to Change in Control (“Double Trigger”)   

 

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

 

»   Accelerated equity vesting upon termination post-change in control

 

  

 

»   Retention of executives through a change in control

 

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

 

»   Assist in attracting top talent

 

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

 

   Page 72
  

 

   Severance Arrangements – Other   

 

»   Specified amounts under employment arrangements with some executive officers

 

»   Discretionary guidelines, for involuntary terminations without cause

 

  

 

»   Provide transition assistance if employment ends involuntarily

 

»   Promote smooth succession planning upon retirement

 

»   Assist in attracting top talent

 

»   Allow the company to obtain release of employment-related claims

 

   Page 72
 
OTHER COMPENSATION    Limited Perquisites   

 

»   Limited additional benefits provided to certain executives

 

  

 

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

 

   Page 73
 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Nasdaq’s executive compensation program is designed to deliver pay in accordance with corporate, business unit and individual performance     

PAY FOR PERFORMANCE

 

Nasdaq’s executive compensation program is designed to deliver pay in accordance with corporate, business unit and individual performance. A large percentage of total target compensation is “at-risk” through long-term equity awards and annual cash incentive awards. These awards are linked to actual performance and include a substantial portion of equity. The mix of actual direct compensation for our NEOs in 2017 is shown below.

 

LOGO

 

    

BASE SALARY

 

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


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The following table shows each NEO’s base salary at December 31, 2017 and 2016.   

Named Executive Officer

 

  

Base Salary at

December 31, 2017 ($)

 

  

Base Salary at

December 31, 2016 ($)

 

 

Adena T. Friedman

 

President and CEO

 

   $1,000,000

 

    

 

$850,000

 

 

 

Michael Ptasznik

 

Executive Vice President, Corporate Strategy and Chief Financial Officer

 

   $500,000

 

    

 

$500,000

 

 

 

Edward S. Knight

 

Executive Vice President, General Counsel and Chief Regulatory Officer

 

   $500,000

 

    

 

$500,000

 

 

 

Bradley J. Peterson

 

Executive Vice President and Chief Information Officer

 

   $550,000

 

    

 

$525,000

 

 

 

Thomas A. Wittman

 

Executive Vice President, Global Trading and Market Services

 

   $550,000

 

    

 

$475,000

 

 

 

 

Under the terms of Ms. Friedman’s employment agreement, her base salary for 2017 was $1,000,000, which was increased from her 2016 base salary in connection with her promotion to President and CEO.

 

In April 2017, Mr. Peterson’s base salary was increased from $525,000 to $550,000 based on performance-related factors and to align his compensation with our total rewards philosophy to reward, motivate and retain our top performers.

 

In April 2017, Mr. Wittman’s base salary increased from $475,000 to $500,000 based on performance-related factors. In addition, in August 2017 his base salary increased from $500,000 to $550,000 to reflect the increased scope of his role after taking responsibility for all of Global Trading and Market Services.

 

ANNUAL INCENTIVE COMPENSATION

 

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

 

Plan-Based Target Award Opportunities

 

Target annual cash incentive award opportunities are established for our NEOs based on an assessment of each officer’s position and responsibilities, the competitive market analysis and the company’s retention objectives.

     


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

  The following table shows each NEO’s target annual incentive opportunity in 2017 and 2016.

 

 

  Named Executive Officer

 

  2017 Target Annual Incentive Opportunity ($)

 

  2016 Target Annual Incentive Opportunity ($)

 

  Adena T. Friedman

 

  $2,000,000

 

  $1,500,000

 

  Michael Ptasznik

 

  $750,000

 

  $750,000

 

  Edward S. Knight

 

  $700,000

 

  $700,000

 

  Bradley J. Peterson

 

  $825,000

 

  $800,000

 

  Thomas A. Wittman

 

  $825,000

 

  $725,000

 

 

 

 

For 2017, Ms. Friedman’s target annual incentive compensation was increased from $1,500,000 to $2,000,000 associated with her promotion to President and CEO.

 

In April 2017, Mr. Peterson’s target annual incentive compensation was increased from $800,000 to $825,000 based on his high level of performance and competitive market positioning.

 

In April 2017, Mr. Wittman’s target annual incentive compensation was increased from $725,000 to $750,000 based on his high level of performance and competitive market positioning. In addition, in August 2017 his target annual incentive compensation was increased from $750,000 to $825,000 in recognition of the increased scope of his role after assuming responsibility for all of Global Trading and Market Services.

 

Performance Goals

 

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

 

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

 

»  corporate objectives, including:

 

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

 

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

 

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


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

 

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

 

Business unit objectives also are established at the beginning of the year and are subject to adjustment for transactions and other extraordinary events. The business unit objectives consist of financial and strategic objectives specific to the business unit. The Management Compensation Committee and/or the Board set the business unit objectives to reflect the key responsibilities of each executive and incent focus on particular objectives in 2017. In lieu of business unit objectives, our President and CEO had strategic objectives relating to the entire organization.

 

We set goals at levels where the maximum payout would be difficult to achieve and beyond budget assumptions. The following table shows each NEO’s performance objectives for 2017 and the relative weighting of these objectives.

     The annual cash incentive award payments for our executives are based on the achievement of pre-established, quantifiable performance goals.  

 

  Named Executive Officer

 

  

Corporate
Operating Income
(Run Rate)

 

 

Corporate Net
Revenues

 

 

Employee
Engagement

 

 

Business Unit
Financial Objectives

 

 

Nasdaq/Business
Unit Strategic
Objectives

 

    Adena T. Friedman

 

   50%

 

  25%

 

  5%

 

  0%

 

  20%

 

    Michael Ptasznik

 

   45%

 

  10%

 

  5%

 

  5%

 

  35%

 

    Edward S. Knight

 

   40%

 

  10%

 

  5%

 

  5%

 

  40%

 

    Bradley J. Peterson

 

   40%

 

  10%

 

  5%

 

  15%

 

  30%

 

    Thomas A. Wittman

 

   10%

 

  10%

 

  5%

 

  50%

 

  25%

 

 

Potential Payouts

 

Payouts are determined after the end of the year and are based on the sum of (i) actual performance under each corporate objective and (ii) actual performance against an executive’s business unit/strategic objectives. Each goal applicable to the NEOs for 2017 had a minimum, target and maximum performance level.

    


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Scoring of each goal is based on actual goal achievement compared to the target. In 2017, payouts on each goal could vary between 0% and 200% of the target. However, certain non-financial goals that were not aligned with longer term strategic-value generation were funded in accordance with the achievement of the operating income (run rate) goal. This funding ensures that there is better alignment with the overall financial results of the company.

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

Corporate Objectives Performance vs. Goals

The table below summarizes the 2017 corporate objectives.

 

  Corporate Objective

 

  

Threshold (0%
payout)

 

  

Target (100% Payout)

 

  

Maximum (200%
payout)

 

  

Nasdaq’s Results for
2017 as Measured for
Compensation
Purposes

 

  

Payout Percentage

of Target Incentive
Award Amount

 

  Operating Income (Run Rate)1

   $1,116.7m    $1,186.7m    $1,231.7m    $1,196.5m    122%

    

                        

  Net Revenues

   $2,323.9m    $2,413.9m    $2,478.9m    $2,395.8m    80%

    

                        

  Employee Engagement2

 

   Overall Senior
Leadership Index:
60

 

   Overall Senior
Leadership Index:
70-71

 

   Overall Senior
Leadership Index:
77

 

   77

 

   200%

 

 

1  Corporate operating income (run rate) excludes Nasdaq NEXT (i.e., our innovation investment program), foreign exchange impact, intra-year acquisitions and non-recurring expense items. Corporate net revenues exclude Nasdaq NEXT, foreign exchange impact and intra-year acquisitions. Non-GAAP expense items primarily include amortization expense of acquired intangible assets, merger and strategic initiatives costs and restructuring charges. As a result, these calculations differ from the U.S. GAAP calculations of operating income and revenues less transaction-based expenses reported in our annual report on Form 10-K.

 

2  In addition to the Overall Senior Leadership Index results, Messrs. Ptasznik, Knight, Peterson and Wittman were also scored on their Business Unit Leadership Index results.

2017 Business Unit Financial and Strategic Objectives Performance vs. Goals

The Management Compensation Committee and/or the Board assessed each officer’s achievement of the business unit financial and strategic objectives in 2017, as described below. Specific metrics for these goals are not disclosed for competitive purposes. However, 100% of our NEO goals were defined with quantifiable performance metrics and were approved by the Management Compensation Committee. No discretion was applied to any goal scoring unless specially noted below.


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  Named Executive Officer

 

 

  Goal

 

  

Goal
Weighting

 

  

Score as a
Percent of Target

 

  Adena T. Friedman

 

 

  Strategic Initiatives

 

  

20%

 

  

119%

 

 

  Strategic Real Estate Initiatives

 

   5%

 

   200%

 

 

 

 

  Controller Function Roadmap Long-Term Initiatives

 

   5%

 

   200%

 

 

 

 

  Michael Ptasznik

 

  Revitalize R&D and Establish Venture Investing Programs

 

   10%

 

   200%

 

 

 

 

 

  Risk Management1

 

   10%    122%
 

 

 

  Corporate Strategy Initiatives

 

   5%

 

   200%

 

 

 

    

  Broaden Investor Base

 

  

5%

 

  

200%

 

 

  OGC Expense Run Rate

 

   5%

 

   142%

 

 

 

 

  Legal Business Unit Support & Project Delivery¹

 

   15%

 

   122%

 

 

 

 

  Edward S. Knight

 

  Risk Management and Mitigation¹

 

   10%

 

   122%

 

 

 

 

 

  Revitalize the Attractiveness to Growth Companies to List on Nasdaq by Improving Market Structure

 

   5%

 

   200%

 

 

 

    

  Public Policy Influence

 

  

10%

 

  

175%

 

 

  Global Technology Expense Run Rate

 

   15%

 

   200%

 

 

 

 

  Bradley J. Peterson

 

  Business Unit Blended Research and Development / Innovation

 

   10%

 

   161%

 

 

 

 

 

  Overall Systems Reliability¹

 

   10%

 

   122%

 

 

 

    

  Systems Resiliency Risk¹

 

  

10%

 

  

122%

 

 

  Global Equities, Derivatives & Trade Management Services Operating Income

 

   15%

 

   78%

 

 

 

 

  Strategic Initiatives

 

   15%

 

   156%

 

 

 

 

  Global Equities, Derivatives & Trade Management Services Revenues

 

   15%

 

   74%

 

 

 

 

  Thomas A. Wittman

 

  Cash Equities Market Share

 

   5%

 

   100%

 

 

 

 

 

  Options Market Share

 

   5%

 

   158%

 

 

 

 

  ISE Integration

 

   10%

 

   200%

 

 

 

 

  Global Fixed Income and Commodities Trading and Clearing & Post-Trade Revenues

 

   5%

 

   100%

 

 

 

    

  Global Fixed Income and Commodities Trading and Clearing & Post-Trade Margin

 

  

5%

 

  

100%

 

 

1   The maximum payout was funded at 122% of target based on operating income (run rate) results.

Award Payouts

In early 2018, the Management Compensation Committee and/or the Board determined the final levels of achievement for each of the goals and approved payout amounts. There were no guaranteed minimum payouts for any of our NEOs.


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

  Named Executive Officer

 

  2017 ECIP Award Payout ($)

 

 

2016 ECIP Award Payout ($)

 

  Adena T. Friedman

 

  $2,296,000

 

 

$2,175,750

 

  Michael Ptasznik

 

  $1,071,375

 

 

$1,200,000

 

  Edward S. Knight1

 

     $960,000

 

 

$1,132,300

 

  Bradley J. Peterson

 

  $1,123,457

 

 

$1,327,600

 

  Thomas A. Wittman2

 

     $950,000

 

 

$1,000,000

 

 

1  In addition to Mr. Knight’s calculated award of $909,300, he also received an additional award of $50,700 to reflect his contributions to Project Revitalize, which were not fully reflected in the 5% weighting of that strategic goal.

 

2  In addition to Mr. Wittman’s calculated award of $917,638, he also received an additional award of $32,362 for driving results within his control, despite lower than expected volumes in 2017.

 

Global Exchange Peer Companies
Used for Three-Year PSUs
  LONG-TERM INCENTIVE COMPENSATION

 

ASX Limited

 

BM&F Bovespa

 

Bolsa Mexicana de Valores

 

Bolsas Y Mercados Espanoles

 

CBOE Holdings, Inc.

 

CME Group Inc.

 

Deutsche Börse

 

Euronext

 

Hong Kong Stock Exchange

 

Intercontinental Exchange

 

Japan Exchange

 

London Stock Exchange Group

 

NEX Group

 

Singapore Exchange

 

TMX Group Ltd.

 

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

 

In 2017, each NEO received a grant of PSUs subject to a three-year cumulative performance period beginning on January 1, 2017 and ending on December 31, 2019. The shares earned, if any, vest at the end of the performance period. Performance is determined by comparing Nasdaq’s TSR to two groups of companies, each weighted 50%.

 

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

 

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

 

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

 
 
 
 
 
 
 


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

 

   

 

Resulting Shares Earned

 

 

 

  >= 85th Percentile

 

   

 

200%             

 

 

 

  67.5th Percentile

 

   

 

150%             

 

 

 

  50th Percentile

 

   

 

100%             

 

 

 

  25th Percentile

 

   

 

50%             

 

 

 

  15th Percentile

 

   

 

30%             

 

 

 

  0 Percentile

 

   

 

0%             

 

 

 

 

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

 

Award Determination

 

In setting Ms. Friedman’s 2017 equity award target, the Management Compensation Committee focused on motivating performance, with significant upside and downside based on relative performance. Historical awards, newness to the role and the retention value of Ms. Friedman’s outstanding equity were taken into account when determining the target amount of her award. Peer group data also was considered in establishing a market-competitive award level.

 

Ms. Friedman recommended the specific equity award targets for each of the other NEOs, which varied among executives depending upon responsibilities and retention considerations. The Management Compensation Committee and Board evaluated these recommendations and determined that the amount of each award reflected the individual’s contributions, was aligned with competitive market levels and was appropriate for retention purposes.

 

The target amount and target face value of the PSUs awarded to each of the NEOs under this program is set forth in the table below. The 2017 awards were approved on March 28, 2017 and granted on March 31, 2017, which was the date of Nasdaq’s annual employee equity grant.

  

 

  Named Executive Officer

 

                      Target TSR  PSUs (#)                    

 

  Target Grant Date Face Value ($)

 

  Adena T. Friedman

 

  86,393

 

  $6,000,000

 

  Michael Ptasznik

 

  17,278

 

  $1,200,000

 

  Edward S. Knight

 

  15,838

 

  $1,100,000

 

  Bradley J. Peterson

 

  20,957

 

  $1,455,500

 

  Thomas A. Wittman

 

  15,838

 

  $1,100,000

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

    

One-Time President and CEO Option Award

 

In addition to the annual grant awarded to Ms. Friedman, the Management Compensation Committee and Board of Directors granted her a one-time, performance-based stock option award with a value of $4,000,000 to recognize her promotion to President and CEO and to provide strong motivation to deliver long-term stock price appreciation in alignment with stockholder interests. 100% of Ms. Friedman’s option grant is performance-based, and the grant vests one-third per year over three years, contingent upon the achievement of performance metrics.

 

The performance criteria for the option grant are set forth in the table below.

 

Vesting Date

 

     Vesting Percent    

Vesting Performance Requirement

 

 

    December 31, 2017

 

  

 

 

 

 

33%

 

 

 

 

 

 

2017 fully diluted EPS must be at least 3% greater than 2016 EPS

 

          

2018 fully diluted EPS must be at least 3% greater than 2016 EPS; and either:

 

    December 31, 2018      33%    

1.

 

  

2018 fully diluted EPS growth must be at least 3.0%; or

 

            

2.

 

  

Average annual 2017 and 2018 fully diluted EPS growth must be at least 3.0%

 

          

2019 fully diluted EPS must be at least 3% greater than 2016 EPS; and either:

 

    December 31, 2019      34%    

1.

 

  

2019 fully diluted EPS growth must be at least 3.0%; or

 

            

2.

 

  

Average annual 2017, 2018, and 2019 EPS growth must be at least 3.0%

 

    

 

Annual fully diluted EPS growth is determined based upon the percentage by which the fully diluted EPS of the company, as determined in accordance with U.S. GAAP for the fiscal year, exceeds the fully diluted EPS of the company, as determined in accordance with U.S. GAAP for the prior fiscal year.

 

2017 Vesting of One-Time President and CEO Option Award

 

On January 30, 2018, the Management Compensation Committee and the Board evaluated and approved the performance results for the vesting of the first one-third of the stock options granted to Ms. Friedman in January of 2017. The company’s 2017 fully diluted EPS growth, negatively adjusted for a one-time after-tax, non-cash intangible asset impairment charge of $341 million related to the full write-off of the eSpeed trade name and a rebranding of our Fixed Income business, exceeded the performance requirement, which resulted in the approval of the vesting of one-third of the 2017 option award, or 89,605 options.

 

Settlement of 2015 PSU Grants Based on Relative TSR

 

On December 31, 2017, the Management Compensation Committee evaluated and approved the performance results for the PSUs granted to senior executives in 2015.


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These PSUs were subject to a three-year cumulative performance period beginning on January 1, 2015 and ending on December 31, 2017 and performance was determined by comparing Nasdaq’s TSR to two groups of companies, each weighted 50%. One group consisted of all S&P 500 companies and the other group consisted of 16 peer companies. We measure our TSR performance relative to two different groups in order to align with the varied interests of our stockholders.  
The following table sets forth the 2015 PSU performance measure results.  

 

  Equity Award

 

 

Cumulative TSR

 

       

Weighting

 

  

Performance Factors

 

  

Percentile Rank

 

    

  2015 Three-Year PSU Award

  71.6%       

 

50%

 

  

Based on Relative TSR Against the S&P 500

 

   84%

 

   
      

50%

 

  

 

Based on Relative TSR Against Peers

 

   56%

 

   

 

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

 

  Named Executive Officer

 

  

Target PSUs

 

         

PSUs Earned

 

 

  Adena T. Friedman

 

    

 

53,538  

 

 

 

        

 

84,055    

 

 

 

  Michael Ptasznik

 

    

 

–  

 

 

 

        

 

–    

 

 

 

  Edward S. Knight

 

    

 

21,415  

 

 

 

        

 

33,622    

 

 

 

  Bradley J. Peterson

 

    

 

24,984  

 

 

 

        

 

39,225    

 

 

 

  Thomas A. Wittman

 

    

 

17,846  

 

 

 

        

 

28,018    

 

 

 

Other 2017 Equity Grants

 

In recognition of the increased scope and criticality of his role after assuming leadership responsibility for all of Global Trading and Market Services, Mr. Wittman received a special one-time grant of RSUs with a face value of $1,000,000 in August 2017. The RSU grant vests 1/3 each year over a three-year period.  

General Equity Award Grant Practices

 

The Management Compensation Committee and the Board approve annual equity awards at their regular March meetings, which are scheduled well in advance without regard to material company news announcements.  
We believe that the current and expected expense and share utilization are reasonable and justified in light of the Management Compensation Committee’s goals of aligning the long-term interests of officers and employees with those of stockholders and rewarding officers for long-term relative TSR growth while retaining a strong management team. We actively monitor the expense and share utilization associated with annual grants, and are committed to making adjustments to grant practices when appropriate.  


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

Throughout the performance periods for equity awards, the Management Compensation Committee receives updates on the executives’ progress in achieving applicable performance measures.

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

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

BENEFITS

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

SEVERANCE

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

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

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

 


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OTHER

Because our executive compensation program emphasizes pay for performance, it includes very few perquisites for our executives. Under her employment agreement, for security reasons, we provide Ms. Friedman with a company car and a security-trained driver for use when conducting company business. NEOs are eligible to receive basic financial planning services and executive health exams. In addition, like all employees and contractors, our executives are eligible to receive 100% corporate matching funds (and sometimes more for specific initiatives) for donations to an IRS-registered, 501(c) (3)-compliant organization. Participation in each of these programs is voluntary. We do not provide tax gross-up payments on perquisites.

Risk Mitigation and Other Pay Practices

RISK ASSESSMENT OF COMPENSATION PROGRAM

We monitor the risks associated with our compensation program on an ongoing basis. In February 2018, the Management Compensation Committee and Audit Committee were presented with the results of an annual formal assessment of our employee compensation program in order to evaluate the risks arising from our compensation policies and practices. This risk assessment report reflected a comprehensive review and analysis of the components of our compensation program. The Management Compensation Committee and Audit Committee both concluded, based on the risk assessment report’s findings, that any risks arising from our compensation program are not reasonably likely to have a material adverse effect on the company.

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

 

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

 

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

 

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

STOCK OWNERSHIP GUIDELINES

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

    

We monitor the risks associated with our compensation program on an ongoing basis.

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

   Under the guidelines, the covered executives are expected to own specified dollar amounts of Nasdaq common stock based on a multiple of their base salary, as set forth in the table below.

 

  Title

 

  

Value of Shares Owned

 

  President and CEO

 

  

6x base salary

 

  CFO

 

  

4x base salary

 

  EVPs

 

  

3x base salary

 

 

  

Individual holdings, shares jointly owned with immediate family members or held in trust, shares of restricted stock (including vested and unvested), shares underlying PSUs after completion of the performance period and shares purchased or held through Nasdaq’s plans, such as the Nasdaq ESPP, count toward satisfying the guidelines. New executives and executives who incur a material change in their responsibilities are expected to meet the applicable level of ownership within four years of their start date or the date of the change in responsibilities. All of the NEOs who were required to be in compliance with the guidelines on December 31, 2017 were in compliance with the guidelines as of that date.

 

STOCK HOLDING GUIDELINES

 

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

 

TRADING CONTROLS AND HEDGING AND PLEDGING POLICIES

 

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

 

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


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Named Executive Officer Compensation  

 

75

 

INCENTIVE RECOUPMENT POLICY

 

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

 

TAX AND ACCOUNTING IMPLICATIONS OF EXECUTIVE COMPENSATION

 

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

 

Section 162(m) of the Internal Revenue Code of 1986, as amended, provided a limit of $1 million on the remuneration that may be deducted by a public company in any year in respect of the President and CEO and the three other most highly compensated executive officers (other than the principal financial officer). However, “performance-based compensation” was fully deductible if the plan under which the compensation was paid had been approved by the stockholders and met other requirements. We attempted to structure our compensation arrangements so that amounts paid are tax deductible to the extent feasible and consistent with our overall compensation objectives.

 

Section 162(m) was amended by the Tax Cuts and Jobs Act, which was enacted on December 22, 2017 and effective January 1, 2018. New Section 162(m) still provides a limit of $1 million on the remuneration that may be deducted by a public company; however, remuneration in any year in respect of the President and CEO, the principal financial officer and the three other most highly compensated executive officers is now considered. Also, under the new legislation, there is no exception for “performance-based compensation,” unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Given the limited guidance to date on this transition relief, the extent of the transition relief available to Nasdaq has not been entirely determined. Going forward, although “performance-based” criteria is no longer relevant in determining whether remuneration is deductible for tax purposes, the Management Compensation intends to continue to apply such criteria in structuring future compensation arrangements.

 

Depending upon the relevant circumstances at the time, the Management Compensation Committee may determine to award compensation that is not deductible. In making this determination, the Management Compensation Committee balances the purposes and needs of our executive compensation program against potential tax and other implications.

 

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

     The Board and Management Compensation Committee have adopted an incentive recoupment or “clawback” policy that is applicable to officers with the rank of EVP and above.  

 


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   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

  

Management Compensation Committee Report

 

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

 

The Management Compensation Committee

 

Steven D. Black, Chair

Charlene T. Begley

Michael R. Splinter

 

Management Compensation Committee Interlocks and Insider Participation

 

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


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Named Executive Officer Compensation  

 

77

 

Executive Compensation Tables

The following tables, narrative and footnotes present the compensation of the NEOs

during 2017 in the format mandated by the SEC.

2017 Summary Compensation Table

 

Name and Principal        

Position        

 

    

Year

 

      

Salary ($)

 

      

Bonus

($)

 

      

Stock
Awards ($)1

 

      

Option

Awards ($)2

 

    

Non-Equity

Incentive Plan

Compensation

($)3

 

      

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings ($)4

 

      

All Other

Compensation

($)5

 

      

Total ($)

 

 
                   

Adena T. Friedman

President and CEO

 

    

 

 

 

 

2017

 

 

 

 

      

 

$994,231

 

 

 

      

 

 

 

 

      

 

$7,047,077

 

 

 

      

 

$3,999,997

 

  

 

      

 

$2,296,000

 

 

 

      

 

$54,641

 

 

 

      

 

$68,634

 

 

 

      

 

$14,460,580

 

 

 

    

 

 

 

 

2016

 

 

 

 

    

 

 

 

 

$850,000

 

 

 

 

      

 

 

 

 

      

 

$5,111,067

 

 

 

      

 

 

 

 

      

 

$2,175,750

 

 

 

      

 

$26,519

 

 

 

      

 

$30,642

 

 

 

      

 

$8,193,978

 

 

 

    

 

 

 

 

2015

 

 

 

 

    

 

 

 

 

$751,538

 

 

 

 

    

 

 

 

 

 

 

 

 

      

 

$3,428,038

 

 

 

      

 

 

 

 

      

 

$2,088,125

 

 

 

      

 

$5,792

 

 

 

      

 

$26,277

 

 

 

      

 

$6,299,770

 

 

 

Michael Ptasznik

Executive Vice President, Corporate Strategy and Chief Financial Officer

 

       2017          $500,000                   $1,409,366                   $1,071,375                   $65,029          $3,045,770  
      

 

2016

 

 

 

      

 

$221,154

 

 

 

      

 

 

 

 

      

 

$2,252,756

 

 

 

      

 

 

 

 

      

 

$1,200,000

 

 

 

      

 

 

 

 

      

 

$23,542

 

 

 

      

 

$3,697,452

 

 

 

Edward S. Knight

Executive Vice President, General Counsel and Chief Regulatory Officer

       2017          $500,000                   $1,291,906                   $960,000          $46,835          $22,025          $2,820,766  

 

Bradley J. Peterson

Executive Vice President and Chief Information Officer

 

      

 

2017

 

 

 

       $542,885                   $1,709,462                   $1,123,457                   $38,884          $3,414,688  
    

 

 

 

 

2016

 

 

 

 

      

 

$525,000

 

 

 

      

 

 

 

 

      

 

$1,788,841

 

 

 

      

 

 

 

 

      

 

$1,327,600

 

 

 

      

 

 

 

 

      

 

$34,873

 

 

 

      

 

$3,676,314

 

 

 

    

 

 

 

 

2015

 

 

 

 

      

 

$524,231

 

 

 

      

 

 

 

 

      

 

$1,599,726

 

 

 

      

 

 

 

 

      

 

$1,522,000

 

 

 

      

 

 

 

 

      

 

$20,400

 

 

 

      

 

$3,666,357

 

 

 

 

Thomas A. Wittman

Executive Vice President, Global Trading and Market Services

 

       2017          $512,115                   $2,255,492                   $950,000          $55,971          $37,683          $3,811,261  

 

1 

The amounts reported in this column reflect the grant date fair value of the stock awards, including PSUs and RSUs, computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 13 to the company’s audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. Since the 2017 three-year PSU award payouts are contingent on TSR-related performance-based vesting conditions, the grant date fair values were determined based on a Monte Carlo simulation model.

The Monte Carlo simulation model takes into account expected price movement of Nasdaq stock as compared to peer companies. As a result of the company’s pre-grant 2017 TSR performance relative to peer companies, the Monte Carlo simulation model assigned a significantly higher value to each 2017 three-year PSU than the closing price of Nasdaq’s stock on the grant date. Therefore, the value reflected in the 2017 Summary Compensation Table does not reflect the target grant date face value shown in the Long-Term Stock-Based Compensation section of the Compensation Discussion and Analysis in this proxy statement, and there is no assurance that the target grant date face values or FASB ASC Topic 718 fair values will ever be realized. The table below summarizes the target grant date face value of PSU grants that the Management Compensation Committee and the Board approved for the NEOs compared to the FASB ASC Topic 718 fair value.


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78

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

(Footnote 1 continued from the previous page)

 

Name

 

  

Year

 

  

Target PSUs (#)        

 

  

Target Grant Date Face      

Value ($)      

 

  

FASB ASC Topic 718 Fair      

Value ($)      

 

 

Adena T. Friedman

 

       2017        86,393         $ 6,000,000        $ 7,047,077  

 

Michael Ptasznik

 

       2017        17,278         $ 1,200,000        $ 1,409,366  

 

Edward S. Knight

 

       2017        15,838         $ 1,100,000        $ 1,291,906  

 

Bradley J. Peterson

 

       2017        20,957         $ 1,455,500        $ 1,709,462  

 

Thomas A. Wittman

 

       2017        15,838         $ 1,100,000        $ 1,291,906  

 

2 

The amounts reported in this column reflect the grant date fair value of the option awards computed in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in note 13 to the company’s audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K.

 

3 

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

 

4 

The amounts reported in this column reflect the actuarial increase in the present value of the NEOs’ benefits under all pension plans established by Nasdaq. Assumptions used in calculating the amounts include a 3.70% discount rate as of December 31, 2017, a 4.15% discount rate as of December 31, 2016, a 4.30% discount rate as of December 31, 2015, a 4.20% discount rate as of December 31, 2014, retirement at age 62 (which is the earliest age at which a participant may retire and receive unreduced benefits under the plans) and other assumptions used as described in note 12 to the company’s audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. Since Mr. Knight is older than 62, his actual age was used to calculate the present value of his accumulated benefit. None of the NEOs received above-market or preferential earnings on deferred compensation in 2017, 2016 or 2015.

 

5 

The following table sets forth the 2017 amounts reported in the “All Other Compensation” column by type. The incremental cost of personal use of the company car (including commutation) is calculated based on an allocation of the cost of the driver, tolls, fuel, maintenance and other related expenses.

 

Name

 

  

Contribution to

the 401(k) Plan

($)

 

  

Cost of

Executive Health

Exam ($)

 

  

Cost of

Financial/

Tax Planning

Services ($)

 

  

Incremental Cost

of Personal Use

of Company

Car ($)

 

  

Matching

Charitable

Donations ($)

 

  

Relocation

Expenses ($)

 

  

Total All Other

Compensation

($)

 

 

Adena T. Friedman

 

     $ 13,827      $ 4,825      $ 16,709      $ 24,273      $ 9,000             $ 68,634

 

Michael Ptasznik

 

     $ 13,308      $ 4,825                           $ 46,896      $ 65,029

 

Edward S. Knight

 

     $ 16,200      $ 4,825                    $ 1,000             $ 22,025

 

Bradley J. Peterson

 

     $ 16,200      $ 4,825      $ 16,484             $ 1,375             $ 38,884

 

Thomas A. Wittman

 

     $ 16,200      $ 4,825      $ 16,658                           $ 37,683


Table of Contents
Named Executive Officer Compensation  

 

79

 

  2017 Grants of Plan-Based Awards Table

 

                  

Estimated Future

Payouts Under Non-Equity

Incentive Plan Awards1

 

    

Estimated Future Payouts Under
Equity Incentive Plan Awards2

 

  

All Other
Stock

Awards:
Number of

    

All Other
Option

Awards:
Number of
Securities

     Exercise
or Base
Price of
     Grant Date
Fair Value

Name

 

  

Committee and/
or Board
Approval Date

 

    

Grant

Date

 

    

Thres-   
hold ($)   

 

  

Target ($)

 

    

Maximum    

($)    

 

    

Thres-   
hold (#)   

 

 

Target  

(#)  

 

    

Maxi-
mum (#) 

 

    

Shares of
Stock or
Units (#)

 

    

Underlying
Options

(#)3

 

    

Option
Awards

($/Sh)4

 

    

of Stock

and Option
Awards ($)5

 

 

Adena T.

Friedman

  

 

 

 

 

 

3/1/17

 

 

 

 

 

 

    

 

 

3/1/17

 

 

 

 

 

  

 

 

    

 

 

$2,000,000

 

 

 

 

 

    

 

 

$4,000,000

 

 

 

 

 

    

 

 

 

 

     

 

 

   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

   

 

 

  

 

 

 

 

 

 

11/14/16

 

 

 

 

 

  

 

 

 

 

1/3/17

 

 

 

 

  

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

268,817

 

 

 

 

  

 

 

 

 

$66.68

 

 

 

 

  

 

 

 

 

$3,999,997

 

 

 

 

  

 

 

 

 

 

 

3/28/17

 

 

 

 

 

  

 

 

 

3/31/17

 

 

  

 

  

 

 

 

 

 

  

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

86,393

 

 

  

 

 

 

172,786

 

 

  

 

 

 

 

 

  

 

 

 

 

 

  

 

 

 

 

 

  

 

 

 

$7,047,077

 

 

 

Michael

Ptasznik

 

    

 

3/1/17

 

 

 

    

 

3/1/17

 

 

 

  

 

    

 

$750,000

 

 

 

    

 

$1,500,000

 

 

 

    

 

 

 

 

   

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

3/28/17

 

 

 

     3/31/17                               17,278        34,556                             $1,409,366  

 

Edward S.

Knight

 

    

 

3/1/17

 

 

 

    

 

3/1/17

 

 

 

  

 

    

 

$700,000

 

 

 

    

 

$1,400,000

 

 

 

    

 

 

 

 

   

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

3/28/17

 

 

 

    

 

3/31/17

 

 

 

  

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

   

 

15,838

 

 

 

    

 

31,676

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

$1,291,906

 

 

 

 

Bradley J.

Peterson

 

  

 

 

 

 

3/1/17

 

 

 

 

    

 

3/1/17

 

 

 

  

 

    

 

$818,250

 

 

 

    

 

$1,636,500

 

 

 

    

 

 

 

 

   

 

 

 

 

  

 

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

     3/28/17        3/31/17                               20,957        41,914                             $1,709,462  
                                                                                                      
  

 

 

 

3/1/17

 

 

     3/1/17           $775,688        $1,551,376                                                  

Thomas A.

Wittman

 

 

    

 

3/28/17

 

 

 

     3/31/17                               15,838        31,676                             $1,291,906  
    

 

7/30/17

 

 

    

 

8/1/17

 

 

 

  

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

   

 

 

 

 

    

 

 

 

 

    

 

13,372

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

$963,586

 

 

 

 

1 

The amounts reported in these columns represent the possible range of payments under the ECIP or other performance-based incentive compensation programs. For information about the amounts actually earned by each named executive officer under the ECIP or other performance-based incentive compensation programs, see “Executive Compensation Tables – 2017 Summary Compensation Table.” Amounts are considered earned in fiscal year 2017 although they were not paid until 2018.

 

2 

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

 

3 

The amount reported in this column represents shares underlying performance-based options granted under the Equity Plan that vest in one-third annual installments contingent on Nasdaq’s satisfaction of certain specified performance goals established by the Management Compensation Committee and/or Board for each of the fiscal years ending December 31, 2017, 2018 and 2019. On January 30, 2018, the Management Compensation Committee and Board determined that the performance goal for 2017 was met, resulting in the settlement of the first one-third of the grant.

 

4 

The amount reported in this column represents the exercise price of the stock options reported in the previous column and is equal to the closing market price of our common stock on the date of grant.

 

5 

The amounts reported in this column represent the grant date fair value of the total equity awards reported in the previous columns calculated pursuant to FASB ASC Topic 718 based upon the assumptions discussed in note 13 to the company’s audited financial statements for the fiscal year ended December 31, 2017 included in our annual report on Form 10-K. For further information about the calculation of these amounts, see “Executive Compensation Tables – 2017 Summary Compensation Table” on page 77.


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80

   Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

 

  2017 Outstanding Equity Awards at Fiscal Year-End Table

 

  Name

 

  

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

    

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

 

    

Equity

Incentive

Plan Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

 

   

Option

Exercise Price

($)

 

    

Option

Expiration

Date

 

    

Number of

Shares or

Units of Stock

that Have Not

Vested (#)

 

    

Market Value

of Shares or

Units of Stock

That Have

Not Vested
($)

 

    

Equity

Incentive

Plan Awards:

Number of

Unearned

Shares, Units

or Other

Rights that

Have Not

Vested (#)

 

    

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights that

Have Not

Vested ($)

 

Adena T.

Friedman

  

 

 

 

 

89,605

 

 

 

 

            179,212 1      $66.68        1/3/27                              
  

 

 

 

 

 

 

 

 

                                              54,7812        $4,208,824  
  

 

 

 

 

 

 

 

 

                                              86,3933        $6,637,574  

Michael

Ptasznik

  

 

 

 

 

 

 

 

 

                                15,5554        $1,195,091                
  

 

 

 

 

 

 

 

 

                                              8,2792        $636,076