NASDAQ OMX Group (NDAQ)

Tax Deductibility of Executive Compensation

Section 162(m) of the Code provides a limit of $1 million on the remuneration that may be deducted by a public company in any year in respect of each of the CEO and the next three most highly compensated executives. There is an exception to this limitation for “performance-based compensation.” We have endeavored and will continue to endeavor to use this exception to Section 162(m) to maximize the deductibility of our compensation. However, in order to maintain flexibility in compensating executives and to attract needed leadership in exceptional circumstances, we have not adopted a policy that all compensation must be deductible. We believe that such a policy is not in the best interests of the company or its stockholders.

In 2008, all compensation paid to our named executive officers was deductible for corporate income tax purposes, except for approximately $1.3 million for each of Mr. Greifeld and Ms. Ewing and approximately $11,000 for Mr. Böcker. For Mr. Greifeld and Ms. Ewing, the non-deductible amounts primarily relate to restricted stock awards granted in prior years that vested in 2008. Of the total $2.6 million non-deductible compensation for Mr. Greifeld and Ms. Ewing, the tax effect related to $0.8 million is reflected in net income and the tax effect on the remaining $1.8 million is reflected in stockholders’ equity in our financial statements. For Mr. Böcker, the non-deductible amount relates to a portion of his relocation benefit, which is discussed above under “Perquisites and Other Benefits.”