NASDAQ OMX Group (NDAQ)

Tax Gross-Up Provision

Section 4999 of the Code imposes a 20% non-deductible excise tax on the recipient of an “excess parachute payment” and Section 280G of the Code disallows the tax deduction to the payor of any amount of an excess parachute payment that is contingent upon a change in control. In order to be considered an excess parachute payment, a payment as a result of a change in control must exceed three times the executive’s “base amount,” and then the excise tax is imposed on the parachute payments that exceed the executive’s “base amount.”

The 2007 employment agreement with Mr. Greifeld includes a modified excise tax reimbursement provision that entitles Mr. Greifeld to limited gross-up payments in the event he is terminated after a change-in-control to reimburse him for any excise tax imposed under Section 4999 of the Code as well as any additional income and employment taxes resulting from such reimbursement. To the extent that payments to Mr. Greifeld in the event of a termination of employment after a change in control exceed 330% of the “base amount” as defined under Section 280G of the Code, the payments shall be reduced to an amount that would not trigger the excise tax. Without this gross-up, the committee believed that Mr. Greifeld’s potential severance could be materially reduced by any excise tax he would have to pay on the benefit. To induce Mr. Greifeld to remain with NASDAQ OMX, the committee felt it was important to ensure that Mr. Greifeld would receive the full economic benefit of his negotiated severance arrangement, and the committee therefore opted to include the modified excise tax reimbursement provision in the 2007 employment agreement.

The change in control agreements with our other named executive officers do not provide for tax gross-ups or reimbursements of any excise or other taxes that may be payable by the executive under Section 4999 of the Code in connection with the change in control of the company. Rather, the agreements provide that, if any payments or benefits to an executive would be subject to an excise tax under Section 4999, payments and/or benefits to the executive will be reduced to an amount that does not trigger an excise tax.