NYSE Euronext DEF 14A 2012
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
11 WALL STREET NEW YORK, NEW YORK 10005 APRIL 26, 2012, 8:00 A.M., NEW YORK TIME
March 26, 2012
Dear NYSE Euronext Stockholder:
You are cordially invited to attend the 2012 annual meeting of stockholders of NYSE Euronext (the Annual Meeting) scheduled for Thursday, April 26, 2012, at 8:00 a.m., New York time, in person at 11 Wall Street, New York, New York 10005 or via the Internet at www.virtualshareholdermeeting.com/nyx2012. The Board of Directors and management look forward to greeting you.
We enclose our proxy statement, our annual report on Form 10-K for the fiscal year ended December 31, 2011 and a proxy card. Please review these documents carefully.
Your vote is very important to us. Whether or not you plan to attend the meeting in person, your shares should be represented and voted.
After reading the proxy statement, please submit your proxy through the Internet or by touch-tone telephone, or complete, sign, date and promptly return the proxy card by mail in the enclosed self-addressed envelope. We must receive votes submitted via mail, the Internet (via www.proxyvote.com) or by touch-tone telephone by 11:59 p.m., New York time, on April 25, 2012 in order for them to be counted at the Annual Meeting. We encourage you to vote via the Internet using the control number that appears on the front of your proxy card and to choose to view future mailings electronically rather than receiving them on paper.
On behalf of the Board of Directors, thank you for your continued support.
11 Wall Street
New York, New York 10005
Notice of 2012 Annual Meeting of Stockholders
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to be Held on April 26, 2012. The Proxy Statement and our 2011 Annual Report
on Form 10-K are available at http://materials.proxyvote.com/629491.
By Order of the Board of Directors:
TABLE OF CONTENTS
NYSE EURONEXT 11 Wall Street New York, New York 10005
March 26, 2012
We are sending you this proxy statement and the accompanying proxy card in connection with the solicitation of proxies by our Board of Directors for the 2012 annual meeting of stockholders (the Annual Meeting) scheduled for Thursday, April 26, 2012, at 8:00 a.m., New York time, at 11 Wall Street, New York, New York 10005 and via the Internet at www.virtualshareholdermeeting.com/nyx2012, where you will be able to vote electronically during the meeting. We are mailing this proxy statement and the accompanying proxy card to stockholders on or about March 26, 2012. In this proxy statement, we refer to NYSE Euronext as the Company, we, our or us and the Board of Directors as the Board. Whenever we refer in this proxy statement to the Annual Meeting, we are also referring to any meeting that results from any postponement or adjournment of the April 26, 2012 meeting.
Information on how you may vote at the Annual Meeting (such as granting a proxy that directs how your shares should be voted, or attending the Annual Meeting in person or via www.virtualshareholdermeeting.com/nyx2012), as well as how you can revoke a proxy, are discussed in this proxy statement below under Voting Instructions and Information.
Who can vote at the Annual Meeting?
You may vote your shares at the Annual Meeting only if you were a stockholder of record at the close of business on February 28, 2012. On that date, 257.5 million shares of our common stock were outstanding, and we had no other class of equity securities issued and outstanding. Subject to the voting limitations described below under What are the voting and ownership limitations?, you are entitled to one vote for each share of common stock you own for each matter to be voted on at the Annual Meeting. The number of shares you own (and may vote) is listed on the proxy card.
What proposals will be voted on at the meeting?
There are three proposals from NYSE Euronext to be considered and voted on at the meeting:
In addition, there is one proposal from a stockholder to be considered and voted on at the meeting:
How does the Board of Directors recommend I vote?
Our Board of Directors unanimously recommends that you vote:
Who is a stockholder of record?
During the ten days prior to the Annual Meeting, a list of the stockholders of record as of February 28, 2012 will be available for inspection as described below under How can I view the stockholders list?
If you are a stockholder of record, these proxy materials are being sent to you directly. If you hold shares in street name, these materials are being sent to you by the bank, broker or similar institution through which you hold your shares.
How can I view the stockholders list?
A list of the stockholders of record as of February 28, 2012 will be available for inspection during ordinary business hours at our offices located at NYSE Euronext, 11 Wall Street, New York, New York 10005, for ten days prior to the Annual Meeting, as well as at the Annual Meeting. To make arrangements to review the list prior to the Annual Meeting, stockholders should contact our corporate secretary at +1 (212) 656-3000. In accordance with our security procedures, all persons requesting to inspect the stockholder list, either at our offices or at the location of the Annual Meeting, must wear proper attire and present an acceptable form of photo identification, such as a passport or drivers license, and submit to screening by metal detector and x-ray examination of all packages, bags and luggage. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
Stockholders holding shares in registered format:
You may submit your proxy with voting instructions in one of four ways:
The Internet and telephone voting procedures are designed to authenticate stockholders identities, to allow stockholders to give their voting instructions and to confirm that stockholders instructions have been recorded properly. We have been advised that the Internet and telephone voting procedures that have been made available to you are consistent with the requirements of applicable law. Stockholders voting via the Internet or by touch-tone telephone should understand that there may be costs associated with voting in these manners, such as usage charges from Internet access providers and telephone companies that must be borne by the stockholder.
Stockholders holding shares in street name:
If you hold your shares in a street name, you should follow the instructions provided by your bank or broker or you may contact NYSE Euronexts U.S. solicitation agent, MacKenzie Partners, Inc. (telephone: +1 (800) 322-2885 or +1 (212) 929-5500; email: email@example.com) with any questions. If you hold your shares in registered format, you may also contact MacKenzie Partners with any questions.
All Other Stockholders:
If you are a stockholder holding shares through EuroClear or Clearstream, you may contact NYSE Euronexts proxy solicitor, MacKenzie Partners, Inc. (London office) (telephone: +44 (0) 203 178 8057; facsimile +44 (0) 207 526 2136; email: firstname.lastname@example.org) or NYSE Euronext Investor RelationsParis (telephone: +33 1 4927 1512; facsimile: +33 1 4927 1113) for specific information on how to vote your shares or how to attend the Annual Meeting. Please also note that your completed form must be received by your account holder or financial intermediary in sufficient time to ensure that it will be received by NYSE Euronexts proxy solicitor no later than 11:59 p.m., New York time, on April 25, 2012.
If you are uncertain of how you hold your shares or your voting deadline, please contact MacKenzie Partners at (800) 322-2885 (Toll-Free in the U.S.), (212) 929-5500 (Call Collect), +44 (0) 203 178 8057 (London Office) or via email to email@example.com for assistance.
What do I need to do to attend the Annual Meeting?
You may also attend the Annual Meeting and vote your shares in person by ballot. If you plan to attend the Annual Meeting in person, you will need to bring proof of your ownership of NYSE Euronext common stock as of the close of business on February 28, 2012.
If you hold shares in street name (that is, through a bank, broker or other nominee) and would like to attend the Annual Meeting and vote in person, you will need to bring an account statement or other acceptable evidence of ownership of NYSE Euronext common stock as of the close of business on February 28, 2012. Alternatively, in order to vote at the meeting, you may contact the person in whose name your shares are registered and obtain a proxy from that person and bring it to the Annual Meeting.
In accordance with our security procedures, all persons attending the Annual Meeting must wear proper attire and present an acceptable form of photo identification, such as a passport or drivers license, and submit to screening by metal detector and x-ray examination of all packages, bags and luggage. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
Attending the Annual Meeting will not automatically revoke a proxy that was submitted through the Internet or by telephone or mail.
You can revoke your proxy or substitute a new proxy at any time before your proxy is voted at the Annual Meeting as described below.
For a Proxy Submitted by Internet or Telephone:
For a Proxy Submitted by Mail:
If I submit a proxy by Internet, touch-tone telephone or mail, how will my shares be voted?
If you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, your shares will be voted in accordance with your instructions.
If you sign, date and return your proxy card but do not give voting instructions, your shares will be voted as follows: FOR the election of NYSE Euronexts director nominees; FOR the ratification of the appointment of PricewaterhouseCoopers LLP as NYSE Euronexts independent registered public accounting firm for our fiscal year ending December 31, 2012; FOR the advisory vote to approve the Companys executive compensation; and AGAINST the stockholder proposal that would give holders of 10% of the outstanding common stock the power to call a special stockholder meeting; and otherwise in accordance with the judgment of the persons voting the proxy on any other matter properly brought before the Annual Meeting.
If I hold my shares in street name through a U.S. financial intermediary and do not provide voting instructions, can my broker still vote my shares?
Under the New York Stock Exchange (the NYSE) member rules, a member broker (i.e., a member of the New York Stock Exchange) who holds shares in street name for customers generally has the authority to vote on certain routine or discretionary proposals if it has transmitted proxy soliciting materials to the beneficial owner but has not received instructions from that owner. Therefore, if your broker holds shares in your name and delivers this proxy statement to you, the broker is entitled to vote your shares for the ratification of the appointment of our independent auditors even if the broker does not receive voting instructions from you. However, certain member brokers will only vote uninstructed shares in the same proportion as the instructions received from their other stockholders. The proposals relating to the election of directors and the advisory vote to approve the Companys executive compensation as well as the shareholder proposal are not routine or discretionary proposals and therefore, if you do not instruct your broker how to vote with respect to these proposals, your shares will not count and will be treated as broker non-votes. These procedures will not apply to stockholders who hold their shares through non-U.S. financial intermediaries.
How many votes are required to transact business at the Annual Meeting?
A majority of all outstanding shares entitled to vote at the Annual Meeting constitutes a quorum (i.e., the minimum number of shares that must be present or represented by proxy at the Annual Meeting in order to transact business). Abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present. Broker non-votes are proxies returned by brokerage firms for which no voting instructions have been received from beneficial owners and discretionary votes were not cast. Once a share is represented for any purpose at the Annual Meeting, it will be deemed present for quorum purposes for the remainder of the meeting (including any meeting resulting from an adjournment or postponement of the Annual Meeting, unless a new record date is set).
Proposal No. 1Election of Directors
Under our bylaws, and subject to the provisions of our bylaws requiring balanced representation between U.S. and European directors, each director is required to be elected by the vote of the majority of the votes cast with respect to that directors election at our Annual Meeting, unless the number of nominees exceeds the number of directors to be elected, in which case the election is deemed to be a contested election and the directors shall be elected by the vote of a plurality of the votes cast. A majority of votes cast means that the number of votes cast for a directors election exceeds the number of votes cast against that directors election (with abstentions not counted as a vote cast either for or against that directors election). In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a contested election, the
director is required to tender his or her resignation to the Nominating and Governance Committee of the Board of Directors, and the Committee will then make a recommendation to the Board of Directors as to whether to accept or reject the tendered resignation. The Board of Directors will then act on the recommendation of the Committee and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision promptly, and in any event within 90 days, following certification of the election results. If each member of the Nominating and Governance Committee fails to receive a majority of the votes cast in the same election (that is not a contested election), then the independent directors who received a majority of the votes cast in such election will appoint a committee among themselves to consider the tendered resignations and recommend to the Board of Directors whether to accept it. However, if the only directors who received a majority of the votes cast in such election constitute three or fewer directors, all directors may participate in the action regarding whether to accept the tendered resignations. If the Board of Directors accepts a directors resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy or may decrease the size of the Board of Directors.
As mentioned above, if you do not instruct your broker how to vote with respect to this proposal, your broker may not vote your shares with respect to this proposal.
Proposal No. 2Ratification of the Selection of PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm
The affirmative vote of a majority of the votes cast by stockholders entitled to vote at the Annual Meeting is required to ratify the appointment of our independent auditors. An abstention from voting on this matter will be treated as present for quorum purposes. However, since an abstention is not treated as a vote for or against the matter, it will have no effect on the outcome of the vote.
Proposal No. 3Advisory Vote to Approve the Companys Executive Compensation (Say-on-Pay Proposal)
The affirmative vote of a majority of the votes cast by stockholders entitled to vote at the Annual Meeting will constitute the stockholders non-binding approval with respect to our executive compensation programs. The Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. An abstention from voting on this matter will be treated as present for quorum purposes. However, since an abstention is not treated as a vote for or against the matter, it will have no effect on the outcome of the vote.
As mentioned above, if you do not instruct your broker how to vote with respect to this proposal, your broker may not vote your shares with respect to this proposal.
Proposal No. 4Stockholder Proposal
The affirmative vote of a majority of the votes cast by stockholders entitled to vote at the Annual Meeting is required to approve the stockholder proposal. An abstention from voting on the matter will be treated as present for quorum purposes. However, since an abstention is not treated as a vote for or against the matter, it will have no effect on the outcome of the vote.
As mentioned above, if you do not instruct your broker how to vote with respect to this proposal, your broker may not vote your shares with respect to this proposal.
Abstentions and Broker Non-Votes
Because directors are elected by a majority of the votes cast, a director nominee will be elected if the number of votes cast for the directors election exceeds the number of votes cast against that directors election. An abstention is not counted as a vote cast either for or against that directors election and a
broker non-vote will also have no impact on the election. Any director who receives more against votes than for votes for his or her election will be required to submit his or her resignation as described above under Proposal No. 1Election of Directors.
In the case of ratification of the appointment of PricewaterhouseCoopers LLP, the Say-on-Pay proposal and the stockholder proposal, only votes cast for or against the ratification or approval will be considered; abstentions and broker non-votes will not be treated as a vote for or against the ratification or approval and therefore will have no effect on the vote.
What are the voting and ownership limitations?
Our charter places certain ownership and voting limits on the holders of our common stock. Capitalized terms used below are defined in Annex A to this proxy statement. Under our charter:
In the event that a Person, either alone or together with its Related Persons, beneficially owns shares of our common stock representing more than 20% of the total number of votes entitled to be cast on any matter, such Person and its Related Persons shall be obligated to sell promptly, and NYSE Euronext shall be obligated to purchase promptly, at a price equal to the par value of such shares of stock and to the extent that funds are legally available for such purchase, that number of shares of our common stock necessary so that such Person, together with its Related Persons, shall beneficially own shares of our common stock representing in the aggregate no more than 20% of the total number of votes entitled to be cast on any matter, after taking into account that such repurchased shares shall become treasury shares and shall no longer be deemed to be outstanding.
In the event that a Person, either alone or together with its Related Persons, possesses more than 10% of the total number of votes entitled to be cast on any matter (including if it possesses this voting power by virtue of agreements entered into by other persons not to vote shares of our outstanding capital stock), then such Person, either alone or together with its Related Persons, will not be entitled to vote or cause the voting of these shares of our capital stock to the extent that such shares represent in the aggregate more than 10% of the total number of votes entitled to be cast on any matter, and NYSE Euronext shall disregard any such votes purported to be cast in excess of this percentage.
The voting limitations do not apply to a solicitation of a revocable proxy by or on behalf of NYSE Euronext or by any officer or director of NYSE Euronext acting on behalf of NYSE Euronext or to a solicitation of a revocable proxy by a NYSE Euronext stockholder in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the Exchange Act). This exception, however, does not apply to certain solicitations by a stockholder pursuant to Rule 14a-2(b)(2) under the Exchange Act, which permits a solicitation made otherwise than on behalf of NYSE Euronext where the total number of persons solicited is not more than ten.
Our Board of Directors may waive the provisions regarding ownership and voting limits by a resolution expressly permitting this ownership or voting (which resolution must be filed with and approved by the
Securities and Exchange Commission (the SEC) and all required European regulators prior to being effective), subject to a determination of the Board that:
In making these determinations, our Board of Directors may impose conditions and restrictions on the relevant stockholder or its Related Persons that it deems necessary, appropriate or desirable in furtherance of the objectives of the Exchange Act, the European exchange regulations and the governance of NYSE Euronext.
For purposes of these provisions, a European market subsidiary means a market operator, as defined by the European Directive on Markets in Financial Instruments, that:
Our charter also provides that our Board of Directors has the right to require any Person and its Related Persons that our Board reasonably believes to be subject to the voting or ownership restrictions summarized above, and any stockholder (including Related Persons) that at any time beneficially owns 5% or more of our outstanding capital stock, to provide to us, upon our Boards request, complete information as to all shares of our capital stock that such stockholder beneficially owns, as well as any other information relating to the applicability to such stockholder of the voting and ownership requirements outlined above.
If you are a Related Person with another holder of our common stock where either: (i) you (either alone or with your Related Person) may vote shares of common stock representing more than 10% of the then outstanding shares entitled to vote at the Annual Meeting, or (ii) you have entered into an agreement not to vote shares of our common stock, the effect of which agreement would be to enable any Person, either alone or with its Related Persons, to vote or cause the voting of shares of our common stock that represent in the aggregate more than 10% of the then outstanding votes entitled to be cast at the Annual Meeting, then please so notify the Company by either including that information (including each Related Persons complete name) on your proxy card or by contacting the corporate secretary by mail at NYSE Euronext, 11 Wall Street, New York, New York 10005, or by phone at +1 (212) 656-3000.
Who pays for the expenses of this proxy solicitation?
We will bear the cost of soliciting proxies. Our directors, officers and employees may solicit proxies on behalf of the Board through regular and electronic mail, telephone, fax and personal contact. MacKenzie Partners, Inc. has been retained to assist in soliciting proxies at a fee of $20,000, plus distribution costs and other expenses. Directors, officers and employees of the Company will receive no additional compensation for soliciting proxies. We will reimburse certain brokerage firms, banks, custodians and other fiduciaries for the reasonable mailing and other expenses they incur in forwarding proxy materials to the beneficial owners of our stock that those brokerage firms, banks, custodians and fiduciaries hold of record.
Where can I find more information about NYSE Euronext?
We are required to file annual, quarterly and current reports, proxy statements and other reports with the SEC. Copies of these filings are available through our Internet website at www.nyse.com and, in the case of SEC filings, also on the SECs website at www.sec.gov. We will furnish copies of our SEC filings (without exhibits), including our annual report on Form 10-K for the fiscal year ended December 31, 2011, without charge to any stockholder upon written or oral request to our Investor Relations Department at NYSE Euronext, 11 Wall Street, New York, New York 10005, +1 (212) 656-5700 or InvestorRelations@nyx.com.
Consent to Electronic Delivery of Annual Meeting Materials
This proxy statement and our annual report on Form 10-K for the fiscal year ended December 31, 2011 are available on our website at www.nyse.com under the heading Investor RelationsFinancialsAnnual Reports. You can save our postage and printing expense by consenting to access these documents over the Internet. If you consent, you will receive notice next year when these documents are available with instructions on how to view them and submit voting instructions. If you are a stockholder of record, you may sign up for this service at www.proxyvote.com. If you hold your shares through a bank, broker or other holder of record, contact the record holder for information regarding electronic delivery of materials. Your consent to electronic delivery will remain in effect until you revoke it. If you choose electronic delivery, you may incur costs, such as cable, telephone and Internet access charges, for which you will be responsible.
Householding of Annual Meeting Materials
Some banks, brokers and other nominee record holders may participate in the practice of householding proxy statements and their accompanying documents. This means that only one copy of our proxy statement and
our Form 10-K are sent to multiple stockholders sharing the same address. We will promptly deliver a separate copy of these documents to you upon written or oral request to our Investor Relations Department at NYSE Euronext, 11 Wall Street, New York, New York 10005, +1 (212) 656-5700 or InvestorRelations@nyx.com. If you wish to receive separate copies of the proxy statement and our Form 10-K in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact our Investor Relations Department at the above address and phone number.
Board of Directors
Under our charter and bylaws, only our Board of Directors may set the number of directors who may serve on the Board at any time. Our Board of Directors currently consists of 16 directors, and following the Annual Meeting is expected to consist of 16 directors.
At each annual meeting of stockholders, all directors are elected for a one-year term expiring at the next annual meeting of stockholders. Each director will hold office until the directors successor has been elected and qualified, or until the directors earlier resignation or removal. Currently, the Board of Directors consists of Jan-Michiel Hessels (Chairman), Marshall N. Carter (Deputy Chairman), Duncan L. Niederauer (Chief Executive Officer), Dominique Cerutti (President & Deputy Chief Executive Officer), André Bergen, Ellyn L. Brown, Patricia M. Cloherty, Sir George Cox, Sylvain Hefes, Duncan M. McFarland, James J. McNulty, Ricardo Salgado, Robert G. Scott, Jackson P. Tai, Rijnhard van Tets and Sir Brian Williamson.
2012 Annual Meeting
The Board proposes the election as directors of the persons named below under Nominees for Election to the Board of Directors to hold office for a one-year term expiring at the annual meeting of stockholders to be held in 2013.
If you sign the enclosed proxy card and return it to NYSE Euronext or submit your proxy by touch-tone telephone or via the Internet, your proxy will be voted in favor of our 16 director nominees, for one-year terms expiring at the annual meeting of stockholders to be held in 2013, unless you specifically indicate that you are voting against one or more of those nominees.
All of the 16 nominees are current directors of NYSE Euronext, having been elected at the annual meeting of stockholders of NYSE Euronext on April 28, 2011. All of the nominees have been recommended for re-election by our Nominating and Governance Committee and approved and nominated for re-election by the Board of Directors. Mr. Ceruttis election to the Board in 2011 was subject to regulatory approval, which has been obtained. For more information on the regulatory approval requirement, see Corporate GovernanceRequirements for Directors. All nominees have agreed to serve on the Board of Directors if they are elected. If any nominee is unable (or for whatever reason declines) to stand for election at the Annual Meeting, proxies will be voted in favor of such other person or persons who are recommended by the Nominating and Governance Committee and designated by the Board of Directors, or else the size of the Board of Directors will be reduced.
The Board has determined, upon the recommendation of the Nominating and Governance Committee, and in accordance with our Corporate Governance Guidelines and our Director Independence Policy, that all of our director nominees are independent within the meaning of the rules of the NYSE and our Director Independence Policy and have no material relationship with NYSE Euronext, its subsidiaries or its management (either directly or as a partner, stockholder or officer of an organization that has a relationship with NYSE Euronext), with the exception of Mr. Niederauer, our chief executive officer, and Mr. Cerutti, our president and deputy chief executive officer. For more information on the Board of Directors independence determination, see Corporate GovernanceDirector Independence.
Additional information, including information concerning the operation of our Board as well as the security ownership and compensation of our directors, is included below in this proxy statement under Corporate GovernanceCompensation of Directors and Security Ownership of Certain Beneficial Owners and Management.
Nominees for Election to the Board of Directors
As discussed below under Corporate GovernanceBoard Meetings and CommitteesNominating and Governance Committee, the Nominating and Governance Committee selects director candidates on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, previous board or top-level management/leadership experience and ability to make independent analytical inquiries, among other things.
The Nominating and Governance Committee believes that director candidates must have:
In addition to the requirements described under Corporate GovernanceRequirements for Directors and Corporate GovernanceDirector Independence, our bylaws require that in any election of directors, the nominees who shall be elected to the Board shall be nominees who receive the highest number of votes such that, immediately after such election, (i) U.S. persons as of such election shall constitute at least half, but no more than the smallest number of directors that will constitute a majority, of the directors on the Board and (ii) European persons as of such election shall constitute the remainder of the directors on the Board.
A number of our Board nominees have experience as directors of the various predecessor exchanges and companies that now comprise NYSE Euronext. In addition, each of our Board nominees possesses specific experience, qualifications, attributes or skills that led the Nominating and Governance Committee to the conclusion that such person should serve as a director of NYSE Euronext, in light of our business and structure.
Set forth below are the name, principal occupation and certain biographical information, including specific experience, qualifications, attributes or skills, for each of the nominees for election to the Board of Directors to hold office for a one-year term expiring at the 2013 annual meeting of stockholders:
Our Board of Directors unanimously recommends you vote FOR the election of each of the nominees listed above to the Board.
We have created a governance structure that we believe reflects the highest standards of independence, oversight and transparency. Our Board regularly reviews corporate governance developments and modifies our Corporate Governance Guidelines, committee charters and practices from time to time. The charters of the Audit Committee, the Human Resources and Compensation Committee and the Nominating and Governance Committee, as well as our Corporate Governance Guidelines and the Director Independence Policy of the Board of Directors are available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceOverview. Specifics on how to access these documents are provided under the relevant headings below.
In addition, our Board has adopted a Code of Ethics and Business Conduct that applies to our directors, chief executive officer and chief financial officer, as well as to all other employees, which is also available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceOverviewGovernance Policies. Any amendment to the NYSE Euronext Code of Ethics and Business Conduct and any waiver applicable to our directors, executive officers or senior financial officers will be posted on our website within the time period required by the SEC and the NYSE.
Requirements for Directors
Our charter provides that no person who is subject to any statutory disqualification (as defined under Section 3(a)(39) of the Exchange Act) will be permitted to serve as a director of NYSE Euronext.
Each of our directors must be approved by the Chairs Committee of the College of Euronext Regulators and must pass any fit and proper test under applicable European laws or regulations. A finding of fit and proper takes into account, among other things, the integrity and competence of the individual. All of our current directors have been approved by the Chairs Committee of the College of Euronext Regulators and have been found to be fit and proper under applicable European laws and regulations.
NYSE Euronext common stock is listed on the NYSE as well as Euronext Paris. As a company listed on the NYSE, our Board of Directors must comply with the NYSE corporate governance requirements, including the director independence standards. Those standards require that a majority of our Board of Directors be comprised of directors who have no direct or indirect material relationship with NYSE Euronext. In April 2007, we adopted the Independence Policy of the NYSE Euronext Board of Directors (the Independence Policy), which was amended in December 2009. The Independence Policy sets forth the independence requirements that apply to the members of our Board of Directors, which include, and in several respects go beyond, the NYSE standards.
Under our Independence Policy, a director is independent only if the Board of Directors determines that such director does not have any material relationships with NYSE Euronext and its subsidiaries. In making independence determinations, the Board must consider the special responsibilities of a director in light of the fact that NYSE Euronext controls entities that are U.S. self-regulatory organizations subject to the supervision of the SEC, as well as entities that are European securities exchanges subject to the supervision of European regulators. A copy of our Independence Policy is attached to this proxy statement as Annex B and available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceOverviewGovernance Policies.
In February 2012, in connection with the Annual Meeting and the election of directors, our Board of Directors reviewed the independence of each director nominee under the standards set forth in our Independence
Policy. The Board considered, among other things, all transactions and relationships between each director or any member of his or her immediate family and NYSE Euronext and its subsidiaries and affiliates, as well as with members, allied members, allied persons, member organizations (as those terms are defined for purposes of the Independence Policy) and issuers of listed securities. The types of transactions and relationships that could be considered include direct commercial, industrial, banking, consulting, legal, accounting and charitable relationships as well as indirect relationships such as serving as a partner or officer, or holding shares, of an organization that has a relationship with NYSE Euronext and its subsidiaries and affiliates.
In February 2012, our full Board affirmatively determined that each of Jan-Michiel Hessels, Marshall N. Carter, André Bergen, Ellyn L. Brown, Patricia M. Cloherty, Sir George Cox, Sylvain Hefes, Duncan M. McFarland, James J. McNulty, Ricardo Salgado, Robert G. Scott, Jackson P. Tai, Rijnhard van Tets and Sir Brian Williamson were independent.
As part of the independence review undertaken by our Board, our Board of Directors also determined that none of our independent directors had any material relationship with NYSE Euronext or its subsidiaries or management, outside of their directorships on the boards of NYSE Euronext and its subsidiaries. In making its determinations, the Board of Directors considered the various relationships and found them to be immaterial under our Independence Policy. Some of these relationships included Mr. Williamsons current and former positions as directors of companies with broker-dealer affiliates that are either NYSE, NYSE Arca, Inc. or NYSE Amex LLC members.
Based upon the Boards independence review, each of our Audit Committee, Human Resources and Compensation Committee and Nominating and Governance Committee is comprised entirely of directors who have been determined to be independent under the NYSE listing standards and our Independence Policy.
Board Meetings and Committees
Our current Board was elected on April 28, 2011. There were 26 meetings of the Board in 2011. Our independent directors meet regularly in executive session without management participation, as required by the NYSE listing standards. Mr. Hessels has been appointed by the Board as the director presiding at these meetings.
As a matter of Board policy, it is expected that each director will be available to attend substantially all of the meetings of the Board and any committees on which the director serves. Each of our directors attended at least 75% of the total number of meetings of the Board and committees on which the director served that were held while the director was a member, except for Mr. Salgado. Mr. Salgado has been a member of the Board since 2007, and this is the first year that Mr. Salgado did not attend at least 75% of meetings of the Board and the committees on which he served. Mr. Salgado holds a key position as vice-chairman and president of the executive committee of Banco Espirito Santo, Portugals largest bank, which in 2011 required him to focus on managing the banks navigation of the European debt crisis. He also actively participated in high-level European regulatory and political discussions about how best to resolve the crisis. Mr. Salgado attended a number of joint meetings of the European Commission, the European Central Bank and the International Monetary Fund, as well as meetings of the Bank of Portugal and the Portuguese Banking Association, to implement the new requirements imposed on Portugal and its banking sector. Mr. Salgados intensive efforts to address the crisis restricted his ability to attend certain of the significant number of special meetings held in connection with the proposed business combination with Deutsche Börse, which were not part of the regular meeting schedule and were often called with little advance notice. Mr. Salgado participated in major decisions of the Board concerning the proposed business combination, kept apprised of developments regarding the transaction through communications with his fellow directors, and attended all but one of the regularly scheduled meetings of the Board and the committee on which he served.
In addition, our policy is that all directors and nominees should attend annual meetings of stockholders. All of our current directors attended the 2011 annual meeting.
The Boards standing committees include the following:
The Audit Committee is composed of six independent directors and operates pursuant to a written charter. Our Audit Committee Charter is available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceCommittees. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act.
The Board of Directors has determined that each member of the Audit Committee is financially literate and has accounting or related financial management expertise, as such qualifications are defined under the rules of the NYSE, and that Robert G. Scott is an audit committee financial expert within the meaning of the rules of the SEC.
Human Resources and Compensation Committee
The Human Resources and Compensation Committee (HR&CC) is composed of four independent directors and operates pursuant to a written charter. Our HR&CC Charter is available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceCommittees.
HR&CC Interlocks and Insider Participation
In 2011, our HR&CC consisted of Duncan M. McFarland, James J. McNulty, Ricardo Salgado and Sir Brian Williamson. No member of the HR&CC is a current or former officer or employee of NYSE Euronext or any of its subsidiaries, with the exception of Sir Brian Williamson, who resigned as executive chairman of LIFFE, the
predecessor of NYSE Liffe, in April 2003. There are no compensation committee interlocks (i.e., situations where an executive officer of NYSE Euronext serves on the board or compensation committee of another company and an executive officer of such company serves on our Board or HR&CC).
Nominating and Governance Committee
The Nominating and Governance Committee is composed of four independent directors and operates pursuant to a written charter. The Nominating and Governance Committee Charter is available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceCommittees.
Our bylaws provide that the Nominating and Governance Committee must be composed of an equal number of U.S. domiciliaries and European domiciliaries.
The Nominating and Governance Committee is responsible for proposing a slate of directors for election by the stockholders. The Nominating and Governance Committee is responsible for proposing persons as candidates for the Board of Directors who, in the opinion of the committee, (i) meet the requirements related to Board composition set forth in the bylaws, (ii) are committed to serving the best interests of NYSE Euronext and (iii) can discharge the obligations of directors under the NYSE Euronext charter. As part of this process, the Nominating and Governance Committee reviews each incumbent directors continued service on the Board of Directors on an annual basis.
The Nominating and Governance Committee considers each nominee on his or her individual merits, taking into account the needs of NYSE Euronext and the composition of the Board of Directors. Members of the Nominating and Governance Committee discuss and evaluate director candidates and may employ outside consultants to help identify director candidates. The Nominating and Governance Committee will consider nominees recommended by stockholders and the public on the same basis as it considers any other candidates.
The Nominating and Governance Committee selects director candidates on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, previous board or top-level management/leadership experience and ability to make independent analytical inquiries. See Election of DirectorsNominees for Election to the Board of Directors. The Nominating and Governance Committee also considers the skill sets and experiences of the existing directors and actively seeks to add directors who would bring additional relevant skill sets and experiences to the Board or would replace skill sets and experience lost through a directors retirement. Subject to a determination of the Board as set forth in the Independence Policy, directors are required to be independent from listed companies and NYSE, NYSE Arca, Inc. and NYSE Amex LLC members under the Independence Policy established by the Board. At least three-fourths of the directors also must be independent from the management of NYSE Euronext and its subsidiaries in a manner comparable to the requirements of the NYSE governance standards for listed companies. Among other things, no independent director currently may be, or within the past three years may have been, an employee of NYSE Euronext or its subsidiaries, and independent directors must have no other material relationship with NYSE Euronext and its subsidiaries. In selecting director candidates, NYSE Euronext and its subsidiaries do not discriminate on the basis of race, color, religion, sex, sexual orientation, national origin, age, people with disabilities, marital status, citizenship, genetic predisposition or carrier status or any other characteristic protected by law. Our Candidate Nomination Policy, which contains the criteria for director candidates, is available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceOverviewGovernance Policies.
Stockholders and members of the public who wish to submit candidates for consideration should submit them in accordance with the procedures described under Other MattersDirector Nominations and Other Business below.
The Technology Committee is composed of four directors and operates pursuant to a written charter. The Technology Committee Charter is available on our website at www.nyse.com under the heading Investor RelationsCorporate GovernanceCommittees.
Complaint Procedures for Accounting, Internal Accounting Controls or Auditing Matters
NYSE Euronext has adopted a global whistle-blowing policy to enable anyone who has a good-faith complaint regarding NYSE Euronexts accounting, internal accounting controls or auditing matters to communicate that complaint directly to the Audit Committee. Employees of NYSE Euronext may do so on a confidential or anonymous basis. Anyone with complaints regarding accounting matters, internal accounting controls or auditing matters may report them to the NYSE Euronexts chief compliance officer or directly to the Audit Committee by mail to NYSE Euronext, 20 Broad Street, 8th Floor, New York, New York 10005 or by email to firstname.lastname@example.org or through EthicsPoint, a third-party anonymous and confidential reporting website (www.ethicspoint.com) and telephone hotline (provided on the website).
Policy Regarding Communications with the Chairman, Independent Directors and the Board
We have adopted procedures for communicating with our chairman, independent directors and the Board of Directors as a whole. Any person may communicate in writing to NYSE Euronexts chief compliance officer, the chairman of our Board of Directors, our independent directors as a group or our Board of Directors via regular mail addressed to NYSE Euronext, 11 Wall Street, New York, New York 10005. You may also send an email directly to the chief compliance officer at email@example.com, to the corporate secretary at firstname.lastname@example.org or to the chairman of the Board of Directors at email@example.com. All written submissions that appear to be good faith efforts to communicate with Board members about matters involving the interests of NYSE Euronext and our stockholders are collected and forwarded on a periodic basis to the Board of Directors along with a summary of our actions in response to such submissions. Communications that are not related to a directors duties and responsibilities as a Board member may be excluded by the Office of Legal and Government Affairs. The directors to whom such information is addressed will be informed that the information has been removed and that it will be made available to such directors upon request. Matters related to regulatory functions of our U.S. securities exchanges are forwarded directly to NYSE Regulation, an indirect not-for-profit subsidiary of NYSE Euronext.
Compensation of Directors
Non-management directors of NYSE Euronext are compensated under our director compensation program, which is reviewed annually by the Nominating and Governance Committee and approved by the Board. The chairman, the deputy chairman and each of the other non-management members of the Board receives an annual fee of $450,000, $250,000 and $150,000, respectively. These fees are paid 50% in cash and 50% in restricted stock units (RSUs) granted under the NYSE Euronext Omnibus Incentive Plan, which are vested immediately upon grant. The cash portion generally is paid quarterly in arrears, and the RSUs generally are granted on the annual meeting date. The shares underlying the RSUs are delivered on a directors retirement, resignation or other termination (other than for cause), unless the director timely elects to receive the shares in five annual installments following such termination. Prior to the delivery of the shares, directors receive dividend equivalents on the RSUs in respect of any cash dividends that our shareholders receive.
The chairman of the Audit Committee receives an additional annual fee of $25,000. The chairman of each of the Nominating and Governance Committee, the Technology Committee and the Human Resources and Compensation Committee, and each member of the Audit Committee, receives an additional annual fee of $10,000. The chairman and deputy chairman of the Board, however, are not eligible for any such additional fees. All such additional annual fees are paid entirely in cash on the same quarterly schedule in arrears as the cash portion of the Board fee.
Our non-management directors are reimbursed for their out-of-pocket travel expenses. In certain cases, as described below, our non-management directors who also serve as directors on the boards of our subsidiaries receive additional compensation for such service. We generally provide our non-U.S. based directors with reimbursement for tax advice and preparation services primarily related to additional tax obligations resulting from their compensation as directors.
The following table contains compensation information about the fees and other compensation paid to the members of the NYSE Euronext Board of Directors in the fiscal year ended December 31, 2011.
The following table sets forth the number of outstanding RSUs held by each of our non-employee directors as of December 31, 2011. These RSUs are fully vested, but the shares underlying the RSUs have not yet been delivered.
Considerations of Diversity in the Nominations Process
The Nominating and Governance Committee considers diversity in identifying nominees to serve as directors of NYSE Euronext. Although the Nominating and Governance Committee does not have a formal diversity policy, our Candidate Nomination Policy states that the Nominating and Governance Committee believes that director candidates must have diversity of personal, professional and cultural experience. As described above under Election of DirectorsNominees for Election to the Board of Directors, the committee makes an assessment of the specific experience, qualifications, attributes and skills of each director nominee, and one of the factors that the committee considers in making this assessment is the extent to which the candidate demonstrates the desired diversity of personal, professional and cultural experiences among the director nominees.
In addition, our Candidate Nomination Policy contains a non-discrimination provision that states that [i]n selecting director candidates, NYSE Euronext and its subsidiaries do not discriminate on the basis of race, color, religion, sex, sexual orientation, national origin, age, people with disabilities, marital status, citizenship, genetic
predisposition or carrier status, or any other characteristic protected by law. The committee at all times abides by such non-discrimination provision in the selection and recommendation of director nominees.
Board Leadership Structure and Boards Role in Risk Oversight
The leadership structure of the Board of Directors is dictated, in part, by our bylaws, which require that either (i) the chairman of the Board of Directors be a U.S. person and the chief executive officer be a European person or (ii) the chairman of the Board of Directors be a European person and the chief executive officer be a U.S. person. Accordingly, we have separated the role of chairman and chief executive officer. We believe that this is the best structure for a company, such as ours, which is the culmination of a merger between two robust organizations operating in the United States and Europe, to become a global, integrated company. This structure also provides for independent oversight of management at the Board leadership level.
The Company has a comprehensive, three-lines-of-defense risk management process that is ultimately overseen by the Board. The first line, day to day risk management, is monitored by a Business Risk Group a committee comprised of key individuals from across the Companys geographic and business units. The Business Risk Group monitors key internal and external risk drivers and reviews the potential likelihood, possible magnitude and importance of risks. The Business Risk Group also provides suggestions on how to mitigate such risks and assigns appropriate senior executives to act as risk managers.
The Companys Risk Services group forms the second line of defense by creating the proper framework and process for risk identification. Risk Services is an independent function, reporting to the chief financial officer, that provides objective assurance to assist management (including the Business Risk Group) and the Board in risk oversight and assessment and that ensures appropriate escalation and accurate disclosure of risk matters. Internal Audit Services provides the third line of defense by independently verifying the risk and control framework. The Audit Committee receives the results of reviews and internal audits of the process and underlying risk factors and monitors the appropriate disclosure of such risks to investors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership of, and transactions in, our equity securities with the SEC. Such directors, executive officers and 10% stockholders are also required to furnish us with copies of all Section 16(a) reports they file.
Based on our records, and written representations and other information that we received during this fiscal year, we believe that during fiscal 2011 all of such reporting persons complied with all Section 16(a) reporting requirements applicable to them except that one transaction for each of Messrs. Bellegarde and Jones and two transactions for Mr. Leibowitz were not timely reported. For Messrs. Bellegarde and Jones, the failure to timely report resulted from an administrative error by NYSE Euronext. All of these transactions were subsequently reported on Form 4 or Form 5.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information, as of February 28, 2012, regarding the beneficial ownership of shares of NYSE Euronext common stock by:
Unless otherwise indicated, the business address of our directors and named executive officers is 11 Wall Street, New York, New York 10005. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. The table includes shares underlying vested RSUs held by our directors and RSUs held by our named executives that are scheduled to vest within 60 days. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of our common stock shown as beneficially owned by that stockholder. Unless otherwise indicated, no shares have been pledged as security.
Compensation Committee Report
The Human Resources and Compensation Committee of the Board (the HR&CC) reviewed and discussed the Compensation Discussion and Analysis (CD&A) with management, with Towers Watson (the HR&CCs outside compensation consultant) and with counsel. Based on such review and discussions, the HR&CC recommended to the Board that the CD&A be included in this proxy statement.
Members of the HR&CC:
James J. McNulty, Chair
Duncan M. McFarland
Sir Brian Williamson
Compensation Discussion and Analysis
This CD&A describes the principles, policies and practices that informed our executive compensation program for 2011 and explains the application of these principles, policies and practices to six of our executive officers: our chief executive officer, our president and deputy chief executive officer, our chief financial officer and our three other most highly compensated executives. These six executives are named in the 2011 Summary Compensation Table that follows this CD&A, and we refer to them as our named executives.
Our company is complex and unique and has a global reach and these attributes influence our approach to executive compensation. Our 2011 executive compensation program was designed to reward our named executives for their significant contributions to our performance, including the achievement of the key initiatives described below. These achievements and the day-to-day business successes that we accomplished in 2011 occurred at a time when we were also dedicating substantial efforts in connection with a proposed business combination with Deutsche Börse (the Proposed Business Combination) that, as a result of the European Commissions decision to prohibit the combination, did not occur. Through this process our executive team stayed focused on delivering shareholder value, and we believe that the compensation actions described in this CD&A were appropriately taken.
Relationship Between Company Performance and Compensation Actions in 2011
We face increasing competition from a variety of sources, as the methods by which capital markets can be formed and operated continue to expand, and as the services that these markets require proliferate. In particular, recent trends towards the liberalization and globalization of world capital markets have resulted in greater mobility of capital, greater international participation in local markets and more competition among markets in different geographical areas. As a result, global competition among listing venues, trading markets and other execution venues has become more intense. We are proud of the following accomplishments in 2011 that helped us meet these challenges, face uncertain market conditions and continue to build long-term shareholder value:
At the core of our ability to deliver these results is our a dynamic, globally integrated, technologically skilled and entrepreneurial management team. To retain and incentivize our management team, and in recognition of this years accomplishments, we took the following specific compensation actions, which were consistent with our philosophy of tying our executives pay to performance:
Relationship Between NYSE Euronexts Pay for Performance Philosophy and Compensation Actions in 2011
Our compensation program for our named executives is designed to link the executives compensation as closely as possible with the Companys performance and thereby to align the executives interests with those of our shareholders. We attempted to achieve this in 2011 through the following actions that reflect the core elements of our compensation program:
Objectives and Design of the Compensation Program
We have designed our management compensation program to reflect the following guiding principles:
Elements of Executive Compensation
To implement our guiding principles, our executive compensation program for 2011 comprised three basic elements:
The size of the bonus, which was granted in February 2012, was tied to the Companys performance in 2011 utilizing EBITDA as our key financial measure to determine bonus pool funding and to the executives performance through the application of discretion in consideration of the executives contributions to the business. Half of the bonus is paid in equity, which further ties the bonus to longer-term performance. This design fosters our pay-for-performance compensation philosophy, ensures focus on both short-term and long-term success of the Company and strongly aligns the interests of our senior management team with those of our shareholders; and
Each of these elements is discussed in detail below.
Compensation Process and Market Comparisons
Compensation Decision Process
Independence considerations in compensation process
The Company believes that the independence of each member of the HR&CC is instrumental to the committees ability to carry out its responsibilities, including determining the amount and structure of
compensation paid to the named executives and administering the Companys equity-based compensation plans. The independence of the HR&CC also reinforces the values of accountability and transparency in the compensation process.
To maintain the independence of our not-for-profit subsidiary, NYSE Regulation, the compensation of its executives is determined solely by its board of directors, and the executives of NYSE Regulation do not participate in certain of our general compensation programs, including our equity-based compensation plans. The HR&CC advises and assists the NYSE Regulation board at its request concerning executive compensation policies and procedures, and we believe that the compensation philosophies of the HR&CC and the NYSE Regulation board are consistent. None of our current named executives is an executive of NYSE Regulation.
Role of CEO and management in determining compensation
Executive compensation decisions are made within the HR&CCs discretion; however, to make these decisions the committee seeks input from management and guidance from its independent compensation consultant. None of the Companys executives has any direct role in determining the amount of his or her compensation. Our chief executive officer recommends compensation packages for our named executives, other than himself. His assessment of each executive is based on the executives achievement of business or functional results (as appropriate) as well as the management teams collective achievement of strategic priorities. For a further discussion of each named executives contribution, see Annual Performance BonusIndividual bonus amounts.
Independence of compensation consultant and role in determining compensation
The HR&CC has retained Towers Watson, an independent compensation consultant, to provide the committee with guidance and services relating to executive pay. Towers Watson provides various analyses, as directed by the committee, as well as recommendations regarding executive compensation philosophy and design, including the selection of the companies that comprise the peer groups that the HR&CC uses for market compensation comparisons.
Towers Watson conducted an assessment of the features of the Companys executive and employee compensation programs to determine whether any material risks to the Company could result from the design of any of these specific features. This review, presented to the HR&CC at its meeting in February 2012, was undertaken independently under the purview of the HR&CC, although Towers Watson worked with members of management to gather compensation plans and review processes. The foundation of this review was the thorough assessment undertaken in the previous year and the knowledge that the compensation programs had not materially changed.
The HR&CC considered the findings of the assessment and concluded that the Companys compensation programs design and administration continue to operate with the appropriate balance of risk and reward in relation to its overall business and risk management strategy and do not create risks that are reasonably likely to have a material adverse effect on the Company.
2011 Say-on-Pay and Say-When-on-Pay Votes
At our 2011 annual meeting, over 83% of votes were cast, on an advisory basis, in favor of the say-on-pay vote on executive compensation. As such, the HR&CC has concluded that the large majority of our shareholders is satisfied with our existing program. We continuously review our compensation policies and decisions and dialogue with our shareholders to determine whether to make improvements to our existing executive compensation program to ensure that the interests of our named executives are directly aligned with the interests of the Company and shareholders. To that end, on March , 2012, we entered into an amended and restated employment agreement with Mr. Niederauer and recalibrated his equity incentive compensation to include a performance-based element. The employment agreement eliminates the golden parachute excise tax gross-up that was included in his original employment agreement. For more on the employment agreement and performance-based equity awards, see Subsequent Events below.
Also at our 2011 annual meeting, over 83% of votes were cast, on an advisory basis, in favor of holding the advisory say-on-pay vote every year. The Board of Directors considered this result and determined that the Company will hold the advisory say-on-pay vote every year. Therefore this year we again are providing our shareholders with an advisory vote to approve the compensation of our named executives, as disclosed in this proxy statement, including this CD&A and the tables and narrative disclosure that follow (see Proposal No. 3Advisory Vote to Approve the Companys Executive Compensation). We seek your support and believe that it is appropriate because, as further detailed in this CD&A, we have a comprehensive executive compensation program that is designed to link our executives compensation as closely as possible with the Companys performance and to align the executives interests with yours as shareholders. For example, we deliver a significant percentage of total compensation in performance-based and long-term incentive awards. We continually monitor our executive compensation program and modify it as needed to strengthen this link between compensation and performance and to reflect the dynamic, global marketplace in which we compete for executive talent. Although, as an advisory vote, this proposal is not binding on the Company, the HR&CC will carefully consider the shareholder vote on this matter at its next meeting. Our Board unanimously recommends that you vote FOR this proposal.
Peer groups are used to provide the HR&CC with insights into the markets within which we compete for executive talent. Results from studies of the peer groups guide, but do not dictate, the committees decisions regarding pay level and design architecture. The committee believes that its approach of not targeting a specified pay percentile but rather allowing the relative level and design of the programs to inform pay decisions is appropriate given the global nature and diverse skills and experience of our management team.
Due to the evolving nature of our company, the HR&CC has examined two peer groups. To reflect our historical foundation as a traditional exchange business, the HR&CC constructed an exchange industry peer group consisting of exchange companies (the Global Exchange Peer Group). We are also entrepreneurial and innovative and committed to emerging as a world-class technology solutions provider, so the HR&CC also constructed a global peer group consisting of companies that similarly leverage technology and/or serve the financial services industry on a global basis (the Global Peer Group). The companies comprising each peer group are set forth below.
Annually, with the assistance of Towers Watson, the HR&CC reviews these peer groups and ensures their continued applicability. In 2011, there were no changes to the composition of either peer group. The Global Exchange Peer Group consists of publicly traded global marketplaces that are direct competitors of NYSE Euronext. The 2011 composition of the Global Exchange Peer Group is as follows:
The Global Peer Group consists of a blend of U.S. and non-U.S. domiciled companies that have a global reach, in addition to having characteristics such as brand name recognition, regulatory compliance obligations and a technology-dependent business component. The 2011 composition of the Global Peer Group is as follows:
Certain shareholder advisory services have constructed their own peer groups to evaluate our executive compensation program. These services generally select companies within a broad industry category with similar revenues and market capitalizations, without regard to whether the companies share our salient characteristics or compete with us for customers and executive talent. As the companies in the Global Exchange Peer Group and the Global Peer Group share our characteristics and compete with us, we believe that our peer groups provide a more appropriate basis for informing the HR&CCs decisions regarding our executive compensation program.
We believe that the mix of cash and equity awards should provide an appropriate balance between fixed and variable, cash and equity and short- and long-term pay elements. This practice holds executives accountable for annual and longer-term performance and mitigates risk taking by removing focus from short-term performance. Accordingly, while it does not target specified percentages, the HR&CC seeks to allocate a greater portion of compensation to variable and equity-based pay than it allocates to cash, particularly salary.
Towers Watson again this year assessed the pay mix of our named executives against that of the Global Exchange Peer Group and the Global Peer Group. As summarized in the charts below, the analysis compared our named executives 2010 base salaries, 2010 bonuses (paid in 2011) and February 2011 LTIP grants with the base salaries, cash bonuses and equity-based awards of the peers named executives as disclosed in the peers proxy statements filed in 2011. The first chart compares the pay mix of our chief executive officer with that of the chief executive officers of the peer groups, and the second chart compares the aggregate pay mix of our other named executives with that of the peers other named executives. The analysis demonstrates that again this year our named executives received more of their compensation in the form of variable and long-term equity-based compensation than did the peers named executives. The HR&CC believes that compensating the named executives in this manner is a leading industry practice.
For the CEO, the analysis excludes Société Générale Group from the Global Peer Group and excludes Interactive Brokers Group, Inc. from the Exchange Peer Group as these companies did not grant short- or long-term incentive awards. This analysis also excluded Oracle from the Global Peer Group, as this company granted $1 in base salary.
For the named executives other than the CEO, the named executives from Société Générale Group from the Global Peer Group were excluded from the analysis, as this company did not grant short- or long-term incentive awards.
Stock Ownership Guideline
In February 2011, the HR&CC adopted a stock ownership guideline that requires our chief executive officer to maintain ownership of NYSE Euronext common stock in an amount that is at least equal to three times his base salary. Mr. Niederauer currently exceeds this standard.
Elements of Compensation
The principal elements of our compensation program are base salary, annual performance bonus (cash and equity components), equity grants in the form of RSUs under our LTIP, employee benefits, termination benefits and change in control protection.
We establish base salaries at levels that we believe are commensurate with each named executives title, position and experience, recognizing that each named executive is managing a component of a complex global company. The salary level for each title was developed taking into account historic salary practices, appropriate differentiation among titles, the desire to achieve a global compensation program with compensation processes that are consistent across geographic locations and general views of competitive practice. For our chief executive officer, salary was set at $1,000,000, and for our president and deputy chief executive officer, salary was set at 675,000. Salaries for other named executives were set at $750,000. In each case, salaries are denominated in dollars or euros, based on the executives location, and the rates are designed to be roughly equivalent in light of prevailing exchange rates.
We did not increase the salary level for any named executive in 2011 from 2010 and in fact salaries for the named executives have remained flat since 2009, as illustrated in the following table.
Annual Performance Bonus
The second principal element of our compensation system is an annual performance bonus program under which the named executives are eligible to earn annual bonuses paid half in cash and half in equity awards in the form of time-vesting RSUs. Both the cash and equity portions of the annual bonus incentivize the participants to attain short-term individual, business unit and company performance outcomes. The equity portion has the additional purpose of aligning the participants incentives with the interests of our shareholders over a longer period.
The annual bonus pool, in the amount determined for each year, is used to fund the participants bonuses for that year. To strengthen the link between the Companys performance and the funding of the annual bonus pool, we continued to use a single financial measure, EBITDA, to determine bonus pool funding for 2011, as described in more detail below.
2011 bonus pool
The use of EBITDA as the metric for determining the amount of the annual bonus pool for 2011 strengthens the link between the Companys performance and the funding of the pool by enhancing the objectivity of the compensation process and eliminating any undesired effects of financing, capital structure, tax strategies and depreciation and amortization policies on the amount of the pool and by focusing on the Companys core operating profitability.
In February 2011, the HR&CC determined that for 2011 the amount of the global bonus pool, which funds the annual bonuses paid to all our eligible employees, should be calculated based on a specified percentage of EBITDA* (see table below), as reduced to reflect the outsourcing of certain regulatory functions to FINRA, which resulted in fewer participants in the pool. EBITDA for 2011 was $1.286 billion* which resulted in a pre-reduced funding amount of $141.5 million. This amount was reduced, as described above, to arrive at the actual 2011 bonus pool of $135.0 million, a portion of which was distributed to eligible employees in time-vesting RSUs (ranging from 0% to 50% based on the eligible employees total compensation) and the remainder of which was distributed in cash. As described in more detail below, the amount of each named executives 2011 bonus was determined by the HR&CC with input from Mr. Niederauer (except with respect to his own bonus) after carefully considering the executives contributions as indicated by the collective and individual accomplishments of the named executives.
No bonus pool funding would have resulted had EBITDA been less than $862 million. This threshold for funding the 2011 bonus pool was $26 million higher than the threshold for funding the 2010 bonus pool. No additional bonus pool funding would have resulted had EBITDA exceeded $1.6 billion, which effectively capped the amount of the global bonus pool at $192 million (i.e., 12% of $1.6 billion).
Individual bonus amounts
Although the bonus pool is funded based on the formula described above, the distribution of that pool to individuals is based on the accomplishments of specific strategic objectives, team objectives and, as applicable, the accomplishment of business unit objectives. Although no specific formula is applied, the following is a summary of the business-related outcomes that were considered when making individual bonus determinations for each named executive for 2011, including a discussion of the collective and individual accomplishments of the named executives. These amounts, along with the amounts of the named executives bonuses for 2010 and 2009, as applicable, are set forth in the Annual Performance Bonus table at the end of this section.
Mr. Niederauer. The Board of Directors concurred with the HR&CCs recommendation to award Mr. Niederauer an annual performance bonus based on the HR&CCs consideration of the following outcomes:
Other named executives. Mr. Niederauer recommended to the HR&CC, and the HR&CC approved, 2011 bonuses for the named executives other than himself. The HR&CC considered, and the amounts of these bonuses were influenced by, outcomes in 2011 categorized as:
The following is a summary of the management committees collective accomplishments that the HR&CC considered holistically in assessing team performance:
The following is a summary of the executives individual accomplishments that the HR&CC considered, together with this team performance, in assessing Mr. Niederauers recommendation regarding each executives bonus amount:
Mr. Cerutti. NYSE Technologies and Internal Technology delivered the following results:
Mr. Leibowitz. Global Listings, European Cash and United States Cash delivered the following results:
Mr. Geltzeiler. Global Finance delivered the following results:
Mr. Halvey. Legal and Government Affairs delivered the following results:
Mr. Duranton. Human Resources delivered the following results:
The following table summarizes the annual performance bonuses awarded to our named executives for 2011, 2010 and 2009, as applicable. Due to SEC reporting rules, the portion reported in the Equity Component column appears in the Summary Compensation Table for the year following the year for which it was earned.
Annual Performance Bonus
Form of 2011 Annual Bonus
Each year, the HR&CC evaluates the form of the annual performance bonuses awarded to the named executives and other participants in the bonus program, including how the awards will be allocated between cash and equity. Both the cash and equity portions of the bonuses are awarded in February of the year following the year for which the bonuses are earned.
For 2011, as for prior years, we awarded half of each named executives annual performance bonus in cash and the other half in time-vesting RSUs granted under our Omnibus Incentive Plan. We believe that this mix of cash and equity awards appropriately balances the short- and long-term performance objectives of the named executives. The grant of RSUs is consistent with the Companys goals of aligning the long-term interests of senior executives and shareholders and fostering executive retention, whereas the cash portion appropriately recognizes the executives current achievements.
The RSUs for 2011 will vest, and the common stock covered by the RSUs will be distributed, in equal installments on the first, second and third anniversaries of the grant date (subject to accelerated vesting on attaining retirement eligibility status and accelerated vesting and distribution on specified terminations of employment or a change in control). This ratable vesting and distribution schedule is consistent with our prior practice and also distinguishes the equity portion of the annual bonus from the RSUs granted under our LTIP, which are scheduled to fully vest and be distributed on the third anniversary of the grant date (see Elements of CompensationLong-Term Incentive Program below).
The HR&CC granted the RSUs earned for 2011 under the annual bonus program effective February 11, 2012 in a specified dollar amount. After our February HR&CC meeting, we released our 2011 fourth quarter and year-end preliminary earnings results before the opening of trading on February 10, 2012, and the numbers of shares of NYSE Euronext common stock underlying the RSUs were calculated based on the closing price of the stock on that date ($28.94).
The delivery of the annual bonus through cash and equity ensures that our named executives focus is properly balanced between the short- and long-term, and is an industry leading practice. As illustrated above (see Pay Mix), a higher portion of our annual bonus is delivered in equity when compared to our peer groups.
The table below reports the results of a competitive analysis conducted for the HR&CC by Towers Watson. It uses information gathered from 2011 proxy statements for the Companys two peer groups (see Compensation Process and Market ComparisonsPeer Groups) to assess the degree to which our peers defer executives annual bonuses in this manner. As reported, only six of the 27 peers across the two peer groups actually paying a bonus for 2011 (four of 16 in the Global Peer Group and two of 11 in the Exchange Peer Group) paid part of that bonus in equity. Four companies reporting such a practice pay as much of the annual bonus in equity as the Company when considering all of the named executives together.
Peers Who Use Equity as a Component of Bonus
Long-Term Incentive Program
Our third primary compensation component is the LTIP. The program currently consists of annual grants of equity awards under our Omnibus Incentive Plan that nurture an ownership culture and enable our executives to hold a stake in the Company and participate in the long-term success of the Company. As these grants are intended to enhance our ability to retain our executives, to recognize talent and to reward executives for future firm-wide performance, we consider them to be prospective grants. This contrasts with the equity component of the annual performance bonus award, which reflects performance during the most recently completed fiscal year.
Long-Term Incentive Grants Made in 2011
On February 8, 2011, each named executive (and each other participant in the LTIP) received an RSU award under the program as part of the executives compensation for 2011. The initial value of each award was determined based on the executives level and scope of responsibility; the HR&CC also reviewed and considered the results of the annual survey of the peers compensation which, as described above, guide but do not dictate compensation decisions. Award levels for grants made in February 2011 were set at $2,300,000 for
Mr. Niederauer, $1,500,000 for Mr. Cerutti, $1,250,000 for Mr. Leibowitz and $1,000,000 for each of Messrs. Halvey, Geltzeiler and Duranton. Amounts are denominated in dollars for consistency. These dollar amounts were converted into the number of shares of NYSE Euronext common stock covered by the awards based on the closing price of a share on February 7, 2011 ($33.76).
For 2011, as for prior years, the HR&CC determined that it was appropriate to award service-vesting RSUs under the LTIP that vest on the third anniversary of the date of grant. Because the grant date value of each years award varies, and because the ultimate value of the award is tied to the Companys share price, the HR&CC believes that the time-vesting feature best balances the retention and performance aspects of these awards.
Long-Term Incentive Grants Made in 2012
On February 11, 2012, each named executive (and each other participant in the LTIP) received an RSU award under the program as part of the executives compensation for 2012. The initial value of each award was determined based on the executives level and scope of responsibility; the HR&CC also reviewed and considered the results of the annual survey of the peers compensation which, as described above, guide but do not dictate compensation decisions. Award levels for grants made in February 2012 were set at $3,000,000 for Mr. Niederauer, $1,500,000 for Mr. Cerutti, $1,250,000 for Mr. Leibowitz, $1,250,000 for Mr. Halvey, $1,000,000 for Mr. Geltzeiler and $1,000,000 for Mr. Duranton. Amounts are denominated in dollars for consistency. These dollar amounts were converted into the number of shares of NYSE Euronext common stock covered by the awards based on the closing price of a share on February 10, 2012 ($28.94).
For 2012, as for prior years, the HR&CC determined that it was appropriate to award service-vesting RSUs under the LTIP that vest on the third anniversary of the date of grant. Because the grant date value of each years award varies, and because the ultimate value of the award is tied to the Companys share price, the HR&CC believes that the time-vesting feature best balances the retention and performance aspects of these awards. For 2012, the HR&CC also approved the grant to Mr. Niederauer of a new performance-based equity award as an additional incentive to create value for our shareholders (see Subsequent Events below).
Summary of Compensation Awarded to our Named Executives
The following table summarizes the compensation awarded to our named executives for 2011, and where applicable, 2010 and 2009. This table includes for each year (i) the base salary payable for that year, (ii) the annual bonus that was earned for that year (paid partly in cash and partly in RSUs, in each case in February following the year for which the annual bonus was earned) and (iii) the LTIP award that was granted in February of that year. The values in this table differ from those shown in the Summary Compensation Table below because, under the SEC disclosure rules, in the Summary Compensation Table the values of the RSUs granted as part of the annual bonus are reported in the year of grant rather than the year for which the RSUs were earned. For example, the 2011 bonus awards in this table include the RSUs granted in February 2012 as part of each executives annual bonus award made in respect of 2011 performance, whereas the Summary Compensation Table includes for 2011 the RSUs granted in 2011 as part of the annual bonus awards made in respect of 2010 performance.
We are providing this alternative table because we believe that it more accurately reflects the compensation decisions taken by the HR&CC for these years.
Other Compensation Elements
We maintain the following employee benefit and perquisite programs for our named executives.
Welfare Benefits. We have broad-based health, dental, vision, life and disability benefit programs. We do not provide any welfare benefits exclusively to executives.
Retirement Benefits. For named executives based in the United States, Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton, we provide retirement benefits through a tax-qualified 401(k) retirement savings plan and a non-qualified arrangement, the Supplemental Executive Savings Plan (SESP), for contributions above 401(k) limits imposed under the Internal Revenue Code. Prior to January 1, 2010, we provided employer matching of executives contributions to the SESP on a dollar-for-dollar basis up to 6% of base salary in excess of $245,000 (for 2009). Effective January 1, 2010, however, we eliminated this employer match, which resulted in a significant reduction in the executives total compensation.
Perquisites. Consistent with industry and local practice and to facilitate efficient conduct of business and promote the safety of our named executives, we provide them with certain perquisites. These perquisites are in a form and amount that are typical in our industry and the principal countries in which we operate. The HR&CC reviews these perquisites on a regular basis.
We provide Mr. Niederauer with a company car and trained security driver and Mr. Cerutti with a company car. This convenience is provided primarily for business purposes and commuting. With limited exceptions, the named executives do not reimburse us for the cost of their personal use of these services. We provide Messrs. Geltzeiler, Halvey and Duranton with paid parking facilities and, for Mr. Duranton, tax planning services. Although we provide these benefits to enhance the security and efficiency of our key executives, SEC rules require that costs of personal use be disclosed as compensation to the executives.
Termination and Change in Control Arrangements. We have entered into an employment agreement with each of our named executives that provides termination benefits and change in control protection. In addition, under the terms of each of the RSU award agreements of Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey, Cerutti and Duranton, the awards fully vest, and the shares underlying the awards are distributed, on a change in control or on termination of his employment due to his death or disability, by NYSE Euronext without cause or by him for good reason or in a qualifying retirement at or after a specified age.
See 2011 CompensationPotential Payments on Termination and Change in Control below.
We believe that termination benefits are appropriate to attract and retain executive talent, to avoid costly and potentially protracted separation negotiations and to protect our named executives investment in the Company. In addition, such benefits are customary in the jurisdictions in which we do business and in which our named executives reside. Our change in control protection is intended to provide management stability and reduce any reluctance on the part of the named executives to pursue and negotiate potential transactions that may enhance stockholder value, despite the uncertainty of whether the culmination of such transactions may result in the executives employment being terminated or their positions being substantially reduced.
We would seek to recover, under the relevant provisions of the Sarbanes-Oxley Act, previously awarded bonuses or equity-based compensation or profits in the event of a restatement of financial or other performance results. We will establish a policy to provide for the forfeiture or recovery of performance-based compensation in the event of such a restatement (i.e., a clawback), as the rules mandated by the Dodd-Frank Act are defined.
Policy Prohibiting Hedging Transactions
Our Personal Trading Policy prohibits Company employees, including our named executives, from having a financial interest in having Company securities decline in price or engaging in naked short selling of Company securities.
Other Factors Affecting 2011 Compensation
Section 162(m) of the U.S. Internal Revenue Code generally limits the federal income tax deduction for compensation paid to each of the chief executive officer and the three other most highly compensated executive officers (other than the chief financial officer) of a publicly held corporation to $1 million per fiscal year, with exceptions for certain performance-based compensation. Although we consider deductibility under Section 162(m) when structuring our compensation arrangements for our named executives, depending upon the relevant circumstances at the time, the HR&CC may determine to award compensation that may not be deductible. In making this determination, the HR&CC balances the purposes and needs of our executive compensation program against potential tax cost.
In accordance with the terms of the NYSE Euronext Omnibus Incentive Plan, the HR&CC established performance goals for 2011 in a manner intended to ensure that the compensation paid to our named executives would not be subject to deductibility limits under Section 162(m). At its February 2011 meeting, the HR&CC determined that for 2011 Mr. Niederauer and Mr. Cerutti each was eligible for a maximum annual performance bonus of 1.0% of EBITDA (as previously defined); and that the other named executives subject to the limits were each eligible for a maximum annual performance bonus equal to 0.6% of EBITDA. The amounts of the annual performance bonuses paid to our named executives for 2011 were below these maximum amounts.
Note Regarding Equity Grant Calculations
The equity portions of the named executives 2011 annual performance awards were granted at the HR&CCs February 2012 meeting. Because these awards were granted in 2012, they do not appear in the 2011 Summary Compensation Table that follows this CD&A. The equity portion of the 2011 annual performance awards will first appear in the 2012 line of next years Summary Compensation Table.
On March 26, 2012, we entered into an amended and restated employment agreement with Mr. Niederauer and recalibrated his equity incentive compensation to include a performance-based element in the form of performance share units (PSUs). The agreement and PSUs are intended to retain and incentivize our high performing CEO at a critical juncture for the Company following the termination of the Proposed Business Combination. The employment agreement is intended to help ensure the stability and continuity of our management team, and the PSUs, which vest based on relative total shareholder return (TSR), will further strengthen the link between Mr. Niederauers compensation and shareholder value creation.
Amended and Restated Employment Agreement
Under his amended and restated employment agreement, Mr. Niederauer has agreed to waive his right to the golden parachute tax gross-up in his original employment agreement. This right required the Company to reimburse Mr. Niederauer for the 20% excise tax that would be imposed on him under Section 4999 of the Internal Revenue Code if the amount of the payments and benefits that he would receive in connection with a change in control exceeded a specified threshold. In addition, Mr. Niederauer has agreed to a contingent cutback whereby the amount of these payments and benefits will be reduced to the maximum amount that will not trigger the excise tax if it leaves him in a better after-tax position. The waiver of the excise tax and the contingent cutback will benefit the Company by eliminating the excise tax reimbursement and, if the cutback applies, by reducing the amount of the change in control payments and benefits, and also by reducing or eliminating the amount of the Companys corresponding lost compensation deduction under Section 280G of the Internal Revenue Code.
In exchange for this waiver and contingent cutback, the amended and restated employment agreement restores the severance amount that applied under his original employment agreement during the first three years of the term and simplifies the agreement by providing for the same severance amount to be paid in change in control terminations and non-change in control terminations. The amended and restated agreement provides that, on termination of his employment by the Company without cause or by him for good reason, Mr. Niederauer is entitled to severance in an amount equal to two times his annual base salary plus target bonus. Under his original agreement, from the third anniversary of the agreement, on May 29, 2008, this severance amount was reduced to one times his annual base salary plus target bonus (unless the termination occurred in connection with or anticipation of, or within two years after, a change in control, in which case the two times multiple applied). The definitions of cause, good reason and change in control for the amended and restated agreement are the same as for the original agreement (for summaries of these definitions, see 2011 CompensationPotential Payments on Termination and Change in Control below).
Each PSU award represents the right to receive between 0% and 200% of the shares of NYSE Euronext common stock underlying the award based on the Companys TSR relative to the TSR of the S&P 500 during the applicable three-year performance period. Under his amended and restated employment agreement, Mr. Niederauer is entitled to receive a PSU award in each of 2012, 2013, 2014 and 2015, with the grant date number of shares underlying each award equal to $3,000,000 divided by the closing price of a share on the day before the grant date. The HR&CC has approved the 2012 award, which will be granted following the release of the Companys first quarter 2012 financial results. Each award will vest at the end of the applicable three-year performance period, subject generally to Mr. Niederauers continued employment and the level of achievement of the applicable relative TSR goal.
If the Companys TSR equals the TSR of the S&P 500 for the performance period applicable to a PSU award, 100% of the shares underlying the award will be distributed. Each PSU award will be subject to a threshold relative TSR goal that, if met, will result in distribution of 75% of the underlying shares. The threshold will be met if the Companys TSR is 25 percentage points less than the TSR of the S&P 500. If the threshold is not met, no shares will be distributed, and the PSUs will be forfeited in their entirety. Each PSU award is also subject to a maximum relative TSR goal that, if met, will result in distribution of 200% of the underlying shares. The maximum will be met if the Companys TSR is 100 percentage points more than the TSR of the S&P 500. If the maximum is exceeded, no additional shares will be distributed. In addition, each PSU award is subject to a maximum payout such that the fair market value of the distributed shares (valued as of the end of the performance period) is capped at $6,000,000. If the maximum is exceeded, no additional shares will be distributed. In addition, each PSU award is subject to a maximum payout such that the fair market value of the distributed shares (valued as of the end of the performance period) is capped at $6,000,000.
As described in this CD&A, our compensation philosophy and the policies and practices that support it are designed to retain our talented management team and incentivize them to create shareholder value. To achieve these objectives, compensation is directly linked to the achievement of corporate operational and strategic performance outcomes and the value of our stock, and is balanced between performance- and service-based awards. The HR&CC believes that the executive compensation actions that it took in 2011 support our compensation philosophy, implemented our compensation policies effectively, were competitive within the overall market for talent, and were appropriate considering NYSE Euronexts performance.
The following tables contain information about the compensation that we provided to our chief executive officer, president and deputy chief executive officer, chief financial officer and three other most highly compensated executive officers in 2011.
2011 Summary Compensation Table
We granted RSUs as part of the 2011 annual incentive bonus awarded to each named executive. However, because these grants were not made until after the end of 2011, they are not reflected in this column in accordance with SEC rules. These RSU grants are described in the Annual Performance Bonus section of the Compensation Discussion and Analysis that precedes this table.
2011 Grants of Plan-Based Awards
Named Executives Employment Agreements and Equity Awards
We have entered into employment agreements with Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey, Cerutti and Duranton that provide for the payment of base salaries, annual performance bonuses, long-term incentive awards and perquisites to the executives. The agreements also contain restrictions against competing and soliciting our employees and customers that apply during the executives employment and for one year after termination of their employment. The following summary of the terms of these employment agreements reflects, for Mr. Niederauer, the terms of his original employment agreement, which was in effect in 2011. For a summary of certain of the material terms of the amended and restated employment agreement that we entered into with Mr. Niederauer on March , 2012, see Compensation Discussion and AnalysisSubsequent Events above.
The employment agreements with Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton provide that their salaries are to be determined by the HR&CC and can be no less than $1,000,000 for Mr. Niederauer and $750,000 for each of Messrs Leibowitz, Geltzeiler, Halvey and Duranton. The employment agreement with Mr. Cerutti provides for an initial base salary of 675,000.
Annual Performance Bonus Awards
Under the terms of their employment agreements, Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton are eligible for annual bonuses at the discretion of the HR&CC, paid in any combination of cash and equity. On termination of the executives employment by NYSE Euronext without cause, by the executive for good reason or due to the executives death or disability (for the definitions of such terms, see Potential Payments on Termination and Change in Control below), the executive would be entitled to an annual bonus for the year of such termination in an amount based on the HR&CCs determination of the achievement of the applicable performance metrics for such year, pro-rated to reflect the portion of such year that the executive was employed and paid at the time annual bonuses are paid by NYSE Euronext.
Mr. Cerutti is eligible for an annual bonus at the discretion of the HR&CC, paid half in cash and half in RSUs. The maximum amount of Mr. Ceruttis annual bonus will be determined each year by the Company.
Effective February 8, 2011, the HR&CC granted RSU awards to each of the named executives under the NYSE Euronext Omnibus Incentive Plan as part of the 2010 annual performance bonus. Although these awards correspond to the 2010 annual performance bonus, they appear in the above table because they were granted in 2011 (once the financial results for 2010 and annual performance awards had been determined). See the Annual Performance Bonus section of the Compensation Discussion and Analysis on pages 43 to 45 of last years proxy statement for a discussion of the factors considered in determining these award amounts. The RSUs are scheduled to vest, and the underlying shares are scheduled to be delivered, in substantially equal installments on each February 8 of 2012, 2013 and 2014. See the Annual Performance Bonus section of the Compensation Discussion and Analysis for a discussion of these award amounts.
Awards of RSUs granted as part of the 2011 annual performance bonus were granted in 2012 (once the financial results for 2011 and annual performance awards had been determined).
Long Term Incentive Awards
Effective February 8, 2011, the HR&CC granted an additional annual award of RSUs pursuant to the LTIP to each of the named executives, in the amounts set forth in the table above. See the Long-Term Incentive Plan section of the Compensation Discussion and Analysis on pages 47 to 48 of last years proxy statement for a discussion of the factors considered in determining these award amounts. The RSUs were issued under and are governed by the NYSE Euronext Omnibus Incentive Plan. The RSUs are scheduled to vest, and the underlying shares are scheduled to be delivered, in their entirety on February 8, 2014.
Messrs. Niederauers and Ceruttis employment agreements provide for their use of a car and driver to be provided by the Company, provided that Mr. Ceruttis use of a driver, if any, is to be for business purposes only. Mr. Cerutti is currently provided with the use of a car but does not have a driver. Pursuant to their employment agreements, we provide Messrs. Geltzeiler, Halvey and Duranton with paid parking facilities and Mr. Duranton with tax planning services.
Termination of Employment and Change in Control
The employment agreements of Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey, Cerutti and Duranton provide that, on specified terminations of employment, the executives receive severance payments and acceleration of equity award vesting. In addition, the RSU awards held by our named executives provide for accelerated vesting of the RSUs on a change in control. See Potential Payments on Termination and Change in Control below for the values of the accelerated vesting of the named executives equity awards that would have occurred had the executives employment terminated under specified circumstances or had a change in control of NYSE Euronext occurred on December 31, 2011.
Outstanding Equity Awards at December 31, 2011
Stock Vested During 2011
None of our named executives participates in any defined benefit pension plan.
2011 Nonqualified Deferred Compensation
We maintain the SESP to provide deferred compensation opportunities to U.S. employees who earn compensation over the limit set by the U.S. Internal Revenue Code for our U.S. tax qualified plans. Generally, U.S. employees with the title officer and U.S. non-officers whose salaries and cash bonuses for the prior year exceed the IRS limit on pensionable earnings for that prior year ($245,000 for 2011) may participate. A participants account is credited with earnings until distribution based on a measurement alternative selected by the participant from among generally available, publicly traded funds offered by several providers. Participants are not limited in terms of how often they may move their investments between funds, but they cannot change the contribution amount during the year. Participants may elect to receive their account balances in a lump sum distribution or in annual installments following termination of employment.
Participants employed prior to 2006 were immediately vested in employer matching contributions to their accounts under the SESP and any earnings or losses thereon. Participants hired on or after January 1, 2006 vest in the matching contributions and any earnings or losses thereon 20% per year for the first five years of recognized service. Effective January 1, 2010, we eliminated the matching contributions under the SESP.
Potential Payments on Termination and Change in Control
The following narrative and table summarize and quantify the payments and benefits that each of our named executives would have received had his employment terminated or had a change in control of NYSE Euronext occurred, in each case on December 30, 2011 (the last business day of 2011) under the specified circumstances described below. For Mr. Niederauer, the narrative and table describe payments and benefits that he would have received under his original employment agreement, which was in effect on December 30, 2011. For a summary of certain of the material terms of the amended and restated employment agreement that we entered into with Mr. Niederauer on March , 2012, see Compensation Discussion and AnalysisSubsequent Events above.
Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton
Employment agreements. In 2008, we entered into employment agreements with Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton that provide for the following payments and benefits on termination of the executives employment by NYSE Euronext without cause or by the executive for good reason (as such terms are defined below):
These payments and benefits are conditioned on the executives executing a release of claims against NYSE Euronext and its affiliates. Each of the employment agreements provides that, on termination of the executives employment due to his death or disability (as defined below), he is entitled to a pro-rated annual bonus and accelerated vesting and distribution with respect to his equity compensation awards on the same terms as on termination of his employment by NYSE Euronext without cause or by him for good reason, as described above.
Cause generally means the executives:
Good reason generally means the occurrence of any of the following events or actions that remains uncured by NYSE Euronext for 30 days after the executives written notice:
Change in control generally means:
Disability generally means that the executive has been unable, for 120 or more days out of 180 consecutive days, to perform his duties as a result of physical or mental injury, illness, injury or incapacity.
RSU award agreements. Under the terms of each of the RSU award agreements of Messrs. Niederauer, Leibowitz, Geltzeiler, Halvey and Duranton, the awards fully vest, and the shares underlying the awards are distributed, on a change in control or on termination of his employment due to his death or disability, by NYSE Euronext without cause or by the executive for good reason or in a qualifying retirement at or after a specified age. As of December 31, 2011, none of the executives qualified for retirement, and, therefore, had any of the executives resigned his employment without good reason on that date, he would have forfeited his unvested RSUs.
Employment agreement. In September 2009, we entered into an employment agreement with Mr. Cerutti that provides for the following payments and benefits on termination of his employment by NYSE Euronext for any reason other than gross or willful misconduct or an agreed-upon termination:
The agreement provides that, on Mr. Ceruttis resignation, his special 2009 bonus and annual bonus RSUs vest under the following circumstances:
The agreement also provides that, subject to Mr. Ceruttis compliance with such restrictions against competition and solicitation, he will receive an amount equal to 50 percent of the sum of his base salary and maximum annual bonus, paid in 12 equal monthly installments during the restricted period.
RSU award agreements. Under the terms of Mr. Ceruttis special 2009 bonus RSU award agreement, the RSUs fully vest, and the shares underlying the awards are distributed, on a change in control or on termination of his employment due to his death or disability, by NYSE Euronext without cause or due to a reduction in force, or by him for any reason in a qualifying retirement at or after a specified age (as such terms are defined in our Omnibus Incentive Plan). Under the terms of Mr. Ceruttis annual bonus and LTIP RSU award agreements, the RSUs fully vest and are distributed under the same circumstances as are described above for the RSU award agreements of Messrs. Niederauer, Leibowitz, Geltzeiler. Halvey and Duranton (i.e., on a change in control or on termination of his employment due to his death or disability, by NYSE Euronext without cause or by him for good reason or in a qualifying retirement at or after a specified age). Although Mr. Cerutti did not qualify for retirement as of December 31, 2011, had he resigned his employment without good reason on that date, his RSUs would have vested under the terms of his employment agreement, as described above.
Termination for Cause by NYSE Euronext or Engagement in Detrimental Activities
Under the terms of each named executives award agreements, the RSUs are subject to forfeiture on termination of the executives employment by NYSE Euronext for cause.
Golden Parachute Excise Tax Gross-Up
Each of the employment agreements with Messrs. Leibowitz, Geltzeiler, Halvey and Duranton provides that the executive will be entitled to a gross-up of any golden parachute excise tax imposed under U.S. Internal Revenue Code Section 4999 on any payments or benefits that he receives in connection with a change in control (as defined for purposes of U.S. Internal Revenue Code Section 280G). However, if the amount of these payments and benefits does not exceed 110% of the executives safe harbor amount (generally, three times his average total annual compensation for the five calendar years prior to the change in control), then these payments and benefits will be reduced to an amount that is $5,000 less than the amount that would subject the executive to the excise tax.
Mr. Niederauers original employment agreement included the same golden parachute excise tax gross-up right as is included in the agreements with the other named executives. Under his amended and restated employment agreement, Mr. Niederauer agreed to waive his right to this gross-up. As his original employment agreement was in effect as of the end of 2011, the table below includes the value of this gross-up for Mr. Niederauer.
2011 Termination and Change in Control Payments and Benefits
Absence of Material Risks Arising from Compensation Policies
The SEC has asked companies to report on the connection between pay and risk if they determine that their compensation policies are reasonably likely to have a material adverse impact on them. We consider the right short- and long-term behaviors that we want to motivate when designing our compensation plans. We are comfortable with our compensation designs and believe that they include several features that mitigate the incentive to take on excessive risk. See Compensation Discussion and AnalysisCompensation Process and Market CompaniesCompensation Decision ProcessRisk assessment.
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of the Audit Committee
The Audit Committee is responsible for assisting the Board of Directors in its oversight of the integrity of NYSE Euronexts financial statements and the financial reporting process.
In performing its oversight role, the Audit Committee reviewed and discussed with management and PricewaterhouseCoopers LLP, our independent auditors, the audited financial statements of NYSE Euronext for the fiscal year ended December 31, 2011. The Audit Committee also discussed with our independent auditors the matters required under Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee received the written disclosures and the letter from our independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors communications with the Audit Committee, and discussed with our auditors the auditors independence. On the basis of the foregoing, the Audit Committee recommended to the Board of Directors that the audited financial statements of NYSE Euronext for the fiscal year ended December 31, 2011 be included in our annual report on Form 10-K for such fiscal year.
Members of the Audit Committee:
Robert G. Scott, Chair
Jackson P. Tai
Rijnhard van Tets
Ratification and Selection of PricewaterhouseCoopers LLP (Proposal No. 2)
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP as NYSE Euronexts independent auditors for the fiscal year ending December 31, 2012. We are submitting the selection of independent auditors for stockholder ratification at the Annual Meeting. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so. The representative will be available to respond to appropriate questions from stockholders.
Our organizational documents do not require that our stockholders ratify the selection of PricewaterhouseCoopers LLP as our independent auditors. We are doing so because we believe it is a matter of good corporate practice. If our stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP but still may retain them. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of NYSE Euronext and its stockholders.
The Board of Directors unanimously recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors for our fiscal year ending December 31, 2012. Unless a contrary choice is specified, your proxy will be voted FOR ratification of the appointment.
Fees Paid to PricewaterhouseCoopers LLP
The following table shows information about fees paid by NYSE Euronext and its consolidated subsidiaries to PricewaterhouseCoopers LLP for the periods indicated.
Audit services included the audit of NYSE Euronexts annual financial statements and the effectiveness of our internal control over financial reporting as of fiscal year-end and the review of financial statements included in our quarterly reports on Form 10-Q. Audit services also included statutory audits of certain U.S. and foreign subsidiaries and services that were provided in connection with other statutory and regulatory filingsincluding with the SEC and the AMFor engagements.
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of NYSE Euronexts financial statements. These services included financial, tax and accounting due diligence related to potential mergers and acquisitions, as well as audits of employee benefit plans. For the year ended December 31, 2011, audit-related services included $1.2 million of fees incurred in connection with the terminated business combination with Deutsche Börse.
Tax services consisted of the preparation and/or review of, and consultations with respect to, NYSE Euronexts federal, state and local tax returns.
In accordance with the SECs auditor independence rules, the Audit Committee has procedures by which it approves in advance any audit or permissible non-audit services to be provided to NYSE Euronext by its independent registered public accounting firm. All of the services listed above were pre-approved through these procedures.
The Audit Committee annually pre-approves the recurring audit, audit-related, tax and other services we expect the independent registered public accounting firm to provide during the fiscal year. The chairman of the Audit Committee may grant any required pre-approval of specific services as required, provided that the full committee is advised of such approval at the next regularly scheduled Committee meeting. In addition, between Audit Committee meetings, the Audit Committee delegated to the Companys chief financial officer and controller the authority to hire the independent registered public accounting firm for certain audit, audit-related and tax engagements up to a predetermined individual fee amount for each type of service. Unless a service to be provided by the independent registered public accounting firm falls within a type of approved service, it requires separate pre-approval by the Audit Committee or its chairman. Any proposed services that exceed pre-approved fee levels require additional pre-approval by the Audit Committee.
The Audit Committee is informed on a timely basis, and in any event by the next scheduled meeting, of all services rendered by the independent registered public accounting firm and the related fees.
Proposal No. 3Advisory Vote to Approve the Companys Executive Compensation (Say-on-Pay Proposal)
In accordance with the requirements of Section 14A of the Exchange Act, we are providing an advisory shareholder vote to approve the 2011 compensation of the Companys named executives, as such compensation is disclosed in this proxy statement, including the Compensation Discussion and Analysis, the compensation tables and the other narrative executive compensation disclosures.
Shareholders are being asked to vote on the following resolution:
RESOLVED, that the shareholders hereby approve the compensation of NYSE Euronexts executive officers named in the Summary Compensation Table, as disclosed pursuant to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures).
We seek your support and think that it is appropriate because we have a comprehensive executive compensation program that is designed to link our executives compensation as closely as possible with the Companys performance and to align the executives interests with yours as shareholders. We continually monitor our executive compensation program and modify it as needed to strengthen this link between compensation and performance and to reflect the dynamic, global marketplace in which we compete for executive talent.
We believe that our 2011 compensation actions demonstrate a solid link between compensation and shareholder interest. In particular, in 2011:
These actions link a significant portion of total compensation to 2011 company and individual performance, while at the same time tying our executives compensation and incentives to longer-term company performance.
This vote is not intended to address any specific item of compensation, but rather the Companys overall compensation principles, policies and practices and the fiscal 2011 compensation of our named executives, which are described in detail in the section of this proxy statement entitled Compensation of Executive Officers.
Although, as an advisory vote, this proposal is not binding upon the Company or the Board, the Human Resources and Compensation Committee, which is comprised solely of independent directors and is responsible for making decisions regarding the amount and form of compensation paid to the Companys executive officers, will carefully consider the shareholder vote on this matter, along with all other expressions of shareholder views it receives on specific policies and desirable actions, when making future compensation decisions for our named executives.
The Company intends to conduct an advisory vote to approve the Companys executive compensation annually. The next such vote will be conducted at our 2013 Annual Meeting of Shareholders. To help ensure that all shareholder views are well understood by the Board, the Company also encourages shareholders to use any of a number of direct communication mechanisms to effectively raise specific issues or concerns with regard to our executive compensation principles, policies and practices.
Our Board unanimously recommends a vote FOR this proposal.
Proposal No. 4Stockholder Proposal Regarding Power to Call Special Meetings
Mr. Kenneth Steiner, having an office at 14 Stoner Ave., 2M, Great Neck, NY 11021, and beneficial owner of 1,000 shares of common stock, has proposed the adoption of the following resolution and has furnished the following statement in support of his proposal:
4Special Shareowner Meetings
RESOLVED, Shareowners ask our board to take the steps necessary unilaterally (to the fullest extent permitted by law) to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common stock (or the lowest percentage permitted by law above 10%) the power to call a special shareowner meeting.
This includes that such bylaw and/or charter text will not have any exclusionary or prohibitive language in regard to calling a special meeting that apply only to shareowners but not to management and/or the board (to the fullest extent permitted by law).
Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This proposal does not impact our boards current power to call a special meeting.
This proposal topic won our 73%-support at our 2011 annual meeting. This proposal topic also won more than 60% support at CVS, Sprint and Safeway. The Council of Institutional Investors www.cii.org, whose members had $3 trillion invested, recommends that management adopt shareholder proposals upon receiving their 50%-plus vote.
Please encourage our board to respond positively to this proposal to initiate improved corporate governance and financial performance: Special Shareowner Meetings Yes on 4.
NYSE Euronexts Statement in Opposition to Stockholder Proposal Regarding Power to Call Special Meetings
NYSE Euronext is strongly committed to good governance practices and is keenly interested in the views and concerns of our stockholders. However, the Board recommends that you vote against the proposal set forth above (the Steiner Proposal) because we believe that a 10% ownership threshold is too low and could potentially lead to the calling of special meetings when not in the interests of the company and its stockholders generally. We do, however, agree that stockholders who alone or together hold a more significant stake in our company should be able to call special meetings when circumstances make it necessary, provided the matter proposed to be acted upon would not subject NYSE Euronext to possible regulatory sanction or disadvantage. To this end the Board intends to submit a proposal at the 2013 annual meeting seeking stockholder approval for amendments to our charter and bylaws to permit stockholders to call special meetings, subject to an ownership threshold and conditions that are more appropriate for NYSE Euronext than the terms specified in the Steiner Proposal.
The Steiner Proposal, a version of which received the support of a majority of the shares voted at last years annual stockholder meeting, would provide stockholders holding 10% of our common stock with an unfettered right to call an unlimited number of special meetings. We believe that calling a special meeting of stockholders is not a matter to be taken lightly, and appropriate ownership levels and procedural safeguards are necessary so that a special meeting can only be called to cover extraordinary events when fiduciary, strategic, significant transactional or similar considerations dictate that the matter be addressed on an expedited basis, rather than
waiting until the next annual meeting. Moreover, permitting stockholders holding only 10% of our common stock to call a special meeting may lead to agenda items relevant to a particular constituency as opposed to our stockholders generally. We believe that adopting the standard specified in the Steiner Proposal would subject NYSE Euronext to the possibility of numerous special meetings, each one entailing significant cost, management distraction and diversion of financial resources, and, should the subject matter concern elements of our governance that are subject to approval by our core regulators, unnecessarily causing disruption to critical regulatory relationships.
As noted above, the Board does believe that stockholders who alone or together hold a more significant stake in our company should be able to call special meetings. To formulate the proposal that will be presented at the 2013 annual meeting, the Board intends to consider the ownership threshold and other requirements appropriate for striking the balance between the right to call special meetings and the need to safeguard company resources and regulatory relationships, so that this important right is provided to stockholders in a way that minimizes expense, distraction and risk to the company.
Accordingly, the Board unanimously recommends a vote AGAINST the Steiner Proposal.
Adoption of the Steiner Proposal would require the affirmative vote of a majority of shares of common stock of NYSE Euronext voted thereon at the meeting. However, if the proposal were duly adopted, and the Board of Directors determined in its judgment to act on the request embodied in the proposal, the Board of Directors would need to observe the procedural requirements for amendments to our charter and bylaws, including the need for regulatory approval from the U.S. Securities and Exchange Commission and the Euronext College of Regulators, and it is not possible to predict whether such requirements could be satisfied.
Related-Party Transaction Approval Policy
Our Code of Ethics and Business Conduct, which applies to all of our employees and directors, our subsidiaries and certain persons performing services for us, prohibits all conflicts of interest, unless they have been approved by our Board of Directors (or an authorized committee of the Board). The Board has delegated to the Nominating and Governance Committee the review of potential conflicts of interest, as well as the review and approval of related-party transactions involving more than $120,000. In March 2008, upon the recommendation of the Nominating and Governance Committee, our Board adopted a formal, written related-party transactions approval policy. Under this policy, transactions between us and any executive officer, director or holder of more than 5% of our common stock, or any immediate family member of such person, must be approved or ratified by the Nominating and Governance Committee or our Board in accordance with the terms of the policy. In determining whether to approve or ratify a transaction with related persons, the Nominating and Governance Committee or our Board may consider, among other things: (i) whether the terms of the transaction are fair to NYSE Euronext and would apply on the same basis if the other party to the transaction did not involve a related person; (ii) whether there are compelling business reasons for NYSE Euronext to enter into the transaction; (iii) whether the transaction would impair the independence of an otherwise independent director; and (iv) whether the transaction presents an improper conflict of interest, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of his or her interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Nominating and Governance Committee deems relevant.
As of the date of this proxy statement, there are no other matters that the Board of Directors intends to present, or has reason to believe others will present, at the Annual Meeting. If other matters come before the Annual Meeting, the persons named in the accompanying form of proxy will vote in accordance with the recommendation of the Board or in their best judgment with respect to such matters.
Stockholder Proposals for 2013 Annual Meeting
Stockholders who, in accordance with Rule 14a-8 under the Exchange Act, wish to present proposals for inclusion in the proxy materials that we will distribute in connection with our 2013 annual meeting, must submit their proposals to the corporate secretary, NYSE Euronext, 11 Wall Street, New York, New York 10005, so that they are received no later than November 13, 2012. Such proposals must also comply with the requirements of Rule 14a-8. As the rules of the SEC make clear, simply submitting a proposal does not guarantee its inclusion.
If the date of our 2013 annual meeting is more than 30 days after April 26, 2012, we may publicly announce a different submission deadline from that set forth above, in compliance with the rules of the SEC.
Director Nominations and Other Business
Under our bylaws, for director nominations or other business to be brought before our 2013 annual meeting, other than Rule 14a-8 proposals described under Stockholder Proposals for 2013 Annual Meeting above, written notice must be delivered to the corporate secretary, NYSE Euronext, 11 Wall Street, New York, New York 10005, no earlier than the close of business on December 27, 2012 and no later than the close of business on January 26, 2013. Such notices must also comply with the other requirements of our bylaws.
If the date of our 2013 annual meeting is more than 30 days before or more than 60 days after April 26, 2013, the submission deadlines set forth above will be changed in accordance with our bylaws. In that case, our
bylaws provide that to be timely, notice must be delivered as provided above not earlier than the close of business on the 120th day prior to our annual meeting and not later than the close of business on the later of the 90th day prior to the annual meeting or the 10th day following the day on which we first make a public announcement of the meeting date.
New York, New York
Dated: March 26, 2012