8-KMaterial Agreements

CME GROUP INC. 8-K Report, Material Agreement (Nov 6, 2006)

Filed November 6, 2006For Securities:CME

Summary

This Form 8-K filing by CME Group Inc. (CME) primarily details a material definitive agreement regarding the compensation package for Terrence A. Duffy upon his appointment as Executive Chairman. Effective November 1, 2006, Mr. Duffy's compensation structure was formalized, including an annual base salary of $950,000. He also becomes eligible for an annual bonus targeted at 75% of his base earnings and annual equity grants valued at 175% of his base salary, comprising restricted stock and options. Additionally, the filing clarifies a retention payment for Mr. Duffy, designed to protect his compensation should his term as Executive Chairman not be renewed under specific circumstances, provided he has not breached his fiduciary duties. This reporting event provides investors with insight into the executive compensation structure and potential retention incentives for key leadership at CME Group Inc. during a significant period.

Key Highlights

  • 1Terrence A. Duffy appointed as Executive Chairman.
  • 2Effective November 1, 2006, Mr. Duffy's annual base salary set at $950,000.
  • 3Mr. Duffy eligible for an annual bonus with a target of 75% of base earnings starting in 2007.
  • 4Mr. Duffy eligible for annual equity grants valued at 175% of base salary (25% restricted stock, 75% options).
  • 5Retention payment clarified, linked to base salary, conditional on willingness to serve and not being removed for cause.
  • 6Mr. Duffy required to sign confidentiality, non-competition, and non-solicitation agreements.

Frequently Asked Questions

The main purpose of this 8-K filing is to report a material definitive agreement regarding the compensation for Terrence A. Duffy, who was appointed as Executive Chairman of CME Group Inc.

As Executive Chairman, Terrence A. Duffy is entitled to an annual base salary of $950,000. Beginning in 2007, he will also be eligible for an annual bonus with a target of 75% of his base earnings.

Mr. Duffy is eligible to receive annual equity grants with a value equal to 175% of his base salary. This grant will be comprised of 25% restricted stock and 75% stock options.

The Retention Payment is equal to Mr. Duffy's annual base salary. It would be paid if, at the end of his term as Executive Chairman, he is willing and able to serve another term but is not nominated or reelected, provided he has not been removed or failed to be reelected due to a breach of fiduciary duty or willful failure to fulfill his duties.