8-KMaterial AgreementsExhibits & Filings

CME GROUP INC. 8-K Report, Material Agreement (May 18, 2009)

Filed May 18, 2009For Securities:CME

Summary

CME Group Inc. (CME) filed an 8-K on May 18, 2009, detailing material definitive agreements related to the approval of amendments to key equity and incentive compensation plans by its shareholders. Specifically, the Omnibus Stock Plan, the 2005 Director Stock Plan, and the Incentive Plan for Named Executive Officers received shareholder approval. These amendments are effective as of May 13, 2009. Notably, in conjunction with these approvals, CME Group also committed to freezing future grants totaling approximately 900,000 shares. These shares were acquired as part of previous acquisitions of CBOT Holdings, Inc. and NYMEX Holdings, Inc. The filing provides details on the administration, share authorizations, award types, change-in-control provisions, and termination dates for each of these plans, offering insight into CME's executive and director compensation structure and its capital allocation strategy regarding stock-based incentives.

Key Highlights

  • 1Shareholder approval obtained for amendments to the Omnibus Stock Plan, 2005 Director Stock Plan, and Incentive Plan for Named Executive Officers.
  • 2Amendments to the equity and incentive plans are effective as of May 13, 2009.
  • 3CME Group will freeze future grants of approximately 900,000 shares acquired from CBOT and NYMEX acquisitions.
  • 4The Omnibus Stock Plan has 8,045,975 authorized shares and will terminate on June 30, 2012.
  • 5The Director Plan has 125,000 authorized shares and terminates no later than April 27, 2015.
  • 6The Bonus Plan, using cash earnings as a metric, has a maximum annual bonus of $5 million and expires on May 13, 2014.

Frequently Asked Questions

The primary outcome of this filing is the shareholder approval of amendments to the Omnibus Stock Plan, the 2005 Director Stock Plan, and the Incentive Plan for Named Executive Officers. These amendments are effective as of May 13, 2009, and relate to the structure and administration of these compensation programs.

The decision to freeze approximately 900,000 shares under equity plans, which were acquired through the CBOT and NYMEX acquisitions, suggests a strategic decision by CME Group. It may indicate a desire to manage dilution, consolidate equity awards, or simplify the equity structure following these significant acquisitions.

The Omnibus Stock Plan has 8,045,975 authorized shares, permits various equity awards (options, RSUs, etc.), and prohibits repricing. It is administered by the Compensation Committee and terminates on June 30, 2012. The Director Plan has 125,000 authorized shares, offers awards like cash, stock, and options to non-executive directors, and terminates by April 27, 2015. Both plans include provisions for vesting upon a change in control.

The Incentive Plan for Named Executive Officers (Bonus Plan) is designed as a qualified performance-based compensation program. It uses cash earnings as the performance metric for determining annual bonus awards for named executive officers and other designated executives. The plan aims to align executive interests with shareholder interests and has a maximum annual bonus of $5 million, expiring on May 13, 2014.