What is the Executive Corporate Incentive Plan (ECIP)?

The ECIP is a plan approved by Nasdaq stockholders designed to link executive incentive compensation to the company's performance. It also aims to ensure the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code.

How are bonuses determined under the ECIP?

Bonuses are determined based on pre-set financial and non-financial performance goals. For financial goals, bonus payouts can range from 0% to 200% of the target bonus, depending on whether performance falls below, at, or above established floor, target, and ceiling levels. Non-financial goals generally have a cap of 100% of the target unless specifically approved otherwise.

What is the 'Change in Control' agreement, and who is eligible?

The 'Change in Control' agreement is a severance agreement that provides enhanced benefits if an executive's employment is terminated following a change in control of Nasdaq. This standardized agreement was approved for six current executive vice presidents. However, the President and CEO and one other executive vice president will remain under their existing employment arrangements and will not enter into this new agreement.

When will the incentive compensation for 2004 and 2005 be paid?

Incentive compensation under the ECIP for the 2004 fiscal year was paid in February 2005. For the 2005 fiscal year, incentive compensation is expected to be paid in early 2006.

NDAQ 8-K: Material Agreements

Summary

This 8-K filing from The Nasdaq Stock Market, Inc. (NDAQ) on March 8, 2005, details the approval of executive compensation performance goals and parameters for both the 2005 and 2004 fiscal years under its Executive Corporate Incentive Plan (ECIP). The plan is designed to align executive pay with company performance and maintain tax deductibility under IRS regulations. Key financial metrics such as revenue, operating income, and cash flow are established as performance objectives, with bonus payouts potentially ranging from 0% to 200% of target based on achievement levels. Additionally, the report announces the Board of Directors' approval of a standardized "Change in Control" severance agreement for certain executive officers. This agreement provides enhanced severance benefits if an executive's employment is terminated following a change in control of Nasdaq. While most executive vice presidents will receive these agreements, the President and CEO, along with one other executive vice president, will continue to be governed by their existing employment arrangements.

Key Highlights

1Nasdaq approved 2005 and 2004 performance goals and parameters for its Executive Corporate Incentive Plan (ECIP).
2The ECIP ties executive incentive compensation to company performance, with bonuses potentially up to 200% of target.
3Performance metrics for 2005 include budgeted revenue, operating income, cash flow, and business effectiveness.
4Performance metrics for 2004 included operating income, cash flow, and business effectiveness.
5The Board approved a standardized 'Change in Control' severance agreement for certain executive officers.
6This agreement provides enhanced severance benefits upon termination following a change in control.
7The President and CEO and one executive vice president will not receive the new Change in Control agreement.

NASDAQ, INC. 8-K Report, Material Agreement (Mar 8, 2005)

Summary

Key Highlights

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