DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

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   Definitive Proxy Statement     

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   Soliciting Material Pursuant to §240.14a-12     

INTERCONTINENTAL EXCHANGE, INC.

 

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LOGO

 

INTERCONTINENTAL EXCHANGE, INC.

NOTICE OF 2017 ANNUAL MEETING

AND

PROXY STATEMENT


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LOGO

 

March 30, 2017

Dear Stockholder:

On behalf of the Board of Directors and management of Intercontinental Exchange, Inc., I am pleased to invite you to the 2017 Annual Meeting of Stockholders. The Annual Meeting will be held at the St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305 on Friday, May 19, 2017 at 8:30 a.m., local time.

The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be conducted at the Annual Meeting. Our Board of Directors and senior officers, as well as representatives from our independent registered public accounting firm, will be present to respond to appropriate questions from stockholders.

Again this year, we are delivering proxy materials for the Annual Meeting under the Securities and Exchange Commission’s “Notice and Access” rules. These rules permit us to furnish proxy materials, including the attached Proxy Statement and our 2016 Annual Report, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. The rules also allow us to help the environment by reducing the consumption of paper, energy, and other natural resources and to lower printing and distribution expenses paid by Intercontinental Exchange. Our stockholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”), which provides instructions on how to access and review all of our proxy materials on the Internet, and will not receive printed copies unless they request them. The Notice also explains how you may submit your proxy on the Internet.

Whether or not you plan to attend the meeting, please complete, sign, date and return the enclosed proxy card in the envelope provided or vote telephonically or electronically using the telephone and Internet voting procedures described on the proxy card at your earliest convenience.

 

Sincerely,

LOGO

 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer Intercontinental Exchange, Inc.


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Intercontinental Exchange, Inc.

5660 New Northside Drive, Third Floor

Atlanta, Georgia 30328

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 19, 2017

 

 

NOTICE HEREBY IS GIVEN that the 2017 Annual Meeting of Stockholders of Intercontinental Exchange, Inc. will be held at the St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305 on Friday, May 19, 2017 at 8:30 a.m., local time, for the purposes of considering and voting upon:

 

  1. The election of eleven directors to serve until the 2018 Annual Meeting of Stockholders;

 

  2. An advisory resolution to approve our executive compensation;

 

  3. An advisory vote on the frequency of future advisory votes on executive compensation;

 

  4. The approval of the Intercontinental Exchange, Inc. 2017 Omnibus Employee Incentive Plan;

 

  5. The approval of an amendment to the Intercontinental Exchange, Inc. 2013 Omnibus Non-Employee Director Incentive Plan to add an aggregate annual compensation limit;

 

  6. The approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to update and streamline references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, and delete references to certain other subsidiaries;

 

  7. The approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to remove an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext business in 2014;

 

  8. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017;

 

  9. A stockholder proposal regarding the preparation of a report assessing ESG market disclosure expectations, if properly presented at the Annual Meeting; and

 

  10. Such other business as properly may come before the Annual Meeting or any adjournments or postponements thereof. The Board of Directors is not aware of any other business to be presented to a vote of the stockholders at the Annual Meeting.

The Board of Directors has fixed the close of business on March 21, 2017 as the record date for determining the stockholders entitled to notice of and to vote at the meeting and any adjournments or postponements thereof.

If you hold your shares of common stock through a broker or nominee, you will need to bring either a copy of the voting instruction card provided by your broker or nominee or a copy of a brokerage statement showing your ownership as of March 21, 2017.

A list of stockholders entitled to vote at the 2017 Annual Meeting of Stockholders will be available for inspection upon request of any stockholder for any purpose germane to the meeting at our principal executive offices, 5660 New Northside Drive, Third Floor, Atlanta, Georgia 30328, during the ten days prior to the meeting, during ordinary business hours, and at the St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305, during the meeting.


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WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SUBMIT YOUR PROXY WITH VOTING INSTRUCTIONS. YOU MAY VOTE BY TELEPHONE OR INTERNET (BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD) OR BY MAIL IF YOU RECEIVE A PRINTED PROXY CARD.

 

By Order of the Board of Directors,

 

LOGO

 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

Atlanta, Georgia

March 30, 2017


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Important Notice Regarding the Availability of Proxy Materials

for the Stockholder Meeting to be Held on May 19, 2017

We are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders rather than mailing a full paper set of the materials. The Notice contains instructions on how to access our proxy materials on the Internet and how to vote, as well as instructions on obtaining a paper copy of the proxy materials.

For additional information, see Additional Information – Voting Instructions and

Frequently Asked Questions below.

 

 

To Vote by Internet and to Receive Materials Electronically

Read the Proxy Statement.

Go to the website www.proxyvote.com that appears on your proxy card.

Enter the control number found on the front of your proxy card and follow the simple instructions. Choose to receive an e-mail notice when proxy statements and annual reports are available for viewing over the Internet. You will cut down on bulky paper mailings, help the environment, and lower expenses paid by Intercontinental Exchange, Inc.


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TABLE OF CONTENTS

 

     Page  

INTRODUCTION

     1  

EXECUTIVE SUMMARY

     1  

Matters to be Voted on at Our Annual Meeting

     1  

Record Date for Voting and Shares Outstanding

     2  

Corporate Governance Developments and Highlights

     2  

Highlights of Our 2016 Performance

     4  

Compensation Developments and Highlights

     4  

CORPORATE GOVERNANCE

     6  

PROPOSAL 1—ELECTION OF DIRECTORS

     6  

Board of Directors

     6  

Nominees for Election as Directors at the 2017 Annual Meeting

     6  

Directors’ Recommendation

     12  

STRUCTURE AND ROLE OF OUR BOARD

     13  

Meetings and Committees of the Board of Directors

     13  

Independent Non-Employee Directors

     15  

Requirements for Directors

     16  

Nomination of Directors

     16  

Board Leadership Structure

     17  

Board Oversight of Risk

     18  

Board of Directors Governance Guidelines

     18  

Stockholder Recommendations for Director Candidates

     19  

Global Code of Business Conduct and Global Personal Trading Policy

     20  

Communications with the Board of Directors

     20  

COMPENSATION MATTERS

     21  

PROPOSAL 2—ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

     21  

Directors’ Recommendation

     21  

COMPENSATION DISCUSSION & ANALYSIS

     22  

Introduction

     22  

Financial Performance Highlights

     22  

2016 Advisory Vote Results and Stockholder Engagement

     23  

Compensation Objectives and Components

     23  

Role of Compensation Consultant

     24  

Risk Assessment with Respect to Compensation

     26  

Elements of Compensation

     26  

Stock Ownership Policy, Retention Recommendations and Global Personal Trading Policy

     35  

Policy on Deductibility of Compensation

     36  

EXECUTIVE COMPENSATION

     37  

2016 Summary Compensation Table

     37  

2016 All Other Compensation

     38  

2016 Grants of Plan-Based Awards

     39  

Outstanding Equity Awards at Fiscal Year-End

     40  

Option Exercises and Stock Vested During 2016

     41  

2016 Nonqualified Defined Contribution and Other Deferred Compensation Plans

     42  

Employment Agreements and Other Factors Affecting 2016 Compensation

     42  

2016 Payments upon Termination

     45  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     46  

 

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NON-EMPLOYEE DIRECTOR COMPENSATION

     46  

Director Compensation Table

     48  

COMPENSATION COMMITTEE REPORT

     49  

PROPOSAL 3—ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES ON EXECUTIVE COMPENSATION

     50  

Directors’ Recommendation

     50  

PROPOSAL 4—APPROVAL OF THE INTERCONTINENTAL EXCHANGE, INC. 2017 OMNIBUS EMPLOYEE INCENTIVE PLAN

     51  

Summary of the 2017 Employee Plan

     53  

Overview

     53  

Administration

     53  

Eligibility

     54  

ICE Common Stock Available for Awards under the Plan

     54  

Type of Awards

     55  

Change in Control

     56  

Performance Awards

     56  

U.S. Federal Income Tax Implications of Awards

     57  

Transfer Restrictions

     58  

Clawback/Recoupment

     59  

Amendment and Termination

     59  

New Plan Benefits

     59  

Directors’ Recommendation

     59  

EQUITY COMPENSATION PLAN INFORMATION

     60  

PROPOSAL 5—APPROVAL OF AN AMENDMENT TO THE INTERCONTINENTAL EXCHANGE, INC. 2013 OMNIBUS NON-EMPLOYEE DIRECTOR INCENTIVE PLAN TO ADD AN AGGREGATE ANNUAL COMPENSATION LIMIT

     61  

Summary of the 2013 Director Plan

     61  

Administration

     61  

Eligibility

     61  

ICE Common Stock Available for Awards under the Plan

     61  

Type of Awards

     62  

Change in Control

     62  

Section 162(m) of the Code

     62  

U.S. Federal Income Tax Implications of Awards

     62  

New Plan Benefits

     63  

Directors’ Recommendation

     63  

PROPOSALS RELATING TO ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

     64  

PROPOSAL 6—APPROVAL OF THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO UPDATE AND STREAMLINE REFERENCES TO OUR NATIONAL SECURITIES EXCHANGE SUBSIDIARIES, THEIR MEMBERS, AND THE HOLDING COMPANIES THAT CONTROL SUCH EXCHANGES, AND DELETE REFERENCES TO CERTAIN OTHER SUBSIDIARIES

     64  

General

     64  

Review and Approval by the SEC

     65  

Vote Required

     65  

Directors’ Recommendation

     65  

 

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PROPOSAL 7—APPROVAL OF THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REMOVE AN OBSOLETE PROVISO CROSS-REFERENCING A SECTION OF OUR BYLAWS THAT WAS DELETED AFTER THE SALE OF THE EURONEXT BUSINESS IN 2014

     66  

General

     66  

Review and Approval by the SEC

     66  

Vote Required

     67  

Directors’ Recommendation

     67  

AUDIT MATTERS

     68  

AUDIT COMMITTEE REPORT

     68  

PROPOSAL 8—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017

     69  

INFORMATION ABOUT OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES

     69  

Audit and Non-Audit Fees

     69  

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

     70  

OTHER PROPOSALS FOR YOUR CONSIDERATION

     71  

PROPOSAL 9—STOCKHOLDER PROPOSAL REGARDING THE PREPARATION OF A REPORT ASSESSING ENVIRONMENTAL, SOCIAL AND GOVERNANCE MARKET DISCLOSURE EXPECTATIONS

     71  

Supporting Statement

     71  

Statement by Our Board of Directors Against the Stockholder Proposal

     72  

Directors’ Recommendation

     74  

ADDITIONAL INFORMATION

     75  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     75  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     77  

Relationships with Our Stockholders

     77  

Other

     78  

SECTION 16(A) OF THE SECURITIES EXCHANGE ACT BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     78  

VOTING INSTRUCTIONS AND FREQUENTLY ASKED QUESTIONS

     78  

INCORPORATION BY REFERENCE

     87  

STOCKHOLDERS’ PROPOSALS FOR 2018 ANNUAL MEETING

     88  

Proxy Access

     89  

OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING

     89  

EXHIBIT A—FORM OF FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF INTERCONTINENTAL EXCHANGE, INC.

     A-1  

EXHIBIT B—CERTAIN DEFINITIONS RELATED TO OUR OWNERSHIP AND VOTING LIMITATIONS

     B-1  

EXHIBIT C—INTERCONTINENTAL EXCHANGE, INC. 2017 OMNIBUS EMPLOYEE INCENTIVE PLAN

     C-1  

EXHIBIT D—INTERCONTINENTAL EXCHANGE, INC. 2013 OMNIBUS NON-EMPLOYEE DIRECTOR INCENTIVE PLAN

     D-1  

EXHIBIT E—AMENDMENT TO INTERCONTINENTAL EXCHANGE, INC. 2013 OMNIBUS NON-EMPLOYEE DIRECTOR INCENTIVE PLAN

     E-1  

 

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INTRODUCTION

 

This Proxy Statement is furnished to the stockholders of Intercontinental Exchange, Inc. in connection with the solicitation of proxies by our Board of Directors to be voted at the 2017 Annual Meeting of Stockholders and at any adjournments or postponements thereof (the “Annual Meeting”). The Annual Meeting will be held at the St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305 on Friday, May 19, 2017 at 8:30 a.m., local time. The approximate date on which this Proxy Statement and form of proxy card are first being sent or given to stockholders is March 30, 2017.

When used in this Proxy Statement, the terms “we,” “us,” “our,” “Intercontinental Exchange,” “ICE” and the “Company” refer to Intercontinental Exchange, Inc.

EXECUTIVE SUMMARY

 

This summary highlights certain information contained elsewhere in our Proxy Statement. You should read our entire Proxy Statement carefully before casting your vote.

Matters to be Voted on at Our Annual Meeting

 

    

Board
Recommendation

  

Vote Required

  

For more
detail, see page:

1.  Election Of Directors

  

FOR each Director

   Majority of votes cast    6

2.  Advisory Resolution To Approve Executive Compensation

  

FOR

   Majority of votes cast    21

3.  Advisory Vote On Frequency Of Future Executive Compensation Votes

  

FOR an Annual Vote

   Majority of votes cast   

50

4.  Approval Of The Intercontinental Exchange, Inc. 2017 Omnibus Employee Incentive Plan

  

FOR

   Majority of votes cast   

51

5.  Approval Of An Amendment To The Intercontinental Exchange, Inc. 2013 Omnibus Non-Employee Director Incentive Plan To Add An Aggregate Annual Compensation Limit

  

FOR

   Majority of votes cast   

61

6.  Approval Of Our Fourth Amended And Restated Certificate Of Incorporation To Update and Streamline References To Our National Securities Exchange Subsidiaries, Their Members, And The Holding Companies That Control Such Exchanges, And Delete References To Certain Other Subsidiaries

  

FOR

   Holders of not less than 66 2/3% of the outstanding shares of Common Stock entitled to vote thereon   

64

7.  Approval Of Our Fourth Amended And Restated Certificate Of Incorporation To Remove An Obsolete Proviso Cross-Referencing A Section Of Our Bylaws That Was Deleted After The Sale Of The Euronext Business In 2014

  

FOR

   Holders of not less than 66 2/3% of the outstanding shares of Common Stock entitled to vote thereon   

66

8.  Ratification Of Ernst & Young LLP As Our Independent Registered Public Accounting Firm

  

FOR

   Majority of votes cast   

69

9.  Stockholder Proposal Regarding Preparation Of A Report Assessing ESG Market Disclosure Expectations

  

AGAINST

   Majority of votes cast   

71

 



 

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The approval of each of Proposal 6 and Proposal 7 is required to approve the adoption of our Fourth Amended and Restated Certificate of Incorporation. Accordingly, each of Proposal 6 and Proposal 7 is dependent on, and cross-conditioned upon, the approval of each such proposal, and none of such proposals will be implemented unless they are all approved at the Annual Meeting. The approval of Proposal 6 and Proposal 7 collectively shall constitute the requisite approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation, attached to this Proxy Statement as Exhibit A, as required under Delaware law.

Record Date for Voting and Shares Outstanding

We had 593,453,729 shares of our common stock, $0.01 par value per share (the “Common Stock”), outstanding as of March 21, 2017, the record date for determining holders of our Common Stock entitled to vote at the Annual Meeting.

Corporate Governance Developments and Highlights

The current directors that are nominated for re-election will serve a one-year term expiring at the next annual meeting of stockholders. Our Board of Directors, upon the recommendation of our Nominating and Corporate Governance Committee, has determined that ten of our eleven director nominees are independent under the listing standards of the New York Stock Exchange LLC (“NYSE”) and the governance guidelines and independence policy adopted by our Board of Directors.

 

 

LOGO

Our Board of Directors continues to be led by Mr. Jeffrey C. Sprecher, who serves as Chairman of our Board of Directors, and Mr. Frederic V. Salerno, who has been elected as lead independent director for 2017. Mr. Salerno has served as the lead independent director of our Board of Directors since 2008. As lead independent director, Mr. Salerno presides at all executive sessions of the non-management directors and helps set the agenda for our Board of Director meetings.

There have been several important developments regarding the composition of our Board of Directors and governance matters.

 

   

The Board of Directors has nominated eleven director nominees. The Board of Directors believes that the eleven director nominees collectively have the expertise and diversity of experience to effectively oversee and guide our business.

 

   

As part of the Board of Directors focus on board refreshment, including a focus on diversity as well as a focus on succession for Board leadership positions, three of our long standing directors did not stand for re-election in 2016. We added three new directors to our Board of Directors in the last seven months to fill specific needs deemed important by our Nominating and Corporate Governance Committee and our shareholders.

 

 

LOGO

 

   

We have added additional skill sets and diversity to our Board of Directors, which include:

 

   

Thomas Noonan joined our Board of Directors in September 2016 and brings deep cyber security expertise to our Board of Directors.

 



 

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Ann Cairns joined our Board of Directors in March 2017 and brings additional risk expertise to our Board of Directors. Ms. Cairns also chairs the board of our subsidiary, ICE Clear Europe.

 

   

Duriya Farooqui joined our Board of Directors in March 2017 and brings experience in public service, international policy and economic development.

 

 

LOGO

 

   

As detailed above, we have recently added two female directors to the Board bringing additional gender diversity to our Board of Directors. They each bring fresh ideas and unique skills to the Board.

 

   

Among the current independent director nominees, four of the nominees have fewer than five years of service on our Board of Directors and one nominee has between five and ten years of experience on our Board of Directors.

 

   

The Nominating and Corporate Governance Committee engaged a third-party recruiting firm to help us in our search for diverse board candidates with particular skill sets that we deem important.

 

   

In January 2016, our Board of Directors approved an amendment and restatement of our bylaws to implement proxy access. The bylaws became effective upon the approval of the Securities and Exchange Commission (the “SEC”) on May 6, 2016. Our bylaws now provide that a stockholder, or group of up to 20 stockholders, who has held 3% of our outstanding Common Stock for at least three years may nominate and include in our annual meeting proxy materials up to the greater of two director nominees or 20% of our Board.

 

   

On August 1, 2016, our Board of Directors approved pursuing an effective forward stock split by way of a stock dividend contingent upon both the approval of the adoption of the Third Amended and Restated Certificate of Incorporation by the stockholders and by the SEC. On November 3, 2016, the 5-for-1 split of our Common Stock was effected in the form of a four share stock dividend per share of Common Stock to stockholders of record as of the close of market on October 27, 2016. The new shares began trading on a split-adjusted basis on November 4, 2016. All share numbers and option price values in this Proxy Statement have been adjusted to reflect the stock split.

 

   

On March 3, 2017, our Board of Directors approved and declared advisable (i) a further amendment and restatement to our Seventh Amended and Restated Bylaws (“Bylaws”) to replace references to the Vice Chairman with references to the Lead Independent Director and to update and streamline references to our subsidiaries and processes for our meetings of stockholders and stockholder proposals, and (ii) our Fourth Amended and Restated Certificate of Incorporation to update and streamline references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, delete references to certain other subsidiaries and remove an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext business in 2014. As the owner of national securities exchanges (including the New York Stock Exchange), we are required to obtain approval from the SEC for any amendments to our governing documents, and such governing documents were submitted to the SEC on March 15, 2017. Our Fourth Amended and Restated Certificate of Incorporation will, if approved by the SEC and adopted by our Stockholders at this Annual Meeting, become effective at the time stated in such filing with the Secretary of State of the State of Delaware. At such time, the Bylaws, assuming approval by the SEC, will also become effective.

 



 

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Highlights of Our 2016 Performance

ICE continued to deliver strong annual operating results as evidenced by the following 2016 performance highlights:

 

   

Eleventh consecutive year of record revenue and adjusted earnings, including record financial results each year as a public company;

 

   

Record 2016 consolidated revenues less transaction-based expenses of $4.5 billion and 2016 adjusted diluted earnings per share of $2.78, up 14% year-over-year1;

 

   

Returned over $450 million to stockholders through dividends and share repurchases, increased 2017 quarterly dividend by 18% relative to 2016;

 

   

Three-year total shareholder return in excess of 30% (based on stock price increase from $224.92 ($44.98 adjusted for 5-for-1 stock split) on December 31, 2013 to $56.42 on December 31, 2016, plus quarterly dividend payments); and

 

   

Expanded and strengthened markets served and our range of data and risk management services through organic growth and strategic acquisitions.

Compensation Developments and Highlights

We continue to maintain a well-balanced and performance-based executive compensation program, including:

 

   

More than 85% of named executive officer (“NEO”) targeted compensation delivered through variable, performance-based compensation programs;

 

   

In 2017, we introduced a performance-based restricted stock unit that is tied to our three-year TSR performance against the S&P 500 to introduce a longer-term measure in our performance based share awards;

 

   

More than 60% of NEO targeted compensation delivered through equity compensation programs;

 

   

Annual cash bonus opportunity and performance-based restricted stock units capped at 200% of the established target opportunity;

 

   

Mandatory and competitive stock ownership requirements;

 

   

A compensation clawback policy;

 

   

Anti-hedging and anti-pledging policy requirements;

 

   

Change in control protection that requires a “double-trigger” (i.e., there must be a change in control and the executive’s employment is terminated) for payment (including equity awards) to be provided; and

 

   

No Internal Revenue Code Section 280G “golden parachute” excise tax gross-up provisions in employment agreements with our NEOs.

In February 2017, annual bonuses for 2016 performance were paid at 100% of target for our NEOs. Additionally, in February 2017, performance achievement for the performance-based restricted stock units

 

1  Adjusted EPS is a non-GAAP metric. Please refer to the section titled “Non-GAAP Financial Measures” in ICE’s Annual Report on Form 10-K filed with the SEC on February 7, 2017 for the equivalent GAAP term and reconciliation to the GAAP term.

 



 

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granted in January 2016 was calculated at above target levels due to our 2016 EBITDA2 growth outperforming our pre-established goals; payouts were adjusted to 111.5% of target as a result for our executives, including our NEOs. ICE had historically used a one-year EBITDA performance measure for the performance-based restricted stock unit plan. Beginning in 2017, we are introducing a performance-based restricted stock unit that is tied to our three-year TSR performance against the S&P 500 to introduce a longer-term measure in our performance based share awards. We will still issue some portion of long-term incentive awards through the traditional one-year EBITDA share awards. Each of these items is discussed in more detail below in Compensation Matters — Compensation Discussion & Analysis.

We believe that our mix of cash/non-cash and short-term/long-term incentives provides an appropriate balance between our longer-term business objectives and shorter-term retention and competitive needs. We also believe that providing the majority of our NEOs’ compensation in the form of long-term equity awards, when combined with our clawback policy and stock ownership requirements, both of which are described below, has the additional benefit of discouraging employees from taking inappropriate risks.

You should review Compensation Matters — Compensation Discussion & Analysis and Compensation Matters — Executive Compensation below and the compensation-related tables for a complete understanding of our compensation program, including a detailed review of the philosophy, process, considerations, and analysis involved in the determination of compensation granted or paid to our NEOs in 2016.

 

2  EBITDA is earnings before interest and other non-operating income and expense, taxes, depreciation and amortization, which is a non-GAAP financial measure, and serves as a performance target for ICE. For information on the calculation of EBITDA, please see Compensation Matters — Compensation Discussion & Analysis — Elements of Compensation below.

 



 

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CORPORATE GOVERNANCE

 

PROPOSAL 1 — ELECTION OF DIRECTORS

Board of Directors

Under our current Amended and Restated Certificate of Incorporation and Bylaws, our Board of Directors sets the number of directors who may serve on the Board of Directors through resolutions adopted by a majority of the directors then in office. The size of our Board of Directors is currently set at 11 directors and presently consists of 11 directors. We have nominated all of our current directors for re-election at the Annual Meeting of Stockholders. All of our nominees, if elected, will serve for a one-year term expiring at the next annual meeting of stockholders. Each director will hold office until his or her successor is duly elected and qualified or until the director’s earlier resignation or removal.

Each of our directors is elected by majority vote in an uncontested election. A director who fails to receive a majority of “for” votes cast by stockholders entitled to vote will be required to tender his or her resignation to our Board of Directors. Our Nominating and Corporate Governance Committee will then act on an expedited basis to determine whether to accept the director’s resignation and will submit such recommendation for prompt consideration by our Board of Directors. Our Board of Directors expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. Our Board of Directors and our Nominating and Corporate Governance Committee may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Nominees for Election as Directors at the 2017 Annual Meeting

On the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated the persons named below for election as directors at the Annual Meeting of Stockholders, each to serve for a one-year term expiring at the next annual meeting of stockholders in 2018. All of the nominees currently are members of the Board of Directors. Our Board of Directors, upon the recommendation of our Nominating and Corporate Governance Committee, has determined that each of our non-employee directors is independent in accordance with NYSE listing standards and our Board of Directors Governance Guidelines as described below under Corporate Governance — Structure and Role of Our Board — Independent Non-Employee Directors.

Each of the nominees has confirmed that he or she expects to be able to continue to serve as a director until the end of his or her term. If, however, at the time of the Annual Meeting, any of the nominees named below is not available to serve as a director (an event which the Board of Directors does not anticipate), all the proxies granted to vote in favor of such director’s election will be voted for the election of such other person or persons, if any, recommended by the Nominating and Corporate Governance Committee and approved by the Board of Directors. Proxies cannot be voted for a greater number of directors than the eleven nominees named in this Proxy Statement. For a discussion of our policy regarding qualification and nomination of director candidates, see Corporate Governance — Structure and Role of Our Board — Nomination of Directors below.

 

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Set forth below are the nominees’ names, biographical information, age, summary of qualifications and the year in which each director joined our Board of Directors:

 

Name

  

Biographical Information

Ann M. Cairns

 

LOGO

 

Age: 60

Director since: 2017

   Ms. Ann Cairns is President, International Markets for Mastercard, where she is responsible for the management of all markets and customer-related activities outside North America; a role she has held since August 2011. She currently serves as Chair of ICE Clear Europe, our subsidiary. From 2008 to 2011, she was Managing Director and Head of the Financial Industry Services group for Europe with Alvarez & Marsal in London where she oversaw the European liquidation of Lehman Brothers Holdings International. Prior to that, Ms. Cairns was Chief Executive Officer, Transaction Banking at ABN-AMRO in London, from 2002 to 2008. At the start of her career, she spent time as an award-winning research engineer, culminating as the Head of Offshore Engineer-Planning for British Gas and was the first woman qualified to go offshore in Britain. Ms. Cairns joined the AstraZeneca Board of Directors in 2014 and will end her term as a director of AstraZeneca in April 2017. She received a Bachelor of Science in Pure Mathematics at Sheffield University and a Master of Science in Statistics from Newcastle University, UK. In light of Ms. Cairns’ expansive experience across international business, risk management and financial sectors, as well as business acumen as a global executive that has led operations in Europe, U.S. and Japan, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Ms. Cairns should be re-elected to our Board.

Charles R. Crisp

 

LOGO

 

Age: 69

Director since: 2002

   Mr. Crisp is the retired President and Chief Executive Officer of Coral Energy, a Shell Oil affiliate responsible for wholesale gas and power activities. He served in this position from 1999 until his retirement in October 2000, and was President and Chief Operating Officer from January 1998 through February 1999. Prior to that, he served as President of the power generation group of Houston Industries from 1996 to 1997, he served as President and Chief Operating Officer of Tejas Gas Corporation from 1988 to 1996, he served as a Vice President, Executive Vice President and President at Houston Pipeline Co. from 1985 to 1988, he served as Executive Vice President of Perry Gas Co. Inc. from 1982 to 1985 and he was with Conoco, Inc., where he held various positions in engineering, operations and management from 1969 to 1982. Mr. Crisp serves on the Board of Directors of ICE Futures U.S. and ICE Trade Vault, LLC, our subsidiaries. In addition, he serves as a director of EOG Resources, Inc. and Targa Resources, Corp. Prior to the acquisition of AGL Resources, Inc. by Southern Company, he served on the public company board of AGL Resources from 2003 to 2016 and he currently serves on the Southern Company Gas subsidiary board of Southern Company. He holds a B.S. degree in Chemical Engineering from Texas Tech University and completed the Program for Management Development at Harvard Graduate School of Business. In light of Mr. Crisp’s broad knowledge of the energy markets and related businesses, his service on the boards of other public companies and the experience he has gained and contributions he has made during his tenure as a director of ICE, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Crisp should be re-elected to our Board.

 

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Name

  

Biographical Information

Duriya M. Farooqui

 

LOGO

 

Age: 40

Director since: 2017

   Ms. Farooqui is Executive Director of Atlanta Committee for Progress (ACP), a coalition of leading CEOs focused on critical issues for Atlanta; a role she has held since May 2016. This unique public-private partnership focuses on priorities for the City in collaboration with the Mayor of Atlanta. Ms. Farooqui was a principal at Bain & Company from 2014 to 2016. She served the City of Atlanta through several leadership positions including, Chief Operating Officer from 2011 to 2013, Deputy Chief Operating Officer from 2010 to 2011 and Director from 2007 to 2009. At the start of her career, she worked with the Center for International Development at Harvard University, The World Bank, and the Center for Global Development. She serves on the Boards of the Woodruff Arts Center and the International Women’s Forum of Georgia. Ms. Farooqui holds an M.P.A. in International Development from the Kennedy School of Government at Harvard University, and a B.A. in Economics and Mathematics from Hampshire College. In light of Ms. Farooqui’s experience in public service, international policy and economic development, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Ms. Farooqui should be re-elected to our Board.

Jean-Marc Forneri

 

LOGO

 

Age: 57

Director since: 2002

   Mr. Forneri is founder and senior partner of Bucephale Finance, a boutique M&A firm specializing in large transactions for French corporations, foreign investors and private equity firms. For the seven years prior to Bucephale’s founding, he headed the investment banking business of Credit Suisse First Boston in Paris. He was Managing Director and Head of Credit Suisse First Boston France S.A., and Vice Chairman, Europe. Prior to that, he was a Partner of Demachy Worms & Cie Finance from 1994 to 1996, where he was in charge of investment banking activities of Group Worms. He is also a director of Safran SA and Balmain SA, and is Chairman of the Supervisory Board of Grand Port Maritime de Marseille. He holds a B.S. in Political Science from the Ecole Nationale d’Adminstration. In light of his extensive financial services background, merger and acquisition experience and international business experience, as well as the contributions he has made during his tenure as a director of ICE, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Forneri should be re-elected to our Board.

 

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Name

  

Biographical Information

The Right Hon. the Lord Hague of Richmond

 

LOGO

 

Age: 56

Director since: 2015

   Lord Hague is the Chairman of the United for Wildlife Taskforce, Chairman for the International Advisory Board at the law firm Linklaters and Chairman of the security and defense think-tank, the Royal United Services Institute. He also serves as Senior Adviser to global advisory firm Teneo. Lord Hague currently serves as Chairman of the Board of Directors of ICE Futures Europe, our subsidiary. He has previously served as an advisor to the JCB Group and Terra Firma Capital Partners. Mr. Hague was a member of the House of Parliament from 1989 to 2015, serving in various capacities, including Parliamentary Private Secretary to the Chancellor of the Exchequer, Parliamentary Under-Secretary of State at the Department of Social Security, Minister of State, Secretary of State for Wales, Foreign Secretary, First Secretary of State and most recently, Leader of the House of Commons. He is a member of the House of Lords. Prior to joining Parliament, Mr. Hague was a management consultant at McKinsey & Co Inc. and worked for Shell (UK) Limited. Lord Hague frequently carries out speaking engagements on regulatory and political matters. Mr. Hague holds a First-Class Honours degree in Philosophy, Politics, and Economics from Oxford University and an MBA with distinction from the Institut d’Administration des Affaires (INSEAD). In light of Lord Hague’s extensive governmental and political experience in the United Kingdom, his service on the ICE Futures Europe board and the knowledge and experience he provides, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Lord Hague should be re-elected to our Board.

Fred W. Hatfield

 

LOGO

 

Age: 62

Director since: 2007

   Mr. Hatfield is the founder of Hatfield Advisory Services and Senior Advisor at Patomak Global Partners. Mr. Hatfield serves as Chairman of the Board of Directors of ICE Futures U.S. and ICE Swap Trade, LLC and serves on the boards of multiple NYSE U.S. regulated subsidiaries and on the Board of Managers of ICE Clear Credit, all of which are our subsidiaries. Mr. Hatfield serves on the Board of Directors of Pinpoint Global Communications and Ascent Technologies, Inc. Mr. Hatfield served as a Public Policy Advisor at Patton Boggs, LLP from 2006 to 2007 and he was a Commissioner at the Commodity Futures Trading Commission from 2004 to 2006. Mr. Hatfield served as Chief of Staff to former Senator John Breaux (D-LA) from 1995 to 2004 and former House Majority Whip Tony Coelho (D-CA) from 1980 to 1989. He has over twenty years’ experience in the areas of energy, private equity/venture capital/hedge funds, and financial services and products. Mr. Hatfield served as Deputy Commissioner General of the U.S. Pavilion at the World’s Fair in Lisbon, Portugal in 1998. He graduated summa cum laude with a B.A. in History from California State University. In light of Mr. Hatfield’s extensive regulatory and legislative background and his experience in the sectors mentioned above, his service on the boards of our subsidiaries and the knowledge and experience he has gained and contributions he has made during his tenure as a director of ICE, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Hatfield should be re-elected to our Board.

 

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Name

  

Biographical Information

Thomas E. Noonan

 

LOGO

 

Age: 56

Director since: 2016

   Mr. Noonan is a founding partner of TechOperators LLC, and Chairman of TEN Holdings, LLC. Most recently he was the General Manager of the Energy Management business of Cisco from 2013 to 2016, following the acquisition of JouleX in 2013, where he was co-founder and CEO. Mr. Noonan founded Actuation Electronics in 1985 and Leapfrog Technologies in 1987 as well as co-founded Endgame Security in 2008, a leading provider of software solutions to the U.S. Intelligence Community and Department of Defense. Mr. Noonan co-founded Internet Security Systems (ISS) in 1994, where he served as Chairman, President and Chief Executive Officer prior to its acquisition by IBM in 2006. Mr. Noonan began his career as a product manager and engineer for Rockwell Automation. In 2002, President Bush appointed Mr. Noonan to serve on the National Infrastructure Advisory Council (NIAC), a White House homeland defense initiative that protects information systems critical to the nation’s infrastructure, where he continues to serve in that role. Mr. Noonan has served on the Board of Directors of Manhattan Associates since 1999. Mr. Noonan earned a Bachelor of Science degree in Mechanical Engineering from the Georgia Institute of Technology and a CSS in Business Administration and Management from Harvard University. In light of Mr. Noonan’s cyber-security expertise, successful entrepreneurial background and his business acumen, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Noonan should be re-elected to our Board.

Frederic V. Salerno

 

LOGO

 

Age: 73

Director since: 2002

   Mr. Salerno is the former Vice Chairman of Verizon Communications, Inc. Before the merger of Bell Atlantic and GTE, Mr. Salerno was Senior Executive Vice President, Chief Financial Officer and served in the Office of the Chairman of Bell Atlantic from 1997 to 2001. Prior to joining Bell Atlantic, he served as Executive Vice President and Chief Operating Officer of New England Telephone from 1985 to 1987, President and Chief Executive Officer of New York Telephone from 1987 to 1991 and Vice Chairman — Finance and Business Development at NYNEX from 1991 to 1997. Since 2013, Mr. Salerno serves on the boards of multiple NYSE U.S. regulated subsidiaries, all of which are our subsidiaries. He served on the boards of directors of National Fuel Gas Company from 2008 to 2013, CBS Corporation from 2007 to 2016, and Viacom from 1996 to 2017. He has served on the boards of directors of Akamai Technologies, Inc. since 2002, FCB Financial Holdings, Inc. since 2010, and Associated Capital Group since 2017. He has a B.S. in Engineering from Manhattan College and an MBA from Adelphi University. In light of Mr. Salerno’s broad knowledge of financial markets and his business acumen, his service on the boards of our subsidiaries, and other public companies, and the knowledge and experience he has gained and contributions he has made during his tenure as a director of ICE, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Salerno should be re-elected to our Board.

 

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Name

  

Biographical Information

Jeffrey C. Sprecher

 

LOGO

 

Age: 62

Director since: 2000

   Mr. Sprecher has been a director and our Chief Executive Officer since our inception and has served as Chairman of our Board of Directors since November 2002. As our Chief Executive Officer, he is responsible for our strategic direction, operational and financial performance. Mr. Sprecher acquired CPEX, our predecessor company, in 1997. Prior to acquiring CPEX, Mr. Sprecher held a number of positions, including President, over a fourteen-year period with Western Power Group, Inc., a developer, owner and operator of large central-station power plants. While with Western Power, he was responsible for a number of significant financings. Mr. Sprecher holds a B.S. degree in Chemical Engineering from the University of Wisconsin and an MBA from Pepperdine University. In light of Mr. Sprecher’s in-depth knowledge of global markets, his guidance of ICE as Chief Executive Officer since he founded the company, and his successful execution of key strategic initiatives to grow the company, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Sprecher should be re-elected to our Board.

Judith A. Sprieser

 

LOGO

 

Age: 63

Director since: 2004

   Ms. Sprieser was the Chief Executive Officer of Transora, Inc., a technology software and services company until March 2005. Prior to founding Transora in 2000, she was Executive Vice President of Sara Lee Corporation, having previously served as Sara Lee’s Chief Financial Officer. Ms. Sprieser also serves on the Board of Managers of ICE Clear Credit, our subsidiary, and Maroon Holding, LLC, which is the holding company for our interest in MERSCORP Holdings, Inc. Ms. Sprieser has been a member of the boards of directors of Allstate Insurance Company since 1999 (currently Lead Director) and Reckitt Benckiser, plc since 2003 (currently Chair of the Compensation Committee). Previously, she served on the boards of Royal Ahold N.V. from 2006 to 2015, Jimmy Choo plc from 2014 to 2015 and Experian plc from 2010 to 2016. She has a B.A. degree and an MBA from Northwestern University. In light of her financial expertise and her business acumen, and her service as a director for other public companies and the knowledge and experience she has gained and contributions she has made during her tenure as a director of ICE, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Ms. Sprieser should be re-elected to our Board.

 

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Name

  

Biographical Information

Vincent Tese

 

LOGO

 

Age: 74

Director since: 2004

   Mr. Tese currently serves as Chairman of FCB Financial Holdings, Inc. Since 2009, Mr. Tese also serves as Chairman of the Board of ICE Clear Credit and since 2013, serves on the boards of multiple NYSE U.S. regulated subsidiaries, all of which are our subsidiaries. Previously, he served as New York State Superintendent of Banks from 1983 to 1985, Chairman and Chief Executive Officer of the New York Urban Development Corporation from 1985 to 1994, Director of Economic Development for New York State from 1987 to 1994, and Commissioner and Vice Chairman of the Port Authority of New York and New Jersey from 1991 to 1995. He also served as a Partner in the law firm of Tese & Tese from 1973 to 1977. He was a Partner in the Sinclair Group, a commodities company, from 1977 to 1982 and was co-founder of Cross Country Cable TV. Prior to the acquisition of Cablevision Systems Corporation by Altice, he served on the public company board of Cablevision from 1996 to 2016. He currently serves as a member of the boards of directors for Madison Square Garden, Inc., Mack-Cali Realty Corporation, AMC Networks Inc., and serves as a trustee of New York University School of Law and New York Presbyterian Hospital. He has a B.A. degree in accounting from Pace University, a J.D. degree from Brooklyn Law School and an LLM degree in taxation from New York University School of Law. In light of Mr. Tese’s broad knowledge of trading and financial markets, his legal and business acumen, as well as his board service for our subsidiaries and other public companies, and the knowledge and experience he has gained and contributions he has made during his tenure as a director, our Board, based upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Mr. Tese should be re-elected to our Board.

Based on the foregoing qualifications, our Nominating and Corporate Governance Committee believes that the director nominees collectively have the skills and experience to effectively oversee and guide our business. Each nominee has the integrity, business judgment, collegiality and commitment that are among the essential characteristics for membership on our Board of Directors. They also bring highly developed skills in, among other areas, finance, investing, accounting, financial market regulation, public policy, business operations, organizational management and leadership. In addition, members of our Board have had a great diversity of experiences and bring to our Board a wide variety of views that strengthen their ability to guide ICE. They have had extensive involvement in international business and deep professional experience across a broad range of industries and in the energy and derivatives markets in particular. Most have relevant direct experience in the oversight of public companies through their service on our Board and those of other public companies, as well as their current and past senior executive positions.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE TO THE BOARD OF DIRECTORS.

 

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STRUCTURE AND ROLE OF OUR BOARD

Meetings and Committees of the Board of Directors

The Board of Directors conducts its business through meetings of the full Board of Directors and through meetings of the committees of the Board of Directors, consisting of an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and a Risk Committee. The current members of the committees are identified in the table below.

 

Director

   Audit
Committee
     Compensation
Committee
     Nominating and
Corporate Governance
Committee
     Risk
Committee
 

Ann M. Cairns

           

Charles R. Crisp

     X        X        

Duriya Farooqui

           

Jean-Marc Forneri

           X        X  

Fred W. Hatfield

           X        X(Chair)  

Thomas E. Noonan

              X  

Lord Hague of Richmond

        X           X  

Frederic V. Salerno

           X(Chair)     

Jeffrey C. Sprecher

           

Judith A. Sprieser

     X(Chair)           X     

Vincent Tese

     X        X(Chair)        X     

In 2016, our Board of Directors held ten meetings, the Audit Committee held eight meetings, the Compensation Committee held six meetings, the Nominating and Corporate Governance Committee held four meetings and the Risk Committee held five meetings. In addition, our non-management directors met periodically in executive session without management participation, as required by NYSE listing standards. Mr. Salerno has been appointed by the Board of Directors as the non-management lead independent 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 of Directors and any committees on which the director serves. Each director attended at least 75% of the aggregate number of meetings of the Board of Directors and meetings of the committees of which he or she is a member. In fact, eight of our nine directors serving on our Board in 2016 attended 100% of our Board meetings in 2016 and one director missed one meeting. As a matter of policy, it is expected that each director and nominee will attend annual meetings of stockholders. All members of our Board of Directors attended last year’s annual meeting.

Each year, the members of the Board of Directors and each Board committee conduct a confidential oral assessment of their performance with a member of our legal department. As part of the evaluation process, the Board reviews its overall composition, including director tenure, board leadership structure, diversity and individual skill sets, to ensure it serves the best interests of stockholders and positions the company for future success. The results of the oral assessments are then summarized and communicated back to the appropriate committee chairpersons and members of the Board of Directors. After the evaluations, the Board and management work to improve upon any issues or focus points disclosed during the evaluation process. We believe that conducting these evaluations through a discussion with our Board members leads to more meaningful results that are more likely to result in changes when compared to conducting evaluations through a written process or completion of a questionnaire. As part of the evaluation process, each committee reviews its charter annually.

 

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Audit Committee

The Audit Committee is comprised solely of directors who meet the independence requirements of the NYSE and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are financially literate, as required by NYSE rules. At least one member of the Audit Committee qualifies as an audit committee financial expert, as defined by the rules and regulations of the SEC. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to:

 

   

the quality and integrity of our financial statements;

 

   

our compliance with legal and regulatory requirements;

 

   

our system of internal controls regarding finance, accounting and legal compliance;

 

   

the independence, qualification and performance of our independent auditors;

 

   

the performance of our internal audit function; and

 

   

our auditing, accounting and financial reporting processes.

The Audit Committee is governed by a written Audit Committee Charter, which has been approved by our Board of Directors. The charter is available on our website at www.intercontinentalexchange.com. We will also provide a printed copy of the charter to stockholders upon request.

The current members of the Audit Committee are Ms. Sprieser (Chairperson), Messrs. Crisp and Tese. The Board of Directors has determined that Ms. Sprieser and Mr. Tese are both Audit Committee financial experts.

Compensation Committee

The Compensation Committee is comprised solely of directors who meet NYSE independence requirements, the requirements for a “Non-employee Director” under the Exchange Act and the requirements for an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee:

 

   

reviews and approves corporate goals and objectives relevant to the compensation of our executive officers, including our Chief Executive Officer;

 

   

evaluates our Chief Executive Officer’s performance and sets his compensation based on this evaluation;

 

   

approves, in consultation with our Chief Executive Officer, the compensation of our officers who are appointed by our Board of Directors;

 

   

reviews and approves option grants, bonus payments and stock awards to our officers;

 

   

exercises general oversight of our benefit plans and evaluates any proposed new retirement or benefit plans; and

 

   

reviews and approves severance or similar termination payments to former officers.

The Compensation Committee is governed by a written Compensation Committee Charter approved by our Board of Directors. The charter is available on our website at www.intercontinentalexchange.com. We will also provide a printed copy of the charter to stockholders upon request.

The current members of the Compensation Committee are Mr. Tese (Chairperson), Mr. Crisp and Lord Hague.

 

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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is comprised solely of directors who meet NYSE independence requirements. The Nominating and Corporate Governance Committee assists the Board of Directors in:

 

   

identifying and attracting highly qualified individuals to serve as directors and establishing criteria for selecting new board members;

 

   

evaluating and recommending director nominees for the next annual meeting of stockholders;

 

   

developing and maintaining a set of corporate governance guidelines;

 

   

reviewing and approving any related-party transactions;

 

   

oversight of environmental, sustainability and corporate social responsibility activities;

 

   

devising a code of business conduct and ethics for directors, officers and employees; and

 

   

monitoring the Board of Directors’ independence.

The Nominating and Corporate Governance Committee is governed by a written Nominating and Corporate Governance Committee Charter approved by our Board of Directors. The charter is available on our website at www.intercontinentalexchange.com. We will also provide a printed copy of the charter to stockholders upon request.

The current members of the Nominating and Corporate Governance Committee are Mr. Salerno (Chairperson), Ms. Sprieser and Messrs. Hatfield, Forneri and Tese.

Risk Committee

The Risk Committee is comprised solely of directors who meet NYSE independence requirements. The Risk Committee assists the Board of Directors in fulfilling its oversight of management’s responsibility for ICE’s risk structure and governance in:

 

   

identifying risks inherent in ICE’s business, strategy, capital structure, and operating plans;

 

   

developing processes, guidelines, policies and reports for monitoring risks; and

 

   

organizing and performing ICE’s enterprise risk management function.

In addition, the Risk Committee assists the Audit Committee in fulfilling its responsibility to assist the Board of Directors in the oversight of risk assessment and risk management processes.

The Risk Committee is governed by a written Risk Committee Charter approved by our Board of Directors. The charter is available on our website at www.intercontinentalexchange.com. We will also provide a printed copy of the charter to stockholders upon request.

The current members of the Risk Committee are Mr. Hatfield (Chairperson), Lord Hague and Messrs. Noonan and Forneri.

Independent Non-Employee Directors

The Intercontinental Exchange, Inc. Board of Directors Governance Guidelines (the “Governance Guidelines”) were adopted by our Board of Directors. Our Bylaws and Governance Guidelines, which are described below, provide that a majority of our directors must be “independent directors” and specify independence standards consistent with NYSE listing standards. Assuming the election of the nominees to the Board of Directors, all of our directors holding office, with the exception of Mr. Sprecher, will be independent

 

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directors. Our Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has determined that each non-management director and nominee is independent in accordance with NYSE listing standards, our Bylaws, our Independence Policy of the Board of Directors of Intercontinental Exchange, Inc. (the “Independence Policy”) and our Governance Guidelines, and does not have any relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director.

In making their independence determinations, our Board of Directors and the Nominating and Corporate Governance Committee considered transactions, if any, between each non-employee director and ICE and determined that there are no transactions that give rise to any independence issues.

Requirements for Directors

Our Third Amended and Restated Certificate of Incorporation provides that no person who is subject to any statutory disqualification (as defined in Section 3(a)(39) of the Exchange Act) may be permitted to serve as a director on our Board of Directors.

Nomination of Directors

Our Board of Directors is responsible for approving candidates for board membership and has delegated the screening and recruitment process to the Nominating and Corporate Governance Committee. In furtherance of this process, our Nominating and Corporate Governance Committee and Board of Directors have adopted the Independence Policy and the Nominating and Corporate Governance Committee Charter. The Independence Policy and the Nominating and Corporate Governance Committee Charter do not set specific, minimum qualifications that nominees must meet, but rather specify that each nominee should be evaluated on his or her individual merit taking into account the factors described below.

The Nominating and Corporate Governance Committee seeks to create a Board of Directors that consists of a diverse group of qualified individuals that function effectively as a group. Qualified candidates for director are those who, in the judgment of the Nominating and Corporate Governance Committee, possess strong personal attributes and relevant business experience to assure effective service on our Board of Directors. Personal attributes considered by the Nominating and Corporate Governance Committee when evaluating a board candidate include leadership, integrity, ethics, contributing nature, independence, interpersonal skills and effectiveness. Experience and qualifications considered by the Nominating and Corporate Governance Committee when evaluating a board candidate include financial acumen, general business experience, industry knowledge, diversity of viewpoints, special business experience and expertise in an area relevant to ICE. When the Nominating and Corporate Governance Committee reviews a potential new candidate, the Nominating and Corporate Governance Committee looks specifically at the candidate’s qualifications in light of the needs of our Board of Directors and ICE at that time given the then current make-up of our Board of Directors.

Diversity is an important factor in our consideration of potential and incumbent directors. Our Nominating and Corporate Governance Committee considers a number of demographics including, but not limited to, race, gender, ethnicity, culture and nationality in seeking to develop a board that, as a whole, reflects diverse viewpoints, backgrounds, skills, experiences and expertise. The Committee considers the same factors in determining whether to re-nominate an incumbent director. Diversity is also considered as part of the annual Board evaluation.

We believe that ICE benefits from having directors with diverse viewpoints, backgrounds, experiences, skill sets and other demographics. As noted above, one of the factors that the Nominating and Corporate Governance Committee considers in identifying and evaluating a potential nominee is the extent to which the nominee would add to the diversity of our Board, and the Nominating and Corporate Governance Committee assesses the composition of our Board and how a nominee would enhance that diversity. We are actively seeking directors that bring the necessary skill set and additional diversity to our Board of Directors and

 

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have engaged a third party recruiting firm to assist us in the search for new directors. The Nominating and Corporate Governance Committee uses a variety of methods to identify and evaluate nominees for director. The Nominating and Corporate Governance Committee periodically assesses the appropriate size of the Board of Directors and whether any vacancies on the Board of Directors are expected. In the event that vacancies are anticipated or otherwise arise, the Nominating and Corporate Governance Committee will seek to identify director candidates, subject to the restrictions described below, based on input provided by a number of sources, including: (i) Nominating and Corporate Governance Committee members; (ii) other directors; (iii) management; and (iv) our stockholders. The Nominating and Corporate Governance Committee also has the authority to consult with or retain advisors or search firms to assist in the identification of qualified director candidates and used a search firm over the last year to assist in the Board’s desire to increase diversity on the Board of Directors.

Once director candidates have been identified, the Nominating and Corporate Governance Committee will evaluate each candidate in light of his or her qualifications and credentials, and any additional factors that the Nominating and Corporate Governance Committee deems necessary or appropriate, including those set forth above. Qualified prospective candidates will be interviewed by our Chairman and Chief Executive Officer and at least one member of the Nominating and Corporate Governance Committee. The full Board of Directors will be kept informed of the candidate’s progress. Using input from such interviews and other information obtained by it, the Nominating and Corporate Governance Committee will evaluate whether a prospective candidate is qualified to serve as a director and, if so qualified, will seek the approval of the full Board of Directors for the nomination of the candidate or the election of such candidate to fill a vacancy on the Board of Directors.

Existing directors who are being considered for re-nomination will be re-evaluated by the Nominating and Corporate Governance Committee based on each director’s satisfaction of the qualifications described above and his or her prior performance as a director. All candidates submitted by stockholders will be evaluated in the same manner as candidates recommended from other sources, provided that the procedures set forth below under Corporate Governance — Structure and Role of Our Board — Stockholder Recommendations for Director Candidates have been followed.

Additionally, our Board of Directors shall nominate for election or re-election as directors only candidates who agree to tender, promptly following the annual meeting at which they are elected or re-elected as a director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next annual meeting at which they stand for re-election and (ii) acceptance by our Board of Directors of such resignation. Our Board of Directors shall fill director vacancies and newly created directorships only with candidates who agree to tender promptly following their appointment to the Board of Directors the same form of resignation tendered by other directors in accordance with the Governance Guidelines promulgated by our Board of Directors.

All of the current nominees for directors recommended for election by the stockholders at the 2017 Annual Meeting are current members of the Board of Directors. Based on the Nominating and Corporate Governance Committee’s evaluation of each nominee’s satisfaction of the qualifications described above and their past performance as directors, the Nominating and Corporate Governance Committee has decided to recommend the nominees for re-election and the Board of Directors has approved such recommendation. For the reasons specified in the biography of each director identified above under Corporate Governance — Proposal 1-Election of Directors — Nominees for Election as Directors at the 2017 Annual Meeting, our Board has concluded that each director nominee should be re-elected to our Board of Directors. The Nominating and Corporate Governance Committee has not received any nominations from stockholders for the 2017 Annual Meeting.

Board Leadership Structure

Governance Guidelines provide for (i) the role of the Chairman of the Board and Chief Executive Officer to be combined, (ii) a lead independent director and (iii) strong active independent directors. Under our Bylaws, the Chairman of the Board, or our lead independent director if the Chairman is unavailable, presides over meetings of the Board of Directors, presides over meetings of stockholders, consults and advises the Board of Directors and its committees on our business and affairs, and performs such other duties as may be assigned by the Board. The Chairman of the Board, in consultation with the lead independent director, establishes the agenda for Board

 

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of Director meetings and facilitates constructive and useful communication between management and the Board of Directors. We provide agendas to our lead independent director in advance of meetings and solicit input from the lead independent director regarding topics of discussion and agenda items. Our independent directors have elected Mr. Salerno as the lead independent director for 2017, a position he has held since 2008. As lead independent director, Mr. Salerno presides at all executive sessions of the non-management directors.

Our Chief Executive Officer is in general charge of our business affairs, subject to the overall direction and supervision of the Board of Directors and its committees and subject to such powers as reserved by the Board of Directors. Mr. Sprecher serves as both Chairman of the Board and Chief Executive Officer, and he is the only member of our management team that serves on the Board of Directors. Our Board of Directors believes that this leadership structure — a combined Chairman of the Board and Chief Executive Officer, a lead independent director, active and strong non-employee directors, and committees led and comprised of independent directors — is the most effective structure for us.

Our Board of Directors believes that the Chief Executive Officer is in the best position to most effectively serve as the Chairman of the Board for many reasons as he is closest to many facets of our business, including his frequent contact with our customers, regulators and stockholders. In addition, his direct involvement in the strategic and day-to-day management of our business ensures timely communication with the Board of Directors on critical business matters, which is important given the complexity and global nature of our business. Further, much of our business is conducted through our operating subsidiaries, which are overseen by their own board of directors on which Mr. Sprecher serves. Serving in multiple roles allows Mr. Sprecher to be a primary point of contact for these boards of directors and facilitates effective communication regarding our strategic goals, key issues and topics of importance. The Board of Directors believes this structure has functioned well, produced strong financial and operating results, and effectively balances a highly capable management team with appropriate safeguards and oversight by non-employee directors.

Board Oversight of Risk

Our Board of Directors is responsible for overseeing ICE’s risk management process, which includes management of general risks as well as particular risks facing our business. With the assistance of our Audit and Risk Committees, the Board oversees that our assets are properly safeguarded, that appropriate financial and other controls are maintained, and that our business is conducted prudently and in compliance with applicable laws and regulations and our corporate governance guidelines. In this regard, our Board of Directors seeks to understand and oversee critical business risks and does not view the risks facing our business in isolation. While risks are considered in business decision-making and as part of our overall business strategy, the Board of Directors recognizes that it is neither possible nor prudent to eliminate all business risk. Our Board of Directors believes that purposeful and appropriate risk-taking is essential for our business to be competitive on a global basis, to continue to grow and diversify, and to achieve our overall business objectives.

While the Board of Directors oversees ICE’s risk management practices, our management team is charged with managing risks. We have adopted internal processes and internal controls to identify and manage operational and financial risks. The Board of Directors, the Audit Committee and the Risk Committee monitor and evaluate the effectiveness of the internal controls and the risk management program and management communicates routinely with the Audit Committee and the Risk Committee on the risks identified and how they are being managed.

Directors may, and often do, communicate directly with senior management on any areas of our business for which they would like additional information.

Board of Directors Governance Guidelines

We have adopted Governance Guidelines that guide the Board of Directors on matters of corporate governance, including:

 

   

composition of the Board of Directors;

 

   

duties and responsibilities of the Board of Directors;

 

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committees of the Board of Directors;

 

   

leadership, functioning and evaluation of the Board of Directors;

 

   

director independence, orientation, compensation, education and access to management;

 

   

access to independent advisors by our Board of Directors;

 

   

number of public company boards that our directors can serve; and

 

   

director compliance with the Global Code of Business Conduct.

The Governance Guidelines also provide that non-management directors meet in executive session without the participation of management at all regularly scheduled meetings of the Board of Directors as deemed necessary and at any other time as necessary to fulfill the Board of Directors’ responsibilities. In addition, the Governance Guidelines also state that if all non-management directors are not independent directors, then the independent directors will meet at least once annually. Our Governance Guidelines require that our directors limit their other directorships of public companies to five. Further, our Governance Guidelines require that employee directors tender their resignation from the Board of Directors coincident with their termination, resignation or retirement as employees.

A copy of the Governance Guidelines is available on our website at www.intercontinentalexchange.com. We will provide a printed copy of the Governance Guidelines to stockholders upon request.

Stockholder Recommendations for Director Candidates

The Nominating and Corporate Governance Committee considers nominees recommended by stockholders as candidates for election to the Board of Directors. A stockholder wishing to nominate a candidate for election to the Board of Directors at an annual meeting other than through proxy access provisions in our Bylaws, is required to give written notice to our Secretary of his or her intention to make a nomination. Pursuant to our Bylaws, the notice of nomination must be received not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year; provided, however, that if and only if the annual meeting is not scheduled to be held within a period that commences 30 days before and ends 30 days after such anniversary date, the stockholder notice must be given by the later of the close of business on the date 90 days prior to such annual meeting date or the close of business on the tenth day following the date on which the annual meeting is publicly announced or disclosed. Please see Additional Information — Stockholders’ Proposals for 2018 Annual Meeting below for additional information.

To recommend a nominee, a stockholder should write to the Corporate Secretary, c/o Intercontinental Exchange, Inc., 5660 New Northside Drive, Third Floor, Atlanta, Georgia 30328. Any such recommendation must include:

 

   

a statement in writing setting forth the name of the person or persons to be nominated;

 

   

the number and class of all shares of each class of our stock owned of record and beneficially by each such person, as reported to such stockholder by such person;

 

   

the information regarding each such person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the SEC, as amended from time to time;

 

   

each such person’s signed consent to serve as a director if elected;

 

   

a statement whether such person, if elected, intends to tender promptly following such person’s election or re-election, an irrevocable resignation effective upon their failure to receive the required vote for re-election at the next meeting for their re-election;

 

   

such stockholder’s name and address;

 

   

in the case of a nominee holder, evidence establishing such nominee holder’s indirect ownership of stock and entitlement to vote such stock for the election of directors at the annual meeting; and

 

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information disclosing all ownership interests in ICE, including derivatives, hedged positions and other economic and voting interests, as specified in items (v) through (xiii) under Additional Information —Stockholders’ Proposals for 2018 Annual Meeting, below.

In January 2016, our Board of Directors approved an amendment and restatement of our bylaws to implement proxy access. Accordingly, qualified stockholders can nominate candidates for election to the Board of Directors if such stockholders comply with the requirements contained in our Bylaws within the designated time periods. Under the proxy access provisions of our Bylaws, any stockholder (or group of up to 20 stockholders) owning 3% or more of ICE’s Common Stock continuously for at least three years may nominate up to two individuals or 20% of our Board of Directors, whichever is greater, as director candidates for election to the Board of Directors, and require us to include such nominees in our annual meeting proxy statement if the stockholders and nominees satisfy the requirements contained in our Bylaws. To nominate a nominee pursuant to the Bylaws, a stockholder or group of stockholders must meet the qualifications required by the Bylaws and submit to the Corporate Secretary, c/o Intercontinental Exchange, Inc., 5660 New Northside Drive, Third Floor, Atlanta, Georgia 30328:

 

   

a Schedule 14N (or any successor form) relating to the nominee, completed and filed with the SEC by the nominating stockholder, in accordance with the applicable rules;

 

   

a written notice in a form deemed satisfactory by the Board of Directors, of the nomination of such nominee that includes additional information, agreements, representations and warranties as outlined in our Bylaws;

 

   

an executed agreement, in a form deemed satisfactory by the Board of Directors, pursuant to which the nominating stockholder agrees to certain requirements included in our Bylaws; and

 

   

an executed agreement, in a form deemed satisfactory by the Board of Directors, by the nominee.

Global Code of Business Conduct and Global Personal Trading Policy

We have adopted the Global Code of Business Conduct, which applies to all of our directors, officers and employees. The Global Code of Business Conduct meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K, and applies to our Chief Executive Officer, Chief Financial Officer (who is our Principal Financial Officer) and our Principal Accounting Officer, as well as all other employees, as indicated above. The Global Code of Business Conduct also meets the requirements of a code of conduct under NYSE listing standards. The Global Code of Business Conduct, which includes information regarding our hotline for receiving concerns regarding our financial statements or accounting matters, as well as conflicts of interest and code violations, is available on our website at www.intercontinentalexchange.com. We will provide a printed copy of the Global Code of Business Conduct to stockholders upon request.

In addition, we have adopted a Global Personal Trading Policy that applies to all employees and directors, which prohibits, among other things, entering into hedging transactions relating to our stock. Specifically, employees and directors are prohibited from (i) engaging in short sales and buying or selling puts or calls or any derivative securities of our stock and (ii) holding our stock in a margin account or pledging our stock as collateral for a loan.

Communications with the Board of Directors

We have established a process for interested parties to communicate with members of the Board of Directors. If you have any concern, question or complaint regarding any accounting, auditing or internal controls matter, or any issues arising under our Global Code of Business Conduct, or other matters that you wish to communicate to our Board of Directors or non-management directors, send these matters in writing to:

Corporate Secretary

Intercontinental Exchange, Inc.

5660 New Northside Drive

Third Floor

Atlanta, GA 30328

 

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You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party. Communications are distributed to the Board of Directors, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. Information about our Board of Directors communications policy can be found on our website at www.intercontinentalexchange.com under the links “Investors & Media—Governance—Governance & Charter Documents—Board Communication Policy.”

COMPENSATION MATTERS

 

PROPOSAL 2 — ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

In accordance with the requirements of Section 14A of the Exchange Act, we are asking stockholders to approve an advisory resolution on ICE’s executive compensation as reported in this Proxy Statement. As this is an advisory vote, the result will not be binding, although our Compensation Committee will consider the outcome of the vote when evaluating the effectiveness of our compensation principles and practices.

We urge stockholders to read Compensation Matters — Compensation Discussion & Analysis below, which describes how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative below which provide detailed information on the compensation of our NEOs. Our Board of Directors and Compensation Committee believe that the policies and procedures articulated in Compensation Matters — Compensation Discussion & Analysis are effective in achieving our goals and that the compensation of our NEOs reported in this Proxy Statement has supported and contributed to ICE’s success.

We are asking stockholders to approve the following advisory resolution at the 2017 Annual Meeting:

RESOLVED, that the holders of Common Stock approve, on an advisory basis, the compensation of our named executive officers as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the “Compensation Discussion & Analysis”, the compensation tables and related disclosure.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

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COMPENSATION DISCUSSION & ANALYSIS

Introduction

Our Compensation Committee is responsible for designing, administering and implementing our executive compensation programs. The Compensation Committee is composed of three directors and each of the three directors is a “non-employee director,” as defined in Rule 16b-3 promulgated under the Exchange Act, and an “outside director,” as defined pursuant to Section 162(m) of the Code. The Compensation Committee determines the type and level of compensation for executive officers (generally defined as Section 16 officers under the Exchange Act, but the Compensation Committee has historically included all corporate officers under this definition), reviews the performance of the Chief Executive Officer, and oversees the administration of ICE’s Executive Bonus Plan, ICE’s broad-based employee annual bonus plan and all of ICE’s equity compensation plans. The Compensation Committee Charter, which is periodically reviewed and revised by the Compensation Committee and the Board of Directors, outlines the specific responsibilities of the Compensation Committee.

In this section, we discuss certain aspects of our compensation program as it relates to our principal executive officer, our principal financial officer, and our three other most highly-compensated executive officers in 2016. These individuals are collectively referred to as our “Named Executive Officers” or “NEOs.”

 

Name and Position

   NEO Status

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   Principal Executive
Officer

Scott A. Hill

Chief Financial Officer

   Principal Financial
Officer

Charles A. Vice

President and Chief Operating Officer

   Named Executive
Officer

David S. Goone

Chief Strategy Officer

   Named Executive
Officer

Thomas W. Farley

President, NYSE Group

   Named Executive
Officer

Financial Performance Highlights

In 2016 — the best year in ICE’s history as a public company — ICE continued to deliver strong annual operating results as evidenced by the following 2016 performance highlights:

 

   

Eleventh consecutive year of record revenue and adjusted earnings, including record financial results each year as a public company;

 

   

Record consolidated revenues less transaction-based expenses of $4.5 billion;

 

   

Disciplined capital allocation for organic and strategic investments and de-leveraging while returning over $450 million to stockholders through dividends and share repurchases;

 

   

Based on 2016 performance, approved an increase to the 2017 quarterly dividend by 18% relative to 2016;

 

   

Significant progress on integration efforts and identified an additional $25 — $30 million of deal related synergies;

 

   

Increased recurring revenues as percentage of total revenues to 53%, up from 9% five years ago; and

 

   

Expanded and strengthened markets served and our range of data and risk management services through organic growth and strategic acquisitions.

 

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2016 Advisory Vote Results and Stockholder Engagement

At our 2016 Annual Meeting of Stockholders held on May 13, 2016, approximately 97% of stockholders voted to approve the non-binding advisory vote on executive compensation. In addition to seeking stockholder feedback through our “say on pay” vote, ICE also held in-person meetings or telephonic meetings with approximately 15 of our largest stockholders to obtain their views on our executive compensation programs. The Compensation Committee will continue to review our executive compensation program as well as consider stockholder input and consider the outcome of our “say on pay” votes when making future compensation decisions for the NEOs.

C ompensation Objectives and Components

Our executive compensation philosophy is to link compensation with individual achievement, company performance, and the creation of stockholder value. This philosophy manifests itself in the following four primary objectives:

 

   

attract, retain and reward executive officers capable of achieving our business objectives;

 

   

offer competitive compensation opportunities that reward individual contribution and company performance;

 

   

align the interests of executive officers and stockholders over the long-term; and

 

   

pay total compensation that is commensurate with the performance achieved and value created for stockholders.

Our executive compensation program offers several distinct elements that are consistent with the objectives outlined above, including:

 

   

Base salary: A cash base salary enables us to recruit and retain qualified executives by providing regular, stable compensation for their service during the year. We offer base salaries that are competitive with our peers and commensurate with the industry, the experience of the executive and the scope of the role.

 

   

Annual bonus: Our cash bonus plan is designed to reward the achievement of our annual performance targets, which align with our strategic business priorities. These targets are based primarily on objective and quantitative components, but also include qualitative components for measuring both corporate and individual achievement relative to objectives.

 

   

Equity compensation: We believe in the use of a variety of equity vehicles, including stock options, time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) to deliver long-term incentive compensation in a manner that aligns employee interests with the interests of our stockholders, and serves as a retention tool through multi-year vesting schedules. Additionally, we have equity ownership requirements in place for all of our officers (including our NEOs) and directors.

 

   

Benefits and perquisites: We offer limited but competitive benefits and perquisites intended to attract and retain qualified executives.

Our Typical Annual Process

As discussed in more detail below, with the help of its independent compensation consultant, the Compensation Committee reviews our executive compensation programs and practices each year. As it relates to 2016, reviews were completed in both 2015 and 2016 that informed decision making for 2016 compensation levels. Generally, as referenced in the relevant sections below, the review completed in 2015 informed decision making regarding target 2016 equity awards granted in January of 2016. The review completed in 2016 then informed decision making regarding salary adjustments in 2016, as well as target 2016 annual incentive opportunities.

 

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As discussed in more detail below, in 2016, the Compensation Committee:

 

   

Approved base salary adjustments for each executive officer, except for Mr. Sprecher.

 

   

Did not change target annual bonus opportunities from 2015 levels (other than would mathematically occur as a result of the noted salary changes).

 

   

Did not change target long-term incentive awards from 2015 levels.

The next review will be completed in 2017.

Role of Compensation Consultant

The Compensation Committee has engaged a compensation consulting firm to serve as its compensation advisor since the founding of ICE in 2000. During 2016, the Compensation Committee retained Compensation Advisory Partners, which has served the Compensation Committee since 2011, to advise on executive compensation matters. The information provided by Compensation Advisory Partners in 2016 included: competitive salary, bonus and equity data for certain positions within ICE and benchmarking analysis against our peers. In addition, Compensation Advisory Partners helped analyze our bonus and equity award programs, provided advice regarding the selection of our peer group, provided updates to the Compensation Committee on trends and regulatory developments, analyzed director compensation and assisted in the review of our compensation plans to determine if the arrangements incented inappropriate risk taking.

The NEOs have not participated in the selection of Compensation Advisory Partners or any other compensation consultant in connection with advice regarding executive and director compensation matters. A representative from our compensation consultant attends most Compensation Committee meetings and is available between meetings as a resource for the Compensation Committee and management. The Compensation Committee determines in its sole discretion which compensation consultant to retain for various services, and the consultant reports directly to the Compensation Committee. Use of a particular consulting firm by the Compensation Committee does not preclude management from hiring the same consulting firm. In 2016, Compensation Advisory Partners did not provide any other services to ICE. In compliance with the SEC and NYSE requirements regarding the independence of compensation consultants, Compensation Advisory Partners provided the Compensation Committee with a letter addressing each of the six independence factors. Their responses affirm the independence of the firm and its partners, consultants, and employees who service the Compensation Committee on executive compensation matters and governance issues.

Compensation Peer Group

The Compensation Committee utilizes a peer group to assess ICE’s executive compensation program. ICE’s peer group includes comparable financial exchanges, financial services providers, technology companies and related companies based on metrics such as revenue and market capitalization. The peer group is reviewed annually by the Compensation Committee, with assistance and recommendations from its compensation consultant, and adjustments are made as necessary. The Compensation Committee reviews annually the executive pay practices of these peer companies as reported in industry surveys, public filings and reports from compensation consulting firms. This information is considered when making recommendations for ICE’s compensation programs and practices.

The 2016 peer group was substantially similar to the 2015 peer group, with the following two changes:

 

   

CBOE Holdings, Inc. was removed from the peer group due to its substantially smaller size in comparison to the Company; and

 

   

Thomson Reuters was added to the peer group as ICE continues to expand and evolve its data services offerings.

 

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The 2016 peer group was comprised of the following companies:

 

  Citrix Systems Inc.

   ICAP PLC    S&P Global Inc.

  CME Group, Inc.

   London Stock Exchange    Salesforce.com Inc.

  Deutsche Börse AG

   MasterCard, Inc.    State Street Corp.

  Fidelity National Information

  Services Inc.

   Moody’s Corp.    TD Ameritrade Holding Corp.

  Fiserv Inc.

   The Nasdaq OMX Group Inc.    Thomson Reuters

  Hong Kong Exchanges and

  Clearing Limited

   Northern Trust Corp.    Visa Inc.

Compensation Practices

For each NEO, the Compensation Committee reviews an analysis of individual compensation levels prepared by its compensation consultant that reports compensation paid to the NEO and compares base salary, total cash compensation (base salary plus annual bonus) and total direct compensation (total cash compensation plus equity compensation) against relevant market data, including peer group data. The results of the comparisons prepared in 2016 are detailed below.

For Mr. Sprecher, our Chief Executive Officer, the Compensation Committee determines individual performance and conducts an annual review of his salary, bonuses and equity awards. For other NEOs, Mr. Sprecher provides input to the Compensation Committee regarding his views on the performance of these other officers during the Compensation Committee’s annual review of salary, bonuses and equity awards.

In addition to examining market data on individual positions, the Compensation Committee also focuses on the “total cost of management,” which is an aggregation of total direct annual compensation for the NEOs, excluding any special one-time awards. Based on the Compensation Advisory Partners analysis prepared in 2016, our “total cost of management” is between median and the 75th percentile of the peer group. Our revenue, earnings per share and EBITDA performance was in the top quartile relative to our peer group which demonstrates our alignment of executive compensation with company performance.

We do not maintain formal targets for the allocation of total compensation through each compensation element outlined above. We do strive to maintain a low fixed-cost compensation structure (i.e., base salary, benefits and perquisites) and to deliver the majority of value through variable pay elements (i.e., annual bonus and equity-based performance awards). We have maintained this “pay for performance” orientation since our founding and believe it is an important element of our entrepreneurial culture.

 

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The average mix of targeted compensation for our NEOs in 2016 is illustrated by the following chart:

Mix of 2016 Targeted                    

Compensation for NEOs                    

 

 

LOGO

Based on a review by Compensation Advisory Partners, our mix of compensation continues to emphasize variable incentive compensation, rather than fixed compensation. This focus on variable incentive compensation is consistent with the Compensation Committee’s emphasis on performance-based awards for officers and our compensation philosophy.

We believe that our mix of cash/non-cash and short-term/long-term incentives provides an appropriate balance between our longer-term business objectives and shorter-term retention and competitive needs. We also believe that providing the majority of our NEOs’ compensation in the form of long-term incentive awards, when combined with our clawback policy and stock ownership requirements, each discussed below, has the additional benefit of discouraging employees from taking inappropriate risks.

Risk Assessment with Respect to Compensation

The Compensation Committee, with the assistance of its compensation consultant and management, has completed a review of compensation policies and programs, including those not applicable to NEOs, and does not believe there are circumstances where the risks arising from these policies or programs are reasonably likely to have a material adverse effect on ICE. The review examined the balance of fixed and variable elements of compensation, mix of cash and non-cash components and focus on both annual and longer-term operational and financial performance alignment with stockholder interests. Moreover, we designed into our compensation program certain structural features that align our NEOs’ financial incentives with those of our stockholders and mitigate inappropriate risk-taking by our executives, including our NEOs, such as a clawback policy, stock ownership requirements, and a total compensation mix weighted in favor of long-term, equity-based awards. The Compensation Committee continues to monitor the risk exposure of our compensation policies and programs.

Elements of Compensation

The Compensation Committee considers each NEO’s total compensation package when making changes to the individual elements that comprise the NEOs’ compensation. For example, if the Compensation Committee makes a change to an officer’s base salary, the Compensation Committee reviews the change in light of the other elements of compensation, including the annual bonus and annual equity award.

Base Salary

We have historically targeted a base salary for each NEO that is between the median and 75th percentile of the market relative to our peer group depending on the NEO’s experience in his or her respective position, individual performance, impact on the organization and retention concerns. With the assistance of Compensation

 

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Advisory Partners, the Compensation Committee reviewed NEO base salary levels in 2016 and found the competitive positioning relative to peers as detailed in the below table. After reviewing the information and in consultation with Compensation Advisory Partners, the Compensation Committee determined that the following salary adjustments would be made in 2016, and that no salary adjustment would be made for Mr. Sprecher.

 

Name and Position

   Base Salary Positioning
Relative to Peer Group
   Annual Salary as of
June 1, 2015
   Annual Salary as of
June 1, 2016

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   50th to 75th
Percentile
   $1,050,000    $1,050,000

(no change from 2015)

Scott A. Hill

Chief Financial Officer

   25th to 50th
Percentile
   $700,000    $725,000

(3.6% increase)

Charles A. Vice

President and Chief Operating Officer

   50th
Percentile
   $750,000    $775,000

(3.3% increase)

David S. Goone

Chief Strategy Officer

   50th to 75th
Percentile
   $650,000    $675,000

(3.8% increase)

Thomas W. Farley

President, NYSE Group

   50th to 75th
Percentile
   $650,000    $675,000

(3.8% increase)

In making 2016 compensation decisions, the Compensation Committee considered these base salary findings in connection with the findings of total cash and total direct compensation competitiveness noted below. Please see below for a discussion of the individual contributions and company achievements considered in making these decisions.

Annual Bonus

Our annual bonuses are structured to deliver total cash compensation that is competitive with our peers for commensurate performance, and we typically target a range between the median and 75th percentile of the market depending on the officer’s experience in his or her respective position, impact on the organization and corporate and individual performance, although the Compensation Committee retains discretion to award greater or lesser amounts. NEOs participate in our stockholder approved Executive Bonus Plan and target annual bonus and total cash compensation opportunities are reviewed each year. With the assistance of Compensation Advisory Partners, the Compensation Committee reviewed NEO total cash compensation opportunities in 2016 and found the competitive positioning relative to peers as detailed in the below table. After reviewing the information and in consultation with Compensation Advisory Partners, the Compensation Committee determined that no NEO bonus target adjustments would be made in 2016.

 

Name and Position

   Target Total Cash
Positioning  Relative to
Peer Group*
   2015 Target
Bonus
Opportunity
(% of base
salary)
    2016 Target
Bonus
Opportunity
(% of base
salary)

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   75th Percentile      250   250%

(no change from 2015)

Scott A. Hill

Chief Financial Officer

   75th Percentile      175   175%

(no change from 2015)

Charles A. Vice

President and Chief Operating Officer

   50th to 75th Percentile      200   200%

(no change from 2015)

David S. Goone

Chief Strategy Officer

   75th Percentile      175   175%

(no change from 2015)

Thomas W. Farley

President, NYSE Group

   75th Percentile      175   175%

(no change from 2015)

 

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* “Target Total Cash” equals base salary plus target annual bonus.

Actual bonuses paid in any year may range from no payments to bonus payments above the established target level based on company and individual performance. However, executive officers may not receive a bonus that exceeds 200% of the established target level. Further, any potential payments are limited according to the terms of the Executive Bonus Plan.

At the beginning of each year, the Compensation Committee, and as it relates to financial and strategic metrics, the Board of Directors, approves company and individual goals for the year. From these goals, management business objectives, or MBOs, are established that serve as the performance measures for that year’s annual bonus plan. These well-defined company and individual MBOs primarily are made up of financial objectives (90%) and non-financial objectives (10%). For purposes of 2016 annual bonuses, the financial measures included revenue performance and net income performance. The Compensation Committee and management believe that revenue is the right measure for annual performance given our focus on growth. Net income, which is weighted more heavily, was chosen as it is tied to our overall profitability. Our target goals for revenue and net income represented a 39% and 25% increase respectively over 2015 actual results which we believe were achievable but stretch goals. The non-financial performance measures included items such as product launches, integration of acquisitions, key technology initiatives, and leadership development.

At the end of each year, the Compensation Committee evaluates the Executive Bonus Plan funding (which is equal to 3% of EBITDA) and awards annual bonus payments to the NEOs, relative to the target payments for the NEOs based on the achievement of the above noted, pre-established MBOs (covering both company and individual performance). The Compensation Committee also determines the overall bonus pool available for our broad-based employee annual bonus plan, based on the same MBO achievement criteria. This performance review necessarily involves a subjective assessment of corporate and individual performance by the Compensation Committee as it relates to non-financial performance. The Compensation Committee believes that it is appropriate to use some subjective assessments (within the context of the objective funding formula and maximum bonus amounts) as part of the annual bonus determination in light of ICE’s growth, its rapidly evolving industry, the existence of few direct peer companies and the challenges inherent in establishing objective and strictly budget-based goals in a dynamic environment. The Compensation Committee reviews ICE’s performance relative to the MBOs and also monitors the bonus accruals throughout the fiscal year. The Compensation Committee strives to set the performance targets for the annual bonus plan at levels that are challenging but achievable, and incorporates a significant degree of “stretch” to encourage and reward outstanding corporate performance. The payouts are leveraged to provide higher payments in years of exceptional performance and lower payments in years where performance is below the target level. The Compensation Committee believes the 2016 goals were properly challenging given the economic and competitive conditions facing ICE.

In December 2016 and February 2017, the Compensation Committee reviewed ICE’s performance against the pre-established MBOs and the separate aggregate cap in the Executive Bonus Plan for 2016 and authorized payments for the NEOs noted in the table below by applying the framework discussed above. While reviewing ICE’s performance, the Compensation Committee examined the following 2016 financial goals for purposes of determining annual bonus awards:

 

Financial Metric

   2016 Goal    2016 Actual*    2016 Actual
Compared to
2016 Goal
 

Consolidated Revenues (weighted 30%)

   $4,516 Million    $4,499 Million      99.6

Consolidated Net Income Attributable to ICE (weighted 60%)

   $1,644 Million    $1,665 Million      101.3

 

* The 2016 actual consolidated net income attributable to ICE is equal to the adjusted consolidated net income attributable to ICE included in ICE’s most recent Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 7, 2017.

The above weighted financial performance achievement, which accounts for 90% of the overall bonus determination, yields an achievement of approximately 100% of the 2016 financial goals.

 

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In addition to financial performance, the Compensation Committee considered the 2016 non-financial performance relative to MBOs, including the following individual contributions:

 

   

Mr. Sprecher: leadership on continued development of data services business, including the development of new data services management team; continued strategic foresight and market leadership; significant work with global regulators, lawmakers and investors; and his assessment of human capital management.

 

   

Mr. Hill: leadership in budgeting, forecasting and scenario planning processes, as well as risk assessments; significant progress in delivering synergies related to prior acquisitions; leadership on enterprise risk management framework; significant work with institutional investors, rating agencies and analysts; and leadership and coordination of our clearing houses.

 

   

Mr. Vice: leadership in strategic requirements under global financial reform; system reliability, performance and scale enhancements across all of ICE’s technology platforms; launch of NYSE’s integrated trading technology platform in Arca equities; leadership on enterprise risk management framework; significant progress in delivering synergies related to prior acquisitions; and continued leadership in the identification and mitigation of key risks and uncertainties related to projects and daily operations.

 

   

Mr. Goone: ICE Benchmark Administration’s continued development and growth; and oversight and board leadership for key investments (e.g., Cetip, DTCC and OCC).

 

   

Mr. Farley: development of NYSE leadership team; launch of NYSE’s integrated trading technology platform in Arca equities; continued equity market and listings leadership; and significant progress in driving improved business results and efficiencies within NYSE.

Based on these factors and accomplishments, the Compensation Committee determined that management met their non-financial MBO’s for 2016 and scored non-financial performance, which accounts for 10% of the overall bonus determination, at target.

Based on the performance and considerations described above, the following annual bonus awards for fiscal year 2016 were approved by the Compensation Committee:

 

Name and Position

   2016 Annual
Bonus
 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   $

 

2,625,000

(100% of target)

 

 

Scott A. Hill

Chief Financial Officer

   $

 

1,268,750

(100% of target)

 

 

Charles A. Vice

President and Chief Operating Officer

   $

 

1,550,000

(100% of target)

 

 

David S. Goone

Chief Strategy Officer

   $

 

1,181,250

(100% of target)

 

 

Thomas W. Farley

President, NYSE Group

   $

 

1,181,250

(100% of target)

 

 

All annual bonus awards for the NEOs were paid in cash during February 2017, and are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

For purposes of the 2017 Annual Incentive Plan, the Company will utilize the same financial measures and weightings as used in 2016. With regard to specific performance goals for 2017, we note that because the Company does not provide detailed revenue or earnings guidance, the specific 2017 financial goals are not detailed in this filing. We will publish the 2017 targets and the corresponding 2017 achievement in our 2018 Proxy Statement filing. Please refer to the Investors section of our website (www.intercontinentalexchange.com) for publicly available information related to our financial performance.

 

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Equity Compensation

The Compensation Committee believes that equity awards are an effective vehicle to align the interests of executive officers with those of our stockholders, serve as a retention tool through multi-year vesting schedules and discourage employees from taking inappropriate business risks. ICE is sensitive to the concerns of its stockholders regarding the potential dilutive impact of equity awards, and also takes into account the relevant accounting and tax impact of all potential forms of equity awards in designing its grants. The value of the equity awards granted to our NEOs is designed to target total direct compensation between the median and 75th percentile of ICE’s peer group, though actual awards may vary based on individual performance, internal pay equity considerations and retention objectives, as determined in the Compensation Committee’s discretion.

We established the January 2016 equity award levels, with the assistance of Compensation Advisory Partners, based on 2015 performance as well as the competitive positioning relative to peers. In determining the award levels detailed below, the Compensation Committee considered the overall mix of variable compensation delivered through cash and equity, the critical need for executive retention and the competitive positioning relative to peers when considering each individual’s experience and each individual’s continued level of leadership. The resulting positioning of compensation relative to peers based on a 2015 review conducted by Compensation Advisory Partners is included in the table below.

 

Name and Position

  

Target Total Direct

Compensation Positioning

Relative to Peer Group

   Target Grant Date Value
of 2015 Equity Awards
   Target Grant Date  Value
of 2016 Equity Awards*
 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   75th Percentile    $7,000,000     

$7,000,000

(no change from 2015)

 

 

Scott A. Hill

Chief Financial Officer

   75th Percentile    $3,000,000     

$3,000,000

(no change from 2015)

 

 

Charles A. Vice

President and Chief Operating Officer

   Above 75th Percentile    $4,500,000     

$4,500,000

(no change from 2015)

 

 

David S. Goone

Chief Strategy Officer

   Above 75th Percentile    $2,500,000     

$2,500,000

(no change from 2015)

 

 

Thomas W. Farley

President, NYSE Group

   Above 75th Percentile    $2,300,000     

$2,300,000

(no change from 2015)

 

 

 

* Equity grants for our NEOs in 2016 were made under our 2013 Omnibus Employee Incentive Plan.

When determining vehicles to use for the annual equity award, the Committee seeks to maintain a focus on both growth and financial performance. As a result the Committee used stock options to account for 25% of the 2016 target award value and PSUs to account for 75% of the 2016 award value for our NEOs.

We chose stock options as a means of linking a portion of the long-term incentive awards for our most senior executives directly to our Company’s stock price growth and performance. The Committee believes the use of stock options is appropriate given the Company’s continued positioning as a growth company.

We chose PSUs as a means of rewarding senior executives for delivering on pre-established financial performance goals. The PSUs were subject to ICE’s 2016 EBITDA performance as well as a stock market condition that could have reduced the number of shares that were earned above target based on ICE’s 2016 total shareholder return, or TSR, performance as compared to the S&P 500 index. In the event ICE outperformed the EBITDA target for this award, the stock market condition would have reduced the number of shares earned above target by 10% if the TSR on ICE’s Common Stock during 2016 was below the S&P 500 index by 10% or less and reduced such shares by 20% if the TSR on ICE’s Common Stock during 2016 was below the S&P 500 index by more than 10%. The number of shares that could have been earned under PSU awards ranged from zero for performance below the threshold performance target, 50% of the target award for performance at the threshold (85% of the EBITDA goal), 100% of the target award for performance at the target and 200% of the target award for performance at the maximum (113% of the EBITDA goal) performance level.

 

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For purposes of the 2016 PSU award (granted in January 2016), the Committee considered a number of items when establishing (i) the performance measure, and (ii) the performance period utilized, including the fact that the Company closed the acquisition of both Trayport and Interactive Data Corporation in December 2015. The Committee determined that EBITDA was the most appropriate performance measure for a number of reasons, including the Committee’s assessment that EBITDA is a very strong indicator of Company performance and shareholder value, and is the most prominent measure evaluated when determining the financial impact of actual and potential acquisitions. The Committee determined that a one-year performance period was appropriate again in 2016, instead of a longer period, because of the Company’s continued growth trajectory due, in part, to our acquisitive nature. The Committee determined that as a growth company that is continually developing new products and services and entering new markets, the one-year measure provides the Committee the opportunity to reset targeted EBITDA performance each year to account for the impact and financial expectations of new products, services, markets and acquisitions. This was especially true for the 2016 awards given the above-mentioned acquisitions, which closed in December 2015. Because EBITDA has been utilized as a consistent measure for these types of awards, the Committee has the opportunity to ensure the year-over-year targets have a sufficient degree of stretch.

Consistent with the Company’s 2016 proxy filing regarding the re-evaluation of our use of a one-year performance measure, please note that the Company instituted a change in award structure with the 2017 equity award (granted in January 2017). The process and changes, including the introduction of a three-year TSR concept, are discussed further below in the 2017 Equity Award section.

For the 2016 award, both the stock option and PSU awards vest over the three years following grant, subject to continued employment, which provides for continued retention as well as a link to shareholder return.

The following equity awards were made to the NEOs on January 14, 2016:

 

Name and Position

   Stock Options      PSUs at Target
Performance
 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

     177,160        104,970  

Scott A. Hill

Chief Financial Officer

     75,925        44,985  

Charles A. Vice

President and Chief Operating Officer

     113,885        67,480  

David S. Goone

Chief Strategy Officer

     63,270        37,485  

Thomas W. Farley

President, NYSE Group

     58,210        34,490  

The stock options were granted on January 14, 2016 and have a strike price of $50.01, which was the closing price of our Common Stock on the grant date.

In connection with the PSUs granted in January 2016, at a meeting in early February 2017, the Compensation Committee determined that ICE’s EBITDA for 2016 was 101.5% of target, as illustrated below.

 

Financial Metric

   2016 Goal    2016 Actual*    2016 Actual
Compared to 2016
Goal
 

Consolidated EBITDA

   $2,786 Million    $2,827 Million      101.5

 

* The 2016 actual consolidated EBITDA is equal to earnings before interest, taxes, depreciation, and amortization adjusted for the non-GAAP measures described in ICE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission on February 7, 2017.

 

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Pursuant to the terms of the awards, certain costs attributable to merger and acquisition activity were excluded based on the rationale that ICE does not want to discourage future acquisition attempts when opportunities arise. Because ICE’s 2016 EBITDA performance was above target, ICE’s 2016 TSR was evaluated relative to that of the S&P 500. Calculated pursuant to the terms of the award, the Company’s 2016 TSR of 17% was found to exceed that of the S&P 500 at 11%. The impact of the above target EBITDA performance resulted in individual awards at 111.5% of the target level. The first tranche (1/3) of shares earned pursuant to PSUs granted on January 14, 2016 vested on February 16, 2017. Based on continued employment, the second tranche (1/3) of shares earned is scheduled to vest in February 2018 and the final tranche (1/3) of shares earned is scheduled to vest in February 2019.

The following table illustrates the January 14, 2016 PSUs earned based on 2016 performance:

 

Name and Position

   PSUs
at Target
Performance
     PSUs at
Actual Performance
(111.5% of Target Shares)
 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

     104,970        117,041  

Scott A. Hill

Chief Financial Officer

     44,985        50,158  

Charles A. Vice

President and Chief Operating Officer

     67,480        75,240  

David S. Goone

Chief Strategy Officer

     37,485        41,795  

Thomas W. Farley

President, NYSE Group

     34,490        38,456  

Equity awards for all officers are normally approved at a scheduled Compensation Committee meeting. ICE management is not authorized to approve equity awards for officer-level employees, and does not have the discretion or authority to govern the timing of equity awards. In 2016, no equity awards for officers were approved outside of a Compensation Committee meeting. ICE uses the closing price of its Common Stock on the NYSE on the grant date for purposes of establishing the strike price of stock options and for accounting purposes of other equity awards. ICE has not issued stock options with an exercise price below the fair market value of its Common Stock on the grant date.

2017 Equity Award Structure

During 2016, in connection with re-examining the Company’s overall compensation program in light of the December 2015 acquisitions of Trayport and Interactive Data Corporation, the Compensation Committee specifically re-evaluated the Company’s approach to long-term incentive awards. The Compensation Committee considered all aspects of the long-term incentive award program, including equity vehicles used, performance periods, and vesting schedules. In examining the topic, the Compensation Committee worked closely with its independent consultant, reviewed feedback received from shareholder advisory firms, reviewed practices at similarly situated companies (including the peer companies noted above), considered the amount of change appropriate in a given year, and specifically discussed the topic with many large shareholders.

For purposes of the January 2017 equity award, the Compensation Committee ultimately concluded that while the overall existing program was sound, several modifications were appropriate. As illustrated in the table below, the modifications implemented with the January 2017 equity award include:

 

   

Updating stock option vesting schedules to 33% per year, over three years.

 

   

Introduction of a new PSU award design, in addition to the design currently utilized. The number of shares ultimately earned under this new award type will vary based on the Company’s cumulative TSR performance over the three-year period from 2017 — 2019 relative to that of the S&P 500. These awards will cliff vest in February 2020.

 

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Rebalancing long-term incentive awards with 80% in PSUs (20% of the overall award value based on the three-year TSR based PSU vehicle and 60% based on the one-year EBITDA based PSU vehicle) and 20% in stock options

 

Design Provision

   2016 Long-Term Incentive Award Structure    2017 Long-Term Incentive Award Structure
     

Stock option vesting schedule

   33% vest after 12 months. Remainder vest monthly over the following 24 months.    33% per year over three years
     

PSU vesting schedule

   33% per year over three years    Mix of 33% per year over three years; and 3-year cliff vesting
     

Performance period for PSUs

   One-year    Mix of one-year and three-year
     

Performance measure for PSUs

   1-year EBITDA relative to budget, with 1-year TSR modifier   

1-year EBITDA relative to budget, with 1-year TSR modifier; and

 

3-year TSR relative to S&P 500

     

Vehicle mix (as % of targeted value)

  

75% PSUs (1-year EBITDA); and

 

25% stock options

  

60% PSUs (1-year EBITDA)

 

20% PSUs (3-year TSR); and

 

20% stock options

With regard to the specific performance goals for purposes of the 2017 PSU based on one-year EBITDA, we note that because the Company does not provide detailed revenue or earnings guidance, the specific 2017 EBITDA goal is not detailed in this filing. With regard to the 2017 PSUs based on three-year TSR, the performance goals consist of a threshold goal (at which 50% of the target award will be earned) of three-year TSR performance at the 25th percentile relative to that of the S&P 500, a target goal (at which 100% of the target award will be earned) of performance at the 50th percentile and a maximum goal (at which 200% of the target award will be earned) of performance at the 75th percentile. Please refer to the Investors section of our website (www.intercontinentalexchange.com) for publicly available information related to our financial performance. As we have done in this filing with respect to the 2016 award, we will publish the 2017 EBITDA target for our 2017 PSU awards based on one-year EBITDA and the corresponding 2017 achievement in our 2018 Proxy Statement filing.

Benefits and Perquisites

ICE provides medical insurance, life and disability insurance and other benefits to executives that are generally available to other employees. For its U.S. executive officers, ICE provides an enhanced term life insurance benefit (calculated at five times salary less $100,000) and a supplemental disability insurance benefit that is designed to approximate the total benefit level (60% of eligible compensation) that cannot be provided pursuant to the limits in our group disability plans ($10,000 per month). Our contributions to these benefits programs are included in the 2016 All Other Compensation section of the Summary Compensation Table below.

Our Compensation Committee has approved a Corporate Aircraft Policy which, among other things, includes the authorization of up to $75,000 of incremental cost per year to ICE for personal use of company-owned or leased aircraft by each of Mr. Sprecher and Mr. Vice. In 2016, Mr. Sprecher did not have any unreimbursed personal use of company-owned aircraft and Mr. Vice had $28,563 of unreimbursed cost for personal use of company-owned aircraft, which is reported in the 2016 Summary Compensation Table and the 2016 All Other Compensation table. In addition in 2016, the Compensation Committee approved the payment of $125,000 to the Federal Trade Commission on behalf of Mr. Sprecher in connection with filing fees for Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR”) filings. These filings and the corresponding filing fees were required in part due to Mr. Sprecher’s participation in ICE’s equity compensation programs. Mr. Sprecher is responsible for taxes due as a result of ICE paying the filing fees and he was not provided a tax gross-up payment. This $125,000 appears in the 2016 Summary Compensation Table and 2016 All Other Compensation table.

 

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There were no other perquisites provided to any of our executive officers in 2016 that would require disclosure in the Summary Compensation Table.

Retirement Plans

We provide retirement benefits to U.S. corporate officers through a 401(k) retirement plan on the same terms and conditions as those offered to all ICE employees. Generally, in 2016, we provided an immediately vested matching contribution of 100% of the first 6% of employee deferrals of eligible compensation, subject to Internal Revenue Service limits ($265,000 per individual in 2016). We do not offer an active defined benefit pension plan or any other form of active supplemental executive retirement plan.

Clawback Policy

We have adopted a compensation recoupment, or “clawback” policy, to permit ICE to seek recovery of performance-based incentive awards in the event of certain financial statement restatements. The clawback policy states:

Effective December 9, 2010, it is ICE’s policy that if ICE’s financial statements are required to be restated due to intentional misconduct and/or fraud, the Compensation Committee will, when deemed appropriate in its discretion, direct that ICE seek to recover all or a portion of any affected award made to officers who have engaged in the intentional misconduct and/or fraud that caused the need for the restatement with respect to any fiscal period of ICE. An “affected award” includes any cash or equity-based bonus or incentive compensation payment awarded or given to the employee after the effective date of this policy, and the net proceeds of any stock options exercised after the effective date of this policy, that were advantaged by the filing of the financial statements that were required to be restated.

The amount to be recovered from such individual shall be the estimated amount up to which the affected award exceeded the amount that would have been paid to (or received by) the employee had ICE’s financial statements been properly stated. The Compensation Committee has the authority to determine an appropriate recovery amount, if any, under the circumstances, and whether to initiate or continue pursuing a recovery, based upon factors consistent with the Compensation Committee’s exercise of its fiduciary duties and the Compensation Committee’s good faith reliance upon information, opinions or advice from professional advisors, consultants or experts.

When the clawback provision under the Dodd-Frank Wall Street Reform and Consumer Protection Act is finalized and adopted, we will update our policy, as necessary.

Termination of Employment and Change of Control Payments

We have entered into employment agreements with each of our NEOs that provide benefits upon certain employment terminations, including certain terminations in connection with a “Change in Control” of ICE. The terms of these employment agreements are discussed in more detail in the narrative following the 2016 Summary Compensation Table below. The Compensation Committee believes that employment agreements with termination and certain Change in Control protections are appropriate and necessary to attract and retain executive level talent and to mitigate uncertainty and distraction of our management team in the event that the employment of any of our NEOs terminates. The Compensation Committee intends that the terms of NEO employment agreements be consistent with market practice, as adjusted for our business considerations, and periodically reviews the terms of our NEOs’ employment agreements compared to market practice. The employment agreements with our NEOs do not include any Code Section 280G “golden parachute” excise tax gross-up provisions.

The Change in Control protections for NEOs require a “double-trigger” (i.e., two events must occur before any severance payment is made: there must be a Change in Control and the executive officer’s employment must be involuntarily terminated) before a payment is provided. The Compensation Committee opted for a “double-

 

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trigger,” rather than providing for payments solely on the basis of a Change in Control, because the Compensation Committee believes this to be more consistent with the purpose of encouraging the continued employment of our NEOs following a Change in Control and with market practice. Furthermore, the Change in Control provisions provide significant retention value with respect to our NEOs.

Stock Ownership Policy, Retention Recommendations and Global Personal Trading Policy

Stock Ownership Policy

The Compensation Committee believes that it is in the best interests of stockholders for ICE’s executives and directors to own a significant amount of ICE Common Stock. Moreover, a meaningful direct ownership stake by our executives and directors demonstrates to our other investors and stockholders a strong alignment of interests and commitment to ICE’s success, and also provides a structural mechanism to discourage our executives from taking inappropriate business risks. Accordingly, ICE’s Stock Ownership Policy is applicable to all ICE officers (including all of the NEOs) and directors, and requires the following level of ownership (expressed as a multiple of base salary for executives and a multiple of annual cash retainer for directors):

 

Position

  

Ownership Multiple

Policy Requirement

  

Average Stock

Ownership Multiple *

Chief Executive Officer    10 times base salary    297 times (Sprecher)
President    4 times base salary    35 times (Vice)

C-Level Executives and Senior Vice Presidents

   2 times base salary    18 times (Hill/Goone/Farley)

Vice Presidents and any other corporate officers

   1 times base salary    All in compliance

Members of the Board of Directors of ICE

   5 times annual cash retainer    All in compliance

 

* As defined in the Stock Ownership Policy and summarized below as of the record date. New officers and directors have five and three years, respectively, to comply with ownership requirements.

In establishing the ownership multiple, the Compensation Committee considered information about ownership multiples at its peer companies and recommendations from third-party groups such as Institutional Shareholder Services (or ISS) and its external compensation consultant. “Ownership,” for purposes of this Stock Ownership Policy, includes: (i) shares of ICE Common Stock that are owned outright (including those held by a spouse or dependent children), (ii) vested “in-the-money” stock options and (iii) unvested restricted stock, RSUs and any deferred vested RSUs that are not subject to any performance-based vesting metric. All unvested stock options, “underwater” stock options and unearned performance-based equity awards do not count towards the ownership targets. A newly appointed corporate officer will have five years from his or her date of hire or appointment as an officer to comply with this Stock Ownership Policy and a new director will have three years from his or her date of joining the Board of Directors to comply with this Stock Ownership Policy. The Compensation Committee will monitor the ownership levels of its executives and directors during this transition period.

The Compensation Committee monitors the stock ownership levels of our officers and directors on at least an annual basis. In the event of a corporate officer or director’s noncompliance with ICE’s stock ownership policy, the Compensation Committee will review the facts and circumstances regarding the noncompliance and will use its discretion in determining the appropriate corrective actions and/or penalties. Such corrective actions and penalties include, but are not limited to, instructing the officer or director to buy shares of our Common Stock in the open market to comply with the Stock Ownership Policy, reducing or eliminating future equity grants to the officer or director until they comply with the Stock Ownership Policy or issuing a warning to the officer or director. To date, there have been no instances of noncompliance with the Stock Ownership Policy.

 

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Retention Recommendations

To facilitate meeting the minimum holding requirements as specified in this Stock Ownership Policy in a timely fashion, the Compensation Committee recommends that all corporate officers and directors retain a minimum of 50% of the net value of shares obtained pursuant to each stock option exercise and the vesting of restricted stock for all future grants of stock options or restricted stock until such corporate officer or director has satisfied the minimum stock ownership targets for his or her position. Further, the Compensation Committee recommends that a minimum of 50% of the net value of each stock option exercise and vesting of restricted stock for grants awarded to the Chief Executive Officer after 2012 should be retained for three years beyond the applicable exercise or vesting date.

Global Personal Trading Policy

Our Global Personal Trading Policy prohibits employees and directors from entering into hedging transactions in our securities, as well as pledging our securities.

Policy on Deductibility of Compensation

Section 162(m) of the Code generally provides that publicly held companies may not deduct compensation paid to certain of its top executive officers to the extent that such compensation exceeds $1 million per officer in a calendar year. Compensation that is “performance-based compensation” within the meaning of the Code does not count toward the $1 million limit. Performance-based compensation paid under a plan that has been approved by ICE’s stockholders is excluded from the $1 million limit if, among other requirements, the compensation is payable only upon attainment of pre-established, objective performance goals and the Compensation Committee of the Board of Directors that establishes such goals consists only of “outside directors” (as defined for purposes of Section 162(m)).

Our policy is to strive to maximize the deductibility of executive compensation so long as the deductibility is compatible with the more important objectives of retaining executives and maintaining competitive performance-based compensation that is aligned with strategic business objectives, and accordingly the Compensation Committee retains discretion to award compensation that exceeds deductibility limitations if it deems appropriate in the circumstances. To effect this policy, we currently maintain two primary incentive plans (the 2013 Omnibus Employee Incentive Plan and the Executive Bonus Plan, which were approved by stockholders in 2013 and 2009, respectively) used for awards to our NEOs and designed to be compliant with Section 162(m)’s requirements for deductibility in order to preserve ICE’s ability to provide compensation that is “performance-based” within the meaning of the Code and therefore preserve ICE’s ability to maximize the deductibility of executive compensation.

The 2017 Omnibus Employee Incentive Plan, which is submitted for stockholder approval in this Proxy Statement and described further in Proposal 4 below, is also designed to permit the grant of compensation that is deductible under Section 162(m).

 

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EXECUTIVE COMPENSATION

2016 Summary Compensation Table

The following table presents information relating to the compensation earned by the NEOs for the fiscal years ended December 31, 2016, 2015 and 2014.

 

Name and Principal Position

  Year     Salary
($)
    Stock
Awards

($)(1)
    Stock
Option
Awards

($)(2)
    Non-Equity
Incentive Plan
Compensation

($)(3)
    All Other
Compensation

($)(4)
    Total ($)  

Jeffrey C. Sprecher

    2016       1,050,000       5,144,535       1,749,986       2,625,000       160,878       10,730,399  

Chairman and Chief Executive Officer

    2015       1,050,000       5,144,941       1,749,980       2,782,500       109,027       10,836,448  
    2014       1,050,000       5,144,920       1,749,994       2,625,000       51,131       10,621,045  

Scott A. Hill

    2016       714,583       2,204,694       749,987       1,268,750       25,476       4,963,490  

Chief Financial Officer

    2015       700,000       2,204,797       749,980       1,298,500       60,545       5,013,822  
    2014       700,000       2,204,724       749,959       1,225,000       30,548       4,910,231  

Charles A. Vice

    2016       764,583       3,307,173       1,124,956       1,550,000       53,166       6,799,878  

President and Chief Operating Officer

    2015       750,000       3,307,334       1,124,990       1,590,000       74,603       6,846,927  
    2014       750,000       3,307,403       1,124,961       1,500,000       90,589       6,772,953  

David S. Goone

    2016       664,583       1,837,098       624,981       1,181,250       28,277       4,336,189  

Senior Vice President, Chief Strategy Officer

    2015       650,000       1,837,331       624,990       1,205,800       58,614       4,376,735  
    2014       639,583       2,785,803       437,465       1,137,500       31,736       5,032,087  

Thomas W. Farley

    2016       664,583       1,690,333       574,998       1,181,250       22,064       4,133,228  

President, NYSE Group

    2015       650,000       1,690,372       574,961       1,205,800       43,529       4,164,662  
    2014       620,000       1,469,886       499,972       1,085,000       23,635       3,698,493  

 

(1) The amounts in this column represent the aggregate grant date fair value of all restricted stock unit grants in 2016, calculated in accordance with FASB Accounting Standards Codification 718, or ASC Topic 718 on the grant date, which is equal to our closing price on the grant date times the number of performance-based restricted stock units projected to be earned based on the probable outcome of the EBITDA performance condition, less a reduction on performance-based award fair value based on the probability that the TSR market condition is not achieved. Amounts shown are for performance-based restricted stock unit awards that were granted in January 2016, January 2015, and February 2014. A one-time merger-related restricted stock unit award to Mr. Goone in 2014 is also reflected in this column. Additional information regarding the 2016 grants is described under Equity Compensation in the Compensation Discussion & Analysis, footnote 2 of the 2016 Grants of Plan-Based Awards Table and Note 10 to our Consolidated Financial Statements for 2016 (filed with our Annual Report on Form 10-K). If the maximum level of performance were achieved for 2016, the reported amounts would equal $10,289,069, $4,409,388, $6,614,345, $3,674,197 and $3,380,665 for each of Messrs. Sprecher, Hill, Vice, Goone and Farley, respectively.

 

(2) The amounts in this column represent the aggregate grant date fair value of all stock option grants in the calendar year. Additional details of the 2016 stock option awards are included in the Equity Compensation section of the Compensation Discussion & Analysis and footnote 1 of the 2016 Grants of Plan-Based Awards Table. These values were calculated in accordance with ASC Topic 718 on the date of grant using the following assumptions: risk-free interest rate 1.51%; expected life five years; expected volatility 24%; and expected dividend yield 1.36%, as further described in Note 10 to our Consolidated Financial Statements for 2016 (filed with our Annual Report on Form 10-K). The values for the January 2015 grants were calculated using the following assumptions: risk-free interest rate 1.08%; expected life five years; expected volatility 24%; and expected dividend yield 1.25%. The values for January 2014 grants were calculated using the following assumptions: risk-free interest rate 1.23%; expected life five years; expected volatility 27%; and expected dividend yield 1.26%.

 

(3) The amounts in this column represent fiscal year 2014 through 2016 cash bonus awards that were paid in February of the following calendar year. For 2016, during February 2017 the NEOs were paid the amounts reported in the 2016 row of the “Non-Equity Incentive Plan Compensation” column under the Executive Bonus Plan.

 

(4) The amounts in this column represent the items in the 2016 All Other Compensation Table below. Dividend equivalents are earned on unvested equity awards and are paid after the equity awards vest. For 2016, this table excludes dividend equivalents paid as those amounts are factored into the grant date fair value required to be reported for stock awards in the Summary Compensation Table.

 

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2016 All Other Compensation

The following table provides details regarding the perquisites received by each of the NEOs, as well as the other elements of compensation listed in the “All Other Compensation” column of the Summary Compensation Table, for the fiscal year ended December 31, 2016.

 

Name

   401(k) Matching
Contributions ($)(1)
   Life Insurance
Premiums ($)(2)
   Disability Insurance
Premiums ($)(3)
   Other Amounts
($)(4)
   Total($)  

Jeffrey C. Sprecher

   15,900    11,120    8,858    125,000      160,878  

Scott A. Hill

   15,900      1,632    7,944         25,476  

Charles A. Vice

   15,900      2,525    6,178    28,563      53,166  

David S. Goone

   15,900      3,150    9,177         28,227  

Thomas W. Farley

   15,900         741    5,423         22,064  

 

(1) The amounts in this column for Messrs. Sprecher, Hill, Vice, Goone and Farley represent fiscal year 2016 matching contributions under our 401(k) and Profit Sharing Plan (the “401(k) Plan”). The matching formula is 100% of the first 6% of the eligible employee’s compensation contributed to the 401(k) Plan, subject to plan and statutory limits. Each NEO participates under the same terms and conditions as all other eligible employees.

 

(2) The amounts in this column represent fiscal year 2016 payments of term life insurance policy premiums.

 

(3) The amounts in this column represent fiscal year 2016 payments of supplemental disability insurance policy premiums.

 

(4) Dividend equivalents are earned on unvested equity awards and are paid after the equity awards vest but are not included in the above table because dividends are factored into the grant date fair value required to be reported for stock awards in the Summary Compensation Table. The amount listed for Mr. Sprecher includes the $125,000 HSR filing fee paid by ICE on behalf of Mr. Sprecher as described in the Compensation Discussion and Analysis. The amount listed for Mr. Vice includes the $28,563 incremental cost of personal use of the corporate aircraft by Mr. Vice during 2016, calculated based on the variable operating costs to ICE for each flight hour attributed to personal use (as well as any flight hours attributable to empty pick-up or return flights), including fuel costs; labor, parts, and maintenance costs; landing and parking fees; on-board catering costs; and crew expenses. These per-hour costs were determined by using industry-standard cost-estimating guides. Since our aircraft is used primarily for business travel, we do not include the fixed costs that do not change based on usage, such as crew salaries, pilot training, depreciation, hangar rent and insurance. In addition to the incremental cost of personal aircraft use reported above, we also impute taxable income to the named executive officers for any personal aircraft use in accordance with Internal Revenue Service regulations and ICE does not provide tax reimbursements, or “gross-ups,” on these amounts.

 

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2016 Grants of Plan-Based Awards

The following table presents information relating to equity awards granted to the NEOs in fiscal year 2016. References in the table to “2013 OIP” refer to the 2013 Omnibus Employee Incentive Plan, and “EBP” refers to the Executive Bonus Plan. All values in the table reflect the 5-for-1 split of our Common Stock which occurred on November 3, 2016.

 

     Grant Date
and Approval

Date
    Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
    Estimated Future Payouts
Under Equity Incentive
Plan Awards
    All Other
Option
Awards:
Number of
Securities
Underlying
Options

(#)
    Exercise
or Base
Price of
Option
Awards

($/Sh)
    Grant
Date
Fair
Value of
Stock
and
Option
Awards

($)
 

Name

    Threshold
($)
    Target
($)
    Max
($)
    Threshold
(#)
    Target
(#)
    Max
(#)
       

Jeffrey C. Sprecher

                   

2013 OIP

    1/14/2016(1)                   177,160       50.01       1,749,986  

2013 OIP

    1/14/2016(2)             52,485       104,970       209,940           5,144,535  

EBP

        (3)       N/A       2,625,000       5,250,000              

Scott A. Hill

                   

2013 OIP

    1/14/2016(1)                   75,925       50.01       749,987  

2013 OIP

    1/14/2016(2)             22,493       44,985       89,970           2,204,694  

EBP

        (3)       N/A       1,268,750       2,537,500              

Charles A. Vice

                   

2013 OIP

    1/14/2016(1)                   113,885       50.01       1,124,956  

2013 OIP

    1/14/2016(2)             33,740       67,480       134,960           3,307,173  

EBP

        (3)       N/A       1,550,000       3,100,000              

David S. Goone

                   

2013 OIP

    1/14/2016(1)                   63,270       50.01       624,981  

2013 OIP

    1/14/2016(2)             18,743       37,485       74,970           1,837,098  

EBP

        (3)       N/A       1,181,250       2,362,500              

Thomas W. Farley

                   

2013 OIP

    1/14/2016(1)                   58,210       50.01       574,998  

2013 OIP

    1/14/2016(2)             17,245       34,490       68,980           1,690,333  

EBP

        (3)       N/A       1,181,250       2,362,500              

 

(1) Represents stock options granted on January 14, 2016. These values were calculated in accordance with ASC Topic 718 on the date of grant. Please see footnote 2 of our Summary Compensation Table for additional discussion of these grants.

 

(2) Represents performance-based restricted stock units granted on January 14, 2016 with a three-year vesting schedule (33.3% vesting on February 16, 2017, upon approval of 2016 actual performance compared to the targets, and 33.3% on each of February 16, 2018 and 2019). The number of shares issued is determined based on the accomplishment of a 2016 financial target as well as the company’s total shareholder return relative to the S&P 500 index. Please see the Equity Compensation section in the Compensation Discussion & Analysis for additional discussion of this grant. The grant date fair value of this award was calculated in accordance with ASC Topic 718, and such accounting is further described in Note 10 to our Consolidated Financial Statements for 2016 (filed with our Annual Report on Form 10-K). The actual performance-based restricted stock units earned based on 2016 performance were higher than the target amounts noted in the above table and were: Mr. Sprecher: 117,041 shares; Mr. Hill: 50,158 shares; Mr. Vice: 75,240 shares; Mr. Goone: 41,795 shares; and Mr. Farley: 38,456 shares.

 

(3) Represents full-year target bonus payout levels. Bonus targets as a percentage of salary for 2016 were as follows: 250% of salary for Mr. Sprecher, 200% of salary for Mr. Vice, 175% of salary for Messrs. Hill, Goone and Farley. Actual awards granted in any given year may range from no payout to bonus payments up to 200% above the established target levels. However, any bonus payment must be earned in accordance with the terms of the Executive Bonus Plan. For fiscal year 2016, the Compensation Committee authorized cash payments at the target amounts noted in the above table, pursuant to the Executive Bonus Plan.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table presents information relating to outstanding equity awards held by the NEOs for the fiscal year ended December 31, 2016, based on the price of our Common Stock on the NYSE on December 31, 2016, which was $56.42. References in the table to “2000 SOP” refer to the 2000 Stock Option Plan, “2009 OIP” refer to the 2009 Omnibus Incentive Plan, and “2013 OIP” refer to the 2013 Omnibus Employee Incentive Plan. All values in the table reflect the 5-for-1 split of our Common Stock which occurred on November 3, 2016.

 

          Option Awards     Stock Awards  

Name

  Grant Date     Number of
Securities
Underlying
Unexercised
Options (#
Exercisable) (1)
    Number of
Securities
Underlying
Unexercised
Options (#
Unexercisable) (1)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Number
of Shares
or Units
of Stock
That
Have Not
Vested (#)
    Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(2)
    Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)
    Equity Incentive
Plan Awards:
Market or Payout
Value of  Unearned
Shares, Units or Other
Rights That
Have Not Vested ($)(2)
 

Jeffrey C. Sprecher

                 

2000 SOP

    12/16/2008       33,580             16.03       12/16/2018          

2009 OIP

    12/10/2009       133,360             21.20       12/10/2019          

2009 OIP

    1/11/2011       106,080             22.50       1/11/2021          

2009 OIP

    1/17/2012       110,865             22.43       1/17/2022          

2009 OIP

    1/11/2013       162,175             25.87       1/11/2023          

2013 OIP

    1/17/2014       188,080       5,375       41.37       1/17/2024          

2013 OIP

    1/20/2015       136,545       77,180       41.59       1/20/2025          

2013 OIP

    1/14/2016             177,160       50.01       1/14/2026          

2013 OIP

    11/13/2013 (3)                  262,710       14,822,098  

2013 OIP

    2/27/2014 (4)              40,465       2,283,035      

2013 OIP

    1/20/2015 (6)              124,280       7,011,878      

2013 OIP

    1/14/2016 (7)              117,041       6,603,453      
                 

Scott A. Hill

                 

2000 SOP

    12/16/2008       34,730             16.03       12/16/2018          

2009 OIP

    12/10/2009       44,595             21.20       12/10/2019          

2009 OIP

    1/11/2011       35,025             22.50       1/11/2021          

2009 OIP

    1/17/2012       52,750             22.43       1/17/2022          

2009 OIP

    1/11/2013       81,355             25.87       1/11/2023          

2013 OIP

    1/17/2014       80,600       2,305       41.37       1/17/2024          

2013 OIP

    1/20/2015       58,515       33,080       41.59       1/20/2025          

2013 OIP

    1/14/2016             75,925       50.01       1/14/2026          

2013 OIP

    11/13/2013 (3)                  68,955       3,890,441  

2013 OIP

    2/27/2014 (4)              17,340       978,323      

2013 OIP

    1/20/2015 (6)              53,260       3,004,929      

2013 OIP

    1/14/2016 (7)              50,158       2,829,914      
                 

Charles A. Vice

                 

2009 OIP

    1/11/2011       23,090             22.50       1/11/2021          

2009 OIP

    1/17/2012       75,565             22.43       1/17/2022          

2009 OIP

    1/11/2013       108,800             25.87       1/11/2023          

2013 OIP

    1/17/2014       120,905       3,455       41.37       1/17/2024          

2013 OIP

    1/20/2015       87,775       49,620       41.59       1/20/2025          

2013 OIP

    1/14/2016             113,885       50.01       1/14/2026          

2013 OIP

    11/13/2013 (3)                  68,955       3,890,441  

2013 OIP

    2/27/2014 (4)              26,016       1,467,823      

2013 OIP

    1/20/2015 (6)              79,895       4,507,676      

2013 OIP

    1/14/2016 (7)              75,240       4,245,041      
                 

David S. Goone

                 

2009 OIP

    12/10/2009       1,110             21.20       12/10/2019          

2009 OIP

    1/11/2011       5,565             22.50       1/11/2021          

2009 OIP

    1/17/2012       4,450             22.43       1/17/2022          

2009 OIP

    1/11/2013       31,950             25.87       1/11/2023          

2013 OIP

    1/17/2014       47,015       1,345       41.37       1/17/2024          

2013 OIP

    1/20/2015       48,760       27,570       41.59       1/20/2025          

2013 OIP

    1/14/2016             63,270       50.01       1/14/2026          

2013 OIP

    2/27/2014 (4)              10,119       570,914      

2013 OIP

    10/9/2014 (5)              12,315       694,812      

2013 OIP

    1/20/2015 (6)              44,380       2,503,920      

2013 OIP

    1/14/2016 (7)              41,795       2,358,074      
                 

Thomas W. Farley

                 

2000 SOP

    2/22/2007       22,120             32.12       2/22/2017          

2000 SOP

    12/28/2007       22,800             37.89       12/28/2017          

2009 OIP

    1/17/2012       1,480             22.43       1/17/2022          

2009 OIP

    1/11/2013       15,300             25.87       1/11/2023          

2013 OIP

    1/17/2014       53,730       1,540       41.37       1/17/2024          

2013 OIP

    1/20/2015       44,860       25,360       41.59       1/20/2025          

2013 OIP

    1/14/2016             58,210       50.01       1/14/2026          

2013 OIP

    11/13/2013 (3)                  39,405       2,223,230  

2013 OIP

    2/27/2014 (4)              11,565       652,497      

2013 OIP

    1/20/2015 (6)              40,830       2,303,629      

2013 OIP

    1/14/2016 (7)              38,456       2,169,688      

 

(1) Stock options vest over a three-year period. Stock options granted prior to 2017 vest 33.33% on the one-year anniversary of the grant date and the balance vesting ratably on a monthly basis over the remaining 24 months. Stock options granted in 2017 vest 33.33% per year on the anniversary of the grant date.

 

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(2) Market value of stock awards is calculated based on the price of our Common Stock on the NYSE on December 31, 2016 ($56.42) times the number of shares or units of stock that have not vested.

 

(3) Represents one-time performance-based restricted stock units granted on November 13, 2013 that will be earned based on the achievement of a minimum cumulative EBITDA over the three-year period from 2014 — 2016. The number of performance-based restricted stock units that will be earned by the grantees will be determined based on ICE’s achievement of a certain performance metric relative to a target performance level. The performance metric applicable to these performance-based restricted stock units is ICE’s cumulative consolidated EBITDA over the performance period, divided by ICE’s headcount as of January 1, 2017. At the end of the performance period, the number of performance-based restricted stock units that are earned by a grantee will range from 0% to 105% of the target award, depending on the level of performance achieved by ICE. These performance-based restricted stock units were earned at 105% of the target award and vested on February 15, 2017. Therefore, the payout values reflect actual performance.

 

(4) Represents performance-based restricted stock units granted on February 27, 2014 and earned based on the achievement of 2014 financial performance vs. a pre-established target, as well as performance of ICE’s Common Stock vs. the S&P 500 Index. These restricted stock units vest and are settled over a three-year period (33.3% upon approval of 2014 actual performance compared to the target, and 33.3% on each of February 27, 2016 and 2017). Payout values reflect actual performance, which was 96.7% of the target performance level.

 

(5) Represents a one-time grant of time-based restricted stock units granted on October 9, 2014 with a three-year vesting schedule (33.3% per year on each anniversary of the date of grant).

 

(6) Represents performance-based restricted stock units granted on January 20, 2015 and earned based on the achievement of 2015 financial performance vs. a pre-established target, as well as performance of ICE’s Common Stock vs. the S&P 500 Index. These restricted stock units vest and are settled over a three-year period (33.3% upon approval of 2015 actual performance compared to the target, and 33.3% on each of February 17, 2017 and 2018). Payout values reflect actual performance, which was 147.7% of the target performance level.

 

(7) Represents performance-based restricted stock units granted on January 14, 2016 and earned based on the achievement of 2016 financial performance vs. a pre-established target, as well as performance of ICE’s Common Stock vs. the S&P 500 Index. These restricted stock units vest and are settled over a three-year period (33.3% upon approval of 2016 actual performance compared to the target, and 33.3% on each of February 16, 2018 and 2019). Payout values reflect actual performance, which was 111.5% of the target performance level

Option Exercises and Stock Vested During 2016

The following table presents information relating to stock option awards exercised and stock awards vested, respectively, during fiscal year 2016 for the NEOs. All values in the table reflect the 5-for-1 split of our Common Stock which occurred on November 3, 2016.

 

     Option Awards Exercised in 2016      Stock Awards Vested in 2016  

Name

   Number of Shares
Acquired on Exercise
     Value Realized on
Exercise($)(1)
     Number of Shares
Acquired on
Vesting(2)
     Value Realized on
Vesting($)(3)
 

Jeffrey C. Sprecher

     103,695        2,090,763        139,965        6,870,465  

Scott A. Hill

     49,255        1,134,505        62,650        3,078,488  

Charles A. Vice

     109,960        2,372,178        92,105        4,523,703  

David S. Goone

     27,245        910,350        57,700        2,894,621  

Thomas W. Farley

                   45,050        2,214,754  

 

(1) The amounts in this column are calculated by multiplying the number of shares acquired on exercise by the difference between the fair market value of our Common Stock on the date of exercise and the exercise price of the stock options.

 

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(2) These shares represent performance-based restricted stock units initially granted on January 11, 2013, and February 27, 2014 and January 20, 2015 that vested in 2016. In addition for Mr. Goone, this amount includes the time-based restricted stock units initially granted on October 9, 2014 that vested in 2016.

 

(3) The amounts in this column are calculated by multiplying the number of shares that in each case vested during 2016 by the fair market value of our Common Stock on the vesting date.

2016 Nonqualified Defined Contribution and Other Deferred Compensation Plans

We do not maintain any nonqualified defined contribution plans or active nonqualified deferred compensation plans, such as a supplemental executive retirement plan, 401(k) excess plan, or other vehicles to defer the receipt of cash or equity compensation.

Employment Agreements and Other Factors Affecting 2016 Compensation

We have entered into employment agreements with each of the NEOs that contain provisions that govern compensation in the event of termination for cause, termination by ICE unrelated to a Change in Control, and termination by ICE after a Change in Control. The material provisions regarding the employment agreements and the provisions governing these termination scenarios are described below.

Term of Employment

The employment agreements for the NEOs provide for an initial employment term of three years, which will be automatically extended every six months during the term of each agreement so that the remaining term of the agreement is never more than three years or less than two and a half years, unless either ICE or the executive, prior to the date of extension, give written notice to the other that there will be no extension. The effect of this provision is to ensure that the term remaining under any of these agreements is never more than the initial term and never less than six months less than the initial term.

Base and Bonus Compensation

The employment agreements for the NEOs provide for an initial annual base salary, subject to increase, and an annual bonus that is reasonable in light of his contribution for that year and contributions made by and bonuses paid to ICE’s other senior executives for such year. In addition, each of the NEOs is also entitled to receive, from time to time, grants of awards under our equity plans, in each case as determined by the Compensation Committee or by the Board of Directors as a whole.

Non-competition

Each of the NEOs agrees under his employment agreement that for the term of his employment agreement or, if less, for the one-year period which starts on the date that his employment terminates, he will not assume or perform any managerial or supervisory responsibilities and duties that are substantially the same as those that he performs for ICE for any other business entity that engages in operating global commodity and financial products marketplaces for the trading of physical commodities, futures contracts, options contracts, and other derivative instruments, providing risk management tools and clearing services, providing brokerage services, and providing market data relating to these services in which ICE is engaged as of the date of termination of the executive’s employment or in which ICE proposes to engage under its business plan as in effect on such date, if any site of any of the offices or equipment of such competitive business is located in the United States, Canada, the United Kingdom or Singapore.

The employment agreements provide that each executive may own 5% or less of the stock of a publicly traded company that engages in such competitive business, so long as they are only passive investors and are not actively involved in such company in any way.

Non-solicitation

Each of the NEOs is restricted from soliciting, for the purpose of competing with ICE or its affiliates, any of its customers or customers of its affiliates with whom the executive had contact, knowledge or association (i) at

 

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any time during the executive’s employment with ICE or its affiliates and (ii) at any time during the twenty-four month period immediately preceding the beginning of the “restricted period.” “Restricted period” means the term of the executive’s employment agreement, including after termination of employment, the remainder of the term of the agreement without regard to the reason for the executive’s termination of employment (as such initial term may have been extended under the agreement).

Each of the NEOs is restricted from soliciting, for the purpose of competing with ICE or its affiliates, any other officer, employee or independent contractor of ICE or its affiliates with whom the executive had contact, knowledge or association (i) at any time during the executive’s employment with ICE or its affiliates and (ii) at any time during the twelve-month period immediately preceding the beginning of the “restricted period,” to terminate his employment or business relationship with ICE or its affiliates.

Confidentiality Provisions

Each of the NEOs is subject to customary confidentiality provisions during the term of employment and for a five year period after termination, and each executive must not use or disclose any of ICE’s trade secrets for as long as they remain trade secrets.

Termination for Cause or Executive Resignation Other than for Good Reason

For each of the NEOs, if ICE terminates the executive for “Cause,” as such term is defined below, if the executive resigns other than for “Good Reason,” as such term is defined below, or if the executive’s employment terminates as a result of his death or disability, ICE must pay the executive, among other benefits, all accrued but unpaid salary, annual bonus, if any, and unreimbursed expenses. If an executive’s employment terminates as a result of his death, any unvested stock options, unvested restricted stock units and unvested performance share units will become immediately vested.

Termination by ICE Unrelated to a Change in Control

For each of the NEOs, if there is a termination of employment by ICE without “Cause” or resignation by the executive for “Good Reason” that is unrelated to a “Change in Control,” as such term is defined below, ICE must pay a lump sum cash payment equal to (i) the amount of salary the executive would have received over the remainder of the term of employment and (ii) three (3) times the greater of the average of the last three bonuses and the last bonus paid to the executive prior to termination. In addition, any stock options or other equity awards granted (including performance-based awards which were earned but not vested for any performance period that was completed as of the termination of employment) will become exercisable or vest upon the executive’s termination. Performance-based awards for any performance period in progress as of the termination of employment will be earned based on actual performance as determined after completion of the performance period, in accordance with the terms of such grants, and such earned awards will fully vest on such determination date.

Further, ICE is required to continue to make available coverage under the employee benefits plans as if the executive remained employed for the “Welfare Benefit Continuation Period”, defined as the shorter of two years and the balance of the term of the employment agreement.

“Cause,” as used in the employment agreements for each of the NEOs, generally means: (i) the employee is convicted of, pleads guilty to or otherwise admits to any felony or act of fraud, misappropriation or embezzlement; (ii) the employee knowingly engages or fails to engage in any act or course of conduct that (a) is reasonably likely to adversely affect ICE’s rights or qualification under applicable laws, rules or regulations to serve as an exchange or other form of a marketplace for trading the products defined in the non-competition section or (b) violates the rules of any exchange or market on which ICE effects trades (or at such time is actively contemplating effecting trades) and is reasonably likely to lead to a denial of ICE’s right or qualification to effect trades on such exchange or market; (iii) there is any act or omission by the employee involving malfeasance or gross negligence in the performance of his duties and responsibilities or the exercise of his powers to the material

 

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detriment of ICE; or (iv) the employee (a) breaches any of the covenants made under his employment agreement or (b) violates any provision of any code of conduct adopted by ICE that applies to him if the consequence to such violation ordinarily would be a termination of his employment.

“Change in Control,” as used in the employment agreements for each of the NEOs, generally means: (i) any person is or becomes the beneficial owner, directly or indirectly, of securities representing 30% or more of the combined voting power of any outstanding ICE securities eligible to vote in an election of directors (subject to certain exceptions, including if such person is the executive, an entity controlled by the executive or group of which the executive is a member); (ii) any dissolution or liquidation of ICE or any sale or disposition of 50% or more of ICE’s assets or business; or (iii) the consummation of any reorganization, merger, consolidation or share exchange or similar form of corporate transaction involving ICE, unless (a) the persons who were the beneficial owners of outstanding ICE securities eligible to vote in an election of directors immediately before the consummation of such transaction hold more than 60% of the voting power immediately following the consummation of such transaction, and (b) each such person holds such securities in substantially the same proportion immediately following the consummation of such transaction as each such person had held immediately prior to the consummation of such transaction.

“Good Reason,” as used in the employment agreements for each of the NEOs, generally means: (i) there is a material reduction in the executive’s base salary or opportunity to receive any annual bonus and equity grants without the executive’s express written consent; (ii) there is a material reduction in the scope, importance or prestige of the executive’s duties; (iii) executive is transferred from his primary work site to a site that is more than thirty miles from his then current work site; (iv) after a Change in Control, executive’s job title is materially changed or executive is no longer provided the same or substantially equivalent plans, programs and policies; (v) there is a material breach of his employment agreement; (vi) executive receives notice of non-renewal during the three years following a Change in Control; (vii) the failure of any successor to ICE to expressly assume executive’s employment agreement; or (viii) in the case of Mr. Sprecher, ICE fails to nominate Mr. Sprecher for re-election to the Board of Directors.

Termination Following a Change in Control

For each of the NEOs, if the termination of employment by ICE without “Cause” or resignation by the executive for “Good Reason” occurs following, or within 180 days prior to, the effective date of a Change in Control of ICE, ICE must pay the executive a lump sum amount of cash equal to three (3) times (i) the executive’s salary and (ii) the greater of the average of the last three bonuses paid to executive prior to termination, the last bonus paid to executive prior to the effective date of a Change in Control and the last bonus paid to executive prior to termination. In addition, any stock options or other equity awards granted (including performance-based awards which were earned but not vested for any performance period that was completed as of the termination of employment) will become exercisable or vest upon the executive’s termination. Performance-based awards for any performance period in progress as of the termination of employment will be earned based on actual performance as determined after completion of the performance period, in accordance with the terms of such grants, and such earned awards will fully vest on such determination date. The executive will be entitled to exercise his stock options that had been granted after entering into the employment agreement for the same period as if the executive had continued in employment through the remainder of his term.

Further, ICE must continue to make available coverage under the employee benefits plans as if the executive remained employed for the Welfare Benefit Continuation Period.

All gross-up provisions for tax consequences have been removed from the employment agreements; therefore no NEOs are eligible for tax gross-up payments.

 

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2016 Payments upon Termination

The following table presents the estimated benefits and payments for termination of the NEOs unrelated to a Change in Control and following, or within 180 days prior to, a Change in Control, assuming the termination took place on the last business day of the most recently completed fiscal year. For certain items below, the values are based on the closing price of $56.42 for our Common Stock on the NYSE on December 31, 2016. Other applicable terms for these benefits and payments are discussed above under Termination by ICE Unrelated to a Change in Control and Termination Following a Change in Control.

 

Name

   Termination
for Cause
($)
     Voluntary
Resignation
Other
Than for
Good
Reason ($)
     Disability
($)(5)
     Death
($)(5)
     Termination
by ICE
Unrelated to
a Change in
Control ($)
     Termination
Following a
Change in
Control ($)
 

Jeffrey C. Sprecher

                 

Cash Severance(1)

                                 11,497,500        11,497,500  

Cost of Welfare Benefits Continuation(2)

                                 54,201        54,201  

Value of Equity Awards Subject to Accelerated Vesting(3)

                          33,891,518        33,891,518        33,891,518  

Golden Parachute Excise Tax and Income Tax Gross-Up Payment(4)

     N/A        N/A        N/A        N/A        N/A        N/A  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

     0        0        0        33,891,518        45,443,218        45,443,218  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Scott A. Hill

                 

Cash Severance(1)

                                 6,070,500        6,070,500  

Cost of Welfare Benefits Continuation(2)

                                 56,317        56,317  

Value of Equity Awards Subject to Accelerated Vesting(3)

                          11,979,338        11,979,338        11,979,338  

Golden Parachute Excise Tax and Income Tax Gross-Up Payment(4)

     N/A        N/A        N/A        N/A        N/A        N/A  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

     0        0        0        11,979,338        18,106,154        18,106,154  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Charles A. Vice

                 

Cash Severance(1)

                                 7,095,000        7,095,000  

Cost of Welfare Benefits Continuation(2)

                                 54,745        54,745  

Value of Equity Awards Subject to Accelerated Vesting(3)

                          15,958,689        15,958,689        15,958,689  

Golden Parachute Excise Tax and Income Tax Gross-Up Payment(4)

     N/A        N/A        N/A        N/A        N/A        N/A  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

     0        0        0        15,958,689        23,108,434        23,108,434  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

David S. Goone

                 

Cash Severance(1)

                                 5,642,400        5,642,400  

Cost of Welfare Benefits Continuation(2)

                                 61,818        61,818  

Value of Equity Awards Subject to Accelerated Vesting(3)

                   0        7,081,855        7,081,855        7,081,855  

Golden Parachute Excise Tax and Income Tax Gross-Up Payment(4)

     N/A        N/A        N/A        N/A        N/A        N/A  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

     0        0        0        7,081,855        12,786,072        12,786,072  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Thomas W. Farley

                 

Cash Severance(1)

                                 5,642,400        5,642,400  

Cost of Welfare Benefits Continuation(2)

                                 49,491        49,491  

Value of Equity Awards Subject to Accelerated Vesting(3)

                   0        8,294,881        8,294,881        8,294,881  

Golden Parachute Excise Tax and Income Tax Gross-Up Payment(4)

     N/A        N/A        N/A        N/A        N/A        N/A  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

     0        0        0        8,294,881        13,986,772        13,986,772  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) These amounts represent the cash severance payments in accordance with employment agreements as in effect as of December 31, 2016 (as discussed in the preceding narrative) under the termination scenarios as described in the table. These calculations assume all earned base salary and annual incentive payments have been paid. For a termination unrelated to a Change in Control, the duration of the remaining employment term has been assumed to equal three years. Also, in light of the assumed termination date of December 31, 2016, the fiscal year 2015 bonus that was paid in February 2016 is the last bonus paid for purposes of the severance calculation under the employment agreements.

 

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(2) The welfare benefit continuation costs include estimated medical, dental, basic life insurance, and executive life insurance premiums, as may be called for in the employment agreements.

 

(3) The market value of stock awards is calculated based on the closing price of our Common Stock on the New York Stock Exchange on December 31, 2016: $56.42. These costs include the acceleration of vesting of unvested equity awards (including the value of unvested dividend equivalent rights) under other termination scenarios as described above, with the value of options based on the “spread” between $56.42 and the option’s strike price at December 31, 2016. These amounts include the value of the one-time performance-based restricted stock units granted on November 13, 2013 that would vest under the applicable termination scenarios, in each case reported at target. These amounts do not include the value of vested equity awards outstanding as of December 31, 2016.

 

(4) There are no Internal Revenue Code Section 280G “golden parachute” excise tax gross-up provisions.

 

(5) The amounts reported in the table above do not reflect payments upon an NEO’s disability or death under our supplemental disability insurance benefit and life insurance benefit programs, respectively. See the Elements of Compensation — Benefits and Perquisites section of this Compensation Discussion & Analysis for a description of these benefits.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Tese, Mr. Crisp, and The Lord Hague of Richmond served as members of our Compensation Committee during 2016. None of our executive officers or directors serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee.

NON-EMPLOYEE DIRECTOR COMPENSATION

Directors who are also ICE employees do not receive additional compensation for serving as directors. During 2016, with the assistance of its independent consultant, the Compensation Committee reviewed the competitiveness of director compensation relative to peers. Based on the results of this study, the Compensation Committee made certain adjustments in director compensation effective July 1, 2016, as noted below. Prior to this change, ICE last made changes to the director compensation program in November 2013 (upon the close of the merger with NYSE). For 2016, non-employee director compensation consisted of:

 

   

An annual retainer of $100,000 (adjusted from $85,000 on July 1, 2016);

 

   

An annual retainer of $15,000 for committee members of the Audit Committee (adjusted from $10,000 on July 1, 2016), and $10,000 for committee members of the Compensation Committee, Nominating and Corporate Governance Committee and Risk Committee;

 

   

An annual retainer for committee chairpersons (in lieu of the committee member retainers described above) of: $30,000 for the Audit Committee (adjusted from $25,000 on July 1, 2016), $20,000 for the Compensation Committee, Nominating and Corporate Governance Committee and Risk Committee;

 

   

A lead independent director fee of $50,000; and

 

   

A grant of $175,000 in the form of restricted stock units that vest one year from the date of grant (with the number of units calculated at the time of grant by dividing the annual grant value by the closing price per share on the grant date).

Directors do not receive fees for individual Board of Directors or committee meetings in addition to the annual retainers referenced above.

As with our executive compensation program, the Compensation Committee utilizes the services of an independent compensation consultant to benchmark the competitiveness of our director compensation program,

 

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including compensation offered for service on subsidiary boards. The Compensation Committee reviewed a director compensation benchmarking report from Compensation Advisory Partners that analyzed each aspect of director compensation against the same peer companies that were utilized for the executive compensation benchmarking report. Based on the results of this report and consultation with its compensation consultant, the Compensation Committee made the above noted adjustments to the director compensation program for 2016.

In addition, many of our directors also serve as directors on the boards of our subsidiaries and some subsidiary boards pay additional compensation for such board service. In 2016, seven of our current non-employee directors served as members of the boards of directors of our regulated subsidiaries: ICE Futures Europe, ICE Clear Europe Limited, ICE Benchmark Administration Limited, ICE Clear Credit, LLC, ICE Futures U.S., Inc., ICE Clear U.S., Inc., ICE Trade Vault, LLC, ICE Trade Vault Europe Limited, ICE Swap Trade, LLC, New York Stock Exchange, LLC, NYSE MKT LLC, NYSE Arca, Inc., NYSE Arca Equities, Inc. and NYSE National, Inc.

Given the significant level of responsibility, regulatory oversight of subsidiary activities, and director time commitment to serve on subsidiary boards, we provide compensation to non-employee directors for their service on these subsidiary boards (as illustrated in the below table). Each of these subsidiary boards meets independently and holds four or more meetings a year, plus subsidiary committee meetings. Accordingly, with the assistance of Compensation Advisory Partners, we have structured subsidiary compensation to include elements similar to parent board compensation (i.e., board retainer and committee retainers). We also provide office space for certain of our directors that serve as chairperson of the board of directors of an operating subsidiary.

As noted earlier in this Proxy Statement, we are seeking stockholder approval of an amendment to our 2013 Omnibus Non-Employee Director Incentive Plan to formally institute a maximum annual compensation level of $850,000 per year (including cash and equity-based compensation from parent company board service and subsidiary board service, as may be applicable). As noted in the table below, all of our directors were below this limit in 2016. See Proposal 5 beginning on page 61 for more information.

 

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Director Compensation Table

The following table presents information relating to compensation for our directors for the fiscal year ending December 31, 2016.

 

Name and Principal Position

   Fees
Earned or
Paid in
Cash ($)(1)
     Stock
Awards($)(2)
     All Other
Compensation
($)(3)
     Total ($)  

Charles R. Crisp

     115,000        174,980        45,000        334,980  

Jean-Marc Forneri

     108,828        174,980               283,808  

Lord Hague of Richmond

     105,156        199,940        123,321        428,417  

Fred W. Hatfield

     118,828        199,940        191,719        510,487  

Thomas Noonan

     30,938        174,876               205,814  

Frederic V. Salerno

     162,500        174,980        55,000        392,480  

Judith Sprieser

     130,000        199,940        94,375        424,315  

Vincent Tese

     127,656        199,940        125,000        452,596  

Terrence F. Martell(4)

     42,227        149,760        165,000        356,987  

Sir Callum McCarthy(4)

     38,555        74,880        101,123        214,558  

Sir Robert Reid(4)

     38,555        124,800        144,286        307,641  

 

(1) The amounts in this column represent fiscal year 2016 cash payments for Board and committee retainers.

 

(2) The amounts in this column represent the aggregate fair value of restricted stock grants awarded for board service in the 2016 calendar year calculated in accordance with ASC Topic 718, which is equal to our closing stock price on the grant date times the number of shares granted. Grants to directors in 2016 were approved on May 13, 2016, except for Mr. Noonan, whose grant was approved on September 21, 2016 upon his appointment to the board. As of December 31, 2016, Mr. Noonan owned 3,115 unvested shares of restricted stock, Mr. Martell owned 2,880 unvested shares of restricted stock, Sir McCarthy owned 1,440 shares of unvested restricted stock, Sir Reid owned 2,400 shares of unvested restricted stock, each of Messrs. Crisp, Forneri, and Salerno owned 3,365 unvested shares of restricted stock, and each of Lord Hague, Messrs. Hatfield and Tese and Ms. Sprieser owned 3,845 unvested shares of restricted stock.

 

(3) The amounts in this column represent fees paid in cash and equity to directors that also served as members of the boards of directors of our regulated subsidiaries: ICE Futures Europe, ICE Clear Europe Limited, ICE Benchmark Administration Limited, ICE Clear Credit, LLC, ICE Futures U.S., Inc., ICE Clear U.S., Inc., ICE Trade Vault, LLC, ICE Trade Vault Europe Limited, ICE Swap Trade, LLC, New York Stock Exchange, LLC, NYSE MKT LLC, NYSE Arca, Inc., NYSE Arca Equities, Inc. and NYSE National, Inc. The amounts in this column do not include charitable contributions made at the direction of certain U.S. directors that made an equivalent contribution to our Political Action Committee (“PAC”). If a U.S. director makes a contribution to our PAC, ICE will make a contribution in the same amount as contributed by the director (up to $5,000) to certain eligible charities, as requested by the director. In fiscal year 2016, the following directors made a contribution to our PAC that resulted (or could result) in a charitable contribution by ICE at the director’s request: Mr. Crisp: $5,000, Mr. Hatfield: $5,000, Mr. Salerno: $5,000, Ms. Sprieser: $5,000, and Mr. Tese: $5,000. Dividend equivalents are earned on unvested equity awards and are paid after the equity award vest. This table excludes dividend equivalents paid as those amounts are factored into the grant date fair value required to be reported for stock awards in the Director Compensation Table.

 

(4) Each of Mr. Martell, Sir McCarthy and Sir Reid served on our Board of Directors until their term expired at our 2016 Annual Meeting of Stockholders on May 13, 2016.

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the above Compensation Discussion & Analysis with management, and based upon such review and discussion, has recommended to the Board of Directors that the Compensation Discussion & Analysis be included in ICE’s proxy statement for the 2017 Annual Meeting of Stockholders.

Compensation Committee:

Vincent Tese, Chairperson

Charles R. Crisp

The Rt. Hon. The Lord Hague of Richmond

 

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PROPOSAL 3 — ADVISORY VOTE ON THE FREQUENCY OF

FUTURE VOTES ON EXECUTIVE COMPENSATION

In accordance with Section 14A of the Exchange Act, our Board of Directors is asking you to vote on a proposal, commonly known as a “say on pay frequency” proposal, which gives our stockholders the opportunity to advise our Board of Directors on how often we should conduct an advisory stockholder vote on the compensation of our NEOs. We are required to seek an advisory stockholder vote on the frequency of future say on pay votes at least once every six years, although we may seek stockholder input more frequently. As this is an advisory vote, the result will not be binding, however, our Board of Directors values the opinions that our stockholders express in their votes and will take into account the outcome of the vote when considering how frequently we should conduct an advisory vote on the compensation of our NEOs.

You are voting on the following resolution which reads:

RESOLVED, that a non-binding advisory vote of ICE’s stockholders to approve the compensation of ICE’s named executive officers shall be held at an annual meeting of stockholders, beginning with the 2017 Annual Meeting of Stockholders, (i) annually, (ii) biennially or (iii) triennially.

The enclosed proxy card gives you four choices for voting on this item. You can choose whether the say on pay vote should be conducted annually (every year), biennially (every two years) or triennially (every three years). You may also abstain from voting on this item. You are not voting to approve or disapprove the Board of Director’s recommendation on this item.

Our Board of Directors believes that an annual advisory vote on the compensation of our NEOs is an important aspect of stockholder engagement. An annual say on pay vote facilitates direct and regular stockholder feedback on our compensation policies, which our Compensation Committee values in determining our compensation philosophy and evaluating the effectiveness of our compensation principles and practices.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” CONDUCTING AN ANNUAL ADVISORY VOTE ON THE COMPENSATION OF OUR NEOS.

 

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PROPOSAL 4 — APPROVAL OF THE INTERCONTINENTAL EXCHANGE, INC.

2017 OMNIBUS EMPLOYEE INCENTIVE PLAN

On March 3, 2017, upon the recommendation and approval of our Compensation Committee, our Board of Directors unanimously approved the adoption of the 2017 Omnibus Employee Incentive Plan (the “2017 Employee Plan”), subject to approval by our stockholders at the 2017 Annual Meeting. The 2017 Employee Plan will be effective on May 19, 2017 if it is approved by our stockholders at the 2017 Annual Meeting. If the 2017 Employee Plan is not approved by stockholders, no awards will be made under the 2017 Employee Plan and the 2017 Employee Plan will be null and void in its entirety.

The 2017 Employee Plan will be applicable only to awards granted on or after the date the 2017 Employee Plan is approved by our stockholders (the “Effective Date”), and will replace ICE’s 2013 Omnibus Employee Incentive Plan (the “2013 Employee Plan”) for awards granted on or after the Effective Date. The terms and conditions of awards granted under the 2013 Employee Plan prior to stockholder approval of the 2017 Employee Plan will not be affected by the adoption or approval of the 2017 Employee Plan and the 2013 Employee Plan will remain effective with respect to such awards. No new grants will be made under the 2013 Employee Plan after the Effective Date.

The 2017 Employee Plan provides for the issuance of equity-based awards covering up to thirty million (30,000,000) shares of Common Stock, plus the number of additional shares of common stock reserved and available for issuance under the 2013 Employee Plan as of the Effective Date. In addition, the 2017 Employee Plan includes a number of provisions designed to protect stockholder interests and appropriately reflect our compensation philosophy and developments in our compensation practices in recent years, which include a minimum vesting schedule, a double-trigger change in control provision (as a default), no payment of dividends or dividend equivalents on any unvested awards and a clawback provision.

Our Board believes that the thirty million (30,000,000) shares available for grant under the 2017 Employee Plan would provide sufficient shares for equity-based compensation needs of ICE through the 2022 annual shareholder meeting. This estimate is based on our recent share usage, estimated for growth, adjusted upward to allow for the potential that performance-based awards may be earned at maximum and for flexibility around types of vehicles used. Actual issuances could be materially different from this estimate.

As of the record date, approximately 8,685,623 shares remain available for issuance under the 2013 Employee Plan, which, based on the analysis above and our “burn rate” discussed below, we believe to be sufficient to continue our current grant practices for no more than approximately one to two years. Therefore, if stockholders do not approve the 2017 Employee Plan, our future ability to issue equity-based awards, other than cash-settled awards, will be limited. This could have significant negative consequences, and could, among other things:

 

   

Inhibit pay-for-performance and alignment with stockholders. A key element of our compensation philosophy (as described in the Compensation Discussion and Analysis) is to pay a significant portion of variable compensation to a broad population of employees (including our executive officers) in the form of awards that pay out in ICE equity, with our NEOs receiving 61% of their total 2016 compensation in the form of stock options and performance-based restricted stock units, and other employees receiving varying percentages of equity-compensation in accordance with their roles. We believe that stock ownership by employees provides performance incentives and fosters long-term commitment to the benefit of our stockholders because equity-settled compensation (rather than cash-settled compensation) with long-term restrictions, rigorous clawback provisions and stock ownership requirements is essential to align employees’ interests with those of our stockholders.

 

   

Impede ability to attract and retain talent. The successful implementation of our business objectives depends largely on our ability to attract, retain and reward talented employees. If the 2017 Employee Plan is not approved, we would be limited in our ability to use a valuable retention tool and would be at a significant competitive disadvantage in attracting new talent.

 

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Increase volatility in reported earnings and compensation expense. Replacing equity-settled awards with cash-settled awards could increase compensation expense and could contribute to volatility in our reported earnings. Under current accounting rules, the charges for cash-settled awards would be based on quarterly fluctuations in our stock price. This would increase the cost of compensation if our stock price appreciates and lead to unpredictable quarterly results. In addition, replacing equity-settled awards with cash-settled awards would reduce the amount of cash otherwise available for the accelerated repayment of our debt, stock buybacks and strategic purposes.

Our equity-based compensation model, including the broad-based participation of our employees and the portion of equity compensation paid to our senior executives, results in a “burn rate” as indicated in the chart below. All values in the chart reflect the 5-for-1 split of our Common Stock which occurred on November 3, 2016.

 

     2014     2015     2016     Average  

(a) RSUs/performance stock units granted(1)

     2,801,900       3,457,590       3,251,017       3,170,169  

(b) Shares underlying options granted(1)

     771,000       882,335       751,615       801,650  
  

 

 

   

 

 

   

 

 

   

 

 

 

(c) Net increase in diluted shares due to equity awards (a+b)(1)

     3,572,900       4,339,925       4,002,632       3,971,819  
  

 

 

   

 

 

   

 

 

   

 

 

 

(d) Weighted-average basic shares outstanding

     570,000,000       556,000,000       595,000,000       573,666,667  
  

 

 

   

 

 

   

 

 

   

 

 

 

(e) Burn rate (c/d)(2)

     0.6     0.8     0.7     0.7

(f) Adjusted burn rate(3)

     1.61     2.02     1.77     1.80

 

(1) Reflects the gross number of shares underlying awards made to employees during the respective year.

 

(2) Not adjusted for forfeitures, withholding and expirations, which would reduce the burn rate if taken into account.

 

(3) Adjusted to reflect the Institutional Shareholder Services “multiplier” counting each full value award (RSU and performance stock unit) as three option shares.

Our Compensation Committee recognizes that, as commonly calculated, the total potential dilution or “overhang” resulting from the adoption of the 2017 Employee Plan would be 8.33%, with the incremental overhang from the 2017 Employee Plan additional shares equal to 5.06%. The overhang is calculated as follows, in each case as of the record date of March 21, 2017:

 

(a) Shares available under the 2017 Employee Plan

     30,000,000  

(b) Shares underlying outstanding awards(1)

     10,727,871  

(c) Shares remaining available under the 2013 Employee Plan

     8,685,623  
  

 

 

 

(d) Total shares authorized for or outstanding under employee awards (a+b+c)

     49,413,494  
  

 

 

 

(e) Total shares outstanding

     593,453,729  
  

 

 

 

(f) Overhang (d/e)

     8.33

 

(1) Of such shares, 4,490,988 are underlying option awards.

 

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We note that the number of shares remaining available for grant as described above differs from those reported below under Equity Compensation Plan Information, since that table, required by SEC disclosure rules, is dated as of December 31, 2016 and therefore does not take into account year-to-date grants for 2017. Additional information as of the record date of March 21, 2017 includes:

 

Restricted stock outstanding (including performance-based restricted stock)

     6,304,343  

Shares to be issued upon exercise of outstanding options, warrants and rights(1)

     10,884,271  

Weighted average exercise price (for options)

   $ 39.68  

Weighted-average remaining contractual life (for options), in years

     7.04  

Shares available for future issuance under the 2013 Employee Plan and the 2013 Omnibus Non-Employee Director Incentive Plan(2)

     9,692,823  

 

(1) As of the record date there were 100,885 shares to be issued upon exercise of outstanding options, warrants and rights not approved by stockholders, with a weighted-average exercise price (for options) of $14.05 and a weighted-average remaining contractual life (for options) of 1.05 years, with 0 shares remaining available for future issuance under equity compensation plans not approved by stockholders.

 

(2) On March 3, 2017, the Compensation Committee froze the NYSE Euronext Omnibus Incentive Plan such that no further awards will be made under that plan on or after May 19, 2017.

ICE also takes into account the relevant accounting and tax impact of all potential forms of equity awards in designing our grants. We believe that the benefits to our stockholders resulting from equity award grants to our senior employees, including interest alignment and mitigation of incentives to take inappropriate business risks, outweigh the potential dilutive effect of grants under the 2017 Employee Plan. The Compensation Committee believes that paying a significant portion of annual variable compensation in the form of equity awards that vest over multiple years is an effective method of aligning the interests of senior employees with those of our stockholders, encouraging ownership in ICE and retaining, attracting and rewarding talented employees. For additional information with respect to our outstanding equity-based awards, please see Note 10 to the Consolidated Financial Statements included in our Annual Report on Form 10-K.

The following summary of the material terms of the 2017 Employee Plan is qualified in its entirety by reference to the complete text of the 2017 Employee Plan, which is attached hereto as Exhibit C.

Summary of the 2017 Employee Plan

Overview

The purpose of the 2017 Employee Plan is to attract, retain and motivate officers, and key employees (including prospective employees), consultants and others who may perform services for ICE and its consolidated subsidiaries, to compensate them for their contributions to the long-term growth and profits of ICE and to encourage them to acquire a proprietary interest in ICE’s success. The 2017 Employee Plan includes numerous features designed to reflect our commitment to good corporate governance practices. For example, consistent with best practices, the 2017 Employee Plan prohibits the payment of dividends on unvested restricted stock units (including awards subject to performance-based vesting), repricing and reloads of stock options and stock appreciation rights, and recycling shares withheld to satisfy taxes payable upon award settlement or in payment of the exercise price of stock options or the net settlement of stock appreciation rights.

Administration

Our Compensation Committee will administer the 2017 Employee Plan. Among other things, the Compensation Committee will determine the persons who will receive awards under the 2017 Employee Plan, the time when awards will be granted, the terms of the awards and the number of shares of ICE common stock subject to the awards. The Compensation Committee may allocate among its members and/or delegate to any person who is not a member of the Compensation Committee or to any administrative group within ICE, any of its powers, responsibilities and duties. The Board of Directors, in its sole discretion, also may grant awards or administer the 2017 Employee Plan.

 

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The Compensation Committee will have complete control over the administration of the 2017 Employee Plan and will have sole discretion to make all determinations in respect of the 2017 Employee Plan (including, for example, the ability to determine whether individual awards may be settled in cash, shares of common stock, other awards or other property).

Eligibility

Awards may be made to officers and employees (including prospective employees), consultants and other individuals who may perform services for ICE and its consolidated subsidiaries (other than non-employee directors of ICE or its subsidiaries, who may be eligible for grants under the 2013 Omnibus Non-Employee Director Incentive Plan). As of the record date, approximately 5,000 officers and employees would have been eligible to receive awards under the 2017 Employee Plan.

ICE Common Stock Available for Awards under the Plan

Subject to adjustment as described below, the total number of shares of ICE common stock that may be subject to awards granted under the 2017 Employee Plan is thirty million (30,000,000) shares, plus the number of additional shares available for future awards under the 2013 Employee Plan as of the Effective Date and the number of shares related to awards under the 2013 Employee Plan as of the Effective Date which thereafter terminate, expire unexercised, or are forfeited, canceled or otherwise lapse for any reason (as of the record date, there were 8,685,623 shares available for future grant under the 2013 Employee Plan and outstanding awards with respect to 9,124,631 shares (3,057,503 of which are options) under the 2013 Employee Plan). In the case of a grant of a stock-settled stock appreciation right, the number of shares available for grant under the Plan will be reduced by the full number of shares granted under such stock appreciation right. Shares of ICE common stock issued in connection with awards that are assumed, converted or substituted as a result of ICE’s acquisition of another company will not count against the number of shares that may be granted under the 2017 Employee Plan. Shares of ICE common stock underlying the awards (including currently outstanding awards under the 2013 Employee Plan) will be available for reissuance under the 2017 Employee Plan in the event that an award is forfeited, expires, terminates or otherwise lapses without delivery of ICE common stock.

Shares of ICE common stock will not become available for reissuance under the 2017 Employee Plan if the shares are withheld by or tendered to ICE to pay taxes or to pay the exercise price of stock options, or are repurchased by the Company using proceeds from the exercise of stock options.

Shares issued under the 2017 Employee Plan may be authorized but unissued shares of ICE common stock or authorized and previously issued shares of ICE common stock reacquired by ICE. There is no limit on the amount of cash, securities (other than shares of ICE common stock) or other property that may be delivered pursuant to any award. No individual, however, will receive awards of stock options or stock appreciation rights covering, in either case, more than 3,000,000 shares (subject to adjustment as described below) in any one fiscal year. Furthermore, no individual will receive awards of restricted shares, restricted stock units, dividend equivalent rights or other types of stock-based or cash-based awards that are, in each case, subject to the achievement of the performance goals described in the 2017 Employee Plan for more than 2,000,000 shares or, for cash-based awards, the value of 2,000,000 shares (subject in each case to adjustment as described below) in any one fiscal year.

The Compensation Committee will adjust the terms of any outstanding award, the number of shares of ICE common stock issuable under the 2017 Employee Plan and the limit on the number of shares for which awards may be granted to any one individual in any one fiscal year, in each case in such manner as the Compensation Committee deems appropriate (including, without limitation, by payment of cash) to prevent the enlargement or dilution of rights as a result of any increase or decrease in the number of issued shares of ICE common stock (or issuance of share of stock other than shares of ICE common stock) resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of shares of ICE common stock, merger, consolidation, rights offering, separation, reorganization, liquidation, or any other change in the corporate structure or shares of ICE common stock, including any extraordinary dividend or extraordinary distribution.

 

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The market value of ICE common stock on the record date (based upon the closing price on the NYSE) was $60.03 per share.

Type of Awards

The 2017 Employee Plan provides for grants of stock options (both stock options intended to be “incentive stock options” under Section 422 of the Code and non-qualified stock options), stock appreciation rights, restricted shares, restricted stock units, dividend equivalent rights and other equity-based or cash-based awards pursuant to which ICE common stock, cash or other property may be delivered. Awards under the Plan generally will be subject to a minimum vesting schedule of at least thirty-six months following the date of grant of the award (although up to 5% of shares available for grant under the 2017 Employee Plan may be granted with a shorter minimum vesting schedule), provided, however, that (1) after the first year such vesting schedule may be on a monthly, quarterly or yearly pro-rata basis and (2) all awards that are subject to performance goals shall be subject to a minimum vesting schedule of at least twelve months. Awards that are assumed, converted or substituted as a result of ICE’s acquisition of another company will not be subject to the foregoing minimum vesting schedule requirements. Each award will be evidenced by an award agreement, which will govern that award’s terms and conditions.

Stock Options. A stock option entitles the recipient to purchase shares of ICE common stock at a fixed exercise price. The exercise price per share will be determined by the Compensation Committee but will not be less than 100% of the fair market value of ICE common stock on the date of grant. Fair market value will generally be the closing price of ICE common stock on the NYSE on the date of grant. Stock options generally must be exercised within 10 years after the date of grant. All awards may be issued as incentive stock options.

Stock Appreciation Rights. A stock appreciation right entitles the recipient to receive shares of ICE common stock, cash or other property equal in value to the appreciation of the ICE common stock over the stated exercise price. The exercise price per share will be determined by the Compensation Committee but will not be less than 100% of the fair market value of ICE common stock on the date of grant. Fair market value will generally be the closing price of ICE common stock on the NYSE on the date of grant. Stock appreciation rights must be exercised within 10 years after the date of grant.

Restricted Shares. Restricted shares are shares of ICE common stock that are registered in the recipient’s name, but that are subject to transfer and/or forfeiture restrictions for a period of time. The Compensation Committee may grant or offer for sale restricted shares of ICE common stock in such amounts, and subject to such terms and conditions, as the Compensation Committee may determine. Subject to such limits as the Compensation Committee may determine from time to time, the recipient will have the same voting and dividend rights as any other stockholder of ICE, except that dividends will be retained by ICE for the recipient’s account while the transfer and/or forfeiture restrictions apply and will be paid (without interest) only if and when the period of restriction lapses.

Restricted Stock Units. A restricted stock unit is an unfunded, unsecured right to receive a share of ICE common stock, cash or other property at a future date. The Compensation Committee may grant restricted stock units in such amounts, and subject to such terms and conditions, as the Compensation Committee may determine. The recipient will have only the rights of a general unsecured creditor of ICE and no rights as a stockholder of ICE until ICE common stock underlying the restricted stock units, if any, is delivered.

Dividend Equivalent Rights. The Compensation Committee may, in its discretion, include in the award agreement a dividend equivalent right entitling the recipient to receive an amount equal to all or any portion of the regular cash dividends that would be paid on the shares of ICE common stock covered by such award as if such shares had been delivered. Dividend equivalent rights granted in connection with an award of restricted stock units will be subject to the same performance and/or service conditions that apply to such restricted stock units, and dividend equivalents will be released only if and when such restricted stock units have vested. Dividend equivalent rights may be payable in cash, shares of ICE common stock or other property as determined by the Compensation Committee. For the avoidance of doubt, no dividend equivalent rights will be paid on any unvested awards.

 

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Other Stock-Based Awards. The Compensation Committee may grant other types of stock-based, stock-related or cash-based awards, including the grant of unrestricted shares of ICE common stock in such amounts, and subject to such terms and conditions, as the Compensation Committee may determine, but in each case, subject to the individual share limit described above.

Change in Control

Unless otherwise determined by the Compensation Committee (or unless otherwise provided in the applicable award agreement or in an employment agreement), if a recipient’s employment is terminated by ICE or any successor entity thereto without “cause,” or if the recipient terminates employment for “good reason” (each as defined in the 2017 Employee Plan), in each case upon or within two years after a “change in control,” each award granted to such recipient prior to such change in control shall become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of employment, and any shares of common stock deliverable pursuant to restricted stock units shall be delivered promptly (but no later than fifteen days) following such recipient’s termination of employment, provided that, as of the change in control date, any outstanding performance-based awards shall be deemed earned at the greater of the target level or actual performance level through the change in control date with respect to all open performance periods.

In the event of a change in control, the Compensation Committee may (1) cancel awards for the in-the-money spread value for stock options and stock appreciation rights and for fair value for other awards (as determined in the sole discretion of the Compensation Committee), (2) provide for the issuance of substitute awards or (3) provide that for a period of at least 20 days prior to the change in control, stock options or stock appreciation rights will be exercisable as to all shares of common stock subject thereto and that any stock options or stock appreciation rights not exercised prior to the consummation of the change in control will terminate and be of no further force or effect as of the consummation of the change in control. If the Compensation Committee cancels any awards pursuant to clause (1) above and the consideration paid in the change in control includes contingent value rights, the Compensation Committee will determine whether such canceled awards are valued taking into account such contingent value rights (with the value determined in the sole discretion of the Compensation Committee) or are entitled to a share of such contingent value rights.

As used in the 2017 Employee Plan, a “change of control” means (1) any person is or becomes the beneficial owner, directly or indirectly, of securities representing 30% or more of the combined voting power of any outstanding ICE securities eligible to vote in an election of directors (subject to certain exceptions, including if such person is a recipient of an award under the 2017 Employee Plan, an entity controlled by the recipient or group of which the recipient is a member); (2) during any three-year period, individuals who constitute the Board as of the beginning of the period (or subsequent directors whose election or nomination was approved or recommended by a vote of at least two-thirds of such directors or directors whose election or nomination was previously so approved or recommended) cease for any reason to constitute at least a majority of the Board; (3) any dissolution or liquidation of ICE or any sale or disposition of 50% or more of ICE’s assets or business; or (4) the consummation of any reorganization, merger, consolidation or share exchange or similar form of corporate transaction involving ICE, unless (a) the persons who were the beneficial owners of outstanding ICE securities eligible to vote in an election of directors immediately before the consummation of such transaction hold more than 60% of the voting power of (y) the successor or survivor corporation in such transaction or (z) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power of the successor or survivor corporation, and (b) each such person holds such securities in substantially the same proportion immediately following the consummation of such transaction as each such person had held immediately prior to the consummation of such transaction.

Performance Awards

Section 162(m) of the Code generally limits ICE’s tax deductions with respect to compensation in excess of $1 million per year paid to our chief executive officer and three other most highly compensated executive officers (other than our chief financial officer), subject to certain exceptions. The 2017 Employee Plan is

 

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intended to allow the issuance of awards that satisfy the “performance-based compensation” exception under Section 162(m) of the Code (“Performance Awards”) in the case of awards that are subject to the attainment of one or more of the following performance criteria: earnings; earnings per share; earnings before interest, taxes, depreciation and amortization; revenue or net revenue measures; gross profit or operating profit measures (including before or after taxes and including profit growth and profit-related return ratios); cost management; dividend payout ratios; market share measures; economic value added; cash flow; return measures (including return on capital, invested capital, total capital, tangible capital, expenses, tangible expenses, equity, revenue, investment, assets, or net assets or total shareholder return or similar measures); increase in the fair market value of ICE common stock; or changes (or the absence of changes) in the per share or aggregate fair market value of ICE common stock.

If approved, all awards may (but are not required to) be issued as Performance Awards. The performance criteria may be measured in absolute terms or relative to historic performance or the performance of other companies or an index. To the extent permissible for awards to satisfy the “qualified performance-based compensation” exemption under Section 162(m) of the Code, the Compensation Committee may designate additional business criteria to which the Performance Awards are subject or provide for objectively determinable adjustments, modifications or amendments to any of the performance criteria described above (including for one or more items of gain, loss, profit or expense: (1) determined to be extraordinary or unusual in nature or infrequent in occurrence, (2) related to the acquisition or disposal of a segment of a business, (3) related to a change in accounting principle under Generally Accepted Accounting Principles, (4) related to discontinued operations that do not qualify as a segment of business under Generally Accepted Accounting Principles or (5) attributable to the business operations of any entity acquired by ICE during the fiscal year).

U.S. Federal Income Tax Implications of Awards

The following is a brief description of the U.S. federal income tax consequences generally arising with respect to the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. This summary is not intended to (and does not) constitute tax advice to recipients of awards and is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences. Recipients are advised to consult with their own independent tax advisors with respect to the specific tax consequences that, in light of their particular circumstances, might arise in connection with their receipt of awards under the 2017 Employee Plan, including any state, local or foreign tax consequences and the effect, if any, of gift, estate and inheritance taxes.

Non-qualified Stock Options and Stock Appreciation Rights. The grant of a non-qualified stock option or stock appreciation right will create no tax consequences for the recipient or ICE at the grant date. Upon exercising such an option or stock appreciation right, the recipient will recognize ordinary income equal to the excess of the fair market value of the vested shares of ICE common stock (and/or cash or other property) acquired on the date of exercise over the exercise price, and will be subject to FICA tax in respect of such amounts. A recipient’s disposition of common stock acquired upon the exercise of a non-qualified option or stock appreciation right generally will result in short-term or long-term capital gain or loss measured by the difference between the sale price and the recipient’s tax basis in such shares (the tax basis in the acquired shares of common stock generally being the exercise price plus any amount recognized as ordinary income in connection with the exercise of the option).

Incentive Stock Options. A recipient will not recognize taxable income upon exercising an incentive stock option except that the alternative minimum tax may apply. If a recipient holds the common stock acquired under the incentive stock option for at least two years from the grant date and one year from the exercise date (the “Required Holding Period”), the recipient’s subsequent disposition of such common stock generally will result in long-term capital gain or loss measured by the difference between the sale price and the recipient’s tax basis in such shares (the tax basis in acquired shares of common stock for which the Required Holding Period is met generally being the exercise price of the incentive stock option). Upon a disposition of common stock acquired upon exercise of an incentive stock option before the end of the Required Holding Period, the recipient generally will recognize ordinary income equal to the lesser of (i) the excess of the fair market value of the common stock

 

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at the date of exercise of the incentive stock option over the exercise price or (ii) the amount realized upon the disposition of the incentive stock option common stock over the exercise price.

Restricted Stock. The recipient of an award of restricted stock will not recognize ordinary income at grant unless the award is vested at grant or the recipient makes the election referred to below. Instead, when the restricted stock vests, the recipient will recognize ordinary income equal to the fair market value of the common stock on the vesting date less any amount the recipient paid for the restricted stock, and such income will be subject to FICA taxation. The recipient’s basis in the common stock received generally will be equal to the fair market value of ICE common stock on the date the restricted stock vests, and the recipient’s holding period in such common stock begins on the day after the restricted stock vests.

Restricted Stock Units. A recipient of a restricted stock unit (whether time-vested or subject to achievement of performance goals) will not be subject to taxation at grant. Instead, a recipient will be subject to FICA taxation at the time any portion of such award vests and will be subject to income tax at ordinary rates on the fair market value of the common stock or the amount of cash received on the date of delivery in settlement of the restricted stock unit. The recipient’s tax basis for purposes of determining any subsequent gain or loss from the sale of the common stock will be equal to the fair market value of the common stock (if any) received on the delivery date, and the recipient’s holding period will begin at the delivery date. Gain or loss resulting from any sale of common stock delivered to a recipient will be treated as long- or short-term capital gain or loss depending on the length of the holding period.

Deduction. ICE generally will be entitled to a tax deduction equal to the amount recognized as ordinary income by the recipient in connection with the delivery of common stock (or cash) pursuant to an award of restricted stock or restricted stock units, or the exercise of a stock option or stock appreciation right. ICE will not be entitled to any tax deduction with respect to an incentive stock option if the recipient holds the common stock for the Required Holding Period prior to disposition of the common stock, and is generally not entitled to a tax deduction with respect to any amount that represents a capital gain to a recipient or that represents compensation in excess of $1 million paid to “covered employees” that is not “qualified performance-based compensation” under Section 162(m) of the Code. For this purpose, a “covered employee” means our chief executive officer and our three highest compensated employees other than the chief executive officer and the chief financial officer (based on compensation reported to our stockholders). The 2017 Employee Plan is intended to satisfy the “performance-based compensation” exception under Section 162(m) of the Code with respect to stock options, stock appreciation rights and other awards that are subject to the achievement of performance goals.

Additional Medicare Tax. A recipient will also be subject to a 3.8% tax on the lesser of (i) the recipient’s “net investment income” for the relevant taxable year and (ii) the excess of the recipient’s modified adjusted gross income for the taxable year over a certain threshold (between $125,000 and $250,000, depending on the recipient’s circumstances). The recipient’s net investment income generally includes net gains from the disposition of shares. Recipients are urged to consult their tax advisors regarding the applicability of this Medicare tax to their income and gains in respect of their investment in the shares.

Section 409A. If an award is subject to Section 409A of the Code, but does not comply with the requirements of Section 409A of the Code, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties. Recipients are urged to consult with their tax advisors regarding the applicability of Section 409A of the Code to their awards.

Transfer Restrictions

No award (or any rights or obligations thereunder) granted to any person under the 2017 Employee Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged (including through the use of any cash-settled instrument), other than by will or by the laws of descent and distribution. All awards (and any rights thereunder) will be exercisable during the life of the recipient only by the recipient or by the recipient’s legal representative.

 

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Clawback/Recoupment

Awards under the 2017 Employee Plan may be subject to recoupment or clawback as may be required by applicable law, or ICE’s recoupment or “clawback” policy as it may be amended from time to time.

Amendment and Termination

Generally, the Board may from time to time suspend, discontinue, revise or amend the 2017 Employee Plan. In general, the Board may, but is not required to, seek stockholder approval of amendments to the 2017 Employee Plan. The Board, however, must submit amendments to the 2017 Employee Plan to stockholders if required by applicable law, regulation or rule of a securities exchange or if the amendment would reduce the exercise price of outstanding stock options or stock appreciation rights.

Unless earlier terminated by the Board, the 2017 Employee Plan (if approved by ICE’s stockholders) will terminate on May 19, 2027, but any outstanding award will remain in effect until the underlying shares are delivered or the award lapses.

New Plan Benefits

Awards under the 2017 Employee Plan, if any, for 2017 will be subject to the Compensation Committee’s discretion. As a result, we cannot determine the number or type of awards that will be granted to any participant under the 2017 Employee Plan for the 2017 fiscal year. The awards granted in 2016 under the 2013 Employee Plan, which would not have changed if the 2017 Employee Plan had been in place instead of the 2013 Employee Plan, are set forth in the table below. The awards granted in 2016 under the 2013 Omnibus Non-Employee Director Incentive Plan are also set forth in the table below.

 

     2013 Omnibus Employee
Incentive Plan
     2013 Omnibus Non-Employee
Director Incentive Plan
 

Name and Position

   Dollar Value
($)(1)
     Number of
Units(2)
     Dollar Value
($)(1)
     Number of
Units(2)
 

Jeffrey C. Sprecher

Chairman and Chief Executive Officer

   $ 6,894,521        282,130      $ 0        0  

Charles A. Vice

President and Chief Operating Officer

   $ 4,432,129        181,365      $ 0        0  

Scott A. Hill

Senior Vice President, Chief Financial Officer

   $ 2,954,681        120,910      $ 0        0  

David S. Goone

Senior Vice President, Chief Strategy Officer

   $ 2,462,079        100,755      $ 0        0  

Thomas W. Farley

Senior Vice President, Financial Markets

   $ 2,265,331        92,700      $ 0        0  

Current executive officers as a group (includes NEOs)

   $ 42,218,913        1,527,309      $ 0        0  

Current non-employee directors as a group

   $ 0        0      $ 1,499,576        28,590  

Employees other than executive officers as a group

   $ 120,397,610        2,402,899      $ 0        0  

 

(1) Dollar value reflects the grant date fair value of all performance-based restricted stock units, stock options and restricted stock units granted in 2016.

 

(2) Assumes target performance was achieved for 2016 performance-based restricted stock unit awards and includes stock options awarded in 2016.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE INTERCONTINENTAL EXCHANGE, INC. 2017 OMNIBUS EMPLOYEE INCENTIVE PLAN.

 

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information about our common stock that has been or may be issued under our equity compensation plans as of December 31, 2016:

 

Plan Category

   Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights(1)
     Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights(1)
     Number of
Securities
Remaining
Available for Future
Issuance Under
Equity
Compensation Plans
(Excluding
Securities Reflected
in the Second
Column)(1)
 

Equity compensation plans approved by security holders(2)

     10,303,567      $ 36.12        14,344,458  

Equity compensation plans not approved by security holders(3)

     122,220      $ 14.05         
  

 

 

    

 

 

    

 

 

 

Total

     10,425,787      $ 36.05        14,344,458  

 

(1) The share and per share amounts in the table above reflect the 5-for-1 stock split that was effected in the fourth quarter of 2016.

 

(2) The 2000 Stock Option Plan was approved by our stockholders in June 2000. The 2009 Omnibus Incentive Plan was approved by our stockholders on May 14, 2009. The Intercontinental Exchange Holdings, Inc. 2013 Omnibus Employee Incentive Plan and the Intercontinental Exchange Holdings, Inc. 2013 Omnibus Non-Employee Director Incentive Plan were approved by our stockholders on May 17, 2013. The shareholders of NYSE approved the NYSE Omnibus Incentive Plan on April 25, 2013. Of the 10,303,567 securities to be issued upon exercise of outstanding options and rights, 3,866,750 are options with a weighted average exercise price of $36.12 and the remaining 6,436,817 securities are restricted stock shares that do not have an exercise price. Of the 6,436,817 restricted stock shares to be issued, 353,560 shares were originally granted under the NYSE Omnibus Incentive Plan.

 

(3) This category includes the 2003 Restricted Stock Deferral Plan for Outside Directors and the Creditex Amended and Restated 1999 Stock Options/Stock Issuance Plan. It also includes the NYSE 2006 Stock Incentive Plan, subsequent to our acquisition of NYSE. Of the 122,220 securities to be issued upon exercise of outstanding options and rights, 11,955 are options with a weighted average exercise price of $14.05 and the remaining 110,265 securities are restricted stock shares that do not have an exercise price. None of the 11,955 options to be issued were originally granted under the 2006 NYSE Stock Incentive Plan.

 

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PROPOSAL 5 — APPROVAL OF AN AMENDMENT TO THE INTERCONTINENTAL EXCHANGE, INC. 2013 OMNIBUS NON-EMPLOYEE DIRECTOR INCENTIVE PLAN TO ADD AN AGGREGATE ANNUAL COMPENSATION LIMIT

On March 3, 2017, upon the approval and recommendation of our Compensation Committee, our Board of Directors unanimously approved the adoption of an amendment (the “Plan Amendment”) to the 2013 Omnibus Non-Employee Director Incentive Plan (the “2013 Director Plan”), subject to approval by our stockholders at the 2017 Annual Meeting. The 2013 Director Plan was previously approved by our stockholders on May 17, 2013. The Plan Amendment is for the sole purpose of imposing an annual limit such that the aggregate value of cash and non-cash compensation granted to any non-employee director in respect of any calendar year with respect to his or her service to ICE or a subsidiary of ICE may not exceed $850,000. A non-employee director is a director or prospective director of ICE or any of ICE’s subsidiaries who is not an employee of ICE or any of ICE’s subsidiaries.

The Compensation Committee recommended, and the Board of Directors approved, the Plan Amendment in consideration of emerging best practices in corporate governance. While actual non-employee director compensation in recent years has been considerably lower than this proposed limit, the Board believes that the proposed limit provides ICE with a reasonable degree of flexibility for the remainder of the plan term to take into account market increases, make adjustments that may in the future be appropriate or necessary for the non-employee director compensation program to remain competitive and accommodate non-employee directors taking on additional roles (for example, serving on the board of directors of ICE subsidiaries and/or serving as committee chairperson).

The material terms of the 2013 Director Plan are substantially consistent with the material terms of the 2017 Employee Plan described under Proposal 4 above, except for the key differences described below. This summary of the material terms of the 2013 Director Plan is qualified in its entirety by reference to the complete text of the 2013 Director Plan, which is attached hereto as Exhibit D, and the Plan Amendment, which is attached hereto as Exhibit E.

Summary of the 2013 Director Plan

The purpose of the 2013 Director Plan is to attract, retain and motivate qualified and experienced individuals who may perform services for ICE as non-employee directors, to compensate them for their contributions to the long-term growth and profits of ICE and to encourage them to acquire a proprietary interest in ICE’s success.

Administration

The Compensation Committee will have sole discretion to make all determinations in respect of whether and when a grantee’s leave of absence from Board service or change in association with ICE or its subsidiaries results in a termination of his or her service as a non-employee director, and the impact, if any, of any such leave of absence or change in association on outstanding awards.

Eligibility

Awards may be made only to non-employee directors. As of the record date, 29 non-employee directors were eligible to receive awards under the 2013 Director Plan.

ICE Common Stock Available for Awards under the Plan

The total number of shares of ICE common stock that may be subject to awards granted under the 2013 Director Plan is one million two hundred fifty thousand (1,250,000) shares, subject to adjustment as described

 

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under Summary of the 2017 Employee Plan — ICE Common Stock Available for Awards Under the Plan under Proposal 4 above. As of March 21, 2017, awards representing 67,470 shares of common stock were outstanding under the 2013 Director Plan and 1,007,200 shares of common stock remained available for grant. Each of the foregoing numbers reflects the 5-for-1 stock split that was effected in the fourth quarter of 2016.

In addition to the proposed aggregate limit on non-employee director compensation, the maximum number of shares of common stock as to which stock options, stock appreciation rights, restricted shares, restricted stock units, dividend equivalent rights and other types of stock-based or stock-related awards may be granted under the 2013 Director Plan to any one individual in any one fiscal year may not exceed a number of awards with a grant date fair value of $500,000.

Type of Awards

Awards under the 2013 Director Plan are not subject to a minimum vesting schedule or a minimum performance period. The 2013 Director Plan provides for grants of “non-qualified” stock options (i.e., stock options that are not intended to be “incentive stock options” under Section 422 of the Code) since non-employees are not eligible for the grant of incentive stock options under the relevant provisions of the Code. The 2013 Director Plan does not specify that equivalent rights granted in connection with an award of restricted stock units will be subject to the same performance and/or service conditions that apply to such restricted stock units.

Change in Control

Unless otherwise determined by the Compensation Committee (or unless otherwise provided in the applicable award agreement), if a grantee’s service as a non-employee director is terminated by ICE or any successor entity thereto on or within one year after a “change in control,” as defined in the 2013 Director Plan, each award granted to such grantee prior to such change in control shall become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of service, and any shares of common stock deliverable pursuant to restricted stock units shall be delivered promptly (but no later than 15 days) following such grantee’s termination of service, provided that, as of the change in control date, any outstanding performance-based awards shall be deemed earned at the greater of the target level or actual performance level through the change in control date (or if no target level is specified, the maximum level) with respect to all open performance periods.

Section 162(m) of the Code

Compensation paid to non-employee directors is not subject to Section 162(m) of the Code. Therefore, awards granted under the 2013 Director Plan are not eligible for, and not intended to satisfy, the “performance-based compensation” exception under Section 162(m) of the Code.

U.S. Federal Income Tax Implications of Awards

Please see the description of the “U.S. Federal Tax Implications of Awards” for the 2017 Employee Plan, above, which generally applies to awards under the 2013 Director Plan. Non-employee directors, however, are not eligible to receive grants of incentive stock options, and any amounts taxable to non-employee directors in respect of awards are not subject to FICA taxation (but may instead be subject to certain self-employment taxes). In addition, since compensation paid to non-employee directors is not subject to Section 162(m) of the Code, restricted stock units, stock options and stock appreciation rights granted under the 2013 Director Plan are not eligible for, and thus not intended to satisfy, the “performance-based compensation” exception under Section 162(m) of the Code.

This summary is not intended to (and does not) constitute tax advice to recipients of awards and is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences. Recipients are advised to consult with their own independent tax advisors with respect to the specific tax consequences that, in light of their particular circumstances, might arise in connection with their receipt of

 

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awards under the 2013 Director Plan, including any state, local or foreign tax consequences and the effect, if any, of gift, estate and inheritance taxes.

New Plan Benefits

Awards under the 2013 Director Plan, if any, for 2017 will be subject to the Compensation Committee’s discretion. As a result, we cannot determine the number or type of awards that will be granted to any participant under the 2013 Director Plan for the 2017 fiscal year. The awards granted to non-employee directors for the 2016 fiscal year under the 2013 Plan, which would not have changed if the Plan Amendment had been effective, are set forth in the table under New Plan Benefits under Proposal 4 above.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE 2013 OMNIBUS NON-EMPLOYEE DIRECTOR INCENTIVE PLAN.

 

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PROPOSALS RELATING TO ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

PROPOSAL 6 — APPROVAL OF THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO UPDATE AND STREAMLINE REFERENCES TO OUR NATIONAL SECURITIES EXCHANGE SUBSIDIARIES, THEIR MEMBERS, AND THE HOLDING COMPANIES THAT CONTROL SUCH EXCHANGES, AND DELETE REFERENCES TO CERTAIN OTHER SUBSIDIARIES

General

On March 3, 2017, our Board of Directors approved and declared advisable the Fourth Amended and Restated Certificate of Incorporation, which updates and streamlines references to our subsidiaries that are national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, and deletes references to certain other subsidiaries and, as detailed in Proposal 7 below, removes an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext businesses in 2014. The adoption of the Fourth Amended and Restated Certificate of Incorporation is contingent upon both the approval of the adoption by the stockholders and the approval by the SEC. The form of the Fourth Amended and Restated Certificate of Incorporation is attached to this Proxy Statement as Exhibit A, with such additions demarcated by underline and such deletions demarcated by strike-through. The general description of the proposed changes to the Third Amended and Restated Certificate of Incorporation described below is qualified in its entirety by reference to the text of the proposed Fourth Amended and Restated Certificate of Incorporation. The Board recommends that the stockholders approve the adoption of the Fourth Amended and Restated Certificate of Incorporation to update and streamline references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, and remove references to certain other subsidiaries.

Throughout our Third Amended and Restated Certificate of Incorporation, but most prominently within Article V, references are made to certain of our subsidiaries, including three national securities exchanges and other subsidiaries whose operations relate, or in the past related, to our national securities exchanges’ operations, as well as to certain intermediate holding companies for our national securities exchange subsidiaries. The proposed amendments outlined in this Proposal 6 would narrow the references by limiting them to (i) any national securities exchange registered under Section 6 of the Exchange Act that is directly or indirectly controlled by the Company, defined as an “Exchange” and (ii) any entity controlled by the Company that is not itself an Exchange but that directly or indirectly controls an Exchange, defined as an “Intermediate Holding Company”. Eliminating the references to subsidiaries other than Exchanges and Intermediate Holding Companies is consistent with the approach taken by other public holding companies for national securities exchanges and is intended to reduce the compliance burdens on our subsidiaries while retaining the benefit of the regulatory safeguards provided by Article V. Identifying Exchanges and Intermediate Holding Companies by category rather than by name will avoid the need to amend the Fourth Amended and Restated Certificate of Incorporation when there are changes in the ownership of an Exchange or Intermediate Holding Company, such as the 2017 acquisition of the national securities exchange NYSE National, Inc., and would also avoid the delay and expense associated with the stockholder approval process (except as may be required by applicable law or the rules of any stock exchange or stock market on which the Common Stock may be listed or traded).

Additionally, current provisions that refer in detail to the various classes of members, equity trading permit holders and options trading permit holders on each of our Exchanges would be replaced with a more general definition of “Member” that captures all such classes. As a result of the replacement of these terms, other provisions and cross-references throughout our Third Amended and Restated Certificate of Incorporation would also be amended to conform to these changes.

Article V of our Third Amended and Restated Certificate of Incorporation imposes voting limitations and ownership concentration limitations on owners of our Common Stock above certain thresholds. Article V

 

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authorizes our Board of Directors to grant exceptions to those limitations if it makes certain determinations. Currently those include determinations that such an exception would not impair our ability to perform our, or the ability of our national securities exchange subsidiaries, certain of our other subsidiaries and their intermediate holding companies to perform their respective responsibilities under the Exchange Act and the rules and regulations thereunder, and that such an exception is otherwise in our best interests and the best interests of our stockholders and the identified subsidiaries. The proposed amendments would eliminate from these determinations the need to consider any subsidiaries other than Exchanges and Intermediate Holding Companies. This reduction in matters to be considered might under certain circumstances permit our Board of Directors to approve an exception to the voting or ownership concentration limit where it would not be able to under our Third Amended and Restated Certificate of Incorporation. However, any such exception remains in the discretion of the Board of Directors, and the Board of Directors would continue to be able to take into account any factors it considers relevant. The proposed changes will also enable us to add to or shorten the list of our Exchanges or Intermediate Holding Companies without having to amend our Certificate of Incorporation, which would require stockholder approval. Any such changes, however, will remain subject to approval by the Board of Directors of ICE and the SEC.

Review and Approval by the SEC

As the owner of national securities exchanges (including the NYSE), ICE is required to obtain approval from the SEC for any amendments to its Certificate of Incorporation. ICE has begun the process for obtaining approval from the SEC, but has not yet received it. If Proposal 6 and Proposal 7 are approved at the Annual Meeting, our Fourth Amended and Restated Certificate of Incorporation will be adopted by our stockholders, and if approved by the SEC, the Fourth Amended and Restated Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware and become effective at the time stated in such filing.

Vote Required

Approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to update and streamline references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, and delete references to certain other subsidiaries requires, in accordance with Article X of our Third Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of Common Stock entitled to vote thereon.

If you abstain from voting on this matter, your abstention will have the same effect as a vote “against” the approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to update and streamline references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges, and delete references to certain other subsidiaries. If you hold your shares through a broker and you do not instruct the broker on how to vote on this Proposal 6 within a specified period of time prior to the meeting, your broker has the authority to vote your shares. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum.

The approval of each of Proposal 6 and 7 is required to approve the adoption of our Fourth Amended and Restated Certificate of Incorporation. Accordingly, each of Proposal 6 and Proposal 7 is dependent on, and cross-conditioned upon, the approval of each such proposal, and none of such proposals will be implemented unless they are all approved at the Annual Meeting. The approval of Proposal 6 and Proposal 7 collectively shall constitute the requisite approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation, attached to this Proxy Statement as Exhibit A, as required under Delaware law.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO UPDATE AND STREAMLINE REFERENCES TO OUR NATIONAL SECURITIES EXCHANGE SUBSIDIARIES, THEIR MEMBERS, AND THE HOLDING COMPANIES THAT CONTROL SUCH EXCHANGES AND DELETE REFERENCES TO CERTAIN OTHER SUBSIDIARIES.

 

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PROPOSAL 7 — APPROVAL OF THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REMOVE AN OBSOLETE PROVISO CROSS-REFERENCING A SECTION OF OUR BYLAWS THAT WAS DELETED AFTER THE SALE OF THE EURONEXT BUSINESS IN 2014

General

On March 3, 2017, our Board of Directors approved and declared advisable the Fourth Amended and Restated Certificate of Incorporation, which in addition to updating and streamlining references to our national securities exchange subsidiaries, their members, and the holding companies that control such exchanges and removing references to certain other subsidiaries, as noted above in Proposal 6, also removes an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext businesses in 2014. The adoption of the Fourth Amended and Restated Certificate of Incorporation is contingent upon both the approval of the adoption by the stockholders and the approval by the SEC. The form of the Fourth Amended and Restated Certificate of Incorporation is attached to this Proxy Statement as Exhibit A, with such additions demarcated by underline and such deletions demarcated by strike-though. The general description of the proposed changes to the Third Amended and Restated Certificate of Incorporation described below is qualified in its entirety by reference to the text of the proposed Fourth Amended and Restated Certificate of Incorporation. The Board recommends that the stockholders approve the adoption of the Fourth Amended and Restated Certificate of Incorporation to remove an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext business in 2014.

Article X, clause (A) of our Third Amended and Restated Certificate of Incorporation currently provides that no provision of “clause (A) of ARTICLE X shall be amended, modified or repealed, and no provision inconsistent with any such provision shall become part of this Amended and Restated Certificate of Incorporation, unless such matter is approved by the affirmative vote of the holders of not less than 66 2/3% of the voting power of all outstanding shares of Common Stock of the Corporation and all other outstanding shares of stock of the Corporation entitled to vote on such matter, with such outstanding shares of Common Stock and other stock considered for this purpose as a single class” and then qualifies that requirement by adding “provided that, in the case of an amendment seeking to reduce the minimum percentage of votes specified in Section 11.2(b) of the bylaws or which would have the effect of enabling or facilitating such reduction, the minimum percentage applicable shall be 80%”. Following the sale of the Euronext business in 2014, we amended and restated our Fourth Amended and Restated Bylaws to remove Section 11.2(b) and other provisions relevant to our former relationship with Euronext. As a result, the qualification making reference to Section 11.2(b) of the Bylaws is obsolete. As part of our changes to our Third Amended and Restated Certificate as described above in Proposal 6, we are also proposing this non-substantive change to conform our Certificate of Incorporation with our Bylaws by removing the obsolete reference.

The change to remove the above proviso from Article X, clause (A) of our Third Amended and Restated Certificate of Incorporation will have no effect on the rights of our stockholders given that such provision has already been stricken from our Bylaws.

Review and Approval by the SEC

As the owner of national securities exchanges (including the NYSE), ICE is required to obtain approval from the SEC for any amendments to its Certificate of Incorporation. ICE has begun the process for obtaining approval from the SEC, but has not yet received it. If Proposal 6 and Proposal 7 are approved at the Annual Meeting, our Fourth Amended and Restated Certificate of Incorporation will be adopted by our stockholders, and if approved by the SEC, the Fourth Amended and Restated Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware and become effective at the time stated in such filing.

 

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Vote Required

Approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to remove an obsolete proviso cross-referencing a section of our Bylaws that no longer exists requires, in accordance with Article X of our Third Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of Common Stock entitled to vote thereon.

If you abstain from voting on this matter, your abstention will have the same effect as a vote “against” the approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation to remove an obsolete proviso cross-referencing a section of our Bylaws that was deleted after the sale of the Euronext business in 2014. If you hold your shares through a broker and you do not instruct the broker on how to vote on this Proposal 7 within a specified period of time prior to the meeting, your broker has the authority to vote your shares. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum.

The approval of each of Proposal 6 and Proposal 7 is required to approve the adoption of our Fourth Amended and Restated Certificate of Incorporation. Accordingly, each of Proposal 6 and Proposal 7 is dependent on, and cross-conditioned upon, the approval of each such proposal, and none of such proposals will be implemented unless they are all approved at the Annual Meeting. The approval of Proposal 6 and Proposal 7 collectively shall constitute the requisite approval of the adoption of our Fourth Amended and Restated Certificate of Incorporation, attached to this Proxy Statement as Exhibit A, as required under Delaware law.

Directors’ Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF OUR FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REMOVE AN OBSOLETE PROVISO CROSS-REFERENCING A SECTION OF OUR BYLAWS THAT WAS DELETED AFTER THE SALE OF THE EURONEXT.

 

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AUDIT MATTERS

 

AUDIT COMMITTEE REPORT

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the quality and integrity of our financial reporting, compliance with legal and regulatory requirements, systems of internal controls, qualifications and independence of our independent registered public accounting firm, performance of our internal audit function and independent auditors, financial reporting processes and such other functions as the Board may assign from time to time. The Audit Committee is responsible for the appointment, compensation, which includes the fee negotiation, and oversight of the external auditor. The Audit Committee periodically assesses the work performed by Ernst & Young LLP to ensure a high quality of work is provided to us and, in 2015, considered the pros and cons of switching our external auditor. The Audit Committee also works with our management team in selecting the lead partner on our account and met with the current lead partner before he was put in that role. Our current lead partner has been in that position for us since 2014.

Our Board of Directors has adopted an Audit Committee Charter, which sets forth the responsibilities of the Audit Committee. A copy of the Audit Committee Charter is available on our website at www.intercontinentalexchange.com. The Audit Committee held eight meetings during the fiscal year ended December 31, 2016. The Audit Committee reviewed and discussed with management and Ernst & Young LLP our audited financial statements for the fiscal year ended December 31, 2016. The Committee has also discussed with our independent public registered accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board (the “PCAOB”) AU Section No. 380, as currently in effect.

The Audit Committee also received the written disclosures and the letter from Ernst & Young LLP required by Rule 3526 of the PCAOB (Communications with Audit Committees Concerning Independence) and has discussed with Ernst & Young LLP its independence. The Audit Committee reviewed the audit and non-audit services provided by Ernst & Young LLP for the fiscal year ended December 31, 2016 and determined to engage Ernst & Young LLP as the independent registered public accounting firm of ICE for the fiscal year ending December 31, 2017. The Audit Committee meets to review and approve the financial information in each of our quarterly reports on Form 10-Q and our annual report on Form 10-K. During these meetings, the Audit Committee reviews any accounting issues and events that arose during the quarter, reviews legal matters that may impact our financial statements, reviews our earnings press release, meets with representatives of our internal audit department to discuss Sarbanes-Oxley matters and the status of internal audits and discusses the audit or review process conducted by Ernst & Young LLP.

Based upon the Audit Committee’s review of the audited financial statements and the discussions noted above, the Audit Committee recommended that the Board of Directors include the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for filing with the SEC.

Audit Committee:

Judith A. Sprieser, Chairperson

Charles Crisp

Vincent Tese

 

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PROPOSAL 8 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017

The Audit Committee of our Board of Directors, in accordance with its charter and authority delegated to it by the Board of Directors, has appointed the firm of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017, and the Board of Directors has directed that such appointment be submitted to our stockholders for ratification at the Annual Meeting. Ernst & Young LLP has audited our financial statements since 2002 and is considered by our Audit Committee to be well qualified. Our organizational documents do not require that our stockholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm. We are seeking stockholder ratification because we believe doing so is good corporate practice and our Audit Committee believes appointing Ernst & Young LLP to be in the best interest of our stockholders. If the stockholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider the appointment, but may still retain Ernst & Young LLP.

Representatives of Ernst & Young LLP will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so. They also will be available to respond to appropriate questions from stockholders.

THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS AND THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.

INFORMATION ABOUT OUR INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM FEES AND SERVICES

Audit and Non-Audit Fees

Aggregate fees for professional services rendered for us by Ernst & Young LLP as of and for the fiscal years ended December 31, 2016 and 2015 are set forth below. The aggregate fees included in the Audit Fees category are fees billed for the fiscal year for the integrated audit of our annual financial statements and audits and reviews of statutory and regulatory filings. The aggregate fees included in the Audit-Related, Tax and Other Fees categories are fees for services performed in the fiscal years.

 

     Fiscal Year
2016
     Fiscal Year
2015
 

Audit Fees

   $ 11,009,000      $ 11,832,000  

Audit-Related Fees

     1,798,500        789,000  

Tax Fees

     60,000        103,000  

All Other Fees

             
  

 

 

    

 

 

 

Total

   $ 12,867,500      $ 12,724,000  
  

 

 

    

 

 

 

Audit Fees for the fiscal years ended December 31, 2016 and 2015 were for professional services rendered for the audits of our annual consolidated financial statements, reviews of periodic reports and other documents filed with the SEC, audits of the effectiveness of internal control as required by Section 404 of the Sarbanes-Oxley Act and services that are customarily provided in connection with statutory or regulatory filings.

Audit-Related Fees for the fiscal year ended December 31, 2016 and 2015 were for due diligence related to certain merger and acquisition activities and for service organization control attestation reports.

Tax Fees for the fiscal year ended December 31, 2016 and 2015 were for tax compliance services.

 

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Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Pursuant to the provisions of its charter, the Audit Committee’s policy is to pre-approve and monitor all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has sole authority, without action by the Board of Directors, for the review and approval of such services and fees. The Audit Committee pre-approved all services performed by the independent registered public accounting firm in fiscal year 2016.

 

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OTHER PROPOSALS FOR YOUR CONSIDERATION

 

PROPOSAL 9 — STOCKHOLDER PROPOSAL REGARDING THE PREPARATION OF A REPORT ASSESSING ENVIRONMENTAL, SOCIAL AND GOVERNANCE MARKET DISCLOSURE EXPECTATIONS

ICE has been advised that Domini Social Equity Fund, 532 Broadway, 9th Floor, New York, NY 10012, a beneficial owner of at least $2,000 in market value of the Company’s Common Stock, represented by 195 shares of Common Stock, intends to present the following resolution for approval at the Annual Meeting. In accordance with the applicable proxy regulations, the text of the proponent’s proposal and supporting statement, for which we accept no responsibility, are set forth immediately below and under “Supporting Statement” on this page. The Board has recommended a vote against the proposal for the reasons set forth following the supporting statement.

Supporting Statement

WHEREAS: Managing and reporting environmental, social and governance (ESG) business practices assists companies to compete in a global business environment characterized by finite natural resources, changing legislation, and heightened public expectations. ESG reporting allows both companies and investment products to publicize and gain strategic value from existing sustainability efforts while identifying both emerging risks and potential opportunities. Without proper disclosure, analysts have difficulty comparing businesses or investment products. Without such disclosure, analysts cannot ascertain each investment’s ESG exposure in a manner that minimizes material risks.

To remain competitive, regulated exchanges, marketplaces, and clearing houses should be aware of current market trends that influence their ability to attract both listed companies and investment products such as futures, derivatives, indices, and commodities. Some peer regulated exchanges, marketplaces, and clearing houses have already launched sustainability initiatives that train issuers on best practices in ESG reporting, or that produce recommendations, rules or guidance on such disclosure.

Moreover, the London Stock Exchange requires listed companies on its main exchange (1,600 companies) to report total greenhouse gas (GHG) emissions. The Hong Kong Exchanges and Clearing Limited recommends issuers disclose company performance on over a dozen sustainability criteria. The Johannesburg Stock Exchange asks issuers to complete, on a “comply or explain” basis, one integrated report that combines both financial and ESG information. The Singapore Stock Exchange implemented a successful ESG reporting approach on a comply-or-explain basis beginning in 2016. Furthermore, NASDAQ OMX and Intercontinental Exchange, Inc.’s NYSE Euronext joined the Sustainable Stock Exchanges Initiative, where they pledged to work with issuers to improve ESG performance and reporting. Although the World Federation of Exchanges has produced draft ESG guidance for its members and members of the Sustainable Stock Exchanges Initiative have committed to act by the end of 2016, Intercontinental Exchange has not made any such commitment.

In March 2014, over 100 institutional investors collaborated with Ceres Investor Network on Climate Risk to produce a proposal for a listing standard for regulated exchanges on ESG reporting (http://www.ceres.org/resources/reports/incr-listing-standards-drafting-committee-consultation-paper-proposed-sustainability-disclosure-listing-standard-for-global-stock-exchanges/view). Since then numerous reports have been published assessing the ESG practices of certain regulated exchanges, marketplaces, and clearing houses. Proponents therefore suggest it is valuable for Intercontinental Exchange, Inc., and its Board, to better understand the disclosure trends and best practices in this field to stay abreast of market expectations.

RESOLVED: That shareholders request that our Board of Directors prepare a report assessing the current global expectations by investors for ESG market disclosure, and report to shareholders, by November 2017, its findings and the Board’s recommended steps (if any, or its reasons for declining to make recommendations, if any) for encouraging ESG disclosure in the markets where Intercontinental Exchange, Inc. does business. The report should be prepared at a reasonable cost, omitting proprietary information.

 

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Statement by Our Board of Directors Against the Stockholder Proposal

ICE owns and operates 12 exchanges and 6 clearing houses globally and is firmly committed to environmental, social and governance (“ESG”) considerations in support of transparency and long-term shareholder value creation. We recognize the importance of ESG considerations in conducting our business, in listing new derivative products for trading, and in acting as a platform for companies listed on the NYSE to share insights, highlight achievements and gain information. While well intentioned, for the reasons stated below, we firmly oppose the stockholder proposal as being misplaced and not relevant to creating shareholder value within our business. Our Board of Directors believes that this report is not necessary because (i) we are already aware of ESG disclosure expectations and (ii) we are currently active in promoting their development in a cost effective way.

(i) The following demonstrates the vast array of factors determining ESG disclosure expectations and the corresponding reporting practices:

 

   

The SEC requires that publicly held companies provide disclosure regarding exposure to material risks in its Risk Factors information and disclosure regarding known trends, events and uncertainties that are reasonably likely to have material effects on the company’s business, financial position or results of operations in its Management’s Discussion and Analysis information. These disclosures would cover situations that relate to material ESG matters.

 

   

Two primary stock exchange initiatives that NYSE actively participates in are the World Federation of Exchanges (“WFE”) Sustainability Working Group and U.N. Sustainable Stock Exchange Initiative (“UN SSEI”).