10-K/A
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K/A
(Amendment No. 1)
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2008
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission File Number
001-34091
MARKETAXESS HOLDINGS
INC.
(Exact name of registrant as
specified in its charter)
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Delaware
(State of
incorporation)
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52-2230784
(IRS Employer Identification
No.)
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140 Broadway, New York, New York
(Address of principal
executive offices)
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10005
(Zip
Code)
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(212)
813-6000
(Registrants telephone
number, including area code)
SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Title of Each Class:
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Name of Each Exchange on Which Registered:
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Common Stock, par value $0.003 per share
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NASDAQ Global Select Market
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SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 229.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). o Yes o No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
The aggregate market value of the shares of common stock and
non-voting common stock held by non-affiliates of the registrant
as of June 30, 2008 (the last business day of the
registrants most recently completed second fiscal quarter)
was approximately $239.7 million computed by reference to
the last reported sale price on the NASDAQ Global Select Market
on that date. For purposes of this calculation, affiliates are
considered to be officers, directors and holders of 10% or more
of the outstanding common stock of the registrant on that date.
The registrant had 30,988,380 shares of common stock,
1,872,115 of which were held by affiliates, and
2,585,654 shares of non-voting common stock outstanding on
that date.
At April 28, 2009, the aggregate number of shares of the
registrants common stock and non-voting common stock
outstanding was 34,293,814.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
MARKETAXESS
HOLDINGS INC.
2008
FORM 10-K/A
ANNUAL REPORT
TABLE OF
CONTENTS
ii
EXPLANATORY
NOTE
MarketAxess Holdings Inc. is filing this Amendment No. 1 on
Form 10-K/A
(this Amendment) to amend its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 (the
Form 10-K),
as filed with the Securities and Exchange Commission
(SEC) on March 3, 2009, for the purpose of
including the information that was to be incorporated by
reference to its definitive proxy statement relating to its 2009
Annual Meeting of Stockholders. The Registrant will not file its
proxy statement within 120 days of its fiscal year ended
December 31, 2008 and is therefore amending Part III, Items
10 through 14 of its Annual Report on
Form 10-K
as set forth below to include such information. We are also
including as exhibits the certifications required under
Section 302 of the Sarbanes-Oxley Act of 2002.
Except as otherwise expressly stated herein, this Amendment does
not reflect events occurring after the date of the
Form 10-K,
nor does it modify or update the disclosure contained in the
Form 10-K
in any way other than as required to reflect the amendments
discussed above and reflected below. Accordingly, this Amendment
should be read in conjunction with the
Form 10-K
and the Companys other filings made with the SEC
subsequent to December 31, 2008.
Unless the context requires otherwise, the terms
MarketAxess, the Company,
we, us and our refer to
MarketAxess Holdings Inc. and its subsidiaries.
PART III
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Item 10.
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Directors,
Executive Officers and Corporate Governance.
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Board of
Directors
The names of the directors of the Company and certain
information about them are set forth below.
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Richard M. McVey
Director since April 2000
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Richard M. McVey (49) has been Chief Executive Officer
and Chairman of our Board of Directors since our inception. As
an employee of J.P. Morgan & Co., one of our founding
broker-dealers, Mr. McVey was instrumental in the founding of
MarketAxess in April 2000. Prior to founding MarketAxess,
Mr. McVey was Managing Director and Head of North America
Fixed Income Sales at JPMorgan, where he managed the
institutional distribution of fixed-income securities to
investors, from 1996 until April 2000. In that capacity, he was
responsible for developing and maintaining senior client
relationships across all market areas, including fixed-income,
equities, emerging markets, foreign exchange and derivatives.
From 1992 to 1996, Mr. McVey led JPMorgans North America
Futures and Options Business, including institutional brokerage,
research, operations, finance and compliance. Mr. McVey
received a B.A. in Finance from Miami (Ohio) University and an
M.B.A. from Indiana University.
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Roger Burkhardt
Director since July 2007
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Roger Burkhardt (48) is the President and Chief Executive
Officer of Ingres Corporation, a provider of business open
source software and solutions, a position he has held since July
2007. Mr. Burkhardt joined Ingres Corporation as President and
Chief Operating Officer in July 2006. From 2000 until 2006, Mr.
Burkhardt was Chief Technology Officer and Executive Vice
President of NYSE Group, Inc. Prior to his tenure with the NYSE,
Mr. Burkhardt held various capital markets-related technology
positions, including serving as President of listed equities at
Optimark Technologies, Inc., and director of capital markets at
IBM. Mr. Burkhardt holds bachelors and masters degrees in
physics from Oxford University and an M.B.A. in finance from New
York University.
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Stephen P. Casper
Director since April 2004
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Stephen P. Casper (59) is a partner of Vastardis Capital
Services, which provides fund administration and securities
processing outsourcing services to hedge funds, funds of funds
and private equity funds and their investment management
sponsors. Prior to this, Mr. Casper was Chairman and Chief
Executive Officer of Charter Atlantic Corporation, the holding
company of Fischer Francis Trees & Watts, Inc.
(FFTW), a specialist manager of U.S., global and
international fixed income portfolios for institutional clients,
and Malbec Partners, a manager of single-strategy hedge funds.
From April 2004 to January 2008, Mr. Casper was the President
and CEO of FFTW. Mr. Casper joined FFTW as Chief Financial
Officer in 1990 and was appointed Chief Operating Officer in May
2001. From 1984 until 1990, Mr. Casper was Treasurer of the
Rockefeller Family Office. Mr. Casper is a director of FFTW
Funds, Inc., a publicly traded mutual fund. Mr. Casper is a
presiding director of the board of The Depository Trust &
Clearing Corporation and its subsidiaries, the Depository Trust
Company, the National Securities Clearing Corporation, and the
Fixed Income Clearing Corporation. Mr. Casper is also a member
of the Investment Committee of the Brooklyn Museum.
Mr. Casper is a Certified Public Accountant and received a
B.B.A. in accounting from Baruch College, where he graduated
magna cum laude, Beta Gamma Sigma, and an M.S. in finance and
accounting from The Wharton School at the University of
Pennsylvania.
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David G. Gomach
Director since February 2005
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David G. Gomach (50) is currently retired.
Mr. Gomach was the Chief Financial Officer and Treasurer of
School Specialty, Inc. from September 2006 through June 2007,
having joined as Executive Vice President--Finance in August
2006. Prior to School Specialty, Mr. Gomach held various
positions at the Chicago Mercantile Exchange (CME) from 1987 to
2004. From June 1997 until his retirement from the CME in
November 2004, he served as Chief Financial Officer. From 1996
until 1997, Mr. Gomach served as Vice President, Internal Audit
and Administration. Also, during his tenure at the CME, he was a
Senior Director and Assistant Controller. Prior to joining the
CME, Mr. Gomach held positions at Perkin-Elmer, Singer
Corporation and Mercury Marine, a subsidiary of Brunswick
Corporation. Mr. Gomach is a Certified Public Accountant
and received a B.S. from the University of
Wisconsin-LaCrosse
and an M.B.A. from Roosevelt University.
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Carlos M. Hernandez
Director since February 2006
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Carlos M. Hernandez (47) has been the Head of Global
Equities for JPMorgan since September 2006. Mr. Hernandez
has been with JPMorgan since 1986, working on a wide array of
advisory and financing transactions for both corporations and
governments, across various product groups and geographic
regions. Prior to his current position, Mr. Hernandez
spearheaded all forms of capital raising and distribution in the
fixed income, syndicated loans and equity markets. Previously,
Mr. Hernandez managed the Institutional Equities business for
the Americas. Before joining the Equities Division, Mr.
Hernandez served as JPMorgans regional executive for Latin
America. Mr. Hernandez is a member of JPMorgans Global
Investment Banking Management Committee.
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Ronald M. Hersch
Director since July 2000
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Ronald M. Hersch (61) was a Senior Managing Director at
Bear Stearns and Co. Inc. from June 1992 until his retirement in
April 2007. Mr. Hersch was responsible for directing the
firms futures business as well as coordinating eCommerce
activities and initiatives within the Fixed Income Division.
Mr. Hersch is a former Chairman of the Futures Industry
Association. He has previously served on the board of directors
of Bond Desk Group, LLC, the Chicago Board of Trade, and the
National Futures Association, the self-regulatory organization
responsible for futures industry oversight. Mr. Hersch received
a B.A. from Long Island University.
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Jerome S. Markowitz
Director since March 2001
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Jerome S. Markowitz (69) has been a partner of Conifer
Securities, LLC since September 2006. Prior to that
Mr. Markowitz was actively involved in managing a private
investment portfolio since 1998. Mr. Markowitz was Director of
Capital Markets for Montgomery Securities from 1987 to 1998, a
Managing Director at Rothchilds Securities Inc. from 1986 to
1987, and a Senior Managing Director at Prudential Bache from
1983 to 1986.
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T. Kelley Millet
Director since April 2007
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T. Kelley Millet (49) has been President of MarketAxess
since September 2006, with primary responsibility for expanding
and diversifying the Companys North American
business. Prior to joining us, Mr. Millet served as Senior
Managing Director, Co-Head of Global Credit Trading at Bear
Stearns from 2001 to 2006, where he was responsible for
origination, syndication, cash, derivatives and flow trading for
the investment grade and emerging markets businesses, as well as
high-yield derivatives. Prior to joining Bear Stearns in 2001,
Mr. Millet had a 19-year career with JPMorgan, where he held
positions of increasing responsibility, culminating in his
appointment as Global Head, Capital Markets and Syndicate. He
currently serves on the boards of Grace Outreach and the
American Red Cross. Mr. Millet received a B.A. in Economics from
Amherst College.
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Nicolas S. Rohatyn
Director since April 2000
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Nicolas S. Rohatyn (48) has been the Chief Executive
Officer and Chief Investment Officer of TRG Management L.P., the
investment manager of the TRG Global Opportunity Master Fund,
Ltd., since March 2003. From 1982 until 2001, Mr. Rohatyn held a
series of positions at JPMorgan, most recently as Executive
Director of JPMorgan and Co-Head of LabMorgan from March 2000
until September 2001 and as Managing Director and co-Head of
Global Fixed Income from January 1999 until March 2000. Mr.
Rohatyn was also a member of the executive management team at
JPMorgan from January 1995 until December 2000. Mr. Rohatyn
founded the Emerging Markets Traders Association in 1990 and he
served as its Chairman from then until 1994. He currently serves
on the board of The Alvin Ailey American Dance Theatre. Mr.
Rohatyn received a B.A. in Economics from Brown University.
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John Steinhardt
Director since April 2000
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John Steinhardt (55) is the founder, and has been the
Managing Partner, Co-Chief Executive Officer and Co-Chief
Investment Officer, of KLS Diversified Asset Management since
July 2007. From July 2006 until July 2007, Mr. Steinhardt
managed a private investment portfolio. Mr. Steinhardt was the
founder, Chief Executive Officer and Chief Investment Officer of
Spectrum Investment Group from January 2005 to July 2006.
Until October 2004, Mr. Steinhardt was Head of North American
Credit Markets for JPMorgan Chase & Co. and a member of the
Management Committee of the Investment Banking Division of
JPMorgan Chase & Co. Prior to the merger of
J.P. Morgan & Co. and the Chase Manhattan Bank, Mr.
Steinhardt was the Head of U.S. Securities at Chase
Securities Inc. and a member of the Management Committee from
1996 to 2000. He currently serves on the board of directors of
the 92nd Street Y and the board of trustees of the Central Park
Conservancy. Mr. Steinhardt received a B.S. in Economics from
St. Lawrence University and an M.B.A from Columbia University.
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Robert W. Trudeau
Director since July 2008
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Robert W. Trudeau (40) has been a general partner at
Technology Crossover Ventures (TCV), a private
equity and venture capital firm, since August 2005. Mr. Trudeau
was elected to the Board of Directors by the holders of the
Series B Preferred Stock pursuant to the terms thereof. Prior to
joining TCV, from January 2003 to August 2005, Mr. Trudeau
was a principal of General Atlantic Partners, a venture capital
firm. Mr. Trudeau currently serves on the board of directors of
RiskMetrics Group, Inc. and several privately held companies.
Mr. Trudeau received a B.A.H. in Political Science from
Queens University and an MBA from The University of
Western Ontario.
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Executive
Officers
The names of the officers of the Company and certain information
about them are set forth below.
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Name
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Age
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Position
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Richard M. McVey
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49
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Chief Executive Officer and Chairman of the Board of Directors
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T. Kelley Millet
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49
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President
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James N.B. Rucker
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Chief Financial Officer
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Nicholas Themelis
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45
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Chief Information Officer
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Richard M. McVey has been Chief Executive Officer and
Chairman of our Board of Directors since our inception. See
Board of Directors for a discussion of
Mr. McVeys business experience.
T. Kelley Millet has been President since September
2006. See Board of Directors for a discussion of
Mr. Millets business experience.
James N.B. Rucker has been Chief Financial Officer since
June 2004. From our formation in April 2000 through June 2004,
Mr. Rucker was Head of Finance and Operations, with
responsibility for finance and certain client and dealer
services. From January 1995 to April 2000, Mr. Rucker was
Vice President and Head of International Fixed Income Operations
at Chase Manhattan Bank, where he was responsible for the
settlement of international securities and loan, option and
structured trades. He also was a Director of the Emerging
Markets Clearing Corporation from 1999 to 2000. Mr. Rucker
received a B.S. in Economics and Politics from Bristol
University, England.
Nicholas Themelis has been Chief Information Officer
since March 2005. From June 2004 through February 2005,
Mr. Themelis was Head of Technology and Product Delivery.
From March 2004 to June 2004, Mr. Themelis was Head of
Product Delivery. Prior to joining us, Mr. Themelis was a
Principal at Promontory Group, an investment and advisory firm
focused on the financial services sector, from November 2003 to
March 2004. From March 2001 to August 2003, Mr. Themelis
was a Managing Director, Chief Information Officer for North
America and Global Head of Fixed Income Technology at Barclays
Capital. From March 2000 to March 2001, Mr. Themelis was
the Chief Technology Officer and a member of the board of
directors of AuthentiDate Holdings Corp., a
start-up
focused on developing leading-edge content and encryption
technology. Prior to his tenure at AuthentiDate,
Mr. Themelis spent nine years with Lehman Brothers,
ultimately as Senior Vice President and Global Head of the
E-Commerce
Technology Group.
Section 16(a)
beneficial ownership reporting compliance
The members of our Board of Directors, our executive officers
and persons who hold more than 10% of our outstanding Common
Stock are subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as
amended, which requires them to file reports with respect to
their ownership of our Common Stock and their transactions in
such Common Stock. Based solely upon a review of (i) the
copies of Section 16(a) reports that MarketAxess has
received from such persons for transactions in our Common Stock
and their Common Stock holdings for the 2008 fiscal year and
(ii) the written representations of such persons that no
annual Form 5 reports were required to be filed by them for
the fiscal year, the Company believes that all reporting
requirements under Section 16(a) for such fiscal year were
met in a timely manner by its directors, executive officers and
beneficial owners of more than 10% of its Common Stock, except
that Mr. Burkhardt filed one late report that covered
transactions on November 21, 2008 with respect to
open-market purchases of shares of Common Stock.
Code of
Conduct, Code of Ethics and other governance documents
The Board has adopted a Code of Conduct that applies to all
officers, directors and employees, and a Code of Ethics for the
Chief Executive Officer and Senior Financial Officers. Both the
Code of Conduct and the Code of Ethics for the Chief Executive
Officer and Senior Financial Officers, as well as any amendments
to, or waivers under, the Code of Ethics for the Chief Executive
Officer and Senior Financial Officers, can be accessed in the
Investor Relations Corporate Governance
section of our website at www.marketaxess.com.
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You may also obtain a copy of these documents by writing to
MarketAxess Holdings Inc., 140 Broadway, 42nd Floor, New
York, New York 10005, Attention: Investor Relations.
Copies of the charters of our Boards Audit Committee,
Compensation Committee and Nominating and Corporate Governance
Committee, as well as copies of the Companys Corporate
Governance Guidelines, certificate of incorporation and bylaws,
can be accessed in the Investor Relations
Corporate Governance section of our website.
Audit
Committee
The Audit Committee of our Board of Directors reviews, acts on
and reports to our Board of Directors with respect to various
auditing and accounting matters, including the recommendation of
our independent registered public accounting firm, the scope of
the annual audits, the fees to be paid to the independent
registered public accounting firm, the performance of the
independent registered public accounting firm and our accounting
practices. The Audit Committee currently consists of
Messrs. Gomach (Chair), Casper and Hersch.
The Board of Directors has determined that each member of the
Audit Committee is an independent director in accordance with
NASDAQ listing standards and that Mr. Casper and
Mr. Gomach are both Audit Committee financial experts, as
defined by SEC guidelines and as required by the applicable
NASDAQ listing standards.
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Item 11.
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Executive
Compensation.
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COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of compensation objectives and strategy for our Named Executive
Officers
The compensation program for our Chief Executive Officer
(CEO), Mr. McVey, our Chief Financial
Officer (CFO), Mr. Rucker, and our two
other executive officers who were serving as executive officers
at the end of fiscal year 2008, our President, Mr. Millet,
and our Chief Information Officer (CIO),
Mr. Themelis (the named executive officers or
NEOs), is designed to attract and retain the
caliber of executives needed to ensure our continued growth and
profitability. The primary objectives of the program are to:
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create long-term value for our stockholders;
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align personal performance and decision-making with stockholder
value creation;
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reward our NEOs for their individual performance and their
contribution to our overall financial performance;
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support our long-term growth objectives;
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encourage high potential individuals with significant and unique
market experience to build a career at the Company;
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provide rewards that are competitive with organizations that
compete for similarly skilled executives; and
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provide rewards that are cost-efficient and equitable to our
NEOs and stockholders alike.
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We are a hybrid company whose NEOs must combine an expertise of
the fixed-income securities market with the knowledge and
ability to create, implement and deliver technology-driven
market solutions. Further, as we are a small firm with little
overhead in support positions and maintain a relatively flat
organization, our NEOs must have the ability and desire to
manage tactical details, they are expected to effectively
communicate to and lead broad teams of employees across all
levels of the organization and they must be able to think
strategically and broadly. We have discovered that our business
is particularly demanding on senior executives and those who can
flourish in this environment are not easily found due to the
unique and distinct competencies that are required for success.
Accordingly, because of the challenges presented by the current
market conditions and the potential impact of these market
conditions on our ongoing operating results, and despite what
may be more limited employment opportunities due to the downturn
in the financial services industry, the Compensation Committee
believes that our ability
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to retain our current high-performing team of seasoned NEOs to
manage our business is critical to the Companys success.
The compensation programs for our NEOs are administered by the
Compensation Committee of the Board of Directors. Working with
management and our independent outside compensation advisors,
the Compensation Committee has developed and continually reviews
and revises a compensation and benefits strategy that rewards
performance and behaviors to reinforce a culture that will drive
our Companys long-term success.
We have a formal semi-annual planning and goal-setting process
that is fully integrated into the compensation program, creating
alignment between individual efforts, our results, and the
financial awards that are realized by our NEOs as well as our
general employee population.
In addition, the NEOs and other senior managers meet regularly
in order to update corporate goals and initiatives based on
corporate performance, changes in market conditions and
potential emerging market opportunities. Individual strategic
goals and objectives will change as a result of new or changed
corporate initiatives.
To reflect the hybrid nature of our Company, our compensation
structure has traditionally fused the high leverage cash model
typical of the financial services industry (where base salaries
are a smaller percentage of total cash income and annual
incentives may easily exceed 100% of base salary) with the high
risk/high reward equity model, characteristic of the technology
industry that relies heavily on the use of equity-based awards.
In addition to our base pay and annual incentive opportunities,
we seek to promote a long-term commitment to the Company from
our NEOs, as we believe that there is great value to the Company
from the continuity that results in maintaining the same team of
seasoned managers. Our team-focused culture and management
processes are designed to foster this commitment. To support
these objectives, long-term incentives for our NEOs have
traditionally been granted as equity incentives, predominantly
in the form of stock options and restricted stock. In addition,
fiscal year 2008 was the first year that we granted our NEOs
equity incentives in the form of performance shares.
The value realized from the equity incentive awards is dependent
upon our performance and growth in our stock price. The vesting
schedules and performance goals attached to these equity awards
reinforce this long-term, performance-based orientation.
Role of
the Compensation Committee
General
The Compensation Committee establishes our compensation
policies, provides guidance for the implementation of those
policies and determines the amounts and elements of compensation
for our NEOs. The Compensation Committees function is more
fully described in its charter, which has been approved by our
Board of Directors. The charter is available for viewing or
download on our corporate website at www.marketaxess.com under
the Investor Relations-Corporate Governance caption.
The Board of Directors has determined that each member of the
Compensation Committee is an independent director in
accordance with NASDAQ listing standards, a non-employee
director under the applicable SEC rules and regulations
and an outside director under the applicable tax
rules.
The Compensation Committee consults with the compensation
consultant when considering decisions concerning the
compensation of the CEO. When considering decisions concerning
the compensation of our NEOs other than the CEO, the
Compensation Committee generally seeks the recommendations of
both the CEO and the compensation consultant. All compensation
decisions for our NEOs are ultimately made in the Compensation
Committees sole discretion.
No NEO has a role in determining or recommending compensation
for outside directors.
Use of
Outside Advisors
In making its determinations with respect to compensation of our
NEOs, the Compensation Committee retains the services of an
independent outside compensation consultant. Through May 2008,
the Compensation Committee had retained the services of Pearl
Meyer & Partners (PM&P). The
Compensation Committees primary contact at
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PM&P left that firm in March 2008 and shortly thereafter
joined Grahall Partners, LLC (Grahall).
Effective in June 2008, the Compensation Committee ended its
retention of PM&P and retained Grahall so that it could
continue to receive the guidance of its lead consultant. Both
Grahall and PM&P were retained directly by, and report
directly to, the Compensation Committee.
With respect to 2008 compensation for our NEOs, the Compensation
Committee retained PM&P to review and benchmark competitive
market pay levels. In addition, PM&P assisted in the
preparation of the Compensation Discussion and Analysis included
in the proxy statement for our 2008 Annual Meeting of
Stockholders and at the Compensation Committees request
commenced an analysis in relation to potential revisions to our
peer group (as discussed in Pay Levels and
Benchmarking below). In 2008, Grahall provided
consulting services to the Compensation Committee with respect
to compensation for, and the retention of, our NEOs and also
completed the peer group review that was commenced by PM&P.
In addition, Grahall provided the Board of Directors with
recommendations for cash and equity compensation for our
Non-Employee Directors.
The Compensation Committee annually reviews competitive
compensation data, recent compensation trends, and any other
relevant market data prepared by the compensation consultant.
The Compensation Committee has the authority to retain,
terminate and set the terms of the relationship with any outside
advisors who assist the Compensation Committee in carrying out
its responsibilities.
Pay
Levels and Benchmarking
We seek to provide competitive compensation that is commensurate
with performance. The compensation consultant works with our CEO
and other managers of the Company to gather pertinent Company
information, including but not limited to employee and officer
listings, corporate financial performance, and the budget for
the expensing of equity grants. The compensation consultant
independently researches the performance and pay philosophy of
our peer group and benchmarks executive and management positions
using applicable survey data. The compensation consultant
presents to the Compensation Committee the recommended
compensation ranges for Total Direct Compensation
(TDC), being comprised of base salary, cash
bonus and long term equity incentives, for all of our NEOs.
Corporate financial performance (year-over-year growth),
individual performance, completion of corporate strategic goals,
and the ability to incur the suggested compensation expenses
factor heavily into the Compensation Committees decision
of where to position the executives in relation to the benchmark
data and in relation to each other. Additionally, retention
concerns are considered when making pay decisions.
At the end of 2007 for fiscal year 2008, we benchmarked our NEO
base salaries with a peer group of financial technology
companies. This was supplemented, as appropriate, with other
pertinent survey data provided by several different applicable
survey sources, including surveys conducted by McLagan Partners,
Watson Wyatt and PM&P. As discussed below, we have not
increased the base salaries of our NEOs since 2006. At the end
of 2008 for fiscal year 2009, Grahall reviewed each NEOs
benchmark data for variable compensation (both cash and equity)
and developed an appropriate range of TDC for each individual
that was presented to the Compensation Committee. Grahall used
our peer group of financial technology companies and, as
applicable, survey data from McLagan Partners, Mercer and CHiPS.
The TDC range for each NEO was determined based on a number of
factors, including: the NEOs role, responsibilities and
expertise; the pay level for peers within the Company and in the
market for similar positions; the level of competition that
exists within the market for a given position; individual
performance; and contribution to corporate financial
performance, including the development and achievement of our
long-term strategic goals and the enhancement of our franchise
value. The Compensation Committee also considered the general
economic climate and indications of pay levels from their
colleagues in the financial services and technology industries.
After consideration of the foregoing data and the internal
relationships within the group of NEOs at the Company, corporate
financial performance, general individual performance of the
individuals duties and responsibilities and the need to
attract, motivate and retain an experienced and effective
management team, the Compensation Committee determined the TDC
levels for each NEO within the appropriate range. The
Compensation Committee then determined which portion of the TDC
for each NEO should consist of base salary, annual cash
incentives and long-term equity incentive awards.
7
Given the Companys unique position in its industry, we
believe the benchmark data is extremely important in guiding the
Compensation Committee in determining relevant pay levels and
pay mix (the allocation of total pay among the different
elements). The Compensation Committee uses the competitive data
to help strike a favorable balance among cost management, wealth
creation opportunity and retention, without creating undesirable
and unnecessary incentives for executives to take risks that
might inappropriately place the stockholders investment at
risk.
We generally target our NEOs individual target total
compensation level to be around the median of the market data
for accomplishment of target performance. However, as discussed
below, the base salary for each NEO is below market median.
The Compensation Committee assesses competitive
market compensation using a number of sources. As
mentioned above, one of the data sources used in setting
competitive market levels for the NEOs is the information
publicly disclosed by a peer group of financial
technology companies (listed below), the composition of which is
reviewed annually with the compensation consultant. While these
companies may differ from us in terms of exact size and
revenues, they are the closest matches available to us in terms
of a comparable business model.
In 2008, the Compensation Committee updated our peer group by
making the following changes: we replaced eSpeed with BGC
Partners after the merger of those two companies; we removed
International Securities Exchange after its acquisition by
Deutsche Boerse (as public information regarding this
companys pay levels and practices will no longer be
available); and we no longer use TD Ameritrade, as that
organization currently has substantially higher revenues and
franchise value (as measured by market capitalization) than
ours. The firms that were removed from the peer group were
replaced by GFI Group Inc. and Intercontinental Exchange, Inc.,
as these firms annual revenues are more in line with ours
than firms such as TD Ameritrade. However, while TD Ameritrade
is no longer included as a peer for purposes of determining pay
levels for our NEOs, the Compensation Committee continued to
consider TD Ameritrades pay practices for purposes of
providing reference points for how pay is delivered by
competitors in our industry.
Our peer group of companies in the financial services technology
marketplace currently includes:
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BGC Partners, Inc. (successor)
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Labranche & Co., Inc.
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GFI Group Inc. (new)
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Options Xpress Holdings, Inc.
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Intercontinental Exchange, Inc. (new)
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SWS Group, Inc.
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Investment Technology Group, Inc.
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Tradestation Group, Inc.
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Knight Capital Group, Inc.
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As our business model is unique we are the only
publicly-traded company whose core business is providing a
multi-dealer electronic trading platform for credit products for
client-to-dealer trading this peer group data is
supplemented and blended with data from different compensation
surveys. These surveys are selected based on their relevance to
the specific position being evaluated.
In addition, the Compensation Committee also applies other
factors in determining the level of incentive pay for our NEOs.
For example, if the Companys ratio of compensation expense
to gross revenues is greater than that of other companies in our
peer group, the Compensation Committee may choose to reduce the
amount of the annual incentive opportunity for our NEOs
accordingly. The Compensation Committee believes this approach
is typical in the financial services industry, and this
comparison provides an additional data point regarding how our
ratio of aggregate compensation expense as a proportion of
overall expense compares to our own internal guidelines as well
as the industry in which we compete. Since the NEOs
incentive payments are a part of the aggregate compensation
expense, the Compensation Committee may reduce the NEOs
incentives in order to reduce this ratio or to allow for
additional incentive payments to the non-NEO employee population.
As noted above, notwithstanding our overall pay positioning
objectives, pay opportunities for specific individuals vary
based on a number of factors, such as scope of duties, tenure,
institutional knowledge, individual performance, market
conditions and the ability to retain the NEO,
and/or the
difficulty in recruiting a new executive who has the skill set
required to be successful with the Company. Actual total
compensation in a given year will vary above or below the
8
target compensation levels based on the attainment of corporate
strategic and operating goals, individual performance, the
creation of stockholder value and competitive threats.
Details
of the Companys compensation structure for our
NEOs
Pay
Elements Overview
We utilize four main components of compensation for our NEOs:
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base salary that reflects the particular individuals role
and responsibilities, experience, expertise and individual
performance;
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annual variable cash performance awards that are designed to
reward attainment of annual corporate financial goals and
individual performance, and that allow cash compensation to
fluctuate upwards or downwards, as appropriate, with individual
and corporate performance;
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long-term incentives, which in 2008 consisted of grants of
restricted stock and performance shares; and
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benefits and perquisites, offered to all employees, including
healthcare benefits, life insurance and retirement savings
plans; and disability plans in the U.S.
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In addition to the foregoing elements, we have entered into
employment agreements with the CEO and the President that
provide for certain payments and benefits in the event of
certain terminations of their employment or a change in control
of the Company. See Executive Compensation
Potential termination or change in control payments and
benefits for additional detail on potential payments
under specific events of termination or upon a change of control.
Pay
Elements Details
Base
Salary
The Company does not automatically increase base salary each
year. Rather, the Compensation Committee reviews all components
of remuneration and decides which, if any, elements of
compensation should be adjusted or paid based on corporate and
individual performance results and competitive benchmark data.
This approach is in line with the Companys intention of
offering compensation that is highly correlated with each
executives individual responsibilities and performance and
with corporate financial performance.
The Compensation Committee performed its annual review of base
salaries in 2007 and determined not to make any upwards
adjustments in the base salaries for our NEOs for 2008. This
reflects the Companys recognition of the challenging
operating conditions in the current credit markets and the
potential impact of these market conditions on our on-going
operating results. It is also consistent with our compensation
policy to carefully manage fixed expense. The Compensation
Committee has also determined that the base salaries of our NEOs
will not be increased for 2009.
Prior to 2007, the base salary for our NEOs was historically
positioned at or above the median salary of the benchmarked
data. However, as we have not adjusted NEO base salary since
January 2006 and as the benchmark data has increased over time,
our NEOs base salaries are now generally lower than the
applicable median base pay levels suggested by the benchmark
data. We believe this offers the Company improved cost control,
as lower base salaries permit us to manage fixed compensation
costs, reduce benefits costs and emphasize variable pay, so that
our compensation is more fully aligned with performance
outcomes. Accordingly, the Compensation Committee believes that
keeping base salaries constant is an effective method to
reinforce our pay-for-performance philosophy.
Annual
Variable Performance Awards Payable in Cash
Section 162(m) of the Code generally prohibits any
publicly-held corporation from taking a Federal income tax
deduction for compensation paid in excess of $1 million in
any taxable year to the CEO and any other executive officer
(other than the CFO) employed on the last day of the taxable
year whose compensation is required to be disclosed to
stockholders under SEC rules, unless the plan and awards
pursuant to which any portion of the compensation is paid meet
certain requirements.
9
To ensure the tax deductibility of any performance-based cash
compensation awarded to the NEOs (other than our CFO) in 2008,
the Compensation Committee adopted the 2008 Code
Section 162(m) Performance Incentive Program (the
2008 162(m) Incentive Program) which was
approved by stockholders at the 2008 Annual Meeting. The 2008
162(m) Incentive Program was structured in a manner intended to
qualify any performance-based cash compensation awarded to the
NEOs (other than our CFO) as performance-based
compensation eligible for deductibility under Code
Section 162(m).
In 2008, the Companys aggregate bonus pool accrual for all
employees (in which our CFO participated) (the Employee
Bonus Pool) was equal to a minimum guaranteed accrual
of $3,000,000 (the Minimum Accrual) plus 30%
of the Companys 2008 pre-tax operating income before cash
bonus expense (the Variable Accrual). This
accrual methodology differed from the methodology used in 2007.
The 2007 minimum accrual was $5,000,000 and the 2007 variable
accrual rate was 25.1%. It was determined that the Minimum
Accrual, which is guaranteed and not performance-based, should
be lower and the Variable Accrual should be higher so that a
higher percentage of the bonus accrual would be
performance-based. By having a higher Variable Accrual and a
lower Minimum Accrual, the bonus accrual would be lower if the
Company does not meet its target performance goals and higher if
the Company exceeds those targets. The mix was determined to
create a fair balance between (a) the goal of creating
appropriate annual performance incentives in order to retain and
reward high performers and (b) expense management where any
incremental cash bonus expense is only borne by the Company if
financial performance is exceeded.
The bonus pool accrual under the 2008 162(m) Incentive Program
(in which our NEOs other than our CFO participated) was equal to
32.5% of the Variable Accrual (the NEO Bonus
Pool). There was no minimum guaranteed accrual under
the 2008 162(m) Incentive Program. The NEOs who participated in
the 2008 162(m) Incentive Program were not eligible to receive
any portion of the Minimum Accrual or any portion of the
remaining 67.5% of the Variable Accrual. This formula had two
objectives: to align employee bonuses with operating income,
which correlates to earnings per share, and to use the operating
leverage of our business to motivate employees. The percentages
for the Employee Bonus Pool were determined by the Compensation
Committee at the beginning of the year based on our target
financial plan and the aggregate median of competitive cash
bonus levels. The percentage for the NEO Bonus Pool was
determined by the Compensation Committee based on the aggregate
median benchmark data for the NEOs.
The maximum amount that could be earned from the NEO Bonus Pool
by the NEOs who participated in the 2008 162(m) Incentive
Program was established as a percentage of the NEO Bonus Pool
and was determined based on the NEOs role,
responsibilities, and expertise; comparable pay levels for peers
within the Company, and in other companies for similar
positions; the level of competition that exists within the
market for a given position; and the NEOs ability to
contribute to our financial performance
and/or
realization of our on-going strategic initiatives. The
percentage of the NEO Bonus Pool that could be earned by
Messrs. McVey and Millet was 35% each and the percentage
for Mr. Themelis was 30%. Any amount of the NEO bonus not
paid to the NEOs reverted to the general funds of the Company
and the Employee Bonus Pool was increased by such amount.
In 2008, we did not set individual financial performance goals
for the NEOs for achievement of incentive compensation, and
there were no specific quantitative individual-level financial
goals used to determine compensation. However, the Compensation
Committee is apprised of the overall individual performance for
each of the NEOs except the CEO, who reports to and is assessed
by the full Board, and considers individual performance when
determining where to position each NEO along the compensation
data continuum that is developed for each position as part of
its benchmarking exercise.
The actual level of cash bonus awards for each of the NEOs was
determined in the context of our financial performance in 2008,
each officers individual strategic and qualitative
accomplishments (as discussed below), comparative market data
and all other components of the NEOs TDC. At the
conclusion of the 2008 performance period, the Compensation
Committee determined the actual amount to be paid to each NEO
and exercised its discretion to pay each executive an amount
that was lower than the maximum amount permitted. A further
discussion regarding the Compensation Committees use of
negative discretion appears below.
The CEO, President and CIO comprise the three individuals who
participated in the Companys 2008 162(m) Incentive
Program, and are the participants under the MarketAxess Holdings
Inc. 2009 Code Section 162(m)
10
Executive Performance Incentive Plan (the 2009
Incentive Plan) (as discussed below) for the 2009
performance period. To determine participants in the 2008 162(m)
Incentive Program and the 2009 Incentive Plan, the Company
relied on Notice
2007-49
issued by the Internal Revenue Service (IRS),
which provides that the covered employee group for
tax years ending on or after December 15, 2006 consists
only of the principal executive officer of the Company (the
PEO) (which, in the case of the Company, is
the Companys CEO) and the three most highly compensated
officers for the tax year other than the PEO and the principal
financial officer of the Company (the PFO)
(which is our CFO). The PFO, therefore, is no longer a
covered employee for purposes of determining
compliance with Section 162(m) of the Internal Revenue Code
and thus our CFO has not been included as a participant in
either the 2008 162(m) Incentive Program or the 2009 Incentive
Plan. Besides the CEO and CFO, the Company has only two other
NEOs: Mr. Millet (our President) and Mr. Themelis (our
CIO). Despite his exclusion from the 2008 162(m) Incentive
Program and the 2009 Incentive Plan, our CFOs incentive
opportunities and actual bonus pay determinations remain subject
to the Compensation Committees discretion.
The table below shows the actual payout amounts for each of the
NEOs who participated in the 2008 162(m) Incentive Program in
relation to the maximum they were allowed to receive from the
NEO Bonus Pool. While $1.95 million was accrued under the
funding formula for the NEO Bonus Pool, the Compensation
Committee reduced these potential payouts to an aggregate of
$1.45 million. A detailed discussion of the actual bonus
payments awarded to each NEO, including the CFO, appears later
in this section.
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Maximum Bonus
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% Allocated for
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Pool Allocated for
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Financial Results
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162(m) Purposes
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162(m) Purposes
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(In thousands)
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(In thousands)
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Revenues
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$
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93,085
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Expenses
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$
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80,251
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Operating Income (before taxes)
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$
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12,834
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Minimum Accrual
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$
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3,000
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Variable Accrual
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$
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6,000
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32.5
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%
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$
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1,950
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Employee Bonus Pool
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$
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9,000
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Limitations by Officer
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Maximum Percentage
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Maximum Amount
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Actual Bonus Paid
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(In thousands)
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(In thousands)
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CEO
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35
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%
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$
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683
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$
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500
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President
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35
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%
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$
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683
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$
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450
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CIO
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30
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%
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$
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585
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$
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500
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Total Paid
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$
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1,450
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Beginning with the 2009 performance year, the Board of Directors
adopted the 2009 Incentive Plan, which remains subject to
stockholder approval at the 2009 Annual Meeting. The 2009
Incentive Plan is structured in a manner that is intended to
meet the requirements of Code Section 162(m) in order to
preserve our ability to take compensation expense deductions for
annual cash bonuses that qualify as performance-based
compensation. For 2009, the Compensation Committee has adopted a
program under the 2009 Incentive Plan for our NEOs (other than
our CFO) that is identical to the 2008 162(m) Incentive Program,
except that the 2009 NEO Bonus Pool will be funded based on
32.5% of a variable accrual of 27% of the Companys 2008
pre-tax operating income before cash bonus expense, as opposed
to a variable accrual of 30% in 2008.
In addition, in 2009 the Board of Directors adopted the 2009
Employee Performance Incentive Plan (the Employee
Plan) in which our CFO participates. The Employee Plan
is not subject to stockholder approval and is substantially
similar to the 2009 Incentive Plan except that awards granted
under the Employee Plan are not intended to, and will not,
comply with the performance-based compensation
exception under Section 162(m) of the Code. The employee
bonus pool for 2009 was implemented under the Employee Plan.
In light of the current global economic downturn and our
understanding of current cash bonus trends, for 2009 the
Compensation Committee decided to lower the Minimum Accrual to
$2,000,000 (from $3,000,000 in 2008) and the Variable
Accrual to 27% (from 30% in 2008).
11
We believe the decrease in the cash bonus accrual is
appropriate given the market uncertainty, and we believe that
NEOs will be motivated to adopt a long-term perspective that
aligns with their equity holdings. A detailed discussion
regarding equity holdings appears in the Pay Mix
section below. While the portion of the Variable Accrual
that is allocated to the NEOs subject to the 2009 Incentive Plan
(32.5%) has not changed, the Compensation Committee intends to
continue to review the NEO incentive compensation program design
for future years.
The maximum percentage of the NEO Bonus Pool that may be earned
by an NEO also remains subject to the discretion of the
Compensation Committee to reduce the amount allocated to an
individual NEO on an annual basis. The Compensation Committee
believes that the allocation of bonus pools among our NEOs for
2008 was appropriate, and for 2009 is appropriate, based upon
the individual and aggregate data it has reviewed.
The achievement of year-over-year pre-tax operating income
growth is moderately difficult to achieve, especially in the
context of the current unprecedented turmoil in the credit
markets, and requires revenue growth and prudent expense
management. While we managed our expenses well in 2008, we did
not achieve our targeted revenue growth in our core business,
and therefore we did not achieve the year-over-year growth in
operating income that we believed was possible. As such, the
2008 Employee Bonus Pool, and consequently the 2008 NEO Bonus
Pool, was significantly lower than 2007 accrual levels.
Specifically, the Employee Bonus Pool for 2008 was
$9 million as compared to $13.4 million in 2007 (a 33%
decrease). The Employee Bonus Pool for 2008 did not include the
bonus obligations assumed by the Company in conjunction with its
acquisition of Greenline Financial Technologies, Inc.
(Greenline) in March 2008. Prior to our
acquisition, Greenline, now a wholly-owned subsidiary of our
wholly-owned subsidiary MarketAxess Technologies Inc., had
established its own bonus pool and accruals were continued
throughout 2008 separately from the Employee Bonus Pool. In
2009, Greenline will continue to maintain a bonus pool that will
accrue separately from the Companys 2009 Employee Bonus
Pool. No employees of Greenline are currently NEOs nor is it
anticipated that any employee of Greenline will become an NEO.
For the 2008 fiscal year, the Compensation Committee had to
balance our 2008 operating results, which were directly and
negatively impacted by the unprecedented dislocation of the
financial credit markets, with the accomplishment of our
corporate and individual strategic goals and initiatives. In
addition, the Compensation Committee focused on retention of the
executive management team as continuity in leadership is
critical during this difficult time and this team is well-suited
to lead the Company through the financial crisis.
A summary of cash bonuses awarded to the NEOs for 2007 and 2008,
and the relationship between the NEOs cash bonus growth
and stockholder value measured as earnings per share
(EPS), is as follows:
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Year-over-Year
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Financial Results
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2007 actual
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2008 Actual
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Percentage Change
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Operating Income (in thousands)
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$
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17,251
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$
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12,834
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−26
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%
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EPS
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$
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0.30
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$
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0.22
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−27
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%
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Bonus Payments
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(In thousands)
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CEO
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$
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800
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$
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500
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−38
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%
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President
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$
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800
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$
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450
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−44
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%
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CFO
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$
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275
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$
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225
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−18
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%
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CIO
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$
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700
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$
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500
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−29
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%
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As the above chart illustrates, and consistent with the
Compensation Committees intention, the decrease in the
percentage change of cash bonus payments for the NEOs for 2008
was generally greater than the percentage reduction in the
Companys 2008 earnings when compared to 2007. With the
exception of the CFO, our NEOs have the most influence of any of
our employees over growing the revenues and profits of the
Company. Revenues in our core business decreased as a result of
the turbulent market conditions; however, the increased revenue
from our technology services business and our acquisition of
Greenline off-set this revenue decline so that year-over-year
revenues were essentially flat ($93.1 million in 2008 vs.
$93.6 million in 2007). Despite cutting expenses in our
core business, expenses increased 5% overall, largely as a
result of the Greenline acquisition. As such, without revenue
growth, profits decreased, and the Compensation Committee
exercised its discretion so that the cash performance
12
bonuses of the NEOs, other than the CFO, were reduced
accordingly. In the CFOs case, while his cash bonus was
reduced year-over-year, it was not reduced to the same extent as
the bonuses paid to the other NEOs, as the Compensation
Committee felt that the CFOs performance is not linked to
revenue generation and wanted to recognize the CFOs role
in achieving significant cost reductions in a difficult
operating environment.
In determining the CEOs cash bonus for 2008, the
Compensation Committee primarily focused on corporate financial
performance. While operating income, and as a result EPS,
decreased from 2007, we were able to maintain revenues and
strong free cash flow. In addition, the Compensation Committee
factored in qualitative achievements, such as implementation of
the Companys strategic initiatives. In 2008, the CEO was
credited with the following achievements:
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Increasing our trading network by expanding the dealer market
making community and maintaining a strong fixed income
institutional client base;
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Negotiating and closing a $35 million preferred share
transaction with Technology Crossover Ventures and adding Robert
Trudeau to the Board of Directors;
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Adding innovative technology solutions such as Market Lists to
address liquidity gaps in secondary credit markets;
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Retention of senior management team and top performers;
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Attracting and retaining a strong base of long-term shareholders;
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Successfully managing through elevated business risks including
dealer consolidation and failures, investment portfolio risk and
declining dealer capital for market-making; and
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Successful collaboration with the Board of Directors on the
acquisition of Greenline, the preferred share transaction,
adoption of a stockholder rights plan and identification and
implementation of strategies for business expansion.
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In determining the Presidents cash bonus, the Compensation
Committee and CEO focused primarily on corporate financial
performance. In addition to the financial successes outlined
above, the President was credited with the following
accomplishments:
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Leading a focused effort to increase institutional client
inquiries on the system;
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Improving the firms fee capture per million primarily
through the North American regional dealer expansion and the
development of execution services for institutional clients;
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Spearheading the acquisition of Greenline and co-heading the
assessment, due diligence and integration of Greenline into our
existing business;
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Successfully managing the on-boarding of 20 new dealer
market-makers to the trading system;
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Retaining a valuable base of large dealer clients and revenues
during a tumultuous period in the financial community; and
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Building momentum in additional product areas, most notably
high-yield corporate bonds.
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In determining the cash bonus compensation for the CFO, the
Compensation Committee and CEO focused on corporate financial
performance, which includes the metrics noted above as well as
an increase in the free cash flow/net income multiple to 3.0 in
2008 from 2.3 in 2007. In addition, the CFO was credited with:
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Leading the financial due diligence for the Greenline
acquisition;
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Leadership of the Companys Risk Management and Credit
Committees;
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Addition of direct responsibility for the Companys
Investor Relations function; and
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Managing our compliance with the requirements of the
Sarbanes-Oxley Act of 2002 and all other regulatory reporting
requirements.
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13
In addition to contributing to the financial performance of the
Company through the revenues attributed to our technology
services business and prudent expense management, our CIO was
credited with:
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Building on our reputation of trading system stability,
user-friendliness, and client responsiveness;
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Co-heading the assessment, due diligence and assimilation of
Greenline in order to expand our product and service offerings
within our technology services business. Success of this
business is a part our ongoing strategy of diversifying our
revenue streams; and
|
|
|
|
Prudent expense management in the (a) ongoing consolidation
of technology staff, (b) implementation of other technical
efficiencies and (c) successful integration of the
Greenline and Trade West Systems acquisitions into our
technology framework.
|
The Compensation Committee also reviewed each NEOs market
benchmark data and then determined where, within the appropriate
range, each NEO should be positioned. The role,
responsibilities, individual contributions, and expertise of
each NEO were considered in determining pay positioning relative
to the benchmark data.
Finally, as stated above, retention and continuity of leadership
also factored into the compensation decisions for all NEOs.
Long-term
Incentives Equity-based Awards
The Company and the Compensation Committee believe that
equity-based awards are an important factor in aligning the
long-term financial interest of our NEOs and our stockholders.
As such, on October 24, 2007, our Board adopted stock
ownership guidelines for our executive officers that currently
require our NEOs to own not less than a number of shares of
Common Stock equal to or greater than the value set forth beside
their names below, which equates to three times the CEOs
base salary and two times the base salary of the other NEOs as
calculated on the effective date of the policy:
|
|
|
|
|
CEO
|
|
$
|
1,200,000
|
|
President
|
|
$
|
600,000
|
|
CFO
|
|
$
|
400,000
|
|
CIO
|
|
$
|
400,000
|
|
Currently, all NEOs are in compliance with these guidelines and
must remain in compliance throughout the NEOs employment
with the Company. Newly-appointed executives will be subject to
the same guidelines and will be required to be in compliance
within five years of commencement of service. Importantly, under
our ownership guidelines, only shares of Common Stock owned
outright in any form, including shares purchased and held
personally and vested restricted shares, count toward the
minimum ownership requirement. All stock options, irrespective
of whether they are vested or in the money, are specifically
excluded, as are any unvested restricted shares. Compliance with
the stock ownership guidelines is reviewed by the Compensation
Committee on an annual basis.
Equity awards to our NEOs are determined in the same manner as
cash bonuses: the budget for equity-related expenses, corporate
financial performance, group and individual performance,
benchmark data and retention requirements are factors in
determining the equity award. Additionally, total planned cash
compensation vs. benchmark data is considered when determining
the size and type of equity grant.
The Compensation Committee uses the Black-Scholes option pricing
model to value stock options and option expense in determining
the financial impact of equity awards on the Company.
For performance year 2008, after having reduced the cash bonus
amounts for the NEOs due to corporate financial performance, the
Compensation Committee used equity as a retention and long-term
reward tool. By doing so, the Compensation Committee was able to
balance short-term repercussions (i.e., a reduction in
2008 cash incentives due to lower 2008 corporate financial
performance) with long-term motivation and incentives.
Specifically, due to the vesting periods attached to the equity,
retention increases because a NEO only profits if he continues
his employment with the Company, and value is derived from the
award only if the NEO is able to
14
produce long-term profits for the Company. In addition, these
rewards are tied to stockholder returns as the NEO only profits
from the equity when stockholders profit from the Companys
financial performance.
The Compensation Committee evaluates the use of equity-based
awards and intends to continue to use such awards as part of
designing and administering the Companys compensation
program. Our NEOs have been granted stock options, restricted
stock and performance shares (in 2008, as discussed below).
Awards are generally granted to our NEOs at the time of hire and
then annually at the end of each fiscal year for corporate, unit
and individual performance.
Since 2006, our equity award policy has been to grant all
year-end equity awards on
January 15th of
the following year (or the preceding business day if
January 15th is not a business day). This insures that
the timing of any option grants and the setting of the exercise
price, which is the closing price per share of our Common Stock
on the NASDAQ Stock Market on the date of grant, will not be
arbitrary or subject to manipulation. However, the restricted
stock awarded to the NEOs in January 2009 was actually granted
on January 22, 2009, as the Compensation Committee had
delayed the award so that it could evaluate certain tax issues
regarding the potential issuance of the shares as restricted
stock units, which could permit executives the opportunity to
defer portions of their stock awards to a date later than the
originally scheduled vesting date. After completing its review,
the Compensation Committee determined that due to restrictions
on the timing of deferral elections and certain other tax law
requirements, the participants would not have sufficient
flexibility in deferring income (which was the original intent)
upon vesting of restricted stock units and opted to continue its
practice of granting restricted stock without any deferral
features. This delay in the grant date had no impact on the size
of the grant or the value of the award, as the size and value
were determined on January 15, 2009, consistent with our
policy.
The expected value of the year-end equity award to each NEO is
approved by the Compensation Committee prior to grant and is
part of the process in determining TDC for each NEO. The actual
grant amount (i.e., number of shares or options) is
approved by the Compensation Committee on or before the grant
date. Grants to new executive officers are made on the date of
hire and are approved by the Compensation Committee prior to
hire.
In connection with commencement of his employment in 2006, our
President received an incentive stock option award and a
restricted stock award. A portion of the options vest in equal
annual installments over a five-year period beginning on
October 1, 2007. Additional options were subject to the
achievement of certain performance metrics in calendar years
2007 and 2008. The performance metrics for these options, which
were considered by the Compensation Committee to be
stretch goals, were not satisfied, and therefore all
of the options subject to both 2007 and 2008 performance were
forfeited. The restricted stock award vests in equal annual
installments over a five-year period beginning on
October 1, 2007. As discussed elsewhere in this Annual
Report on
Form 10-K/A,
certain portions of the stock option award and the restricted
stock award may also vest upon certain terminations of the
Presidents employment.
Beginning in 2008, the Compensation Committee also utilized
performance shares in order to tie the long-term equity
component of compensation more closely to stockholder returns.
Specifically, the Compensation Committee implemented the use of
performance shares to:
|
|
|
|
|
replace some value of guaranteed restricted stock
awards with a variable pay instrument that aligns with financial
performance;
|
|
|
|
manage stockholder dilution by using less shares than similar
value stock option grants; and
|
|
|
|
provide a balance between stock option upside and
retention/downside protection of restricted stock.
|
The performance shares were structured in a manner intended to
qualify as performance-based compensation eligible
for deductibility under Code Section 162(m).
The Compensation Committee has approved two forms of performance
share award agreements. One form is for use in connection with
grants of performance share awards to the CEO and the President,
and a second form is for use in connection with grants of
performance share awards to all other performance award
recipients, including our other NEOs. Each performance share
award agreement provides for the grant of a target number of
performance shares that will vest or be forfeited based on the
level of our achievement, during the applicable performance
period, of a level of pre-tax operating income per share of our
Common Stock before payment of (a) cash bonuses for
15
performance during the performance period and (b) expenses
incurred in connection with the grant of all performance share
awards for the performance period.
For each performance share earned, a participant will receive
one share of restricted stock. Any restricted stock awarded to a
participant will vest and become freely tradable in equal 50%
installments on each of the second and third anniversaries of
the grant date of the applicable performance share award.
Certain portions of the performance shares or the restricted
stock may also vest upon certain terminations of a
participants employment, or after the occurrence of a
qualifying change in control.
In connection with their 2007 performance, in January 2008 the
Compensation Committee approved grants for an aggregate of
122,120 performance shares to our NEOs for the 2008 performance
period. As the performance target for 2008 was not achieved, all
such performance shares expired and were unvested at the
conclusion of 2008.
In January 2009 the NEOs were granted performance shares with
respect to the 2009 performance period. These grants are 20% of
the aggregate equity grant value granted to each NEO in January
2009 (the remaining percentage was granted as described below).
The target performance metric under these awards is the
Companys achievement during 2009 of pre-tax operating
income of $0.43 per share of the Companys Common Stock
before payment of (a) cash bonuses for performance during
2009 and (b) expenses incurred in connection with the grant
of all performance share awards for performance in 2009, based
on the Board-approved 2009 financial plan of the Company. The
actual amount that may be earned is based on the level of our
achievement of the performance goal during 2009, as follows:
|
|
|
|
|
|
|
|
|
Achievement (percentage of target pre-tax operating income)
|
|
Less than 80%
|
|
Minimum 80%
|
|
Target 100%
|
|
Maximum 120% or more
|
Payout (percentage of shares)
|
|
0%
|
|
50%
|
|
100%
|
|
150%
|
Payout results are interpolated on a straight-line basis between
80% and 120% achievement of performance goals, and maximum
payouts are capped at 150% of target. If the minimum percentage
is not achieved, no portion of the performance share awards will
be earned by the executives.
Set forth below is the target number of performance shares that
may be awarded to our NEOs (i.e., the number of
performance shares that would be earned based upon achievement
of 100% of the performance goal) and their value as of the date
of grant:
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
Value of Performance Shares
|
|
|
|
Shares at 100%
|
|
|
at 100% Achievement as of
|
|
|
|
Achievement
|
|
|
Date of Grant
|
|
|
CEO
|
|
|
48,848
|
|
|
$
|
387,853
|
|
President
|
|
|
23,798
|
|
|
$
|
188,956
|
|
CFO
|
|
|
5,636
|
|
|
$
|
44,750
|
|
CIO
|
|
|
16,283
|
|
|
$
|
129,287
|
|
For the remaining 80% of the equity award grants made to the
NEOs in January 2009, the NEOs were given the choice under the
Companys Flex Grant program to choose between
the following two alternatives: (1) a 50%/50% split between
options and restricted stock or (2) 100% in restricted
stock. The trade-off of restricted stock to stock options was
determined at an appropriate level at which the accounting
expense charged to the Company was unaffected by the
executives reward selection. The ratio of restricted stock
to stock options granted was one to 1.6.
The Flex Grant program was implemented by the
Compensation Committee to permit executives to have appropriate
input into the composition of their reward structure, within
appropriate limits designated by the Company. This equity
program recognizes the unavoidable individual risk preferences
that exist among executives and permits the Company to deliver
more individualized awards with greater perceived value to the
individual recipients without incurring additional actual
expense or accounting cost to the Company.
The Flex Grant program gives the Compensation
Committee the ability to control the alternatives made available
to executives based on any criteria the Compensation Committee
deems appropriate. In 2008, the Compensation Committee required
that at least 50% of each NEOs equity award (excluding
performance shares)
16
be designated in restricted stock because the Compensation
Committee wanted to increase the retentive nature of the
NEOs current equity holdings. This is in part due to the
fact that a significant portion of stock option awards from
previous years is currently significantly
underwater, meaning the options have strike prices
well above the Companys current share price, and thus
provide little if any real retention of our NEOs.
By requiring NEOs to receive at least 50% of their 2009 equity
grant (after the 20% allocation to performance shares) in
restricted stock, the Compensation Committee believes their
compensation is tied closely and appropriately to stockholder
returns. In addition, the Compensation Committee believes that
restricted stock promotes a long-term outlook on success vs.
stock options, which recent research suggests may promote
excessive risk-taking in search of potential short-term results
at the expense of long-term price appreciation. Accordingly, the
Compensation Committee seeks to balance the equity held by our
NEOs. In 2009, all of the NEOs elected 100% of their equity
award in restricted stock (after the allocation of performance
shares) with time-based vesting of three years.
Further details on the 2008 year-end equity grants made in
January 2009 and a discussion of TDC are included in the Pay
Mix section below.
The Compensation Committee will continue to evaluate the mix of
performance shares, restricted stock, stock options and other
stock-based awards to align rewards for personal performance
with stockholder value creation.
Pay
Mix
For performance year 2008, the variable compensation portion of
our NEOs TDC was no less than 80%, except for the CFO,
whose variable compensation was just below 70% of his TDC. The
slightly lower percentage of variable compensation for our CFO
is a function of his variable cash and incentive equity value
being lower than that of the other NEOs. Therefore, on a
percentage basis, his base, or fixed compensation, makes up a
higher percentage of his TDC. His lower variable compensation is
in line with market data for the CFO position. A summary of 2008
payments (comprised of 2008 base salary, 2008 year-end cash
bonus and January 2009 equity grants for performance year 2008),
with the percentages that are variable and fixed, is as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Compensation
|
|
|
Variable Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Value
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
Performance
|
|
|
Restricted
|
|
|
as a %
|
|
|
|
|
|
|
Base
|
|
|
TDC
|
|
|
Cash Bonus
|
|
|
TDC
|
|
|
Shares(1)
|
|
|
Stock(1)
|
|
|
of TDC
|
|
|
TDC
|
|
|
CEO
|
|
$
|
400,000
|
|
|
|
15
|
%
|
|
$
|
500,000
|
|
|
|
19
|
%
|
|
$
|
387,853
|
|
|
$
|
1,414,233
|
|
|
|
67
|
%
|
|
$
|
2,702,086
|
|
President
|
|
$
|
300,000
|
|
|
|
18
|
%
|
|
$
|
450,000
|
|
|
|
28
|
%
|
|
$
|
188,956
|
|
|
$
|
688,986
|
|
|
|
54
|
%
|
|
$
|
1,627,942
|
|
CFO
|
|
$
|
200,000
|
|
|
|
32
|
%
|
|
$
|
225,000
|
|
|
|
36
|
%
|
|
$
|
44,750
|
|
|
$
|
163,183
|
|
|
|
33
|
%
|
|
$
|
632,933
|
|
CIO
|
|
$
|
200,000
|
|
|
|
15
|
%
|
|
$
|
500,000
|
|
|
|
38
|
%
|
|
$
|
129,287
|
|
|
$
|
471,414
|
|
|
|
46
|
%
|
|
$
|
1,300,701
|
|
|
|
|
(1)
|
|
Restricted stock vests over three
years. Performance shares settle one year after grant, and vest
over the following two years.
|
As stated in the section above titled Annual Variable
Performance Awards Payable in Cash, the Compensation
Committee considered the financial performance of the Company
during a difficult market environment that existed during 2008,
individual contributions of each NEO (listed above) and
retention concerns in making a determination as to the size of
the equity grant and in targeting each NEOs TDC. The
guidance for TDC was based on the benchmark data obtained from
our peer group and other compensation surveys (see Pay Levels
and Benchmarking above). The data selected for each NEO was
individualized based on the NEOs position, role within the
organization, scope of responsibilities and relative size of the
Company. After adding the annualized value of previous
multi-year grants, the CEOs and Presidents TDC fell
above the benchmark median, but below the 75th percentile,
and their TDCs dropped 21% and 20%, respectively, from 2007
levels. The TDCs for the CFO and CIO were generally at the
benchmark median, and declined 21% and 15%, respectively, from
2007 levels.
As a significant portion of each NEOs compensation is
awarded in equity and our NEOs are subject to stock ownership
guidelines, we believe the NEOs are motivated to align personal
performance and decision-making with stockholder value creation,
and they are motivated to improve the financial results for the
Company on a long-term basis. As such, and given the current
market environment, we believe that the change in the 2009 cash
bonus accrual
17
methodology (i.e., lower Minimum Accrual and lower
Variable Accrual) is not a detriment to our NEOs and that it
will not result in unnecessary short-term risk taking.
Other
Benefits
We provide our NEOs with the same benefits offered to all other
employees. The cost of these benefits constitutes a small
percentage of each NEOs total compensation. In the U.S.,
key benefits include paid vacation; premiums paid for life
insurance and short-term and long-term disability policies; a
matching contribution to the NEOs 401(k) plan; and the
payment of 80% of the NEOs healthcare premiums. We review
these other benefits and perquisites on an annual basis and make
adjustments as warranted based on competitive practices and our
performance.
Risk
Mitigation
We do not believe that the performance-based nature of our NEO
compensation encourages excessive risk-taking by our NEOs that
would potentially threaten the economic viability of the
Company. Each component of performance-based compensation is
subject to a cap on cash or the number of shares delivered. The
performance criteria are designed to focus on performance
metrics that deliver value to our stockholders and that focus on
the health of our business. Further, as noted above, we have
instituted stock ownership guidelines that require our NEOs to
maintain a substantial ownership interest in the Company,
further aligning their interests with those of our other
stockholders while mitigating the chance of excessive
risk-taking.
Compensation
Committee Discretion
The Compensation Committee retains the discretion to decrease or
eliminate all forms of incentive payouts based on its
performance assessment, whether individual or Company-based.
Likewise, the Compensation Committee retains the discretion to
provide additional payouts
and/or
consider special awards for significant achievements, including
but not limited to achieving superior operating results,
strategic accomplishments
and/or
consummation of partnerships, acquisitions or divestitures.
Severance
and change in control arrangements
In hiring and retaining executive level talent, the Compensation
Committee believes that providing the executive with a level of
security in the event of an involuntary termination of
employment or in the event of a change in control is an
important and competitive part of the executives
compensation package. We have entered into employment agreements
with our CEO and President that provide for severance payments
and benefits in the event of certain terminations of their
employment. In addition, the terms of our equity grant award
agreements with our CEO and President provide for accelerated
vesting of their equity awards in the event of certain
terminations of their employment or upon a change in control of
the Company. The other NEOs are entitled to severance payments
and benefits in the event of certain terminations of their
employment under the MarketAxess Severance Pay Plan. Please see
Executive Compensation Potential
termination or change in control payments and benefits
below, for information regarding these payments and benefits.
Impact of
Tax and Accounting
As a general matter, the Compensation Committee reviews and
considers the tax and accounting implications of using the
various forms of compensation employed by the Company.
When determining the size of grants to our NEOs and other
employees under the Companys stock incentive plans, the
Compensation Committee examines the accounting cost associated
with the grants. Under FAS 123R, grants of stock options,
restricted stock, performance shares and other share-based
payments result in an accounting charge for the Company. The
accounting charge is equal to the fair value of the instruments
being issued. For restricted stock and performance shares, the
cost is equal to the fair value of the stock on the date of
grant times the number of shares or units granted. For stock
options, the cost is equal to the fair value determined using an
option pricing model. This expense is amortized over the
requisite service or performance period.
18
Code Section 162(m) generally prohibits any publicly-held
corporation from taking a Federal income tax deduction for
compensation paid in excess of $1 million in any taxable
year to the chief executive officer and any other executive
officer (other than the chief financial officer) employed on the
last day of the taxable year whose compensation is required to
be disclosed to stockholders under SEC rules. Exceptions include
qualified performance-based compensation, among other things. It
is the Compensation Committees policy to maximize the
effectiveness of our executive compensation plans in this
regard. Nonetheless, the Compensation Committee retains the
discretion to grant awards (such as restricted stock with
time-based vesting) that will not comply with the
performance-based exception of 162(m) if it is deemed in the
best interest of the Company to do so.
Notwithstanding anything to the contrary set forth in any of
our previous or future filings under the Securities Act of 1933
or the Securities Exchange Act of 1934 that might incorporate
this Annual Report on
Form 10-K/A
or future filings with the SEC, in whole or in part, the
following report shall not be deemed to be soliciting
material or filed with the SEC and shall not
be deemed to be incorporated by reference into any such
filing.
19
REPORT OF
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis to be
included in this Annual Report on
Form 10-K/A.
Based on the reviews and discussions referred to above, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this Annual Report on
Form 10-K/A.
Submitted by the Compensation Committee of
the Board of Directors:
John Steinhardt Chair
Roger Burkhardt
Robert W. Trudeau
20
EXECUTIVE
COMPENSATION
Summary
compensation table
The following table sets forth all compensation received during
the last fiscal year by (i) our Chief Executive Officer,
(ii) our Chief Financial Officer and (iii) our two
other executive officers who were serving as executive officers
at the end of the last fiscal year. These executives are
referred to as our named executive officers
elsewhere in this Annual Report on
Form 10-K/A.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compen-
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
sation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Richard M. McVey
|
|
|
2008
|
|
|
|
400,000
|
|
|
|
|
|
|
|
1,140,393
|
|
|
|
755,098
|
|
|
|
500,000
|
|
|
|
2,500
|
|
|
|
2,797,991
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
|
400,000
|
|
|
|
800,000
|
|
|
|
1,140,120
|
|
|
|
313,049
|
|
|
|
|
|
|
|
4,000
|
|
|
|
2,657,169
|
|
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
500,000
|
|
|
|
1,139,859
|
|
|
|
83,709
|
|
|
|
|
|
|
|
1,500
|
|
|
|
2,125,068
|
|
T. Kelley Millet
|
|
|
2008
|
|
|
|
300,000
|
|
|
|
|
|
|
|
307,709
|
|
|
|
668,076
|
|
|
|
450,000
|
|
|
|
2,500
|
|
|
|
1,728,286
|
|
President
|
|
|
2007
|
|
|
|
300,000
|
|
|
|
800,000
|
|
|
|
307,291
|
|
|
|
388,190
|
|
|
|
|
|
|
|
4,000
|
|
|
|
1,799,481
|
|
|
|
|
2006
|
|
|
|
90,961
|
(3)
|
|
|
200,000
|
|
|
|
102,470
|
|
|
|
340,838
|
|
|
|
|
|
|
|
7,500
|
|
|
|
741,766
|
|
James N.B. Rucker
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
225,000
|
|
|
|
81,419
|
|
|
|
115,866
|
|
|
|
|
|
|
|
2,500
|
|
|
|
624,785
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
|
200,000
|
|
|
|
275,000
|
|
|
|
56,766
|
|
|
|
113,254
|
|
|
|
|
|
|
|
4,000
|
|
|
|
649,020
|
|
|
|
|
2006
|
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
56,927
|
|
|
|
83,945
|
|
|
|
|
|
|
|
1,500
|
|
|
|
542,372
|
|
Nicholas Themelis
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
|
|
|
|
188,672
|
|
|
|
262,770
|
|
|
|
500,000
|
|
|
|
2,500
|
|
|
|
1,153,942
|
|
Chief Information Officer
|
|
|
2007
|
|
|
|
200,000
|
|
|
|
700,000
|
|
|
|
141,367
|
|
|
|
266,730
|
|
|
|
|
|
|
|
4,000
|
|
|
|
1,312,097
|
|
|
|
|
2006
|
|
|
|
200,000
|
|
|
|
475,000
|
|
|
|
98,256
|
|
|
|
223,303
|
|
|
|
|
|
|
|
1,500
|
|
|
|
998,059
|
|
|
|
|
(1)
|
|
The amounts reported reflect the
dollar amount recognized for financial statement reporting
purposes for the fiscal years ended December 31, 2008, 2007
and 2006, in accordance with FAS 123R, of awards of
restricted stock or stock options and thus include amounts from
awards granted in and prior to 2008, without regard to the
estimated forfeiture related to service-based vesting
conditions. Assumptions used in the calculation of this amount
are included in footnote 12 to the Companys audited
financial statements for the fiscal year ended December 31,
2008, included in the Companys Annual Report on
Form 10-K
filed with the SEC on March 3, 2009. These amounts reflect
the Companys accounting expense for these awards and do
not correspond to the actual amounts, if any, that will be
recognized by the named executive officers.
|
|
(2)
|
|
These benefits represent employer
matching contributions to the Companys defined
contribution plan and, in the case of Mr. Millet,
reimbursement for legal fees in 2006.
|
|
(3)
|
|
Mr. Millets employment
commenced in September 2006. His annualized base salary for 2006
was $300,000.
|
21
Grants of
plan-based awards
The following table summarizes the grants of restricted stock
and option awards we made to the named executive officers in
2008 as well as future payouts pursuant to certain
performance-based equity compensation arrangements. There can be
no assurance that the Grant Date Fair Value of Stock and Option
Awards will ever be realized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Under Non-
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
Estimated Future Payouts Under Equity Incentive Plan
Awards(2)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Approval
|
|
|
Target
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Date
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)(3)
|
|
|
(#)(4)
|
|
|
($/Sh)(5)
|
|
|
($)(6)
|
|
|
Richard M. McVey
|
|
|
6/05/2008
|
|
|
|
6/05/2008
|
|
|
$
|
950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
34,300
|
|
|
|
68,600
|
|
|
|
102,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
749,798
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,000
|
|
|
|
10.93
|
|
|
|
1,433,651
|
|
T. Kelley Millet
|
|
|
6/05/2008
|
|
|
|
6/05/2008
|
|
|
|
950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
13,700
|
|
|
|
27,400
|
|
|
|
41,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299,482
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,000
|
|
|
|
10.93
|
|
|
|
574,460
|
|
James N.B. Rucker
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
4,460
|
|
|
|
8,920
|
|
|
|
13,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,496
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
76,510
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,650
|
|
|
|
10.93
|
|
|
|
93,162
|
|
Nicholas Themelis
|
|
|
6/05/2008
|
|
|
|
6/05/2008
|
|
|
|
831,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
8,600
|
|
|
|
17,200
|
|
|
|
25,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,996
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
147,555
|
|
|
|
|
1/15/2008
|
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,850
|
|
|
|
10.93
|
|
|
|
179,082
|
|
|
|
|
(1)
|
|
Represents the grant of an award
pursuant to the MarketAxess Holdings Inc. 2008 Code
Section 162(m) Performance Incentive Program (the
2008 Incentive Program), which was adopted by
the Compensation Committee on March 28, 2008 and approved
by the stockholders of the Company at the 2008 annual meeting of
stockholders on June 5, 2008. As such awards do not have a
threshold or maximum payout, the amounts disclosed in the table
reflect the amounts that would have been payable to Messrs.
McVey, Millet and Themelis if the 2008 Incentive Program had
been in effect during 2007.
|
|
(2)
|
|
Reflects the number of performance
shares that would vest based on the level of achievement by the
Company of pre-tax operating income for the 2008 calendar year
performance period. For each performance share earned, a
participant would be awarded an equal number of shares of
restricted stock that would vest and cease to be restricted
stock in equal 50% installments on each of the second and third
anniversaries of the date of grant of the applicable performance
share award. The Company failed to meet the pre-tax operating
income per share target for 2008 and, accordingly, all of the
performance share awards were forfeited.
|
|
(3)
|
|
Restricted stock awards vest in
three equal annual installments beginning on the first
anniversary date of the grant.
|
|
(4)
|
|
Stock option awards vest in three
equal annual installments beginning on the first anniversary of
the grant.
|
|
(5)
|
|
The exercise price for stock
options granted was equal to the closing price of the
Companys Common Stock on the date of grant.
|
|
(6)
|
|
The value of a restricted stock or
stock option award is based on the fair value as of the grant
date of such award determined pursuant to FAS 123R, and
disregards estimates of forfeitures related to service-based
vesting conditions. The proceeds to be paid to the individual
following an exercise do not include the option exercise price,
and the exercise price of option awards has not been deducted
from the amounts indicated above. Regardless of the value placed
on a stock option award on the grant date, the actual value of
the stock option will depend on the market value of Common Stock
at such date in the future when the stock option is exercised.
|
22
Outstanding
equity awards at fiscal year end
The following table summarizes unexercised stock options,
performance-based stock options with performance conditions that
have not yet been satisfied and shares of restricted stock that
have not vested and related information for each of our named
executive officers as of December 31, 2008. The market
value of restricted stock awards is based on the closing price
of the Companys Common Stock on December 31, 2008 of
$8.16.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable(1)
|
|
|
Unexercisable(1)
|
|
|
($)
|
|
|
Date
|
|
|
(#)(2)
|
|
|
($)
|
|
|
Richard M. McVey
|
|
|
127,774
|
|
|
|
|
|
|
|
2.70
|
|
|
|
4/15/2012
|
|
|
|
255,000
|
|
|
|
2,080,800
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
2.70
|
|
|
|
2/7/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
15.60
|
|
|
|
1/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
12.96
|
|
|
|
1/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,000
|
|
|
|
10.93
|
|
|
|
1/15/2018
|
|
|
|
|
|
|
|
|
|
T. Kelley Millet
|
|
|
200,000
|
|
|
|
300,000
|
|
|
|
10.25
|
|
|
|
9/13/2016
|
|
|
|
90,000
|
|
|
|
734,400
|
|
|
|
|
|
|
|
|
115,000
|
|
|
|
10.93
|
|
|
|
1/15/2018
|
|
|
|
|
|
|
|
|
|
James N.B. Rucker
|
|
|
61,117
|
|
|
|
|
|
|
|
3.60
|
|
|
|
6/15/2011
|
|
|
|
19,000
|
|
|
|
155,040
|
|
|
|
|
374
|
|
|
|
|
|
|
|
2.70
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
8,334
|
|
|
|
|
|
|
|
2.70
|
|
|
|
12/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
13.95
|
|
|
|
1/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
15.60
|
|
|
|
1/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
19,456
|
|
|
|
544
|
|
|
|
11.18
|
|
|
|
1/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
19,140
|
|
|
|
10,860
|
|
|
|
12.96
|
|
|
|
1/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,650
|
|
|
|
10.93
|
|
|
|
1/15/2018
|
|
|
|
|
|
|
|
|
|
Nicholas Themelis
|
|
|
100,000
|
|
|
|
|
|
|
|
13.95
|
|
|
|
2/25/2014
|
|
|
|
42,166
|
|
|
|
344,075
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
15.60
|
|
|
|
1/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
43,776
|
|
|
|
1,224
|
|
|
|
11.18
|
|
|
|
1/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
47,850
|
|
|
|
27,150
|
|
|
|
12.96
|
|
|
|
1/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,850
|
|
|
|
10.93
|
|
|
|
1/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For options granted prior to 2008,
one-third of the options vest on the first anniversary of the
grant date and the balance vests in 24 equal monthly
installments thereafter. Options granted in 2008 vest in three
equal annual installments. The options granted to
Mr. Millet in 2006 vest in five equal annual installments.
Stock options will vest and become exercisable in the event of
certain terminations of employment or upon a change in control
of the Company. See Executive Compensation
Potential termination or change in control payments and
benefits for additional information.
|
|
(2)
|
|
Each share of restricted stock
represents one share of the Companys Common Stock that is
subject to forfeiture if the applicable vesting requirements are
not met. Shares of restricted stock granted prior to 2007 vest
in five equal annual installments commencing on the first
anniversary of the date of grant. Shares of restricted stock
granted in 2007 and 2008 vest in three equal annual installments
commencing on the first anniversary of the date of grant. Shares
of restricted stock will vest in the event of certain
terminations of employment or upon a change in control of the
Company. See Executive Compensation
Potential termination or change in control payments
and benefits for additional information.
|
23
Option
exercises and stock vested
The following table summarizes each exercise of stock options,
each vesting of restricted stock and related information for
each of our named executive officers on an aggregated basis
during 2008.
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|
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|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
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|
|
|
Number of Shares
|
|
|
Value Realized
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|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(2)
|
|
|
Richard M. McVey
|
|
|
|
|
|
|
|
|
|
|
87,000
|
|
|
|
828,849
|
|
T. Kelley Millet
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
216,510
|
|
James N.B. Rucker
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|
|
35,176
|
|
|
|
69,763
|
|
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4,500
|
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42,871
|
|
Nicholas Themelis
|
|
|
|
|
|
|
|
|
|
|
11,334
|
|
|
|
118,981
|
|
|
|
|
(1)
|
|
Value realized represents the
market value on the date of exercise in excess of the exercise
price.
|
|
(2)
|
|
Value realized represents the
market value on the date of vesting.
|
Employment
agreements and severance arrangements with our named executive
officers
Richard
M. McVey Employment Agreement
In May 2004, we entered into an employment agreement with
Richard M. McVey. The employment agreement provides that
Mr. McVey will be employed by us as President, Chief
Executive Officer and Chairman of the Board of Directors, and
his employment may be terminated by him or by us at any time.
Mr. McVeys annual base salary under the agreement is
$300,000 per year, which amount was increased in 2006 to
$400,000. Mr. McVey is also eligible to receive an annual
bonus in accordance with the Companys annual performance
incentive plan as in effect from time to time and is entitled to
participate in all benefit plans and programs available to our
other senior executives, at a level commensurate with his
position. In connection with the hiring of Mr. Millet,
Mr. McVey agreed to waive his right to serve as President
of the Company.
Mr. McVeys employment agreement provides for
severance payments and benefits if his employment is terminated
under various conditions. See Executive
Compensation potential termination or change in
control payments and benefits below for a description
of such payments and benefits.
For the purposes of Mr. McVeys agreements,
Cause generally means his:
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|
|
willful misconduct or gross negligence in the performance of his
duties;
|
|
|
|
conviction of, or plea of guilty or nolo contendere to, a
crime relating to us or any of our affiliates or any
felony; or
|
|
|
|
material breach of his employment agreement or any other
material written agreement with us.
|
For purposes of Mr. McVeys employment agreement,
Good Reason generally means:
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|
|
|
|
his no longer holding the title of President and Chief Executive
Officer, or the failure of the Board to nominate him as a
director or, once elected to the Board, the failure of the Board
to elect him as Chairman;
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|
|
|
a material diminution in his duties, authorities or
responsibilities (other than as a result of his ceasing to be a
director) or the assignment of duties or responsibilities
materially adversely inconsistent with his then position;
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|
|
our material breach of his employment agreement;
|
|
|
|
a relocation of his principal place of business of more than
50 miles; or
|
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|
|
our failure to obtain a reasonably satisfactory written
agreement from any successor to all or substantially all of our
assets to assume and agree to perform our obligations under his
employment agreement.
|
Mr. McVey elected not to exercise his right to resign for
Good Reason for no longer holding the title of President in
connection with Mr. Millets appointment as President.
24
For the purposes of Mr. McVeys agreements,
Change in Control generally means:
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|
|
|
an acquisition representing 50% or more of the combined voting
power of our then outstanding securities;
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|
|
|
a change in the majority of the members of our Board during any
two-year period, unless such members are approved by two-thirds
of the Board members who were members at the beginning of such
period or members whose nominations were so approved;
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|
our merger or consolidation, other than (a) a transaction
resulting in our voting securities outstanding immediately prior
thereto continuing to represent more than 50% of the combined
voting power of our voting securities or such surviving entity
immediately after such transaction or (b) a transaction
effected to implement a recapitalization (or similar
transaction) in which no person acquires more than 50% of the
combined voting power of our then outstanding securities; or
|
|
|
|
our stockholders approval of a plan of complete
liquidation or the consummation of the sale or disposition of
all or substantially all of our assets other than (a) the
sale or disposition of all or substantially all of our assets to
a beneficial owner of 50% or more of the combined voting power
of our outstanding voting securities at the time of the sale or
(b) pursuant to a spinoff type transaction of such assets
to our stockholders.
|
T.
Kelley Millet Employment Agreement
In September 2006, T. Kelley Millet commenced employment with us
pursuant to an employment agreement entered into in August 2006.
The agreement provides that Mr. Millet will be employed by
us as President, and his employment may be terminated by him or
by us at any time. Mr. Millets base salary under the
agreement is $300,000 per year. Mr. Millet is also eligible
to receive an annual bonus in accordance with the 2004 Annual
Performance Plan. He is also entitled to participate in all
benefit plans and programs available to our other senior
executives, at a level commensurate with his position.
Mr. Millets employment agreement provides for
severance payments and benefits if his employment is terminated
under various conditions. See Executive
Compensation potential termination or change in
control payments and benefits below for a description
of such payments and benefits.
For the purposes of Mr. Millets agreement,
Cause and Change in Control have the
same meaning as provided above for Mr. McVey.
For purposes of Mr. Millets agreement, Good
Reason generally means:
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|
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|
|
any reduction in his title;
|
|
|
|
a material diminution in his duties, authorities or
responsibilities or the assignment of duties or responsibilities
materially adversely inconsistent with his then position;
|
|
|
|
our material breach of his employment agreement;
|
|
|
|
a relocation of his principal place of business of more than
50 miles; or
|
|
|
|
our failure to obtain a reasonably satisfactory written
agreement from any successor to all or substantially all of our
assets to assume and agree to perform our obligations under his
employment agreement.
|
Severance
Pay Plan
Messrs. Rucker and Themelis do not have employment
agreements with us but are entitled to severance payments and
benefits under the Companys Severance Pay Plan (the
Severance Plan) in the event their employment
is terminated by us for any reason other than a termination for
Cause. The Severance Plan provides for up to 24 weeks of
continued base salary and continued healthcare coverage based on
the number of years of an employees consecutive service
with us prior to termination. On September 22, 2008, the
Severance Plan was amended to include an additional bonus
payments for any employee whose employment terminates between
September 22, 2008 and January 15, 2009, equal to 50%
of the employees 2007 year-end bonus, prorated for
the number of full calendar months (rounded up for service of at
least one-half month) worked in calendar year 2008.
25
Cause is generally defined in the Severance Plan as
(i) an employees act or omission resulting or
intended to result in personal gain at our expense; (ii) an
employees misconduct; (iii) performance of duties by
an employee in a manner we deem to be materially unsatisfactory;
(iv) cause (or words of like import) as defined
in an agreement between us and the employee; or (v) an
employees improper disclosure of proprietary or
confidential information or trade secrets, or intellectual
property that we are under a duty to protect.
As of December 31, 2008, Mr. Rucker had completed
eight years of consecutive service with us and Mr. Themelis
had completed four years of consecutive service with us. Had we
terminated them without Cause on December 31, 2008, they
would have been entitled to 24 and 16 weeks of continued
base salary and continued healthcare coverage, respectively.
Proprietary
Information and Non-Competition Agreements
Each of the named executive officers has entered into, and is
subject to the terms of, a Proprietary Information and
Non-Competition Agreement with us that contains, among other
things, (i) certain provisions prohibiting disclosure of
our confidential information without our prior written consent,
(ii) certain non-competition provisions that restrict their
engaging in certain activities that are competitive with us
during their employment and for one year thereafter, and
(iii) certain non-solicitation provisions that restrict
their recruiting, soliciting or hiring our nonclerical employees
or consultants, or soliciting any person or entity to terminate,
cease, reduce or diminish their relationship with us, during
their employment and for two years thereafter.
Loans to
executive officers of the Company
Prior to enactment of the Sarbanes-Oxley Act in July 2002, we
made two loans to Richard M. McVey, our Chief Executive Officer
and Chairman of our Board of Directors. We entered into
restricted stock purchase agreements with Mr. McVey on
June 11, 2001 and July 1, 2001, respectively, in
connection with his compensation package. Pursuant to these
agreements, we sold an aggregate of 289,581 shares of our
Common Stock to Mr. McVey at a purchase price of $3.60 per
share. We loaned an aggregate of approximately $1,042,488 to
Mr. McVey to finance his purchase of these shares.
Mr. McVey executed secured promissory notes with us to
document these loans. These promissory notes bear interest at an
average rate of 5.69% per annum. The principal and accrued
interest on each of these promissory notes is due and payable as
follows: (1) 20% of the principal and accrued interest is
due on the sixth anniversary of the issuance date; (2) an
equal amount is due on each of the seventh, eighth, ninth and
tenth anniversaries of the issuance date; and (3) the
balance is due on the eleventh anniversary of the issuance date.
Mr. McVey may prepay all or any part of any note at any
time without paying a premium or penalty. A portion of the
promissory notes, representing 80% of the aggregate purchase
price, is non-recourse and the remaining portion of the
promissory notes, representing 20% of the aggregate purchase
price, is full-recourse. As security for his obligations under
the promissory notes, Mr. McVey has pledged the
289,581 shares of our Common Stock acquired by him under
the restricted stock purchase agreements described above. During
2008, Mr. McVey made principal and interest payments
aggregating $293,400.
The loans described in the preceding paragraph were entered into
prior to the passage of the Sarbanes-Oxley Act. Because of the
prohibitions against certain loans under Section 402 of the
Sarbanes-Oxley Act, we will not modify any of these outstanding
loans, nor will we enter into new loans with any of our
directors or executive officers, other than as permitted by
applicable law at the time of the transaction.
Potential
termination or change in control payments and benefits
Messrs. McVey and Millet are entitled to certain payments
and benefits pursuant to their employment agreements and other
agreements entered into between us and them upon a termination
of their employment in certain circumstances or in the event of
a Change in Control of the Company. Messrs. Rucker and
Themelis do not have employment agreements with us but are
entitled to severance payments and benefits under the Severance
Plan and pursuant to certain equity grants.
The following tables estimate the payments we would be obligated
to make to each of our named executive officers as a result of
his termination or resignation under the circumstances shown or,
in the case of Mr. McVey and Mr. Millet, because of a
Change in Control, in each case assuming such event had occurred
on December 31, 2008.
26
We have calculated these estimated payments to meet SEC
disclosure requirements. The estimated payments are not
necessarily indicative of the actual amounts any of our named
executive officers would receive in such circumstances. The
table excludes (i) compensation amounts accrued through
December 31, 2008 that would be paid in the normal course
of continued employment, such as accrued but unpaid salary, and
(ii) vested account balances under our 401(k) Plan that are
generally available to all of our salaried employees. Where
applicable, the information in the table uses a price per share
for our Common Stock of $8.16, the closing price on
December 31, 2008. In addition, where applicable, the
amounts reflected for bonuses reflect the actual amounts paid to
the named executive officers for 2008, since the hypothetical
termination or Change in Control date is the last day of the
fiscal year for which the bonus is to be determined.
Certain of the stock options granted to our named executive
officers would have become vested under certain circumstances;
however, the tables below do not reflect any value for such
vesting, as the exercise prices of the stock options held by our
named executive officers are greater than the market value of
the Common Stock on December 31, 2008 and therefore would
not have had any value on December 31, 2008. The
performance share award agreements entered into between us and
each of our named executive officers in January 2008 provided
for vesting of the performance shares under certain
circumstances; however, the tables below do not reflect any
value for such vesting as the performance metrics for the 2008
performance share grants were not achieved and therefore such
shares were forfeited.
Payments
and Benefits for Mr. McVey
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Restricted
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
Health
|
|
|
Stock
|
|
|
Payment
|
|
|
|
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Benefits(3)
|
|
|
Acceleration(4)
|
|
|
Reduction(5)
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Termination Without Cause Outside a Change in Control Protection
Period (CCPP) and prior to a Non-Cash Transaction
|
|
|
400,000
|
|
|
|
600,000
|
|
|
|
11,983
|
|
|
|
550,800
|
|
|
|
|
|
|
|
1,562,783
|
|
Termination Without Cause Outside a CCPP and upon or following a
Non-Cash Transaction
|
|
|
400,000
|
|
|
|
600,000
|
|
|
|
11,983
|
|
|
|
1,982,880
|
|
|
|
|
|
|
|
2,994,863
|
|
Termination Without Cause During a CCPP, but prior to a Change
in Control
|
|
|
800,000
|
|
|
|
1,200,000
|
|
|
|
17,974
|
|
|
|
550,800
|
|
|
|
|
|
|
|
2,568,774
|
|
Termination Without Cause During a CCPP and upon or following a
Change in Control
|
|
|
800,000
|
|
|
|
1,200,000
|
|
|
|
17,974
|
|
|
|
1,982,880
|
|
|
|
|
|
|
|
4,000,854
|
|
Termination for Good Reason Outside a CCPP
|
|
|
400,000
|
|
|
|
600,000
|
|
|
|
11,983
|
|
|
|
|
|
|
|
|
|
|
|
1,011,983
|
|
Termination for Good Reason During a CCPP in connection with a
Cash Transaction
|
|
|
800,000
|
|
|
|
1,200,000
|
|
|
|
17,974
|
|
|
|
1,982,880
|
|
|
|
|
|
|
|
4,000,854
|
|
Termination for Good Reason During a CCPP in connection with a
Non-Cash Transaction
|
|
|
800,000
|
|
|
|
1,200,000
|
|
|
|
17,974
|
|
|
|
|
|
|
|
|
|
|
|
2,017,974
|
|
Cash Transaction No Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,982,880
|
|
|
|
|
|
|
|
1,982,880
|
|
Death or disability
|
|
|
400,000
|
|
|
|
600,000
|
|
|
|
11,983
|
|
|
|
1,982,880
|
|
|
|
|
|
|
|
2,994,863
|
|
|
|
|
(1)
|
|
Mr. McVeys employment
agreement provides that (i) if his employment is terminated
outside of a Change in Control Protection Period (as defined
below) for any reason other than his voluntary resignation
without Good Reason or by us for Cause (a Non-Change in
Control Termination), he will receive continued
payment of his base salary for 12 months following
termination, or (ii) if he resigns for Good Reason or his
employment is terminated for any reason other than his
resignation without Good Reason, his death or by us for Cause,
in any case, within three months prior to, or, within
18 months after, a Change in Control (such period a
Change in Control Protection Period or
|
27
|
|
|
|
|
CCPP and any
such termination a Change in Control
Termination), then he will receive continued payment
of his base salary for 24 months following termination.
|
|
(2)
|
|
Mr. McVeys employment
agreement provides that in the event of a Non-Change in Control
Termination, he will receive an amount equal to his average
annual cash bonus for the three years prior to termination
(payable in 12 equal monthly installments), or two times such
amount in the event of a Change in Control Termination (payable
in 24 equal monthly installments).
|
|
(3)
|
|
Mr. McVeys employment
agreement provides that we will pay the cost of continuation
health coverage for up to 12 months following a Non-Change
in Control Termination or for up to 18 months following a
Change in Control Termination.
|
|
(4)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. McVey made as of
January 31, 2006:
|
|
|
|
all unvested restricted
shares will fully vest upon his death or disability;
|
|
|
|
subject to the last
bullet below, 67,500 shares of restricted stock (or, if
less, the entire unvested amount) will fully vest if we
terminate his employment without Cause;
|
|
|
|
in the event of a
Change in Control in which the holders of our Common Stock
receive cash (a Cash Transaction), the
portion of the restricted stock that is exchanged for cash will
immediately vest prior to the Change in Control; and
|
|
|
|
in the event of a
Change in Control in which any other consideration is paid (a
Non-Cash Transaction), the portion of the
restricted stock that is exchanged for such consideration will
immediately vest upon a termination of his employment by us (or
any successor) without Cause following such Change in Control.
|
|
(5)
|
|
Mr. McVeys employment
agreement provides that if any payments or benefits paid or
provided to him would be subject to, or result in, the
imposition of the excise tax imposed by Section 4999 of the
Internal Revenue Code, then the amount of such payments will be
automatically reduced to one dollar less than the amount that
subjects such payment to the excise tax, unless he would, on a
net after-tax basis, receive less compensation than if the
payment were not so reduced.
|
Payments
and Benefits for Mr. Millet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
Health
|
|
|
Stock
|
|
|
Payment
|
|
|
|
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Benefits(3)
|
|
|
Acceleration(4)
|
|
|
Reduction(5)
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Termination Without Cause or for Good Reason Outside a CCPP
|
|
|
150,000
|
|
|
|
625,000
|
|
|
|
5,991
|
|
|
|
244,800
|
|
|
|
|
|
|
|
1,025,791
|
|
Termination Without Cause or for Good Reason During a CCPP
|
|
|
150,000
|
|
|
|
625,000
|
|
|
|
11,983
|
|
|
|
734,400
|
|
|
|
|
|
|
|
1,521,383
|
|
Cash or Privatization Transaction No Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
734,400
|
|
|
|
|
|
|
|
734,400
|
|
Death/ Disability
|
|
|
150,000
|
|
|
|
625,000
|
|
|
|
5,991
|
|
|
|
734,400
|
|
|
|
|
|
|
|
1,515,391
|
|
|
|
|
(1)
|
|
Mr. Millets employment
agreement provides that if his employment is terminated for any
reason other than his voluntary resignation without Good Reason
or by us for Cause, he will receive continued payment of his
base salary for six months following termination.
|
|
(2)
|
|
Mr. Millets employment
agreement provides that if his employment is terminated for any
reason other than his voluntary resignation without Good Reason
or by us for Cause, he will receive an amount equal to his
average annual cash bonus for up to three years prior to
termination (in either case, payable in 12 equal semi-monthly
installments).
|
|
(3)
|
|
Mr. Millets employment
agreement provides that we will pay the cost of continuation
health coverage for up to six months following a Non-Change in
Control Termination or for up to 12 months following a
Change in Control Termination.
|
|
(4)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. Millet made as of
September 13, 2006:
|
|
|
|
all unvested restricted
shares will fully vest upon his death or disability;
|
|
|
|
subject to the last
bullet below, 30,000 shares of restricted stock (or, if
less, the entire unvested amount) will fully vest if we
terminate his employment without Cause or he resigns for Good
Reason;
|
|
|
|
in the event of a Cash
Transaction or a Change in Control following which our Common
Stock is no longer publicly traded (a Cash or
Privatization Transaction), then all unvested
restricted shares will fully vest immediately prior to the
Change in Control; and
|
|
|
|
in the event of any
other Change in Control, then all unvested shares of restricted
stock will vest upon such Change in Control if it occurs during
a Change in Control Protection Period
|
|
(5)
|
|
Mr. Millets employment
agreement provides that if any payments or benefits paid or
provided to him would be subject to, or result in, the
imposition of the excise tax imposed by Section 4999 of the
Internal Revenue Code, then the amount of such payments will be
automatically reduced to one dollar less than the amount that
subjects such payment to the excise tax, unless he would, on a
net after-tax basis, receive less compensation than if the
payment were not so reduced.
|
28
Payments
and Benefits for Mr. Rucker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
Health
|
|
|
Stock
|
|
|
|
|
|
|
Salary(1)
|
|
|
|
|
|
Benefits(3)
|
|
|
Acceleration
|
|
|
Total
|
|
|
|
($)
|
|
|
Bonus(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Termination Without Cause
|
|
|
92,308
|
|
|
|
137,500
|
|
|
|
5,991
|
|
|
|
|
|
|
|
235,779
|
|
Termination Without Cause within 24 months following a
Change in Control
|
|
|
92,308
|
|
|
|
137,500
|
|
|
|
5,991
|
|
|
|
57,120
|
(4)
|
|
|
292,919
|
|
Death/Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,560
|
(5)
|
|
|
28,560
|
|
|
|
|
(1)
|
|
In accordance with the Severance
Plan, Mr. Rucker is entitled to 24 weeks of continued
base salary upon a termination of his employment without Cause.
|
|
(2)
|
|
In accordance with the Severance
Plan, Mr. Rucker is entitled to an amount equal to 50% of
his 2007 bonus upon a termination of his employment without
Cause prior to January 15, 2009.
|
|
(3)
|
|
In accordance with the Severance
Plan, Mr. Rucker is entitled to 24 weeks of continued
healthcare coverage upon a termination of his employment without
Cause.
|
|
(4)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. Rucker made as of
January 15, 2008, all unvested shares of restricted stock
will fully vest upon a termination of his employment without
Cause that occurs within 24 months following a Change in
Control (as such terms are defined in the Companys 2004
Stock Incentive Plan).
|
|
(5)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. Rucker made as of
January 15, 2008, 50% of the unvested shares of restricted
stock will vest upon his death or disability.
|
Payments
and Benefits for Mr. Themelis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
Health
|
|
|
Stock
|
|
|
|
|
|
|
Salary(1)
|
|
|
|
|
|
Benefits(3)
|
|
|
Acceleration
|
|
|
Total
|
|
|
|
($)
|
|
|
Bonus(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Termination Without Cause
|
|
|
61,538
|
|
|
|
350,000
|
|
|
|
3,994
|
|
|
|
|
|
|
|
415,532
|
|
Termination Without Cause within 24 months following a
Change in Control
|
|
|
61,538
|
|
|
|
350,000
|
|
|
|
3,994
|
|
|
|
110,160
|
(4)
|
|
|
525,692
|
|
Death/Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,080
|
(5)
|
|
|
55,080
|
|
|
|
|
(1)
|
|
In accordance with the Severance
Plan, Mr. Themelis is entitled to 16 weeks of
continued base salary upon a termination of his employment
without Cause.
|
|
(2)
|
|
In accordance with the Severance
Plan, Mr. Themelis is entitled to an amount equal to 50% of
his 2007 bonus upon a termination of his employment without
Cause prior to January 15, 2009.
|
|
(3)
|
|
In accordance with the Severance
Plan, Mr. Themelis is entitled to 16 weeks of
continued healthcare coverage upon a termination of his
employment without Cause.
|
|
(4)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. Themelis made as of
January 15, 2008, all unvested shares of restricted stock
will fully vest upon a termination of his employment without
Cause that occurs within 24 months following a Change in
Control (as such terms are defined in the Companys 2004
Stock Incentive Plan).
|
|
(5)
|
|
Pursuant to the Restricted Stock
Agreement between us and Mr. Themelis made as of
January 15, 2008, 50% of the unvested shares of restricted
stock will vest upon his death or disability.
|
Director
compensation
Each non-employee director receives an annual retainer of
$50,000. The Lead Independent Director receives a supplemental
annual retainer of $10,000 and the chairman of the Nominating
and Corporate Governance Committee receives a supplemental
annual retainer of $7,500. The supplemental annual retainer for
the chairman of the Audit Committee is $15,000 and the
supplemental annual retainer for the chairman of the
Compensation Committee is $10,000. In addition, each
non-employee director receives $1,500 for each meeting of our
Board of Directors, $2,000 for each meeting of the Audit
Committee, and $1,000 for each meeting of the Compensation
Committee and the Nominating and Corporate Governance Committee
that the director attends. In August 2008, we granted
4,225 shares of restricted stock and options to purchase
4,225 shares of our Common Stock to each non-employee
director, other than Mr. Hernandez. One-half of these
awards vested on November 30, 2008 and the balance vests on
May 31, 2009. The exercise price of the stock options is
equal to the fair market value of the stock
29
($9.72 per share) on the date of grant. These awards were made
under the Companys 2004 Stock Incentive Plan (Amended and
Restated Effective April 28, 2006) (the Stock
Incentive Plan). The Board of Directors recommends,
reviews and oversees the stock option plans for our non-employee
directors. We expect to continue to compensate our non-employee
directors with a combination of cash and equity awards.
Mr. Trudeau has informed the Company of his obligation to
transfer to TCV VI Management, L.L.C.
(TCM VI) any and all cash and equity
compensation paid to him by the Company in his capacity as a
director of the Company. Mr. Trudeau is a member of TCM VI.
Mr. Trudeau has the sole voting and dispositive power over
the shares of restricted stock and options granted to him;
however, TCM VI owns 100% of the pecuniary interest therein.
Mr. Trudeau disclaims beneficial ownership of such
securities except to the extent of his pecuniary interest
therein.
Prior to April 2009, Mr. Hernandez employer,
JPMorgan, did not permit Mr. Hernandez to receive
compensation for his service as a director and therefore he
received no cash payments or grants of restricted stock or stock
options from us prior to such date. Effective April 2009,
Mr. Hernandez receives compensation for his services as a
director on the same terms as our other non-employee directors.
The Company and the Board of Directors believe that equity-based
awards are an important factor in aligning the long-term
financial interest of the non-employee directors and
stockholders. As such, in October 2007 the Board of Directors
adopted stock ownership guidelines for the non-employee
directors requiring that they hold not less than a number of
shares of Common Stock equal in value to two times the annual
base cash retainer payable to a director, calculated as of the
October 24, 2007 effective date of the policy. All
non-employee directors must be in compliance within the later of
three years from the effective date of the policy or three years
after the director becomes a Board member, and the designated
level of ownership must be maintained throughout the
non-employee directors service with the Company. Only
shares of Common Stock owned outright in any form, including
shares purchased and held personally and vested restricted
shares, count toward the minimum ownership requirement; unvested
stock options and unvested restricted shares are excluded.
Currently, all non-employee directors are in compliance, other
than Mr. Burkhardt, who joined the Board in July 2007,
Mr. Hernandez, who did not receive director compensation
from the Company prior to April 2009, and Mr. Trudeau, who
joined the Board in July 2008. Messrs. Burkhardt, Hernandez
and Trudeau are expected to be in compliance within the required
timeframe.
Director
Compensation for Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)(2)
|
|
|
($)(1)(2)
|
|
|
($)
|
|
|
Roger Burkhardt
|
|
|
65,000
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
124,030
|
|
Stephen P. Casper
|
|
|
90,500
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
149,530
|
|
David G. Gomach
|
|
|
94,000
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
153,030
|
|
Carlos M. Hernandez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Hersch
|
|
|
77,000
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
136,030
|
|
Wayne D. Lyski
|
|
|
22,333
|
|
|
|
17,640
|
|
|
|
7,774
|
|
|
|
47,747
|
|
Jerome S. Markowitz
|
|
|
77,000
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
136,030
|
|
Nicolas S. Rohatyn
|
|
|
81,167
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
140,197
|
|
John Steinhardt
|
|
|
78,583
|
|
|
|
41,667
|
|
|
|
17,363
|
|
|
|
137,613
|
|
Robert W. Trudeau
|
|
|
28,517
|
|
|
|
24,027
|
|
|
|
9,589
|
|
|
|
62,133
|
|
|
|
|
(1)
|
|
The amounts reported reflect the
dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in
accordance with Statement of Financial Accounting Standards
No. 123 (revised 2004), Share-Based
Payment (FAS 123R), without
regard to the estimated forfeiture related to service-based
vesting conditions, of awards pursuant to the Stock Incentive
Plan, and thus include amounts attributable to awards granted in
and prior to 2008. Assumptions used in the calculation of this
amount are included in footnote 12 to the Companys audited
financial statements for the fiscal year ended December 31,
2008, included in the Companys Annual Report on
Form 10-K
filed with the SEC on March 3, 2009. The amounts reflect
the accounting expense for these awards and do not correspond to
the actual value that may be recognized by such persons with
respect to these awards.
|
30
|
|
|
(2)
|
|
The table below sets forth
information regarding the aggregate number of stock awards and
the aggregate number of options awards outstanding at the end of
fiscal year 2008 for each non-employee director:
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Number of Stock
|
|
|
Aggregate Number of Option
|
|
|
|
Awards Outstanding at
|
|
|
Awards Outstanding at
|
|
|
|
Fiscal Year End (#)
|
|
|
Fiscal Year End (#)
|
|
|
Roger Burkhardt
|
|
|
2,113
|
|
|
|
6,725
|
|
Stephen P. Casper
|
|
|
2,113
|
|
|
|
26,725
|
|
David G. Gomach
|
|
|
2,113
|
|
|
|
21,725
|
|
Carlos M. Hernandez
|
|
|
|
|
|
|
|
|
Ronald M. Hersch
|
|
|
2,113
|
|
|
|
26,725
|
|
Jerome S. Markowitz
|
|
|
2,113
|
|
|
|
35,059
|
|
Nicolas S. Rohatyn
|
|
|
2,113
|
|
|
|
35,059
|
|
John Steinhardt
|
|
|
2,113
|
|
|
|
26,725
|
|
Robert W. Trudeau(*)
|
|
|
2,113
|
|
|
|
4,225
|
|
|
|
|
(*)
|
|
Pursuant to a Form 4 filed by
Mr. Trudeau on August 5, 2008, these shares of
restricted stock and stock options are held directly by
Mr. Trudeau, who has sole voting and dispositive power of
these securities. However, TCM VI, of which Mr. Trudeau is
a member, owns 100% of the pecuniary interest in such
securities. Mr. Trudeau disclaims beneficial ownership of
such securities except to the extent of his pecuniary interest
therein.
|
Compensation
Committee interlocks and insider participation
No member of our Boards Compensation Committee has served
as one of our officers or employees at any time. None of our
executive officers serves as a member of the compensation
committee of any other company that has an executive officer
serving as a member of our Board of Directors. None of our
executive officers serves as a member of the board of directors
of any other company that has an executive officer serving as a
member of our Boards Compensation Committee.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
|
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Companys Common Stock as of
April 7, 2009 by (i) each person or group of
affiliated persons known by us to beneficially own more than
five percent of our Common Stock, (ii) each of our named
executive officers, (iii) each of our directors and
nominees for director and (iv) all of our directors and
executive officers as a group.
The following table gives effect to the shares of Common Stock
issuable within 60 days of April 7, 2009 upon the
exercise of all options and other rights beneficially owned by
the indicated stockholders on that date. Beneficial ownership is
determined in accordance with
Rule 13d-3
promulgated under Section 13 of the Securities Exchange Act
of 1934, as amended, and includes voting and investment power
with respect to shares. Percentage of beneficial ownership is
based on 31,709,004 shares of Common Stock outstanding at
the close of business on April 7, 2009. Except as otherwise
noted below, each person or entity named in the following table
has sole voting and investment power with respect to all shares
of our Common Stock that he, she or it beneficially owns.
Unless otherwise indicated, the address of each beneficial owner
listed below is
c/o MarketAxess
Holdings Inc., 140 Broadway, 42nd Floor, New York, New York
10005.
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Series B Preferred Stock
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Percentage
|
|
|
Shares
|
|
|
Percentage
|
|
|
|
Beneficially
|
|
|
of Stock
|
|
|
Beneficially
|
|
|
of Stock
|
|
|
|
Owned
|
|
|
Owned
|
|
|
Owned
|
|
|
Owned
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entities related to Technolgy Crossover Ventures(1)
|
|
|
4,208,450
|
|
|
|
11.72
|
%
|
|
|
35,000
|
|
|
|
100.00
|
%
|
J.P. Morgan Partners (23A), L.P.(2)
|
|
|
1,171,408
|
|
|
|
3.65
|
%
|
|
|
|
|
|
|
|
|
LabMorgan Corporation(3)
|
|
|
2,404,818
|
|
|
|
7.50
|
%
|
|
|
|
|
|
|
|
|
Total for entities affiliated with J.P. Morgan
Chase & Co.
|
|
|
3,204,818
|
|
|
|
9.99
|
%
|
|
|
|
|
|
|
|
|
Burgandy Asset Management Ltd.(4)
|
|
|
2,761,623
|
|
|
|
8.71
|
%
|
|
|
|
|
|
|
|
|
Royce & Associates, L.L.C.(5)
|
|
|
2,567,300
|
|
|
|
8.10
|
%
|
|
|
|
|
|
|
|
|
Kornitzer Capital Management, Inc.(6)
|
|
|
2,297,006
|
|
|
|
7.24
|
%
|
|
|
|
|
|
|
|
|
Barclays Global Investors NA(7)
|
|
|
1,591,977
|
|
|
|
5.02
|
%
|
|
|
|
|
|
|
|
|
Keeley Asset Management Corp.(8)
|
|
|
1,584,000
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. McVey(9)
|
|
|
2,986,494
|
|
|
|
9.03
|
%
|
|
|
|
|
|
|
|
|
Roger Burkhardt(10)
|
|
|
13,450
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Stephen P. Casper(11)
|
|
|
43,450
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
David G. Gomach(12)
|
|
|
43,450
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Carlos M. Hernandez(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Hersch(11)
|
|
|
43,450
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Jerome S. Markowitz(14)
|
|
|
61,298
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
T. Kelley Millet(15)
|
|
|
512,399
|
|
|
|
1.60
|
%
|
|
|
|
|
|
|
|
|
Nicolas S. Rohatyn(16)
|
|
|
51,784
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
John Steinhardt(11)
|
|
|
43,450
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Robert W. Trudeau(1)
|
|
|
4,208,450
|
|
|
|
11.72
|
%
|
|
|
35,000
|
|
|
|
100.00
|
%
|
James N.B. Rucker(17)
|
|
|
305,770
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Nicholas Themelis(18)
|
|
|
375,518
|
|
|
|
1.17
|
%
|
|
|
|
|
|
|
|
|
All Executive Officers and Directors as a Group
(13 persons)(19)
|
|
|
8,688,963
|
|
|
|
22.80
|
%
|
|
|
35,000
|
|
|
|
100.00
|
%
|
|
|
|
*
|
|
Less than 1%.
|
|
(1)
|
|
Consists of
(i) 3,472,653 shares of Common Stock issuable upon
conversion of shares of Series B Preferred Stock held by
TCV VI, L.P. (TCV VI),
(ii) 694,530 shares of Common Stock issuable upon
exercise of warrants held by TCV VI,
(iii) 27,347 shares of Common Stock issuable upon
conversion of shares of Series B Preferred Stock held by
TCV Member Fund, L.P. (TCV MF and, together
with TCV VI, the TCV VI Funds),
(iv) 5,470 shares of Common Stock issuable upon
exercise of warrants held by TCV MF, (v) 2,111 shares
of Common Stock held by TCM VI, (vi) 2,114 shares of
Common Stock held directly by Robert W. Trudeau and
(vii) 4,225 shares of Common Stock issuable upon
exercise of stock options held directly by Mr. Trudeau. The
TCV VI Funds are organized as blind pool
partnerships in which the limited partners (or equivalents) have
no discretion over investment or sale decisions, are not able to
withdraw from TCV VI Funds, except under exceptional
circumstances, and generally participate ratably in each
investment made by the TCV VI Funds. The sole General Partner of
TCV VI and a General Partner of TCV MF is TCM VI.
Mr. Trudeau, a director of the Company, is a member of TCM
VI. Mr. Trudeau and TCM VI share voting and dispositive
power with respect to the shares beneficially owned by the TCV
VI Funds. Mr. Trudeau and TCM VI disclaim beneficial
ownership of any shares held by the TCV VI Funds except to the
extent of their respective pecuniary interests therein.
Mr. Trudeau has the sole voting and dispositive power over
the stock options held directly by him, any shares issuable upon
the exercise of such stock options, and the shares held directly
by him; however TCM VI owns 100% of the pecuniary interest in
such stock options and any such shares. Mr. Trudeau
disclaims beneficial ownership of such stock options, any shares
to be issued upon exercise of such stock options, any shares
held directly by him, and any shares held by TCM VI and the TCV
VI Funds except to the extent of his pecuniary interest therein.
|
|
(2)
|
|
Information regarding
J.P. Morgan Partners (23A), L.P. was obtained from a
Schedule 13G filed by J.P. Morgan Partners (23A), L.P.
with the SEC. Consists of 800,000 shares of Common Stock
and 371,408 shares of Common Stock issuable upon conversion
of shares of non-
|
32
|
|
|
|
|
voting common stock that are
presently convertible. Excludes 853,909 shares of
non-voting common stock, because the terms of the non-voting
common stock contain a limitation on acquiring shares of Common
Stock if the conversion would result in the holder beneficially
owning more than 9.99% of our outstanding Common Stock. In
total, 1,225,317 shares of non-voting common stock are
owned by the holder. The general partner of J.P. Morgan
Partners (23A), L.P. is J.P. Morgan Partners (23A Manager),
Inc., an indirect wholly-owned subsidiary of JPMorgan
Chase & Co. The principal business address of
J.P. Morgan Partners (23A), L.P. is 270 Park Avenue, New
York, NY 10017.
|
|
(3)
|
|
Information regarding LabMorgan
Corporation was obtained from a Schedule 13G filed by
LabMorgan Corporation with the SEC. Consists of
2,033,410 shares of Common Stock and an aggregate of
371,408 shares of Common Stock issuable upon conversion of
shares of non-voting common stock that are presently
convertible. Excludes 988,929 shares of non-voting common
stock because the terms of the non-voting common stock contain a
limitation on acquiring shares of Common Stock if the conversion
would result in the holder beneficially owning more than 9.99%
of our outstanding Common Stock. In total, 1,360,337 shares
of non-voting common stock are owned by the holder. LabMorgan
Corporation is a direct wholly-owned subsidiary of JPMorgan
Chase & Co. The principal business address of
LabMorgan Corporation is 270 Park Avenue, New York, NY 10017.
|
|
(4)
|
|
Information regarding Burgandy
Asset Management Ltd. was obtained from a Schedule 13G
filed by Burgandy Asset Management Ltd. with the SEC. The
principal business address of Burgandy Asset Management Ltd. is
181 Bay Street, Suite 4510, Toronto, Ontario M5J 2T3.
|
|
(5)
|
|
Information regarding
Royce & Associates, LLC was obtained from a
Schedule 13G filed by Royce & Associates, LLC
with the SEC. The principal business address of
Royce & Associates, LLC is 1414 Avenue of the
Americas, New York, NY 10019.
|
|
(6)
|
|
Information regarding Kornitzer
Capital Management, Inc. was obtained from a Schedule 13G filed
by Kornitzer Capital Management, Inc. with the SEC. The
principal business address of Kornitzer Capital Management, Inc.
is 5420 West 61st Place, Shawnee Mission, KS 66205.
|
|
(7)
|
|
Information regarding Barclays
Global Investors, NA was obtained from a Schedule 13G filed
by Barclays Global Investors, NA with the SEC. Barclays Global
Investors NA and Barclays Global Fund Advisors hold shares
in trust accounts for the economic benefit of the beneficiaries
of those accounts. The principal business address of Barclays
Global Investors NA is 400 Howard Street, San Francisco,
CA 94105.
|
|
(8)
|
|
Information regarding Keeley Asset
Management Corp. was obtained from a Schedule 13G filed by
Keeley Asset Management Corp. with the SEC. The principal
business address of Keeley Asset Management Corp. is 401 South
LaSalle Street, Chicago, IL 60605.
|
|
(9)
|
|
Consists of
(i) 796,784 shares of Common Stock owned by
Mr. McVey individually; (ii) 346,115 shares of
unvested restricted stock; (iii) 1,348,441 shares of
Common Stock issuable pursuant to stock options granted to
Mr. McVey that are or become exercisable within
60 days; and (iv) 495,154 shares of Common Stock
owned of record by a trust for the benefit of Mr. McVey and
his family members. Does not include 241,333 shares of
Common Stock issuable pursuant to stock options or 48,848
performance shares that are not exercisable within 60 days.
|
|
(10)
|
|
Consists of
(i) 4,612 shares of Common Stock held individually;
(ii) 2,113 shares of unvested restricted stock; and
(iii) 6,725 shares of Common Stock issuable pursuant
to stock options that are or become exercisable within
60 days.
|
|
(11)
|
|
Consists of
(i) 14,612 shares of Common Stock held individually;
(ii) 2,113 shares of unvested restricted stock; and
(iii) 26,725 shares of Common Stock issuable pursuant
to stock options that are or become exercisable within
60 days.
|
|
(12)
|
|
Consists of
(i) 19,612 shares of Common Stock held individually;
(ii) 2,113 shares of unvested restricted stock; and
(iii) 21,725 shares of Common Stock issuable pursuant
to stock options that are or become exercisable within
60 days.
|
|
(13)
|
|
Does not include shares of Common
Stock and other MarketAxess securities held by J.P. Morgan
Partners (23A SBIC), L.P. or LabMorgan Corporation, each of
which is a direct wholly-owned subsidiary of JPMorgan
Chase & Co. Mr. Hernandez disclaims beneficial
ownership of such shares.
|
|
(14)
|
|
Consists of
(i) 17,319 shares of Common Stock held by
Mr. Markowitz individually; (ii) 2,113 shares of
unvested restricted stock held by Mr. Markowitz;
(iii) 35,059 shares of Common Stock issuable pursuant
to stock options granted to Mr. Markowitz that are or
become exercisable within 60 days; and
(iv) 6,807 shares of Common Stock held by
Mr. Markowitz in joint tenancy with his spouse.
|
|
(15)
|
|
Consists of
(i) 97,291 shares of Common Stock held individually;
(ii) 176,774 shares of unvested restricted stock; and
(iii) 238,334 shares of Common Stock issuable pursuant
to stock options that are or become exercisable within
60 days. Does not include 576,666 shares of Common
Stock issuable pursuant to stock options or 23,798 performance
shares that are not exercisable within 60 days.
|
|
(16)
|
|
Consists of
(i) 14,612 shares of Common Stock held individually;
(ii) 2,113 shares of unvested restricted stock; and
(iii) 35,059 shares of Common Stock issuable pursuant
to stock options that are or become exercisable within
60 days.
|
|
(17)
|
|
Consists of
(i) 102,884 shares of Common Stock held in joint
tenancy with his spouse; (ii) 32,718 shares of
unvested restricted stock; and (iii) 170,168 shares of
Common Stock issuable pursuant to stock options that are or
become exercisable within 60 days. Does not include
18,307 shares of Common Stock issuable pursuant to stock
options or 5,636 performance shares that are not exercisable
within 60 days.
|
|
(18)
|
|
Consists of
(i) 32,548 shares of Common Stock held in joint
tenancy with his spouse; (ii) 85,705 shares of
unvested restricted stock; and (iii) 257,265 shares of
Common Stock issuable pursuant to stock options that are or
become exercisable within 60 days. Does not include
38,585 shares of Common Stock issuable pursuant to stock
options or 16,283 performance shares that are not exercisable
within 60 days.
|
|
(19)
|
|
Consists of
(i) 1,633,571 shares of Common Stock;
(ii) 658,216 shares of unvested restricted stock;
(iii) 2,197,176 shares of Common Stock issuable
pursuant to stock options that are or become exercisable within
60 days, (iv) 700,000 shares of Common Stock
issuable pursuant to warrants that are currently exercisable and
(v) 3,500,000 shares of Common Stock issuable upon the
conversion of 35,000 shares of Series B Preferred
Stock. Does not include 674,891 shares of Common Stock
issuable pursuant to stock options or 94,565 performance shares
that are not exercisable within 60 days.
|
33
Equity
Compensation Plan Information
The following table provides certain information regarding
common stock authorized for issuance under the Companys
equity compensation plans as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
|
|
|
Future Issuance under
|
|
|
|
to be Issued upon
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
in Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by stockholders(1)
|
|
|
4,398,286
|
|
|
$
|
10.47
|
|
|
|
5,661,605
|
|
Equity compensation plans not approved by stockholders(2)
|
|
|
888,889
|
|
|
$
|
2.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,287,175
|
|
|
$
|
9.05
|
|
|
|
5,661,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These plans consist of the Companys 2004 Stock Incentive
Plan (Amended and Restated Effective April 28, 2006), 2001
Stock Incentive Plan and 2000 Stock Incentive Plan. |
|
(2) |
|
Represents the grant of a stock option made in February 2003 to
a senior officer. This option is now fully vested. |
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
Certain
Relationships and Related Transactions
Our related parties include our directors, director nominees,
executive officers and holders of more than five percent of the
outstanding shares of our Common Stock. Set forth in this
section is information concerning transactions with our related
parties.
Principal
stockholder broker-dealer clients
JPMorgan, one of our broker-dealer clients, owns more than five
percent of the outstanding shares of our Common Stock. See
Security Ownership of Certain Beneficial Owners and
Management. For the year ended December 31, 2008,
$5.9 million, or 6.4% of our total revenues, were generated
by JPMorgan.
We have separate agreements with each of our broker-dealer
clients, including JPMorgan. These agreements govern each such
broker-dealers access to, and activity on, our electronic
trading platform. The term of the agreements is generally three
years, with automatic annual renewal thereafter unless notice to
terminate is given by a party at least 30 days prior to
automatic renewal. Under each agreement, the broker-dealer is
granted a worldwide, non-exclusive and non-transferable license
to use our electronic trading platform. The broker-dealer agrees
to supply us, on a non-exclusive basis, with indicative prices
and quantities of a minimum number of fixed-income instruments
for our inventory pages. We may only provide the pricing and
other content provided by a broker-dealer to those of our
institutional investor clients approved by the broker-dealer to
receive such content. Additionally, institutional investors must
be approved by a broker-dealer before being able to engage in
transactions on our platform. These agreements also provide for
the fees and expenses to be paid by the broker-dealers for their
use of our electronic trading platform.
Indemnification
agreements
We have entered into an indemnification agreement with each of
our outside directors. The indemnification agreements and our
certificate of incorporation and bylaws require us to indemnify
our directors and officers to the fullest extent permitted by
Delaware law.
34
Registration
rights agreement
JPMorgan, along with certain other holders of our Common Stock,
are party to our sixth amended and restated registration rights
agreement. Stockholders who are a party to this agreement are
provided certain rights to demand registration of shares of
Common Stock and to participate in a registration of our Common
Stock that we may decide to do, from time to time. Generally, we
have agreed to pay all expenses of any registration pursuant to
the registration rights agreement, except for underwriters
discounts and commissions.
Robert W. Trudeau
Mr. Trudeau is a member of TCM VI which is the sole general
partner of TCV VI and a general partner of TCV MF.
Mr. Trudeau and TCM VI share voting and dispositive power
with respect to the shares of Series B Preferred Stock, and
the shares of Common Stock that the Series B Preferred
Stock may be converted into, beneficially owned by the TCV VI
Funds. Mr. Trudeau and TCM VI disclaim beneficial ownership
of any shares held by the TCV VI Funds except to the extent of
their respective pecuniary interests therein. Mr. Trudeau
holds options to purchase 4,225 shares of Common Stock, of
which 2,113 shares are fully vested and exercisable, and
2,111 shares of Common Stock. Mr. Trudeau has the sole
voting and dispositive power over the options, any shares of
Common Stock issuable upon the exercise of the options, and the
shares of Common Stock held directly by him; however, TCM VI
owns 100% of the pecuniary interest in such options, any shares
to be issued upon exercise of such options and the shares of
Common Stock held directly by Mr. Trudeau. In addition, as
more fully discussed under Corporate Governance and
Board Matters Director Compensation,
Mr. Trudeau receives an annual retainer for his service as
a director.
Director
Independence
The Board of Directors has determined that seven of our nominees
for director, Messrs. Burkhardt, Casper, Gomach, Hersch,
Markowitz, Rohatyn, and Steinhardt, as well as Mr. Trudeau,
who was elected to the Board of Directors by the holders of the
Series B Preferred Stock pursuant to the terms thereof,
currently meet the independence requirements contained in the
NASDAQ listing standards and applicable tax and securities rules
and regulations. None of these directors has a relationship with
the Company or its subsidiaries which would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director. Each of these directors is
independent as defined within the meaning of the
NASDAQ listing standards. In compliance with the NASDAQ listing
standards, we have a Board of Directors comprised of a majority
of independent directors.
The NASDAQ listing standards have both objective tests and a
subjective test for determining who is an independent
director. The objective tests state, for example, that a
director is not considered independent if he is an employee of
the Company or is a partner in or executive officer of an entity
to which the Company made, or from which the Company received,
payments in the current or any of the past three fiscal years
that exceed 5% of the recipients consolidated gross
revenue for that year. The subjective test states that an
independent director must be a person who lacks a relationship
that, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director.
None of the non-employee directors were disqualified from
independent status under the objective tests. In
assessing independence under the subjective test, the Board took
into account the standards in the objective tests, and reviewed
and discussed additional information provided by the directors
and the Company with regard to each directors business and
personal activities as they may relate to MarketAxess
management. Based on all of the foregoing, as required by the
NASDAQ listing standards, the Board made a substantive
determination as to each of the eight independent directors that
no relationship exists which, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. After reviewing the
relationship between the Company and Mr. Hernandezs
employer, JP Morgan Chase & Co.
(JPMorgan), the Company has decided not to treat
Mr. Hernandez as an independent director for purposes of
the NASDAQ listing standards and applicable SEC rules. In making
this determination, the Board considered that JPMorgan
represented less than 10% of the Companys annual revenue
in each of 2008, 2007 and 2006, and has from time to time
provided certain investment banking services to the Company,
including acting as an underwriter of our initial public
offering in 2004.
35
The Board has not established categorical standards or
guidelines to make these subjective determinations, but
considers all relevant facts and circumstances.
In addition to Board-level standards for director independence,
the directors who serve on the Audit Committee each satisfy
standards established by the SEC providing that to qualify as
independent for purposes of membership on the Audit
Committee, members of audit committees may not accept directly
or indirectly any consulting, advisory or other compensatory fee
from the Company other than their director compensation. Also,
each of the directors who serve on the Compensation Committee
has been determined to be a non-employee director
for purposes of the applicable SEC rules and regulations and an
outside director for purposes of the applicable tax
rules.
In making its independence determinations, the Board considered
transactions occurring since the beginning of 2006 between the
Company and entities associated with the independent directors
or members of their immediate family. In each case, the Board
determined that, because of the nature of the directors
relationship with the entity
and/or the
amount involved, the relationship did not impair the
directors independence. The Boards independence
determinations included reviewing the following relationships:
|
|
|
|
|
Mr. Casper was previously an executive officer of FFTW,
which represented less than 1% of the Companys annual
revenue in each of the past three years. FFTW is a wholly-owned
subsidiary of BNP Paribas, which represented less than 10% of
the Companys annual revenue in each of the past three
years.
|
|
|
|
Mr. Hersch was previously an employee, but not an executive
officer, of Bear, Stearns & Co., Inc., which
represented less than 5% of the Companys annual revenue in
each of the past three years.
|
|
|
|
Mr. Rohatyn is an executive officer of TRG Management L.P.,
the investment manager of the TRG Global Opportunity Master
Fund, Ltd. TRG Global Opportunity Master Fund, Ltd. represented
less than 1% of the Companys annual revenue in each of the
past three years.
|
|
|
|
Mr. Steinhardt was previously an employee, but not an
executive officer, of JPMorgan, which represented less than 10%
of the Companys annual revenue in each of the past three
years.
|
|
|
Item 14.
|
Principal
Accounting Fees and Services.
|
Audit and
other fees
The aggregate fees billed by our independent registered public
accounting firm, PricewaterhouseCoopers LLP (PwC),
for professional services rendered in connection with the audit
of our annual financial statements set forth in our Annual
Report on
Form 10-K
for the years ended December 31, 2008 and 2007 and the
audit of our broker-dealer subsidiaries annual financial
statements, as well as fees paid to PwC for tax compliance and
planning and other services, are set forth below.
Except as set forth in the following sentence, the Audit
Committee, or a designated member thereof, preapproves 100% of
all audit, audited-related, tax and other services rendered by
PwC to the Company or its subsidiaries. The Audit Committee has
authorized the Chief Executive Officer and the Chief Financial
Officer to purchase permitted non-audit services rendered by PwC
to the Company or its subsidiaries up to and including a limit
of $10,000 per service and an annual limit of $20,000.
Immediately following the completion of each fiscal year, the
Companys independent registered public accounting firm
shall submit to the Audit Committee (and the Audit Committee
shall request from the independent registered public accounting
firm), as soon as possible, a formal written statement
describing: (i) the independent registered public
accounting firms internal quality-control procedures;
(ii) any material issues raised by the most recent internal
quality-control review or peer review of the independent
registered public accounting firm, or by any inquiry or
investigation by governmental or professional authorities,
within the preceding five years, respecting one or more
independent audits carried out by the independent registered
public accounting firm, and any steps taken to deal with any
such issues; and (iii) all relationships between the
independent registered public accounting firm and the Company,
including at least the matters set forth in Independence
Standards Board Standard No. 1 (Independence Discussion
with Audit Committees), in order to assess the independent
registered public accounting firms independence.
36
Immediately following the completion of each fiscal year, the
independent registered public accounting firm also shall submit
to the Audit Committee (and the Audit Committee shall request
from the independent registered public accounting firm), a
formal written statement of the fees billed by the independent
registered public accounting firm to the Company in each of the
last two fiscal years for each of the following categories of
services rendered by the independent registered public
accounting firm: (i) the audit of the Companys annual
financial statements and the reviews of the financial statements
included in the Companys Quarterly Reports on
Form 10-Q
or services that are normally provided by the independent
registered public accounting firm in connection with statutory
and regulatory filings or engagements; (ii) assurance and
related services not included in clause (i) that are
reasonably related to the performance of the audit or review of
the Companys financial statements, in the aggregate and by
each service; (iii) tax compliance, tax advice and tax
planning services, in the aggregate and by each service; and
(iv) all other products and services rendered by the
independent registered public accounting firm, in the aggregate
and by each service.
Set forth below is information regarding fees paid by the
Company to PwC during the fiscal years ended December 31,
2008 and 2007.
|
|
|
|
|
|
|
|
|
Fee Category
|
|
2008
|
|
|
2007
|
|
|
Audit Fees(1)
|
|
|
1,359,823
|
|
|
|
1,358,785
|
|
Tax Fees(2)
|
|
|
29,450
|
|
|
|
61,800
|
|
Audit Related Fees
|
|
|
12,577
|
|
|
|
|
|
All Other Fees
|
|
|
3,251
|
|
|
|
3,651
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,405,102
|
|
|
$
|
1,424,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The aggregate fees incurred include amounts for the audit of the
Companys consolidated financial statements (including fees
for the audit of our internal controls over financial reporting)
and the audit of our broker-dealer subsidiaries annual
financial statements. |
|
(2) |
|
The aggregate fees incurred for tax services include amounts in
connection with tax compliance and tax consulting services. |
37
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules.
|
(a) Financial Statements and Schedules
The financial statements are set forth under Item 8 of this
Annual Report on Form 10-K. Financial statement schedules
have been omitted since they are either not required, not
applicable, or the information is otherwise included.
(b) Exhibit Listing
|
|
|
|
|
Number
|
|
Description
|
|
|
3
|
.1
|
|
Intentionally omitted
|
|
3
|
.2*
|
|
Amended and Restated Certificate of Incorporation
|
|
3
|
.3
|
|
Intentionally omitted
|
|
3
|
.4*
|
|
Amended and Restated Bylaws
|
|
3
|
.5
|
|
Form of Certificate of Designation of Series A Preferred Stock
of MarketAxess Holdings Inc. (incorporated by reference to
Exhibit 3.1 to the registrants Registration Statement on
Form 8-A dated June 3, 2008)
|
|
3
|
.6
|
|
Form of Certificate of Designation of Series B Preferred Stock
of MarketAxess Holdings Inc. (incorporated by reference to
Exhibit 3.2 to the registrants Current Report on Form 8-K
dated June 2, 2008)
|
|
4
|
.1*
|
|
Specimen Common Stock certificate
|
|
4
|
.2*
|
|
Sixth Amended and Restated Registration Rights Agreement
|
|
4
|
.3*
|
|
Intentionally omitted
|
|
4
|
.4*
|
|
See Exhibits 3.2 and 3.4 for provisions defining the rights of
holders of common stock and non-voting common stock of the
registrant
|
|
4
|
.5
|
|
Investor Rights Agreement by and among MarketAxess Holdings
Inc., a Delaware corporation, TCV VI, L.P., a Delaware
limited partnership, and TCV Member Fund, L.P., a Delaware
limited partnership, dated June 2, 2008 (incorporated by
reference to Exhibit 4.1 to the registrants Current Report
on Form 8-K dated June 2, 2008)
|
|
4
|
.6
|
|
Form of Warrant issued by MarketAxess Holdings Inc.
(incorporated by reference to Exhibit 4.2 to the
registrants Current Report on Form 8-K dated June 2, 2008)
|
|
4
|
.7
|
|
Stockholders Rights Agreement, dated as of June 2, 2008 by and
between MarketAxess Holdings Inc. and American Stock Transfer
& Trust Company, LLC, as Rights Agent (incorporated by
reference to Exhibit 4.1 to the registrants Registration
Statement on Form 8-A dated June 3, 2008)
|
|
10
|
.1(a)
|
|
Employment Agreement, dated as of May 3, 2004, by and between
MarketAxess Holdings Inc. and Richard M. McVey# (incorporated by
reference to Exhibit 10.1 to the registrants Registration
Statement on Form S-1, as amended (Registration No. 333-112718)
|
|
10
|
.1(b)**
|
|
Amendment to Employment Agreement, dated as of December 19,
2008, by and between MarketAxess Holdings Inc. and Richard M.
McVey#
|
|
10
|
.2(a)*
|
|
Restricted Stock Purchase Agreement, dated as of June 11, 2001,
by and between MarketAxess Holdings Inc. and Richard M. McVey#
|
|
10
|
.2(b)*
|
|
Full Recourse Secured Promissory Note, dated June 11, 2001, by
Richard M. McVey in favor of MarketAxess Holdings Inc.#
|
|
10
|
.2(c)*
|
|
Non-Recourse Secured Promissory Note, dated June 11, 2001, by
Richard M. McVey in favor of MarketAxess Holdings Inc.#
|
|
10
|
.2(d)*
|
|
Stock Pledge Agreement, dated as of June 11, 2001, by and
between MarketAxess Holdings Inc. and Richard M. McVey#
|
|
10
|
.2(e)*
|
|
Restricted Stock Purchase Agreement, dated as of July 1, 2001,
by and between MarketAxess Holdings Inc. and Richard M. McVey#
|
|
10
|
.2(f)*
|
|
Full Recourse Secured Promissory Note, dated July 1, 2001, by
Richard M. McVey in favor of MarketAxess Holdings Inc.#
|
38
|
|
|
|
|
Number
|
|
Description
|
|
|
10
|
.2(g)*
|
|
Non-Recourse Secured Promissory Note, dated July 1, 2001, by
Richard M. McVey in favor of MarketAxess Holdings Inc.#
|
|
10
|
.2(h)*
|
|
Stock Pledge Agreement, dated as of July 1, 2001, by and between
MarketAxess Holdings Inc. and Richard M. McVey#
|
|
10
|
.3*
|
|
Stock Option Agreement, dated February 7, 2003, by and between
MarketAxess Holdings Inc. and Richard M. McVey#
|
|
10
|
.4
|
|
Intentionally omitted
|
|
10
|
.5
|
|
Intentionally omitted
|
|
10
|
.6*
|
|
MarketAxess Holdings Inc. Amended and Restated 2000 Stock
Incentive Plan#
|
|
10
|
.7*
|
|
MarketAxess Holdings Inc. Amended and Restated 2001 Stock
Incentive Plan#
|
|
10
|
.8*
|
|
Amendment No. 1 to the MarketAxess Holdings Inc. Amended and
Restated 2001 Stock Incentive Plan#
|
|
10
|
.9*
|
|
Amendment to the MarketAxess Holdings Inc. 2001 and 2000 Stock
Incentive Plans#
|
|
10
|
.10(a)
|
|
MarketAxess Holdings Inc. 2004 Stock Incentive Plan (amended and
restated effective April 28, 2006)# (incorporated by reference
to Appendix A to the registrants Proxy Statement for its
Annual Meeting for Stockholders held on June 7, 2006, filed on
May 1, 2006)
|
|
10
|
.10(b)
|
|
Form of Incentive Stock Option Agreement pursuant to the
MarketAxess Holdings Inc. 2004 Stock Incentive Plan (amended and
restated effective April 28, 2006)# (incorporated by reference
to Appendix B to the registrants Proxy Statement for its
Annual Meeting of Stockholders held on June 7, 2006, filed on
May 1, 2006)
|
|
10
|
.10(c)
|
|
Form of Non Qualified Stock Option Agreement pursuant to the
MarketAxess Holdings Inc. 2004 Stock Incentive Plan (amended and
restated effective April 28, 2006)# (incorporated by reference
to Appendix C to the registrants Proxy Statement for its
Annual Meeting of Stockholders held on June 7, 2006, filed on
May 1, 2006)
|
|
10
|
.11*
|
|
MarketAxess Holdings Inc. 2004 Annual Performance Incentive Plan#
|
|
10
|
.12*
|
|
Form of Indemnification Agreement
|
|
10
|
.13
|
|
Restricted Stock Agreement Pursuant to MarketAxess Holdings Inc.
2004 Stock Incentive Plan, dated as of January 31, 2006, by and
between MarketAxess Holdings Inc. and Richard M. McVey#
(incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K dated
March 30, 2006)
|
|
10
|
.14(a)
|
|
Offer Letter dated August 21, 2006 between MarketAxess Holdings
Inc. and T. Kelley Millet# (incorporated by reference to Exhibit
10.1 to the registrants Current Report on Form 8-K dated
September 12, 2006)
|
|
10
|
.14(b)**
|
|
Amendment to Employment Agreement, dated as of December 23,
2008, by and between MarketAxess Holdings Inc. and T. Kelley
Millet#
|
|
10
|
.15
|
|
Stock Option Agreement dated September 13, 2006 between
MarketAxess Holdings Inc. and T. Kelley Millet#
(incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K dated September 13,
2006)
|
|
10
|
.16
|
|
Restricted Stock Agreement dated September 13, 2006 between
MarketAxess Holdings Inc. and T. Kelley Millet#
(incorporated by reference to Exhibit 10.2 to the
registrants Current Report on Form 8-K dated September 13,
2006)
|
|
10
|
.17
|
|
Form of Performance Share Award Agreement for Messrs. McVey and
Millet pursuant to the MarketAxess Holdings Inc. 2004 Stock
Incentive Plan (as amended and restated effective April 28,
2006)# (incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K dated January 15,
2008)
|
|
10
|
.18
|
|
Form of Performance Share Award Agreement for Employees other
than Messrs. McVey and Millet pursuant to the MarketAxess
Holdings Inc. 2004 Stock Incentive Plan (as amended and restated
effective April 28, 2006)# (incorporated by reference to
Exhibit 10.2 to the registrants Current Report on Form 8-K
dated January 15, 2008)
|
|
10
|
.19
|
|
Form of Restricted Stock Agreement for Employees other than
Messrs. McVey and Millet pursuant to the MarketAxess Holdings
Inc. 2004 Stock Incentive Plan (as amended and restated
effective April 28, 2006)# (incorporated by reference to
Exhibit 10.3 to the registrants Current Report on Form 8-K
dated January 15, 2008)
|
39
|
|
|
|
|
Number
|
|
Description
|
|
|
10
|
.20
|
|
Form of Incentive Stock Option Agreement for Employees other
than Messrs. McVey and Millet pursuant to the MarketAxess
Holdings Inc. 2004 Stock Incentive Plan (as amended and restated
effective April 28, 2006)# (incorporated by reference to
Exhibit 10.4 to the registrants Current Report on Form 8-K
dated January 15, 2008)
|
|
10
|
.21
|
|
Form of Incentive Stock Option Agreement for Mr. McVey pursuant
to the MarketAxess Holdings Inc. 2004 Stock Incentive Plan (as
amended and restated effective April 28, 2006)# (incorporated
by reference to Exhibit 10.5 to the registrants Current
Report on Form 8-K dated January 15, 2008)
|
|
10
|
.22
|
|
Form of Incentive Stock Option Agreement for Mr. Millet pursuant
to the MarketAxess Holdings Inc. 2004 Stock Incentive Plan (as
amended and restated effective April 28, 2006)# (incorporated
by reference to Exhibit 10.6 to the registrants Current
Report on Form 8-K dated January 15, 2008)
|
|
10
|
.23
|
|
Stock Purchase and Investment Agreement, dated as of March 5,
2008, by and among MarketAxess Technologies Inc., Greenline
Financial Technologies, Inc., the Sellers party thereto and the
Sellers Representative party thereto (incorporated by
reference to Exhibit 10.1 to the registrants Current
Report on Form 8-K dated March 5, 2008)
|
|
10
|
.24
|
|
Form of MarketAxess Holdings Inc. Restricted Stock Agreement,
dated as of March 5, 2008, by and between MarketAxess Holdings
Inc. and each of the Sellers party to the Stock Purchase and
Investment Agreement listed as Exhibit 10.23 above (incorporated
by reference to Exhibit 10.2 to the registrants Current
Report on Form 8-K dated March 5, 2008)
|
|
10
|
.25
|
|
Escrow Agreement, dated as of March 5, 2008, by and among
MarketAxess Technologies Inc., the Sellers Representative
and JPMorgan Chase Bank, National Association, as escrow agent
(incorporated by reference to Exhibit 10.3 to the
registrants Current Report on Form 8-K dated March 5, 2008)
|
|
10
|
.26
|
|
Securities Purchase Agreement by and among MarketAxess Holdings
Inc., a Delaware corporation, TCV VI, L.P., a Delaware limited
partnership, and TCV Member Fund, L.P., a Delaware limited
partnership, dated June 2, 2008 (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on Form 8-K
dated June 2, 2008)
|
|
10
|
.27
|
|
Form of Restricted Stock Agreement for Messrs. McVey and Millet
pursuant to the MarketAxess Holdings Inc. 2004 Stock Incentive
Plan (Amended and Restated effective April 28, 2006)#
(incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K dated January 23,
2008)
|
|
10
|
.28(a)**
|
|
MarketAxess Severance Pay Plan, effective August 1, 2006#
|
|
10
|
.28(b)**
|
|
Amendment No. 1 to MarketAxess Severance Pay Plan, dated as of
December 17, 2008#
|
|
21
|
.1**
|
|
Subsidiaries of the Registrant
|
|
23
|
.1**
|
|
Consent of PricewaterhouseCoopers LLP
|
|
31
|
.1***
|
|
Certification by Chief Executive Officer pursuant to Exchange
Act Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31
|
.2***
|
|
Certification by Chief Financial Officer pursuant to Exchange
Act Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32
|
.1**
|
|
Certification by Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
|
32
|
.2**
|
|
Certification by Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
|
|
|
* |
|
Incorporated by reference to the identically-numbered exhibit to
the registrants Registration Statement on
Form S-1,
as amended (Registration
No. 333-112718). |
|
** |
|
Incorporated by reference to the identically-numbered exhibit to
the registrants Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 filed with the
SEC on March 3, 2009. |
|
*** |
|
Filed herewith. |
|
# |
|
Management contract or compensatory plan or arrangement. |
40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MARKETAXESS HOLDINGS INC.
Richard M. McVey
Chief Executive Officer
Date: April 30, 2009
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
|
|
|
|
|
|
|
Signature
|
|
Date
|
|
Title(s)
|
|
|
|
|
|
|
/s/ Richard
M. McVey
Richard
M. McVey
|
|
Chief Executive Officer and Chairman
of the Board of Directors
(principal executive officer)
|
|
April 30, 2009
|
|
|
|
|
|
/s/ James
N.B. Rucker
James
N.B. Rucker
|
|
Chief Financial Officer (principal financial and accounting
officer)
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Roger
Burkhardt
Roger
Burkhardt
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Stephen
P. Casper
Stephen
P. Casper
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ David
G. Gomach
David
G. Gomach
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Carlos
Hernandez
Carlos
Hernandez
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Ronald
M. Hersch
Ronald
M. Hersch
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Jerome
S. Markowitz
Jerome
S. Markowitz
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ T.
Kelley Millet
T.
Kelley Millet
|
|
President and Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Nicolas
S. Rohatyn
Nicolas
S. Rohatyn
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ John
Steinhardt
John
Steinhardt
|
|
Director
|
|
April 30, 2009
|
|
|
|
|
|
/s/ Robert
Trudeau
Robert
Trudeau
|
|
Director
|
|
April 30, 2009
|
41