Exhibit 10.1
AGREEMENT
THIS AGREEMENT, made
and entered into this 5 th day
of August, 2009, by and between CME GROUP INC. (“
Employer ”), a Delaware corporation, having its
principal place of business at 30 South Wacker Drive, Chicago,
Illinois, and CRAIG S. DONOHUE (“ Executive
”).
RECITALS:
WHEREAS, on November
7, 2003, Chicago Mercantile Exchange Inc. (" CME ") and
Executive entered into an agreement (the “ Original
Agreement ”) whereby CME agreed to employ Employee as
Chief Executive Officer and Employee accepted such employment;
WHEREAS, the Original
Agreement was restated in its entirety by a new agreement dated
April 3, 2006 (the “ 2006 Agreement ”);
WHEREAS, the 2006
Agreement, as amended, expires on December 31, 2009 subject to
renewal by mutual written agreement, and Employer has an interest
in ensuring continuity of its leadership;
WHEREAS, Employer
wishes to continue the services of Executive in the capacity of
Chief Executive Officer upon the terms and conditions hereinafter
set forth and Executive wishes to accept such employment; and
WHEREAS, it is
desirable that the 2006 Agreement be replaced by this Agreement so
that, on and after the date of this Agreement, this Agreement shall
contain the terms and conditions governing the employment of
Executive in the capacity as Chief Executive Officer of
Employer;
NOW, THEREFORE, in
consideration of the mutual promises contained herein, the parties
mutually agree as follows:
1.
Employment . Subject to the terms of the
Agreement, Employer hereby agrees to continue to employ Executive
during the Agreement Term as Chief Executive Officer and Executive
hereby accepts such employment. Executive shall report
to Employer’s Board of Directors, or any successor to the
Board of Directors (hereinafter, “ Board ” shall
mean the Board of Directors of Employer and/or any successor
thereto). The duties and responsibilities of Executive
and his relations with the Board, its Chairman and its officers
shall be consistent with the practice during his term as Chief
Executive Officer to date. Executive’s duties
shall include, but not be limited to, the performance of all duties
associated with executive oversight and management of
Employer. Executive will provide such business and
professional services in the
performance of his duties that are consistent
with Executive’s position as Chief Executive
Officer. Executive shall devote his full time, ability
and attention to the business of Employer during the Agreement
Term. During the Agreement Term, Executive shall comply
with the Company’s share ownership guidelines as in effect
from time to time.
Notwithstanding anything to the contrary
contained herein, nothing in the Agreement shall preclude Executive
from participating in the affairs of any governmental, educational
or other charitable institution, engaging in professional speaking
and writing activities, and/or serving as a member of the board of
directors of a publicly held corporation (except for a competitor
of Employer), provided Executive notifies the Governance Committee
of the Board prior to his participating in any such activities and
as long as the Governance Committee does not determine that any
such activities unreasonably interferes with or diminishes
Employee's obligations under the Agreement. Executive
shall be entitled to retain all fees, royalties and other
compensation derived from such activities, in addition to the
compensation and other benefits payable to him under the Agreement,
but shall disclose such fees to Employer.
2. Agreement
Term . Executive shall be employed hereunder for a term
commencing on August 5, 2009 (the " Effective Date "), and
expiring on December 31, 2012, unless sooner terminated as herein
provided (“ Agreement Term ”). The Agreement
Term may be extended or renewed only by the mutual written
agreement of the parties.
3.
Compensation .
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Annual Base Salary . Effective as of
the Effective Date, Employer shall pay to Executive a base salary
at a rate of $850,000 per year (“ Base Salary
”), until December 31, 2009. Effective January 1,
2010, Employer shall pay to Executive a Base Salary at a rate of
$1,000,000 per year. The Base Salary shall be payable in
accordance with Employer’s normal payment schedule.
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Bonuses . Executive shall be eligible
to participate in Employer’s Annual Incentive Plan (the
“ AIP ”) as in existence or as amended from time
to time in accordance with its terms. Effective for 2010
and subsequent years in the Agreement Term, Executive’s
threshold annual incentive shall be 75% of his Base Salary (“
AIP Threshold ”); target annual incentive shall be
150% of his Base Salary(“ AIP Target ”) and
maximum annual incentive shall be 300% of his Base
Salary. Any amendment of the AIP shall not diminish
Executive’s threshold, target or maximum annual
incentives
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relative to the target incentives of the other
members of the management team. With respect to 2009,
the threshold, target and maximum percentages of Executive’s
2009 Base Salary specified above shall apply; it being agreed that
in order to provide those bonus percentages the Employer shall
grant an additional bonus opportunity under the AIP which, when
combined with the 2009 AIP bonus granted prior to the Effective
Date, provides the specified total incentive opportunity.
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Equity Compensation . Executive shall
be eligible to participate in the Chicago Mercantile Exchange
Holdings Inc., Amended and Restated Omnibus Stock Plan (“
EIP ”), as in existence or as amended from time to
time, in accordance with the terms of the Plan for executives in
the Office of the Chief Executive Officer. Effective for
2009 and subsequent years in the Agreement Term, Executive shall
have a target grant of not less than 350% of his Base Salary
(“ EIP Target ”). The grant shall be
satisfied in the following manner: (i) 50% of the EIP Target amount
in the form of restricted stock; and (ii) 50% of the EIP Target
amount in the form of non-qualified stock options. Any
amendment of the EIP shall not diminish Executive’s target
grant relative to the target grants of the other executives in the
Office of the Chief Executive Officer. Employer shall
cause the EIP and all future grants thereunder to be modified to
permit Executive to transfer awards granted thereunder for estate
and tax planning purposes to members of Executive’s immediate
family or to one or more trusts for the benefit of such family
members, partnerships in which such family members are the only
partners, or corporations in which such family members are the only
stockholders.
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If a “ Change of Control ”
(as defined in Employer’s Amended and Restated Omnibus Stock
Plan (“ Plan ”)) occurs prior to the
Executive’s termination of employment with Employer, all
options and shares previously granted to Executive that have not
fully vested, whether pursuant to this Agreement, the Original
Agreement, the 2006 Agreement or otherwise, will have vesting
accelerated so as to fully vest one year from the date of a Change
in Control, provided that during such one-year period the Employer
does not terminate Executive for Cause (as defined in Section 6,
below) in which case Executive shall not be entitled to any options
or shares which had not fully vested prior to a Change in
Control.
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Executive may exercise all other vested
options in accordance with the terms of the
Plan. Thereafter, the options will continue to be
subject to the terms, definitions and provisions of the Plan and
any related option agreement. If Executive is
involuntarily terminated without Cause or resigns with Good Reason
within sixty (60) days prior to a Change of Control or anytime
within the one year after a Change of Control, all unvested options
and shares held by the Executive on the date of Change of Control
shall become 100% vested and all options and shares which would
have been granted to Executive had the Executive been employed on
the date of Change of Control shall become granted and 100% vested,
and Executive shall have until the date that is four years after
the date the Executive's employment terminates to exercise any New
Agreement Options (as defined below) that are then vested but
unexercised, or that become vested as a result of the
foregoing.
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4. Benefits
. Executive shall be entitled to insurance, vacation and other
employee benefits and perquisites commensurate with his position in
accordance with Employer’s policies for executives in effect
from time to time. Without limiting the generality of
the immediately preceding sentence, for each year during the Term
of this Agreement, Executive shall be entitled to fully vested
“make-whole” benefit accruals (or cash equivalents if
the plan is terminated) under the Chicago Mercantile Exchange Inc.
Senior Management Supplemental Deferred Savings Plan (“
Deferred Savings Plan ”) equal to the amount of 401(k)
Savings Plan Discretionary Contribution or Pension Plan
contributions that would have been accrued under such plans but for
the Internal Revenue Code limitation on compensation that can be
considered under a qualified retirement plan, which accruals shall
be made in accordance with the terms of the Deferred Savings Plan,
as in effect from time to time. Executive acknowledges receipt of a
summary of Employer’s employee benefits policies in effect as
of the date of this Agreement
5. Expense
Reimbursement . During the Agreement Term, Employer shall
reimburse Executive, in accordance with Employer’s policies
and procedures, for all proper expenses incurred by him in the
performance of his duties hereunder.
6.
Termination .
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Death . Upon the death of Executive,
this Agreement shall automatically terminate and all rights of
Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease,
except for compensation which shall have accrued to the date
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of death, including accrued Base Salary and a
prorated AIP Target payment for the year of termination, and other
employee benefits to which Executive is entitled upon his death, in
accordance with the terms of the plans and programs of Employer
including without limitation any accrued, but unpaid, AIP payments
attributable to completed fiscal years and full vesting of all
outstanding options and shares previously granted to Executive
after the Effective Date (" New Agreement Awards ") that
have not fully vested. The exercise period for options
included in the New Agreement Awards (the " New Agreement
Options ") shall be four years from the date of
termination.
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Disability . Employer may, at its
option, terminate this Agreement upon written notice to Executive
if Executive, because of physical or mental incapacity or
disability, fails to perform the essential functions of his
position required of him hereunder for a continuous period of 90
days or any 120 days within any 12-month period. Upon such
termination, all obligations of Employer hereunder shall cease,
except for payment of accrued Base Salary and a prorated AIP Target
payment for the year of termination, and other employee benefits to
which Executive is entitled upon his termination hereunder, in
accordance with the terms of the plans and programs of Employer,
including without limitation any accrued, but unpaid, AIP payments
attributable to completed fiscal years and full vesting of all New
Agreement Awards that have not fully vested. The
exercise period for the New Agreement Options shall be four years
from the date of termination. In the event of any
dispute regarding the existence of Executive’s disability
hereunder, the matter shall be resolved as follows: (1) by the
determination of a physician selected by the Board; (2) Executive
shall have the right to challenge that determination by presenting
a contrary determination from a physician of his choice; (3) in
such event, a physician selected by agreement of the Executive and
the Board will make the final determination. The Executive shall
submit to appropriate medical examinations for purposes of making
the medical determinations hereunder.
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Cause . Employer may, at its option,
terminate Executive’s employment under this Agreement for
Cause. As used in this Agreement, the term “
Cause ” shall mean any one or more of the
following:
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any bad faith refusal by Executive to perform
his duties and responsibilities under this Agreement or material
violation of any rule, regulation or guideline imposed by a
regulatory or self -regulatory body having jurisdiction over
Employer, as determined after investigation by the Board.
Executive, after having been given written notice by Employer,
shall have seven (7) days to demonstrate to the satisfaction of the
Board that Executive has been able to cure or refute such refusal
or violation;
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any intentional act of fraud, embezzlement,
theft or misappropriation of Employer’s funds by Executive,
as determined after investigation by the Board, or
Executive’s admission or conviction of or plea of nolo
contendere to a felony or of any crime involving fraud,
embezzlement, theft or misrepresentation and which the Board
reasonably believes has had or will have a detrimental effect on
the Employer’s reputation or business or the
Executive’s reputation;
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any gross negligence or willful misconduct of
Executive resulting in a material financial loss or liability to
Employer, or damage to the reputation of Employer, as determined
after investigation by the Board; or
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any breach by Executive of any one or more of
the covenants contained in Section 7, 8 or 9 hereof.
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The exercise of the right of Employer to
terminate this Agreement pursuant to this Section 6(c) shall not
abrogate any other rights or remedies of Employer in respect of the
breach giving rise to such termination.
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If Employer terminates Executive’s
employment for Cause, Executive shall be entitled to accrued Base
Salary through the date of the termination of his employment, as
well as all other employee benefits to which Executive is entitled
upon his termination of employment with Employer, in accordance
with the terms of the plans and programs of Employer including
without limitation any accrued, but unpaid, AIP payments
attributable to completed fiscal years. Upon termination
for Cause,
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Executive shall forfeit any unvested or
unearned compensation or long-term incentives, unless otherwise
provided herein or specified in the terms of the plans and programs
of Employer.
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Termination Without Cause . Upon 30
days prior written notice to Executive, Employer may terminate this
Agreement for any reason other than a reason set forth in
subsections (a), (b) or (c) of this Section 6. If,
during the Agreement Term, Employer terminates the employment of
Executive hereunder for any reason other than a reason set forth in
subsections (a), (b) or (c) of this Section 6:
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Executive shall be entitled to receive accrued
Base Salary through the date of the termination of his employment,
and other employee benefits to which Executive is entitled upon his
termination of employment with Employer, in accordance with the
terms of the plans and programs of Employer including without
limitation any accrued, but unpaid, AIP payments attributable to
completed fiscal years; and
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Subject to Executive’s execution and
delivery prior to the Release Deadline (as defined below) of a
general release in a form and of a substance satisfactory to
Employer acting in good faith (a “ Release ”),
Executive shall be entitled to a one time lump sum severance
payment equal to two (2) times the sum of his Base Salary plus his
AIP Threshold each as of the date of Executive’s termination,
which shall be paid six (6) months after the date Executive
terminates employment pursuant to Paragraph 6(d). For purposes
hereof, the “ Release Deadline ” means the
deadline prescribed by Employer for the execution of a Release,
which deadline shall in no event be later than 60 days following
the date the Executive’s employment terminates.
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Executive shall be vested in any outstanding
New Agreement Awards under the EIP Plan (but shall not participate
in any awards subsequent to the date Executive received notice of
termination) to the extent that such New Agreement Awards would
have vested if Executive had continued as Chief Executive Officer
through the termination date of this Agreement; and Executive shall
have until
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the date that is four years after the date the
Executive's employment terminates to exercise any New Agreement
Options that are then vested but unexercised, or that become vested
as a result of the foregoing; and
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Executive shall be entitled to the following
with respect to the life, disability, accident and healthcare
insurance plans, programs or arrangements in which Executive was
participating immediately prior to such
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