mktx-def14a_20210609.htm

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Amendment No.         )

 

 

Filed by the Registrant 

Filed by a Party other than the Registrant 

 

 

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to § 240.14a-12

MarketAxess Holdings Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

(5)

Total fee paid:

 

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

(3)

Filing Party:

 

 

(4)

Date Filed:

 

 


 

 

Market Axess® 2021 Proxy Statement and Notice of Annual Meeting of Stockholders

 


 

 

 

 

MarketAxess Holdings Inc.

55 Hudson Yards, 15th Floor

New York, New York 10001

April 28, 2021

TO THE STOCKHOLDERS OF MARKETAXESS HOLDINGS INC.:

You are invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of MarketAxess Holdings Inc. (the “Company”) scheduled for Wednesday, June 9, 2021 at 10:00 a.m., Eastern Daylight Time. The Annual Meeting will be a virtual meeting of stockholders.  You will be able to participate in the Annual Meeting, vote and submit your questions via live webcast by visiting www.virtualshareholdermeeting.com/MKTX2021. The Company’s Board of Directors and management look forward to your participation.

Details of the business to be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting and Proxy Statement, which you are urged to read carefully.

We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. On April 28, 2021, we expect to mail to our stockholders a Notice containing instructions on how to access our Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 and vote online. The Notice contains instructions on how you can receive a paper copy of the Proxy Statement, proxy card and Annual Report if you only received a Notice by mail.

Your vote is important to us. Whether or not you plan to attend the Annual Meeting, your shares should be represented and voted. After reading the enclosed Proxy Statement, please cast your vote via the Internet or telephone or complete, sign, date and return the proxy card in the pre-addressed envelope that we have included for your convenience. If you hold your shares in a stock brokerage account, please check your proxy card or contact your broker or nominee to determine whether you will be able to vote via the Internet or by telephone.

On behalf of the Board of Directors, thank you for your continued support.

 

Sincerely,

Richard M. McVey

Chairman and Chief Executive Officer

 

 


 

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

Attend the Annual Meeting at:

 

www.virtualshareholdermeeting.com/MKTX2021

 

Your vote is very important, regardless of the number of shares you own. Please read the attached proxy statement carefully and complete and submit your proxy card via the internet or sign and date your paper proxy card as promptly as possible and return it in the enclosed envelope. Alternatively, you may be able to submit your proxy by touch-tone phone as indicated on the proxy card.

 

 

 

TO THE STOCKHOLDERS OF MARKETAXESS HOLDINGS INC.:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of MarketAxess Holdings Inc., a Delaware corporation (the “Company”), will be held via live webcast on Wednesday, June 9, 2021, at 10:00 a.m., Eastern Daylight Time. You can participate in the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/MKTX2021. You must have your 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials) to join the Annual Meeting.

At the Annual Meeting we will:

1.  vote to elect the 12 nominees named in the attached Proxy Statement as members of the Company’s Board of Directors for terms expiring at the 2022 Annual Meeting of Stockholders;

2.  vote to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021;

3.  hold an advisory vote to approve the compensation of the Company’s named executive officers as disclosed in the attached Proxy Statement; and

4.  transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

 

BY INTERNET

Visit 24/7

www.proxyvote.com

 

 

 

 

 

BY PHONE

Call 1-800-690-6903

in the U.S. or Canada to vote your

shares

 

 

 

 

 

BY MAIL

Cast your ballot, sign your proxy

card and return

 

 

 

 

 

PARTICIPATE IN THE

ANNUAL MEETING

Vote during the Annual Meeting at www.virtualshareholdermeeting.com/MKTX2021 using your 16-digit control number

 

 

These items are more fully described in the Company’s Proxy Statement accompanying this Notice.

The record date for the determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting, or any adjournment or postponement thereof, was the close of business on April 12, 2021. You have the right to receive this Notice and vote at the Annual Meeting if you were a stockholder of record at the close of business on April 12, 2021. Please remember that your shares cannot be voted unless you cast your vote by one of the following methods: (1) vote via the Internet or call the toll-free number as indicated on the proxy card; (2) sign and return a paper proxy card; or (3) vote during the Annual Meeting at www.virtualshareholdermeeting.com/MKTX2021.

 

By Order of the Board of Directors,

Scott Pintoff

General Counsel and Corporate Secretary

New York, New York

April 28, 2021

 


 

 

TABLE OF CONTENTS

 

 

PROXY SUMMARY

 

1

 

 

 

Annual Meeting information

 

1

 

 

 

Voting items

 

1

 

 

 

How to vote

 

1

 

 

 

PROPOSAL 1 — ELECTION OF DIRECTORS

 

2

 

 

 

Your vote

 

2

 

 

 

Qualifications for director nominees

 

3

 

 

 

Board of Directors skills and expertise

 

3

 

 

 

Director diversity

 

4

 

 

 

Director Information

 

5

 

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

11

 

 

 

Director independence and tenure

 

11

 

 

 

Board diversity policy

 

11

 

 

 

How nominees to our Board are selected

 

11

 

 

 

Board leadership structure

 

12

 

 

 

Board committees

 

12

 

 

 

Meetings and attendance

 

14

 

 

 

Board involvement in risk oversight

 

14

 

 

 

Board evaluations, succession planning and talent management

 

15

 

 

 

Code of Conduct, Code of Ethics and other governance documents

 

16

 

 

 

Communicating with our Board members

 

16

 

 

 

Director compensation

 

16

 

 

 

Certain relationships and related party transactions

 

19

 

 

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY AND INITIATIVES

 

21

 

 

 

How MarketAxess defines sustainability

 

22

 

 

 

Trading for Trees

 

22

 

 

 

PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

23

 

 

 

Your vote

 

23

 

 

 

Audit and other fees

 

24

 

 

 

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

 

25

 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

26

 

 

 

EXECUTIVE OFFICERS

 

28

 

 

 

A LETTER FROM OUR COMPENSATION AND TALENT COMMITTEE

 

30

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

31

 

 

 

Responding to stockholders; evolving pay practices

 

31

 

 

 

Business and financial performance

 

32

 

 

 

How we make compensation decisions

 

35

 

 

 

How we determine pay levels

 

38

 

 

 

Elements of executive compensation

 

45

 

 

 

2020 compensation

 

46

 

 

 

REPORT OF THE COMPENSATION AND TALENT COMMITTEE OF THE BOARD OF DIRECTORS

 

57

 

 

 

EXECUTIVE COMPENSATION

 

58

 

 

 

Summary compensation table

 

58

 

 

 

Grants of plan-based awards

 

59

 

 

 

Outstanding equity awards at fiscal year-end

 

60

 

 

 

Option exercises and stock vested

 

61

 

 

 

Nonqualified deferred compensation

 

62

 

 

 

Employment agreements and severance arrangements with our Named Executive Officers

 

63

 

 

 

Potential termination or change in control payments and benefits

 

66

 

 

 

Compensation Committee interlocks and insider participation

 

73

 

 

 

PROPOSAL 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

74

Your vote

 

75

 

 

 

CEO PAY RATIO

 

76

 

 

 

OTHER INFORMATION

 

78

 

 

 

General information

 

78

 

 

 

Solicitation of proxies

 

79

 

 

 

Voting

 

79

 

 

 

Availability of certain documents

 

82

 

 

 

Other matters

 

82

 

 

 

Stockholder proposals for 2022 Annual Meeting

 

82

 

 

 

 


 

 

PROXY SUMMARY

This summary contains highlights about MarketAxess Holdings Inc. (“MarketAxess”, the “Company”, “we” or “our”) and the upcoming 2021 Annual Meeting of Stockholders (the “Annual Meeting”).  This summary does not contain all of the information you should consider in advance of the Annual Meeting and we encourage you to read the entire Proxy Statement before voting.

This Proxy Statement, the accompanying Notice of Annual Meeting of Stockholders and proxy card are first being mailed to stockholders on or about April 28, 2021. Whenever we refer in this Proxy Statement to the “Annual Meeting,” we are also referring to any meeting that results from any postponement or adjournment of the June 9, 2021 meeting.

Annual Meeting information

 

 

Date and Time:

Wednesday, June 9, 2021, at 10:00 a.m., Eastern Daylight Time

Virtual Meeting:

www.virtualshareholdermeeting.com/MKTX2021

Record Date:

Monday, April 12, 2021

Due to the continuing public health impact of the coronavirus outbreak (COVID-19) (the “Pandemic”) and to support the health and well-being of our stockholders and other participants at the Annual Meeting, the Annual Meeting will be held in virtual format only.

Voting items

 

The following table summarizes the items that we are asking our stockholders to vote on at the Annual Meeting, along with the voting recommendations of our Board of Directors (the “Board” or “Board of Directors”).

 

Item

Board Recommendation

Required Approval

Page Reference

1.    Election of Directors

FOR

Majority of votes cast for each nominee

2

2.    Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021

FOR

Majority of shares present and entitled to vote

23

3.    Advisory vote to approve the compensation of the Company’s named executive officers as disclosed in the attached Proxy Statement

FOR

Majority of shares present and entitled to vote

74

How to vote

 

Your vote is important.  Stockholders of record as of the Record Date are entitled to vote through one of the following options:

 

By Mail:

Cast your ballot, sign your proxy card and return.

Via the Internet:

To vote before the meeting, visit www.proxyvote.com.

To vote at the meeting, visit www.virtualshareholdermeeting.com/MKTX2021. You will need the control number printed on your notice, proxy card or voting instruction form.

By Telephone:

Call the phone number located on your proxy card.

 

 

 

 

 

2021 Proxy Statement

1

 


 

 

PROPOSAL 1 — ELECTION OF DIRECTORS

The first proposal to be voted on at the Annual Meeting is the election of directors. Our Board currently consists of 13 directors, 11 of whom are not our employees. Each of the nominees for director was elected by the Company’s stockholders on June 10, 2020, except for Kourtney Gibson, who was appointed to the Board as of July 16, 2020. The directors are nominated for a term that begins at the Annual Meeting and ends at the 2022 Annual Meeting of Stockholders. Each director will hold office until such director’s successor has been elected and qualified, or until such director’s earlier resignation, retirement or removal.  The Board will continue to evaluate its composition as part of its focus on self-assessment and board refreshment.

John Steinhardt, who has been a director since April 2000, has not been re-nominated and will not stand for reelection.  Mr. Steinhardt’s service as a director on the Board will cease as of the date of the Annual Meeting.  Following the Annual Meeting, and assuming the election of each director nominee, our Board will consist of 12 directors, 10 of whom are not our employees.  The Company thanks Mr. Steinhardt for his twenty-one years of service.

Your vote

 

If you sign the enclosed proxy card and return it to the Company, your proxy will be voted FOR all directors, for terms expiring at the 2022 Annual Meeting of Stockholders, unless you specifically indicate on the proxy card that you are casting a vote against one or more of the nominees or abstaining from such vote.

A majority of the votes cast by stockholders entitled to vote at the Annual Meeting is required for the election of each director. Abstentions and broker non-votes will have no effect on the outcome of the vote.

 

P

 

BOARD RECOMMENDATION

The board unanimously recommends that you vote “FOR” the election of each of the following nominees:

 

 

 

     Richard M. McVey

     Nancy Altobello

     Steven L. Begleiter

     Stephen P. Casper

     Jane Chwick

     Christopher R. Concannon

 

     William F. Cruger

     Kourtney Gibson

     Justin G. Gmelich

     Richard G. Ketchum

     Emily H. Portney

     Richard L. Prager

 

Each of these nominees is currently serving as a director on our Board, and each nominee has agreed to continue to serve on the Board if he or she is elected at the Annual Meeting. If any nominee is unable (or for good cause declines) to serve as a director at any time before the Annual Meeting, proxies may be voted for the election of a qualified substitute designated by the current Board, or else the size of the Board will be reduced accordingly. Biographical information about each of the nominees is included below under Director information.

 

 

 

2

2021 Proxy Statement

 

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

Qualifications for director nominees

 

Our Board has adopted minimum qualifications for our directors: 

substantial experience working as an executive officer for, or serving on the board of, a public company;

significant accomplishment in another field of endeavor related to the strategic running of our business; or

an ability to make a meaningful contribution to the oversight and governance of a company having a scope and size similar to our Company.

A director must have an exemplary reputation and record for honesty in his or her personal dealings and business or professional activity. All directors must demonstrate strong leadership skills and should possess a basic understanding of financial matters; have an ability to review and understand the Company’s financial and other reports; and be able to discuss such matters intelligently and effectively. He or she also needs to exhibit qualities of independence in thought and action. A candidate should be committed first and foremost to the interests of the stockholders of the Company. The key experience, qualifications and skills each of our directors brings to the Board that are important in light of our business are included in their individual biographies below.

 

Board of Directors skills and expertise

 

The Company’s directors are selected on the basis of specific criteria set forth in our Corporate Governance Guidelines.  All of our directors possess financial industry experience and a history of strategic leadership.  In addition to those qualifications, listed below are the skills and experience that we consider important for our director nominees.  More detailed information is provided in each director nominee’s biography.

 

 

Corporate

Governance

Fixed

Income/

Electronic

Trading

Regulatory

Technology/

Cybersecurity

Mergers

and

Acquisitions

Finance / Accounting

Risk

Management

Other

Public

Company

Board

Experience

Talent

Management

Richard M. McVey

 

 

Nancy Altobello

 

 

Steven L. Begleiter

 

 

 

Stephen P. Casper

 

 

Jane Chwick

 

 

 

Christopher R. Concannon

 

 

William F. Cruger

 

 

 

Kourtney Gibson

 

 

 

 

Justin G. Gmelich

 

 

 

 

Richard G. Ketchum

 

 

 

 

Emily H. Portney

 

 

 

 

Richard L. Prager

 

 

 

 


 

 

2021 Proxy Statement

3

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

Director diversity

 

 

The Company recognizes and embraces that having a diverse Board enhances both the Board’s effectiveness in fulfilling its oversight role and the Company’s performance. See “Corporate Governance and Board Matters – Board Diversity Policy” for more information. Listed below are the number of director nominees that self-identify as female or as a racial minority as well as the number of director nominees by tenure and age:

 

 

GENDER

RACE

TENURE

AGE

 

 

 

 

 

 

4

2021 Proxy Statement

 

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

Director information

 

At the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the persons named below to serve as directors of the Company for a term beginning at the Annual Meeting and ending at the 2022 Annual Meeting of Stockholders.

 

 

 

Richard M. McVey

Age:  61

Director since: April 2000

Chairman of the Board of Directors

Board Committees:

    None

 

Qualifications and Career Highlights:

Richard M. McVey has been our 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 J.P. Morgan, where he managed the institutional distribution of fixed-income securities to investors. Mr. McVey led MarketAxess through the Company’s IPO in 2004, and since that time, MarketAxess has been one of the fastest growing financial technology companies in the U.S. public markets, with industry leading total stockholder returns.  Mr. McVey was named the Ernst & Young National Entrepreneur of the Year for financial services in 2012, and he has been named to the Institutional Investor Tech 40 list 15 times. Mr. McVey was a member of the U.S. Securities and Exchange Commission’s (“SEC”) Fixed Income Market Structure Advisory Committee, for which he chaired the Technology and Electronic Trading Sub-Committee from November 2017 to March 2021. Mr. McVey serves on the Board of Directors of Miami (Ohio) University Foundation, as well as the Board of Trustees of Colby College. He previously served on the Board of Directors of Blue Mountain Credit Alternatives L.P., an asset management fund focused on the credit markets and equity derivatives markets. Mr. McVey received a B.A. in finance from Miami (Ohio) University and an M.B.A. from Indiana University.

Mr. McVey’s role as one of our founders and his service as our Chief Executive Officer for over 20 years give him deep knowledge and understanding of all aspects of the business and operations of MarketAxess. Mr. McVey’s extensive experience in the financial services industry, including significant leadership roles at J.P. Morgan, has provided the Company with comprehensive knowledge of the financial markets that we serve and the institutions and dealers that are our clients.

 

 

Nancy Altobello

Age:  63

Director since: April 2019

Board Committees:

    Audit (Chair)

    Compensation and Talent

 

Qualifications and Career Highlights:

Nancy Altobello was most recently Global Vice Chair, Talent of Ernst & Young (“EY”), a professional services firm, where she was responsible for EY’s talent and people strategy worldwide from July 2014 until her retirement in June 2018. Previously, Ms. Altobello held a number of senior positions at EY, including Americas Vice Chair, Talent from 2008 to 2014, Managing Partner, Northeast Region Audit and Advisory Practices from 2003 to 2008 and Managing Partner, North American Audit Practice from 1999 to 2003. Throughout this time, Ms. Altobello also served as an audit partner for a number of leading global organizations.  She currently serves on the Board of Directors of Cornerstone OnDemand and on the Board of Trustees of Fidelity Charitable. She previously served on the Board of Directors of MTS Systems Corporation until its acquisition and CA Technologies until its acquisition. Ms. Altobello received a B.S. in accounting from Fairfield University, earned a Corporate Director Certificate from Harvard Business School and is a licensed Certified Public Accountant in New York and Connecticut.

Ms. Altobello was selected to serve on the Board due to her financial, audit and Sarbanes Oxley compliance expertise, her knowledge of talent and people strategy, and her global business experience.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 Proxy Statement

5

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

 

Steven L. Begleiter

Age:  59

Director since: April 2012

Board Committees:

    Compensation and Talent (Chair)

    Finance

 

Qualifications and Career Highlights:

Steven L. Begleiter has been employed with Flexpoint Ford, LLC, a private equity group focused on investments in financial services and healthcare, since October 2008, where he currently serves as Managing Director. Prior to joining Flexpoint Ford, Mr. Begleiter spent 24 years at Bear Stearns & Co., serving first as an investment banker in the Financial Institutions Group and then as Senior Managing Director and member of its Management and Compensation Committee from 2002 to September 2008. Mr. Begleiter also served as head of Bear Stearns’ Corporate Strategy Group. Mr. Begleiter currently serves on the Board of Directors of Great Ajax Corp. and certain portfolio companies of Flexpoint Ford, LLC. He previously served on the Board of Directors of WisdomTree Investments, Inc. Mr. Begleiter received a B.A. with Honors in economics from Haverford College.

Mr. Begleiter brings many years of leadership experience in the financial services and private equity industries to the Board. Mr. Begleiter also has extensive industry knowledge and expertise relating to mergers and acquisitions and capital formation.

 

 

 

Stephen P. Casper

Age:  71

Director since: April 2004

Lead Independent Director

Board Committees:

    Nominating and Governance

 

Qualifications and Career Highlights:

Stephen P. Casper is retired. Most recently, Mr. Casper was the President of TRG Management L.P., the investment manager of the TRG Global Opportunity Master Fund, Ltd., from April 2010 to August 2012. From September 2008 to April 2010, Mr. Casper was 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 has been a member of the Board of Directors of multiple fixed income hedge funds managed by KLS Diversified Asset Management since July 2012. Mr. Casper is Vice-Chairman of the Board of Directors of GMO LLC, a global investment management firm providing clients with asset management solutions and services, since May 2014 and 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, from which 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.

Mr. Casper’s experience in the fixed-income markets and financial services industry and his experience in financial reporting and accounting roles bring extensive public accounting, financial reporting, risk management and leadership skills to the Board.

 

 

 

 

 

 

6

2021 Proxy Statement

 

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

 

Jane Chwick

Age:  58

Director since: October 2013

Board Committees:

    Nominating and Governance

    Risk (Chair)

 

Qualifications and Career Highlights:

Jane Chwick was most recently the Co-Founder and Co-CEO of Trewtec, Inc., a technology advisory firm designed to help board members and CEOs evaluate the technology function in their companies, from September 2014 until the firm ceased operations in August 2017. Prior to this role, she was a Partner and Co-Chief Operating Officer of the Technology Division of Goldman Sachs Group, Inc. where she was responsible for financial and business planning, technical strategy and ongoing management of an 8,000-person organization until her retirement in April 2013. During her 30-year career at Goldman Sachs, Ms. Chwick held a number of senior positions, including Global Head of Technology of the Securities Division and Global Head of Derivatives Technology.  Ms. Chwick served on many governance committees at Goldman Sachs, including the firm’s Finance Committee, the firm-wide New Activity Committee and the Technology Risk Committee, and served as co-chair of the Technology Division Operating Committee. During her tenure, she drove the design, build and integration of technology across all of Goldman Sachs’ derivatives businesses, including fixed income, commodities, currencies and equities. Ms. Chwick is a member of the Board of Directors of Voya Financial, Inc., People’s United Financial, Inc., Essent Group and Thoughtworks, and also serves on the Executive Board of Trustees of the Queens College Foundation. Ms. Chwick received a B.A. in mathematics from Queens College and an M.B.A. from St. John’s University with a concentration in MIS and quantitative analysis.

Ms. Chwick’s extensive technology leadership experience gained in a global financial services firm, combined with her depth of market knowledge and industry insight, bring valuable skills and strategic perspective to the Board.

 

 

Christopher R. Concannon

Age:  53

Director since: January 2019

Board Committees:

    None

 

Qualifications and Career Highlights:

Christopher R. Concannon has been our President and Chief Operating Officer since January 2019. Mr. Concannon previously served as President and Chief Operating Officer of Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, a position he was appointed to upon Cboe’s acquisition of Bats Global Markets, Inc. in 2017.  At Cboe, he was responsible for the company’s transaction businesses, including global derivatives, U.S. and European equities, and global foreign exchange – as well as overseeing Cboe’s technology, operations, risk, and marketing divisions.  Until Bats’ acquisition by Cboe, Mr. Concannon served as President of Bats from December 2014, director from February 2015, and Chief Executive Officer from March 2015. Mr. Concannon has more than 20 years of experience as an executive at Nasdaq, Virtu Financial, Instinet and as an attorney at Morgan Lewis and Bockius and the Securities and Exchange Commission.  Mr. Concannon has received a B.A. from Catholic University, an M.B.A. from St. John’s University, and a J.D. from Catholic University’s Columbus School of Law.

Mr. Concannon brings to the Board extensive experience leading companies in the global exchange industry.  Mr. Concannon also has deep and critical knowledge regarding automated trading, the delivery of innovative technology solutions, market structure and clearing operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 Proxy Statement

7

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

 

William F. Cruger

Age:  62

Director since: November 2013

Board Committees:

    Audit

    Finance

    Nominating and Governance (Chair)

 

Qualifications and Career Highlights:

William F. Cruger was most recently Vice Chairman of Investment Banking at JPMorgan Chase & Co. where he was responsible for key client relationships on a global basis until his retirement in August 2013. Previously, Mr. Cruger held a number of senior positions at J.P. Morgan, including Managing Director in the Financial Institutions group from 1996 to 2011. During this time, he oversaw the rationalization of the firm’s private equity investments in trading platforms and related ventures at LabMorgan from 2000 to 2001. Prior to this, Mr. Cruger ran the firm’s investment banking practices in Japan from 1991 to 1996, Latin America from 1989 to 1991 and Emerging Asia from 1984 to 1988. He currently serves on the Board of Directors of People’s United Financial, Inc. and Virtu Financial, Inc., and has previously served on the Boards of Directors of Archipelago, Credittrade and Capital IQ. Mr. Cruger received a B.A. from Clark University and an M.B.A. from Columbia University.

Mr. Cruger’s diverse experience in investment banking at a global financial services firm, his extensive knowledge of financial institutions and financial markets, his leadership roles as a director of other financial services firms, and his international business experience bring critical skills and strategic insight to the Board.

 

 

Kourtney Gibson

Age:  39

Director since: July 2020

Board Committees:

    Audit

 

Qualifications and Career Highlights:

Kourtney Gibson has been the President of Loop Capital Markets, an investment bank, brokerage and advisory firm, since June 2016. Prior to this role, Ms. Gibson served in various roles at Loop Capital Markets, including as Head of the Fixed Income Division from January 2015 to June 2016 and Head of the Equity Division from June 2005 to December 2015. Ms. Gibson currently serves on the Board of lululemon athletica inc. and is a member of The Economic Club of Chicago and the Treasury Market Practices Group sponsored by the Federal Reserve Bank of New York. Ms. Gibson also currently serves on the Board of Trustees at the University of Miami and Viterbo University, the Board of the Dibia Dream Foundation and as Chairman of the Board of the Chicago Scholars Foundation. Ms. Gibson received an M.B.A. from the Kellogg School of Management at Northwestern University and a B.B.A. from the University of Miami.

Ms. Gibson brings to the Board her wealth of experience relating to the evolving market structure of both the fixed income and equity markets, as well her broad-based experience with institutional investor clients.

 

 

 

 

 

 

 

8

2021 Proxy Statement

 

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

 

Justin G. Gmelich

Age:  52

Director since: October 2019

Board Committees:

    Audit

 

Qualifications and Career Highlights:

Justin G. Gmelich has been a Partner and Global Head of Markets with King Street Capital Management, a global investment management company, since January 2020, where he is also a member of the Management Committee, the Global Investment Committee and the Real Estate Investment Committee.  Prior to this, Mr. Gmelich was the Global Chief Operating Officer for Fixed Income, Commodities, and Currencies (“FICC”) at Goldman Sachs from November 2017 to March 2019.  Before being named COO of FICC, Mr. Gmelich was Global Head of Credit at Goldman Sachs since March 2012.  Additionally, while at Goldman Sachs, he was a member of the Firm’s Management Committee, Firmwide Risk Committee, Securities Division Executive Committee, Securities Division Volcker Committee and the Global Recruiting Council. Earlier in his career, Mr. Gmelich worked as an associate trader at Chase and was a vice president at Salomon Brothers. Mr. Gmelich serves as the Chair of the Villanova University Board of Trustees, where he also chairs the Investment Committee, and serves on the Boards of Teddy’s Fund and Trinity Hall. Mr. Gmelich received a B.S. in Finance from Villanova University, an M.S. in Accounting/Taxation from the University of Southern California and an M.B.A. in Finance from Columbia University.

Mr. Gmelich brings to the Board a deep knowledge of fixed income market structure and valuable experience in electronic trading.  Mr. Gmelich also provides key insight into the perspectives of our dealer customer base.

 

 

Richard G. Ketchum

Age:  70

Director since: April 2017

Board Committees:

    Risk

 

Qualifications and Career Highlights:

Richard G. Ketchum is retired.  Mr. Ketchum was Chief Executive Officer of the Financial Industry Regulatory Authority, Inc. (“FINRA”) from March 2009 to July 2016 and served as Chairman of FINRA’s Board of Governors from March 2009 to August 2016.  Prior to joining FINRA, Mr. Ketchum held a range of senior regulatory positions in the financial industry over twenty years, including as Chief Executive Officer of NYSE Regulation, Inc., President of the NASDAQ OMX Group Inc., a predecessor of Nasdaq, Inc., President and Chief Operating Officer of the National Association of Securities Dealers Inc., a predecessor of FINRA, and Director of the Division of Market Regulation at the SEC.  Mr. Ketchum was also the General Counsel of the Corporate and Investment Bank of Citigroup Inc.  Mr. Ketchum is on the Board of Directors of GSS, a subsidiary of BNY Mellon.  He previously served as Non-Executive Chairman of the Board of Directors of Sculptor Capital Management, Inc. Mr. Ketchum received a B.A. from Tufts University and a J.D. from New York University School of Law.

Mr. Ketchum brings to the Board substantial regulatory experience in the securities industry and deep knowledge of the legal and compliance issues facing companies in the financial services industry.

 

 

 

 

 

 

 

2021 Proxy Statement

9

 


PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

 

Emily H. Portney

Age:  49

Director since: October 2017

Board Committees:

    Risk

 

Qualifications and Career Highlights:

Emily H. Portney has been Chief Financial Officer of BNY Mellon since July 2020. In this role, she is responsible for global financial strategy and finance functions, including controllership, business CFO teams, treasury, capital management, tax, corporate development, investor relations, procurement and real estate. Prior to this role, Ms. Portney was Head of Asset Servicing, Americas for BNY Mellon from October 2018 to July 2020. In that role, she oversaw the business unit that provides investment administration, and operational and technology solutions to alternative investment managers, asset managers, asset owners, insurance companies, banks and broker-dealers. Ms. Portney was Chief Financial Officer of Barclays International from September 2016 to September 2018, where she helped to establish the non-ring-fenced bank, and led a global organization spanning the Corporate and Investment Bank, the Private Bank, and the Cards and Payments businesses. From April 2016 to August 2016, she served as North America Chief Financial Officer for Visa, Inc. Prior to that, from June 1993 to January 2016, Ms. Portney worked at JPMorgan Chase & Co., serving in various senior roles including Global Head of Clearing, Collateral Management, and Execution; Chief Financial Officer of Equities and Prime Services; and Chief Operating Officer of Futures and Options. Ms. Portney previously served on the Board of Directors of The Depository Trust & Clearing Corporation (DTCC).  Ms. Portney received a B.A. from Duke University and an M.B.A. from Columbia University.

Ms. Portney brings leadership experience from a number of financial institutions. Ms. Portney also has in-depth experience relating to clearing operations and strategies and the requirements of operating a firm in a highly regulated industry.

 

 

Richard L. Prager

Age:  61

Director since: July 2019

Board Committees:

    Compensation and Talent

    Risk

 

Qualifications and Career Highlights:

Richard L. Prager has been a Senior Advisor at Tresata, a data analytics firm, since July 2019. From May 2016 to July 2019, Mr. Prager was a Senior Managing Director of BlackRock and served on the firm’s Global Executive Committee. In that role, he led the firm’s global trading, cash management and securities lending teams and played a leadership role in managing BlackRock’s global investment platform for both active portfolios and the iShares ETF business.  Mr. Prager joined BlackRock in 2008 during the financial crisis as a Managing Director in their Financial Market Advisory business where BlackRock assisted the U.S. Government and many financial firms navigating the crisis. After BlackRock acquired BGI in 2009, Mr. Prager moved internally to the investment platform where he initially headed fixed income trading and soon thereafter, oversaw all asset class trading. In 2012 he assumed responsibility of the firm’s cash management and securities lending businesses in addition to global trading.  Before joining BlackRock in 2008, Mr. Prager worked in various senior roles for Bank of America from 2000 to 2008 including Global Head of Rates, Currencies and Commodities.  He has also held senior roles at GenRe from 1999 to 2000, ING from 1993 to 1999 and Westpac from 1984 to 1993. Mr. Prager received a B.S. from Duke University.

Mr. Prager possesses valuable expertise in the financial markets and has been an industry leader in the areas of electronic trading and trading technology.  Mr. Prager also brings significant experience in the areas of global asset management, risk management and settlements.

 

 

 

 

 

 

 

 

 

10

2021 Proxy Statement

 

 


 

CORPORATE GOVERNANCE AND BOARD MATTERS

Director independence and tenure

 

The Board of Directors has determined that each of our current directors, other than Messrs. McVey, our Chief Executive Officer, and Concannon, our President and Chief Operating Officer, currently meet the independence requirements contained in the NASDAQ listing standards and applicable securities rules and regulations. None of our non-employee directors has a relationship with the Company or its subsidiaries that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

We do not have director age or term limits, as we believe our efforts to regularly refresh the Board with new directors, as well as natural turnover, have achieved the appropriate balance between maintaining longer-term directors with deep institutional knowledge and new directors who bring new perspectives and diversity to our Board. Our Board reviews director tenure every year in connection with its director independence determinations. We plan to continue to refresh our Board of Directors to ensure that it is composed of high functioning, qualified and diverse members.

Board diversity policy

 

The Company recognizes and embraces that having a diverse Board enhances both the Board’s effectiveness in fulfilling its oversight role and the Company’s performance. The Company’s Board Diversity Statement cites diversity at the Board level as an essential element in the attainment of its strategic objectives and in achieving sustainable and balanced development. In designing the Board’s composition, diversity is considered from a number of aspects, including but not limited to gender, age, race, ethnicity, nationality, cultural and educational background, professional experience, skills, knowledge and length of service. In any formal search for Board candidates, the Nominating and Corporate Governance Committee includes, and requests that any search firm that it engages include, qualified candidates with a diversity of race/ethnicity and gender in the initial pool from which the Committee selects director candidates.   The ultimate decision on all Board nominations is based on merit and the contributions that the selected candidates will bring to the Board, having due regard for the benefits of diversity. See Proposal 1—Election of Directors—Director Diversity for more information.

How nominees to our Board are selected

 

Candidates for election to our Board of Directors are nominated by our Nominating and Corporate Governance Committee and ratified by our full Board of Directors for election by the stockholders. The Nominating and Corporate Governance Committee operates under a charter, which is available in the Investor Relations — Corporate Governance section of our corporate website at www.marketaxess.com.

The Nominating and Corporate Governance Committee will give due consideration to candidates recommended by stockholders. Stockholders may recommend candidates for the Nominating and Corporate Governance Committee’s consideration by submitting such recommendations directly to the Nominating and Corporate Governance Committee as described below under Communicating with our Board members. In making recommendations, stockholders should be mindful of the discussion of minimum qualifications set forth above under Qualifications for director nominees though meeting such minimum qualification standards does not imply that the Nominating and Corporate Governance Committee will necessarily nominate the person recommended by a stockholder. The Nominating and Corporate Governance Committee may also engage outside search firms to assist in identifying or evaluating potential nominees.

 

 

2021 Proxy Statement

11

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

Board leadership structure

 

Our Chief Executive Officer (“CEO”) also serves as the Chairman of the Board (the “Chairman”), and we have a Lead Independent Director who is responsible, among other things, for consulting with the Chairman regarding the agenda and meeting schedules for each Board meeting, coordinating the activities of the non-employee directors, including presiding over the executive sessions of non-employee directors, and serving as a liaison between the Chairman and the non-employee directors. We believe that this structure is appropriate for the Company because it allows one person to speak for and lead the Company and the Board, while also providing for effective oversight by an independent Board through a Lead Independent Director. Our CEO, as the individual with primary responsibility for managing the Company’s strategic direction and day-to-day operations, is in the best position to provide Board leadership that is aligned with our stockholders’ interests, as well as the Company’s needs. Our overall corporate governance policies and practices, combined with the strength of our independent directors, serve to minimize any potential conflicts that may result from combining the roles of CEO and Chairman.

Mr. Casper has been appointed by our independent directors to serve as our Lead Independent Director.  Our Corporate Governance Guidelines provide that the Chairman of the Nominating and Corporate Governance Committee shall act as the Lead Independent Director, unless otherwise determined by a majority vote of the independent directors of the Board.

The Board has established other structural safeguards that serve to preserve the Board’s independent oversight of management. The Board is comprised almost entirely of independent directors who are highly qualified and experienced, and who exercise a strong, independent oversight function. The Board’s Audit Committee, Compensation and Talent Committee, Nominating and Corporate Governance Committee, Risk Committee and Finance Committee are comprised entirely of, and are chaired by, independent directors. Independent oversight of our CEO’s performance is provided through a number of Board and committee processes and procedures, including regular executive sessions of non-employee directors and annual evaluations of our CEO’s performance against pre-determined goals. The Board believes that these safeguards preserve the Board’s independent oversight of management and provide a balance between the authority of those who oversee the Company and those who manage it on a day-to-day basis.

Board committees

 

Audit Committee

The Audit Committee of the Board of Directors oversees the accounting and financial reporting process of the Company and the audits of the financial statements of the Company. The Audit Committee is also responsible for preparing the audit committee report required to be included in this proxy statement, and the Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the Company’s outside auditor. The Audit Committee currently consists of Ms. Altobello (Chair), Mr. Cruger, Ms. Gibson and Mr. Gmelich.

The Board of Directors has determined that each member of the Audit Committee is an independent director in accordance with NASDAQ listing standards and Rule 10A-3 of the Securities Exchange Act of 1934, as amended. The Board has determined that each member of the Audit Committee is able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement, as required by NASDAQ rules. In addition, the Board has determined that each member of the Audit Committee satisfies the NASDAQ rule requiring that at least one member of our Board’s Audit Committee have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background that results in the member’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. The Board has also determined that each member of the Audit Committee is an “audit committee financial expert” as defined by the SEC.  For information regarding the experience and qualifications of our Audit Committee members, see the information in this Proxy Statement under the section heading Proposal 1 — Election of Directors — Director information.

 

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2021 Proxy Statement

 

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

Compensation and Talent Committee

The Compensation and Talent Committee of the Board of Directors (the “Compensation Committee”) is responsible for reviewing and approving, and, as applicable, recommending to the full Board for approval, the compensation of the CEO and all other officers of the Company, as well as the Company’s compensation philosophy, strategy, program design and administrative practices. The compensation programs reviewed and approved by the Compensation Committee consist of all forms of compensation, including salaries, cash incentives, and stock-based awards and benefits. The Compensation Committee is also responsible for oversight of the Company’s talent management processes, including talent acquisition, leadership development and succession planning for key roles, reviewing the Company’s diversity, equity and inclusion programs, and reviewing the Company’s corporate culture.  The Compensation Committee currently consists of Mr. Begleiter (Chair), Ms. Altobello, Mr. Prager and Mr. Steinhardt. The Board of Directors has determined that each member of the Compensation Committee is an “independent director” in accordance with NASDAQ listing standards and a “non-employee director” under the applicable SEC rules and regulations.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee of the Board of Directors identifies individuals qualified to become Board members and recommends for selection by the Board the director nominees to stand for election at each annual meeting of the Company’s stockholders. In connection therewith, the Nominating and Corporate Governance Committee reviews certain policies regarding the nomination of directors and recommends any changes in such policies to the Board for its approval; identifies individuals qualified to become directors; evaluates and recommends for the Board’s selection nominees to fill positions on the Board; and recommends changes in the Company’s corporate governance policies, including the Corporate Governance Guidelines, to the Board for its approval. The Nominating and Corporate Governance Committee oversees the annual review of the performance of the Board of Directors, each director and each committee. The Nominating and Corporate Governance Committee also oversees the Company’s environmental, social and governance strategy and initiatives. See Environmental, Social and Governance Strategy and Initiatives. The Nominating and Corporate Governance Committee currently consists of Mr. Cruger (Chair), Mr. Casper and Ms. Chwick. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is an independent director in accordance with NASDAQ listing standards.

Risk Committee

The Risk Committee assists the Board with its oversight of the Company’s risk management activities, with particular responsibility for overseeing designated areas of risk that are not the primary responsibility of another committee of the Board or retained for the Board’s direct oversight. Items delegated to the Risk Committee by the Board include technology and cyber-security risk, credit risk, clearing risk and regulatory risk. The Risk Committee currently consists of Ms. Chwick (Chair), Mr. Ketchum, Ms. Portney and Mr. Prager.

Finance Committee

The Finance Committee assists the Board with its oversight of the Company’s global treasury activities, mergers, acquisitions, divestitures, and strategic investments, capital structure and capital allocation strategy, financing and liquidity requirements, dividends, stock repurchase authorizations, investor relations activities and insurance and self-insurance programs. The Finance Committee currently consists of Messrs. Steinhardt (Chair), Begleiter and Cruger. Prior to April 2021, the Finance Committee was known as the Investment Committee and assisted the Board in monitoring whether the Company had adopted and adheres to a rational and prudent investment and capital management policy; whether management’s investment and capital management actions were consistent with attainment of the Company’s investment policy, financial objectives and business goals; the Company’s compliance with legal and regulatory requirements pertaining to investment and capital management; the competence, performance and compensation of the Company’s external money managers; and such other matters as the Board or Investment Committee deemed appropriate.

 

 

2021 Proxy Statement

13

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

Meetings and attendance

 

The following table sets forth the chairs and membership structure of the Board and each standing Board committee as of April 28, 2021, and the number of Board and Board committee meetings held during 2020.

 

 

The non-management directors met in executive session without management directors or employees at each of the meetings of the Board during 2020. We expect each director to attend each meeting of the full Board and of the committees on which he or she serves and to attend the annual meeting of stockholders. All directors attended at least 75% of the meetings of the full Board and the meetings of the committees on which they served, and all directors attended our 2020 annual meeting of stockholders (not counting Ms. Gibson, who was not a director at the time of our 2020 annual meeting).

Board involvement in risk oversight

 

The Company’s management is responsible for defining the various risks facing the Company, formulating risk management policies and procedures, and managing the Company’s risk exposures on a day-to-day basis. The Board’s responsibility is to monitor the Company’s risk management processes by informing itself of the Company’s material risks and evaluating whether management has reasonable controls in place to address the material risks. The Board is not responsible, however, for defining or managing the Company’s various risks.

The Board of Directors monitors management’s responsibility for risk oversight through regular reports from management to the Risk and Audit Committees and the full Board. Furthermore, the Risk and Audit Committees report on the matters discussed at the committee level to the full Board. The Risk and Audit Committees and the full Board focus on the material risks facing the Company, including strategic, operational, market, technology and cyber-security, credit, liquidity, legal and regulatory risks, to assess whether management has reasonable controls in place to address these risks. In addition, the Compensation Committee is charged with reviewing and discussing with management whether the Company’s compensation arrangements are consistent with effective controls and sound risk management. Risk management is a factor that the Board and the Nominating and Corporate Governance Committee consider when determining who to nominate for election as a director of the Company and which directors serve on the Risk and Audit Committees. In addition, the Nominating and Corporate Governance Committee is charged with overseeing risk related to the Company’s environmental, social and governance strategy and initiatives. The Board believes this division of responsibilities provides an effective and efficient approach for addressing risk management.

 

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2021 Proxy Statement

 

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

The Company’s Global Management Team assists management’s efforts to assess and manage risk. The Global Management Team is chaired by the CEO and is comprised of the Company’s senior managers with global oversight. The Global Management Team assesses the Company’s business strategies and plans and ensures that appropriate policies and procedures are in place for identifying, evaluating, monitoring, managing and measuring significant risks. The Chief Risk Officer regularly prepares updates and reports for the Global Management Team, Risk Committee, Audit Committee and the Board of Directors.

We have assembled a cross-functional team, which includes several of our executive officers, for continuously monitoring the impact of the Pandemic on our employee base and business operations. Throughout the Pandemic, the Board has overseen this risk management initiative, working closely with management to maintain information flow and timely review of issues arising from the Pandemic. For information on the effect of the Pandemic on our business, see Management’s Discussion and Analysis—Critical Factors Affecting our Industry and our Company—Economic, Political and Market Factors in the Company’s Annual Report on Form 10-K.

Board evaluations, succession planning and talent management

 

Each year, the members of the Board of Directors conduct a confidential written assessment of the Board’s performance that is reviewed and summarized by the Company’s Lead Independent Director and the Chair of the Nominating and Corporate Governance Committee. As part of the evaluation process, the Board reviews its overall composition, including director tenure, board leadership structure, diversity and individual skill sets, to ensure it serves the best interests of stockholders and positions the Company for future success. Each Board committee also conducts an annual written self-assessment of its performance during the prior year.  The results of the assessments are then summarized and communicated back to the appropriate committee chairpersons and our Lead Independent Director. After the evaluations, the Board and management work to improve upon any issues or focus points disclosed during the evaluation process. As part of the evaluation process, each committee reviews its charter annually.

The Board is committed to positioning MarketAxess for further growth through ongoing talent management, succession planning and the deepening of our leadership bench.  Management facilitates a formal talent management and leadership development review on an annual basis for the Board.   The review is focused on both immediate, short-term coverage plans for all executives in the event of an unforeseen situation, as well as longer-term, strategic succession planning.  A critical element of the review is an evaluation of the Company’s formal leadership development and talent acquisition initiatives in order to ensure that our leadership team has the skills, capabilities and experience to effectively lead our existing, and future, global business.  The review also focuses on the retention of key managers.  The annual talent management and leadership development review is supplemented by an additional year-end review by the Board of the individual performance and year-end compensation proposals for the executive management team and other key staff.

The Board values diversity among the management team and strives to increase the diversity of the executive management team, as well as the management teams reporting to them.  The Board considers formal and informal initiatives to promote diversity as part of their annual talent management review.  In addition, in any external searches for executive management team candidates in which the Company considers candidates that are not employees of the Company, the Company will request that any search firm that it engages include qualified candidates with a diversity of race/ethnicity and gender in the initial pool from which the Company selects such executive management team candidates.  

The Board has formal exposure to the executive team at Board meetings, as well as at Board committee meetings and other discussions.  There are other opportunities for more informal interaction with employees across the organization throughout the year through various events and collaborative experiences.

 

 

2021 Proxy Statement

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

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 CEO and Senior Financial Officers, which includes Mr. DeLise, our Chief Financial Officer. Both the Code of Conduct and the Code of Ethics for the CEO and Senior Financial Officers can be accessed in the Investor Relations — Corporate Governance section of our website at www.marketaxess.com.  We intend to satisfy any disclosure obligations regarding waivers of or amendments to our Code of Conduct and Code of Ethics for the CEO and Senior Financial Officers by posting such information on our website at www.marketaxess.com.  

You may also obtain a copy of these documents without charge by writing to MarketAxess Holdings Inc., 55 Hudson Yards, 15th Floor, New York, New York 10001, Attention: Investor Relations.

Copies of the charters of our Board’s Audit Committee, Compensation Committee, Finance Committee, Risk Committee and Nominating and Corporate Governance Committee, as well as a copy of the Company’s Corporate Governance Guidelines, can be accessed in the Investor Relations — Corporate Governance section of our website.

Communicating with our Board members

 

Although our Board of Directors has not adopted a formal process for stockholder communications with the Board, we make every effort to ensure that the views of stockholders are heard by the Board or by individual directors, as applicable, and we believe that this has been an effective process to date. Stockholders may communicate with the Board by sending a letter to the MarketAxess Holdings Inc. Board of Directors, c/o General Counsel, 55 Hudson Yards, 15th Floor, New York, New York 10001. The General Counsel will review the correspondence and forward it to our CEO and Chairman of the Board and the Lead Independent Director, or to any individual director or directors to whom the communication is directed, as appropriate. Notwithstanding the above, the General Counsel has the authority to discard or disregard any communication that is unduly hostile, threatening, illegal or otherwise inappropriate or to take any other appropriate actions with respect to such communications.

In addition, any person, whether or not an employee, who has a concern regarding the conduct of the Company or our employees, including with respect to our accounting, internal accounting controls or auditing issues, may, in a confidential or anonymous manner, communicate that concern in writing by addressing a letter to the Chairman of the Audit Committee, c/o Corporate Secretary, at our corporate headquarters address, which is 55 Hudson Yards, 15th Floor, New York, New York 10001, or electronically, at our corporate website, www.marketaxess.com under the heading Investor Relations — Corporate Governance, by clicking the Confidential Ethics Web Form link.

Director compensation

 

Our Compensation Committee has retained the services of Grahall LLC (“Grahall”) as its independent compensation consultant for purposes of advising on non-employee director compensation. Grahall reports directly to the Compensation Committee and conducts an annual review of director compensation levels and a bi-annual review of director pay structure and practices, and in each event, shares the results of those reviews with the Compensation Committee. The Compensation Committee then submits any proposed changes in pay level or program structure of our non-employee director compensation to the full Board for its consideration, and if appropriate, approval.

Grahall reviews and recommends compensation structure and adjustments based on the board compensation of the following:

Proxy peer group (see Compensation Discussion and Analysis – How We Determine Pay Levels – Peer Group);

ISS peer group (updated by ISS annually); and

Industry data sources, including the National Association of Corporate Directors.

 

 

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2021 Proxy Statement

 

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

All directors, other than Mr. McVey and Mr. Concannon, are regarded as non-employee directors. Mr. McVey and Mr. Concannon receive no additional compensation for service as a director.

In 2020, the Board member equity retainer was increased from $115,000 to $120,000 per year, as recommended by Grahall.  This change was effective June 10, 2020.  The change was made to better align director compensation with the above-referenced market data provided by Grahall.   The director pay recommendations resulted in pay levels between the projected medians of our proxy peers and ISS’s peer group.  

A summary of the structure of our director pay program that is in effect as of June 2020 is as follows:

 

Director Compensation Pay Structure - Effective June 2020

 

 

 

Cash Board

Retainer ($)

 

 

Cash Chair

Retainer ($)

 

 

Cash

Committee

Retainer ($)

 

 

Restricted

Stock ($)

 

Annual Retainer – All

 

 

85,000

 

 

 

 

 

 

 

 

 

120,000

 

Audit Committee

 

 

 

 

 

25,000

 

 

 

12,500

 

 

 

 

Compensation / Talent Committee

 

 

 

 

 

20,000

 

 

 

7,500

 

 

 

 

Governance / Nominating Committee

 

 

 

 

 

15,000

 

 

 

7,500

 

 

 

 

Finance Committee (1)

 

 

 

 

 

10,000

 

 

 

2,500

 

 

 

 

Risk Committee

 

 

 

 

 

20,000

 

 

 

7,500

 

 

 

 

Lead Independent Director (2)

 

 

 

 

 

22,500

 

 

 

 

 

 

22,500

 

 

(1)

Prior to April 2021, and for the entirety of the 2020 fiscal year, the Finance Committee was known as the Investment Committee.

(2)

The Lead Independent Director can elect to receive his retainer in cash or in a combination of cash and equity.  

In June 2020, we granted 238 shares of restricted stock to each non-employee director except for Ms. Gibson, who was granted a prorated amount of 209 shares on August 1, 2020 after joining the Board in July 2020. Mr. Casper, as Lead Director, received 45 additional shares equating to half of his applicable retainer.  All shares are scheduled to vest on May 31, 2021. The number of shares of restricted stock granted was determined on the grant date by dividing the equity grant value of $120,000 by the average of the closing price of our Common Stock for the ten trading days up to and including the grant date. We expect to continue to compensate our non-employee directors with a combination of cash and equity awards. All equity awards to non-employee directors are made under the Company’s 2020 Equity Incentive Plan.

 

 

2021 Proxy Statement

17

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

Below is a summary of the amount and form of actual compensation received by each non-employee director in 2020:

 

Director Compensation for Fiscal 2020

 

Name

 

Fees Earned

or Paid in

Cash (1)

 

 

Stock

Awards

($)(2)(4)

 

 

All Other

Compensation

($)(3)

 

 

Total($)

 

Stephen P. Casper, Lead Independent Director

 

 

116,250

 

 

 

136,423

 

 

 

422

 

 

 

253,095

 

Nancy Altobello

 

 

117,077

 

 

 

114,730

 

 

 

408

 

 

 

232,215

 

Steven L. Begleiter

 

 

106,794

 

 

 

114,730

 

 

 

360

 

 

 

221,884

 

Jane Chwick

 

 

112,500

 

 

 

114,730

 

 

 

360

 

 

 

227,590

 

William F. Cruger

 

 

115,000

 

 

 

114,730

 

 

 

360

 

 

 

230,090

 

Kourtney Gibson

 

 

44,819

 

 

 

107,990

 

 

 

 

 

 

152,809

 

Justin Gmelich

 

 

97,500

 

 

 

114,730

 

 

 

356

 

 

 

212,586

 

Richard Ketchum

 

 

92,500

 

 

 

114,730

 

 

 

360

 

 

 

207,590

 

Emily Portney

 

 

103,299

 

 

 

114,730

 

 

 

360

 

 

 

218,389

 

Richard Prager

 

 

100,000

 

 

 

114,730

 

 

 

320

 

 

 

215,050

 

John Steinhardt

 

 

103,206

 

 

 

114,730

 

 

 

360

 

 

 

218,296

 

 

(1)

The amounts represent Board, Committee, Committee Chair and Lead Independent Director retainers earned in 2020. For Ms. Gibson, the amount represents Board and Committee retainers earned for the portion of the year that she served on the Board.  

(2)

The amounts represent the aggregate grant date fair value of stock awards granted by the Company in 2020, computed in accordance with FASB ASC Topic 718.  For further information on how we account for stock-based compensation, see Note 11 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.  Ms. Gibson received a prorated number of shares (209 shares) based on her length of service in 2020.  

(3)

Represents accrued dividends paid on restricted stock.

(4)

The table below sets forth information regarding the aggregate number of stock awards outstanding at the end of fiscal year 2020 for each non-employee director, including unvested stock awards granted in fiscal year 2020 and, in relation to Messrs. Begleiter and Cruger and Ms. Chwick, RSUs for which the director previously elected to defer receipt.  There are no stock option awards granted in fiscal year 2020 that were outstanding at fiscal year end.  

 

Equity Awards Outstanding

 

 

Aggregate Number

of Stock Awards

Outstanding at

Fiscal Year End (#)

 

 

Stephen P. Casper, Lead Independent Director

 

 

283

 

 

Nancy Altobello

 

 

238

 

 

Steven L. Begleiter

 

 

756

 

 

Jane Chwick

 

 

724

 

 

William F. Cruger

 

 

1,210

 

 

Kourtney Gibson

 

 

209

 

 

Justin Gmelich

 

 

238

 

 

Richard Ketchum

 

 

238

 

 

Emily Portney

 

 

238

 

 

Richard Prager

 

 

238

 

 

John Steinhardt

 

 

238

 

 

 

 

18

2021 Proxy Statement

 

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Share Ownership & Holding Guidelines

To keep the interests of non-employee directors and stockholders aligned, the Board of Directors has adopted stock ownership guidelines for our non-employee directors.  Non-employee directors are required to hold not less than the number of shares of Common Stock equal in value to five times the annual base cash retainer payable to a director, or $425,000.  As of April 2021, the holding requirement was equal to 834 shares, calculated using a price of $509.46 per share, which was the average of the daily closing price of our Common Stock for the twelve-month period ended on March 31, 2021.  The holding requirement must be achieved within five years after the director has become a Board member and maintained throughout the non-employee director’s service with the Company. All shares of Common Stock beneficially owned by the director, including shares purchased and held personally, vested and unvested restricted shares, vested and unvested restricted stock units, settled performance shares, and shares deferred under a non-qualified deferred compensation arrangement, count toward the minimum ownership requirement. Vested and unvested stock options and unearned performance shares are excluded.

In addition to the ownership guidelines, all non-employee directors must hold all shares granted for service for a minimum of five years from the date of grant. Directors are also required, for a period of six months following his or her departure from the Board, to comply with the Company’s Insider Trading Policy that, among other things, prohibits trading in the Company’s securities during specified blackout periods.  

All of our non-employee directors have either achieved the designated level of ownership or are in the five-year period following their appointment or election to the Board during which they are expected to achieve compliance:

 

Directors' Stock Ownership

 

 

 

 

Multiple of Cash Retainer

Name

 

Elected

 

Requirement

 

Current Holdings

Stephen P. Casper, Lead Independent Director

 

April 2004

 

5x

 

320x

Nancy Altobello

 

April 2019

 

5x

 

4x

Steven L. Begleiter

 

April 2012

 

5x

 

52x

Jane Chwick

 

October 2013

 

5x

 

35x

William F. Cruger

 

November 2013

 

5x

 

35x

Kourtney Gibson

 

July 2020

 

5x

 

1x

Justin G. Gmelich

 

October 2019

 

5x

 

3x

Richard Ketchum

 

April 2017

 

5x

 

11x

Emily Portney

 

October 2017

 

5x

 

9x

Richard Prager

 

July 2019

 

5x

 

9x

John Steinhardt

 

April 2000

 

5x

 

128x

 

Our equity plan provides for the accrual of dividends (or dividend equivalents) on unvested shares.   However, dividends are not paid and are subject to forfeiture until all restrictions on the shares have lapsed.

We do not provide any retirement benefits or other perquisites to our non-employee directors.

Certain relationships and related party transactions

 

Review and approval of related party transactions

Our related parties include our directors, director nominees, executive officers, holders of more than five percent of the outstanding shares of our Common Stock and the foregoing persons’ immediate family members. We review relationships and transactions in which the Company and our related parties are or will be participants to determine

 

 

2021 Proxy Statement

19

 


CORPORATE GOVERNANCE AND BOARD MATTERS

 

whether such related persons have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to a related party are disclosed in this Proxy Statement. In addition, the Audit Committee reviews and, if appropriate, approves and ratifies any related party transaction that is required to be disclosed.

Though not considered related party transactions that are required to be disclosed under SEC rules, each of the 5% stockholders that are listed under Security Ownership of Certain Beneficial Owners and Management or their affiliated entities is a party to a user agreement or dealer agreement that governs their access to, and activity on, our electronic trading platforms. These agreements were each entered into in the ordinary course of business and, subject to our usual trade terms, provide for the fees and expenses to be paid by such entities for the use of the platform.

 

 

 

20

2021 Proxy Statement

 

 


 

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY AND INITIATIVES

MarketAxess is committed to integrating sustainability into our everyday actions to help create long-term value for our stockholders and the communities in which we operate. We aim to operate the company responsibly while managing risks and using our resources wisely.  The Company’s environmental, social and governance (“ESG”) strategy and initiatives are overseen by the Board’s Nominating and Corporate Governance Committee.  We have also established an ESG Working Group comprised of employees from across the Company, including members of senior management.  As further described in the Company’s 2020 ESG Report, MarketAxess demonstrated its ESG commitment in 2020 by practicing sustainability, advocating volunteerism and philanthropy and actively partnering with our employees, clients and others on environmental, social and governance initiatives.  Our 2020 ESG Report can be accessed in the Investor Relations — Corporate Governance section of our website.

We believe that our growing role in making the global credit markets work better brings with it the obligation to be a responsible corporate citizen. MarketAxess’ vision of corporate citizenship has four pillars:

 

 

An enduring commitment to high standards of governance. We believe the touchstones of responsible leadership are integrity and fairness. In 2020, we continued to strengthen our Board of Directors with new members who value the interests of all our stakeholders – clients, employees, investors and business partners. We benefit greatly from having board members who bring proven leadership to our ESG efforts.

Helping communities become more resilient. We expanded our support in 2020 to organizations that are on the frontline of addressing the impact of the Pandemic, particularly the immediate challenge of food insecurity. To address community resilience over the long term, we established the MarketAxess Charitable Foundation, whose mission is to work with organizations that support underserved communities, with an emphasis on youth education, diversity, equity and inclusion.

Building a strong, diverse workforce. We believe a strong culture built on accountability and mutual respect has been a significant factor in our success, and will continue to be even more so in the future. This year’s ESG Report details the initiatives we have taken to sustain our culture and ensure its continued vitality as we grow. Diversity, equity and inclusion must remain a priority if we are to continue to be prosperous over the long term, and our management team is working hard to strengthen this important part of our ESG program.

Adopting sound sustainability practices across our business operations. We are in the process of improving our ability to measure our Company’s impact in areas such as climate, waste, and water use.  As an initial part of that effort, we are reporting for 2020 against metrics outlined by the Sustainability Accounting Standards Board (SASB) for the first time for the following sectors: Security & Commodity Exchanges, Professional & Commercial Services and Software and IT.

 

 

2021 Proxy Statement

21

 


ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY AND INITIATIVES

How MarketAxess defines sustainability

 

We define sustainability as a business’ commitment to advancing economic prosperity while improving the world in which we operate. Our commitment to sustainability and corporate responsibility is in line with our goal of applying our ingenuity, innovative technology and electronic network to make global credit markets work better for the people who depend on them. In pursuing this commitment, we embrace our responsibility as a corporate citizen to ensure that our global activities positively impact our communities and our environment.

Trading for Trees

 

Green bonds are fixed income instruments designed to fund projects that have positive environmental and/or climate benefits.  In 2020, $27 billion in corporate and municipal green bond trading volume was executed globally on MarketAxess, an increase of 42% from 2019. In the U.S., where public data is available, MarketAxess ranks as the largest corporate and municipal green bond marketplace with an estimated market share of 20.3% in TRACE-reported corporate and municipal green bond volume.

The second year of our “Trading for Trees” initiative with our partner, One Tree Planted, a 501(c)(3) non-profit that focuses on global reforestation, proved successful.  Our clients’ green bond trading on the MarketAxess platform resulted in over 130,000 trees being planted across five continents and eight countries, including India, Papua New Guinea, Canada and New Zealand. In 2020, One Tree Planted created 1,498 jobs and planted over 2 million fruit trees to support almost 30,000 families in critical regions around the world.

 

 

 

 

22

2021 Proxy Statement

 

 


 

 

PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2021 and to audit the Company’s internal control over financial reporting as of December 31, 2021, and the Board is asking stockholders to ratify that selection. PwC has audited our consolidated financial statements each year since our formation in 2000. The Audit Committee periodically considers whether there should be a rotation of independent registered public accounting firms and the Audit Committee currently believes that the continued retention of PwC is in the best interests of the Company and our stockholders. Although current law, rules and regulations, as well as the charter of the Audit Committee, require our independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of our independent registered public accounting firm to be an important matter of stockholder concern and considers a proposal for stockholders to ratify such selection to be an important opportunity for stockholders to provide direct feedback to the Board on an important issue of corporate governance. In the event that stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain PwC, but may ultimately determine to retain PwC as our independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.

In 2011, the Company, in the ordinary course of its business, entered into a bulk data agreement with PwC for the purpose of supporting valuation conclusions reached by PwC in the normal course of PwC’s audit and other work for its clients, which has been amended from time to time. Pursuant to the agreement, the Company provides bond pricing data to PwC on terms consistent with the terms of similar data sales agreements entered into by the Company. The aggregate annual revenue to the Company from the data agreement is $295,000. On an annual basis, the Audit Committee evaluates the effect of such agreement on the independence of PwC and has concurred with the opinion of the Company’s management and PwC that the arrangement constitutes an “arm’s-length” transaction that would not affect PwC’s independence.

Representatives of PwC will be present at our Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions from stockholders.

Your vote

 

Unless proxy cards are otherwise marked, the persons named as proxies will vote FOR the ratification of PwC as the Company’s independent registered public accounting firm for the year ending December 31, 2021. Approval of this proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal.

 

 

BOARD RECOMMENDATION

 

The board unanimously recommends that you vote “FOR” ratification of PwC as the Company’s independent registered public accounting firm for the year ending December 31, 2021.

 

 

 

2021 Proxy Statement

23

 


PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

Audit and other fees

 

The aggregate fees billed by our independent registered public accounting firm 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, 2020 and 2019 and the audit of our broker-dealer subsidiaries’ annual financial statements, as well as fees paid to PwC for tax compliance and planning, if any, and other services, are set forth below.

Except as set forth in the following sentence, the Audit Committee, or a designated member thereof, pre-approves 100% of all audit, audit-related, tax and other services rendered by PwC to the Company or its subsidiaries. The Audit Committee has authorized the CEO 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 aggregate limit of $20,000 for all such services.

Immediately following the completion of each fiscal year, the Company’s independent registered public accounting firm submits to the Audit Committee (and the Audit Committee requests from the independent registered public accounting firm), as soon as possible, the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence.

Immediately following the completion of each fiscal year, the independent registered public accounting firm also submits to the Audit Committee (and the Audit Committee requests 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 Company’s annual financial statements and the reviews of the financial statements included in the Company’s 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 Company’s 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, 2020 and 2019.

 

Fee Category

 

2020

 

 

2019

 

Audit Fees(1)

 

$

2,765,478

 

 

$

2,261,404

 

All Other Fees(2)

 

 

4,460

 

 

 

4,838

 

Total

 

$

2,769,938

 

 

$

2,266,242

 

 

(1)

The aggregate fees incurred include amounts for the audit of the Company’s 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)

Other Fees are comprised of annual subscription fees for accounting related research and service fees related to XBRL conversion services.

 

 

 

24

2021 Proxy Statement

 

 


 

 

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Audit Committee currently consists of Ms. Altobello (Chair), Mr. Cruger, Ms. Gibson and Mr. Gmelich. Each member of the Audit Committee is independent, as independence is defined for purposes of Audit Committee membership by the listing standards of NASDAQ and the applicable rules and regulations of the SEC.

The Audit Committee appoints our independent registered public accounting firm, reviews the plan for and the results of the independent audit, approves the fees of our independent registered public accounting firm, reviews with management and the independent registered public accounting firm our quarterly and annual financial statements and our internal accounting, financial and disclosure controls, reviews and approves transactions between the Company and its officers, directors and affiliates, and performs other duties and responsibilities as set forth in a charter approved by the Board of Directors.

During fiscal year 2020, the Audit Committee met six times. The Company’s senior financial management and independent registered public accounting firm were in attendance at such meetings. Following each quarterly meeting during 2020, the Audit Committee conducted a private session with the independent registered public accounting firm, without the presence of management. The Audit Committee also had one joint meeting with the Risk Committee during 2020.

The management of the Company is responsible for the preparation and integrity of the financial reporting information and related systems of internal controls. The Audit Committee, in carrying out its role, relies on the Company’s senior management, including particularly its senior financial management, to prepare financial statements with integrity and objectivity and in accordance with generally accepted accounting principles, and relies upon the Company’s independent registered public accounting firm to review or audit, as applicable, such financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”).

We have reviewed and discussed with senior management the Company’s audited financial statements for the year ended December 31, 2020 which are included in the Company’s 2020 Annual Report on Form 10-K. Management has confirmed to us that such financial statements (i) have been prepared with integrity and objectivity and are the responsibility of management and (ii) have been prepared in conformity with generally accepted accounting principles.

In discharging our oversight responsibility as to the audit process, we have discussed with PwC, the Company’s independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the PCAOB and the SEC.

We have received the written disclosures and the letter from PwC concerning their communications with us concerning independence, as required by applicable requirements of the PCAOB, and we have discussed with PwC their independence.

Based upon the foregoing review and discussions with our independent registered public accounting firm and senior management of the Company, we recommended to our Board that the financial statements prepared by the Company’s management and audited by its independent registered public accounting firm be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, that was filed with the SEC.

 

Submitted by the Audit Committee of the

Board of Directors:

 

Nancy Altobello — Chair

William F. Cruger

Kourtney Gibson

Justin G. Gmelich

 

 

 

 

 

 

2021 Proxy Statement

25

 


 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of April 12, 2021 by (i) each person or group of 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 12, 2021 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. The percentage of beneficial ownership is based on 37,607,108 shares of Common Stock outstanding at the close of business on April 12, 2021. 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., 55 Hudson Yards, 15th Floor, New York, New York 10001.

 

 

 

 

Number of

Shares

Beneficially

Owned

 

 

Percentage

of Stock

Owned

 

5% Stockholders

 

 

 

 

 

 

 

 

The Vanguard Group (1)

 

 

4,165,820

 

 

 

11.08

%

BlackRock, Inc. (2)

 

 

3,435,510

 

 

 

9.14

%

Named Executive Officers and Directors

 

 

 

 

 

 

 

 

Richard M. McVey (3)

 

 

545,992

 

 

 

1.45

%

Nancy Altobello (4)

 

 

606

 

 

*

 

Steven Begleiter (5)

 

 

8,223

 

 

*

 

Stephen P. Casper (6)

 

 

53,408

 

 

*

 

Jane Chwick (7)

 

 

5,877

 

 

*

 

Christopher Concannon (8)

 

 

27,454

 

 

*

 

William F. Cruger (9)

 

 

4,892

 

 

*

 

Kourtney Gibson (10)

 

 

209

 

 

*

 

Justin Gmelich (11)

 

 

446

 

 

*

 

Richard G. Ketchum (12)

 

 

1,760

 

 

*

 

Emily H. Portney (13)

 

 

1,497

 

 

*

 

Richard Prager (14)

 

 

1,526

 

 

*

 

John Steinhardt (15)

 

 

21,313

 

 

*

 

Antonio L. DeLise (16)

 

 

17,041

 

 

*

 

Kevin McPherson (17)

 

 

91,265

 

 

*

 

Scott Pintoff (18)

 

 

4,979

 

 

*

 

Christophe Roupie (19)

 

 

8,331

 

 

*

 

Nicholas Themelis (20)

 

 

28,362

 

 

*

 

All Executive Officers and Directors as a Group (18 persons) (21)

 

 

823,181

 

 

 

2.19

%

 

*

Less than 1%.

(1)

Information regarding the number of shares beneficially owned by The Vanguard Group was obtained from a Schedule 13G filed by The Vanguard Group with the SEC on February 10, 2021. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.

(2)

Information regarding the number of shares beneficially owned by BlackRock, Inc. was obtained from a Schedule 13G filed by BlackRock, Inc. with the SEC on January 29, 2021. The principal business address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

 

26

2021 Proxy Statement

 

 


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

(3)

Consists of (i431,930 shares of Common Stock owned individually; (ii) 2,000 shares of Common Stock owned by immediate family members; (iii) 41,314 shares of unvested restricted stock; and (iv) 70,748 shares of Common Stock issuable pursuant to stock options granted to Mr. McVey that are or become exercisable within 60 days. Does not include (i) 160,877 shares of Common Stock issuable pursuant to stock options that are not exercisable within 60 days; (ii) 5,735 unvested restricted stock units; (iii) 285,452 deferred restricted stock units or (iv) 7,930 performance shares.

(4)

Consists of (i) 368 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days.

(5)

Consists of (i) 7,985 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days. Does not include 518 deferred restricted stock units.

(6)

Consists of (i) 8,317 shares of Common Stock owned individually; (ii) 44,808 shares held indirectly in a trust for which Mr. Casper’s spouse is the trustee; and (iii) 283 unvested restricted stock units that vest within 60 days.

(7)

Consists of (i) 5,153 shares of Common Stock owned individually; (ii) 238 unvested restricted stock units that vest within 60 days; and (iii) 486 deferred restricted stock units that will deliver within 60 days.

(8)

Consists of (i) 8,540 shares of Common Stock owned individually; and (ii) 18,914 shares of unvested restricted stock. Does not include (i) 81,226 shares of Common Stock issuable pursuant to stock options that are not exercisable within 60 days; (ii) 15,522 unvested restricted stock units or (iii) 5,343 performance shares.

(9)

Consists of (i) 4,654 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days. Does not include 972 deferred restricted stock units.

(10)

Consists of 209 unvested restricted stock units that vest within 60 days.

(11)

Consists of (i) 208 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days.

(12)

Consists of (i) 1,522 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days.

(13)

Consists of (i) 1,259 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days.

(14)

Consists of (i) 1,288 shares of Common Stock beneficially owned by Mr. Prager by trust; and (ii) 238 unvested restricted stock units that vest within 60 days.

(15)

Consists of (i) 21,075 shares of Common Stock owned individually; and (ii) 238 unvested restricted stock units that vest within 60 days.

(16)

Consists of (i) 7,053 shares of Common Stock; (ii) 381 shares of unvested restricted stock; and (iii) 9,607 shares of Common Stock issuable pursuant to stock options that are or become exercisable within 60 days. Does not include (i) 2,025 unvested restricted stock units; (ii) 18,172 deferred restricted stock units or (iii) 1,851 performance shares.

(17)

Consists of (i) 68,534 shares of Common Stock; (ii) 343 shares of unvested restricted stock; and (iii) 22,388 shares of Common Stock issuable pursuant to stock options that are or become exercisable within 60 days. Does not include (i) 2,211 unvested restricted stock units or (ii) 2,103 performance shares.

(18)

Consists of (i) 4,661 shares of Common Stock; and (ii) 318 shares of unvested restricted stock. Does not include (i) 1,494 unvested restricted stock units or (ii) 1,346 performance shares.

(19)

Consists of (i) 4,601 shares of Common Stock; and (ii) 3,730 shares of unvested restricted stock. Does not include 885 performance shares.

(20)

Consists of (i) 14,513 shares of Common Stock owned in joint tenancy with his spouse; (ii) 416 shares of unvested restricted stock; and (iii) 13,433 shares of Common Stock issuable pursuant to stock options that are or become exercisable within 60 days. Does not include (i) 2,658 unvested restricted stock units or (ii) 2,515 performance shares.

(21)

Consists of (i) 638,469 shares of Common Stock; (ii) 65,416 shares of unvested restricted stock; (iii) 3,120 shares of restricted stock units that vest or deliver within 60 days; and (iv) 116,176 shares of Common Stock issuable pursuant to stock options that are or become exercisable within 60 days.  Does not include (i) 242,103 shares of Common Stock issuable pursuant to stock options that are not exercisable within 60 days; (ii) 29,645 restricted stock units that are unvested or (iii) 21,973 performance shares.

 

 

 

 

 

2021 Proxy Statement

27

 


 

 

EXECUTIVE OFFICERS

Set forth below is information concerning our executive officers as of the date hereof.

 

Name

 

Age

 

Position

Richard M. McVey

 

61

 

Chief Executive Officer and Chairman of the Board of Directors

Christopher R. Concannon

 

53

 

President and Chief Operating Officer

Antonio L. DeLise

 

60

 

Chief Financial Officer

Kevin McPherson

 

50

 

Global Head of Sales

Scott Pintoff

 

50

 

General Counsel and Corporate Secretary

Christophe Roupie

 

55

 

Head of EMEA and APAC

Nicholas Themelis

 

57

 

Chief Information Officer

 

Richard M. McVey has been Chief Executive Officer and Chairman of our Board of Directors since our inception. See Proposal 1 — Election of Directors — Director information for a discussion of Mr. McVey’s business experience.

Christopher R. Concannon has been President and Chief Operating Officer, and a member of the Board of Directors, since January 2019. See Proposal 1 — Election of Directors — Director information for a discussion of Mr. Concannon’s business experience.

Antonio L. DeLise has been Chief Financial Officer since March 2010. From July 2006 until March 2010, Mr. DeLise was the Company’s Head of Finance and Accounting, where he was responsible for financial regulatory compliance and oversight of all controllership and accounting functions. Prior to joining us, Mr. DeLise was Chief Financial Officer of PubliCard, Inc., a designer of smart card solutions for educational and corporate sites, from April 1995 to July 2006. Mr. DeLise also served as Chief Executive Officer of PubliCard from August 2002 to July 2006, President of PubliCard from February 2002 to July 2006, and a director of PubliCard from July 2001 to July 2006. Prior to PubliCard, Mr. DeLise was employed as a senior manager with the firm of Arthur Andersen LLP from July 1983 through March 1995. Mr. DeLise received a B.S. in accounting from Fairfield University, from which he graduated magna cum laude.

Kevin McPherson has been Global Head of Sales since June 2014.  From January 2008 to June 2014, Mr. McPherson was the Company’s U.S. Sales Manager.  From March 1999 to December 2007, Mr. McPherson was a Sales Representative for the Company, running the Company’s West Coast sales and distribution effort.  From June 1996 to March 1999, Mr. McPherson worked within the Emerging Markets Fixed Income Group of Scudder Stevens & Clark, where he traded emerging market fixed income securities and supported portfolio administration.  Mr. McPherson began his career at State Street Bank & Trust, where he worked from June 1994 to June 1996 as an accountant and auditor for fixed income and equities portfolios.  Mr. McPherson received a B.A. in business administration from the University of Maine.

Scott Pintoff has been General Counsel and Corporate Secretary since February 2014.  Prior to joining us, Mr. Pintoff was General Counsel and Corporate Secretary at GFI Group, a position he held since 2003.  At GFI, Mr. Pintoff was responsible for all legal, regulatory and compliance matters, including their IPO, all acquisitions and implementation of the Dodd-Frank Act. Mr. Pintoff joined GFI Group in 2000 as Associate General Counsel. Prior to GFI, Mr. Pintoff was at Dewey Ballantine LLP from 1996 to 2000 within the mergers and acquisitions group. Mr. Pintoff received a B.A. (Honors) from Wesleyan University and a J.D. from the New York University School of Law.

 

 

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EXECUTIVE OFFICERS

 

 

Christophe Roupie has been Head of EMEA and APAC since May 2020. From March 2017 through May 2020, Mr. Roupie was the Company’s Head of Europe and Asia.  Prior to joining us, from October 2015 until October 2016, Mr. Roupie was the CEO of HiRock AG, a family office in Switzerland.  From May 2005 to October 2015, Mr. Roupie was Global Head of Trading and Securities Financing at AXA Investment Managers. While at AXA Investment Managers, he managed trading teams in Paris, London, Hong Kong and Greenwich, Connecticut across equities, fixed income, FX, derivatives, repo and stock lending.  Prior to this, Mr. Roupie was the Global Head of Fixed Income Trading at IXIS AM (now Natixis Asset Management) from October 2000 to March 2005.

Nicholas Themelis has been Chief Information Officer since March 2005. From June 2004 through February 2005, Mr. Themelis was the Company’s Head of Technology and Product Delivery. From March 2004 to June 2004, Mr. Themelis was the Company’s 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.

 

 

 

 

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A LETTER FROM OUR COMPENSATION AND TALENT COMMITTEE

Dear Fellow Stockholders,

 

As members of MarketAxess’ Compensation and Talent Committee (the “Compensation Committee”), we endeavor to create an executive compensation program that is performance-based, directly correlated with business and financial results, and designed to attract, reward and retain high caliber executives.

2020 was a challenging year for the global economy as a result of the Pandemic. During this time, despite the volatility caused by the Pandemic, MarketAxess maintained strong financial performance and delivered on our operating expectations. The Compensation Committee took into account the Company’s performance, in addition to the direct feedback we heard from our stockholders, as we implemented the 2020 compensation program and structured the compensation program for 2021. In consideration of the Company’s strong financial and operating performance, we did not make any changes or adjustments to our executive compensation program as a result of the Pandemic.

In 2020, following a thorough review of the compensation program and significant stockholder engagement, the Committee implemented a number of substantive enhancements that both responded to stockholder feedback and continued to support our core compensation principles. These changes were designed to enhance the performance-based nature of the program, while retaining the key elements of the program that have been highly successful for both our executives and our stockholders for many years. Stockholder feedback since these changes were implemented, through the 2020 say-on-pay proposal, which received 93.7% support, and subsequent stockholder engagement in late 2020 and early 2021, has generally been positive.

The Compensation Committee seeks to include the input of our stockholders in the regular evaluation of our programs and welcomes continued stockholder feedback regarding our executive compensation practices. We remain determined to understand your perspectives and committed to considering constructive changes in response to your feedback.

Our Committee is and will remain committed to the ongoing evaluation and improvement of our executive compensation program. We look forward to continuing the dialogue and encourage you to reach out with any questions or concerns related to our program before making your voting decision. Thank you for your investment in MarketAxess.

Submitted by the Compensation and Talent Committee of the Board of Directors:

Steven L. Begleiter – Chair

Nancy Altobello

Richard L. Prager

John Steinhardt

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes the Company’s executive compensation program and provides an overview of the Company’s pay for performance methodology and compensation decisions for our CEO, CFO and our three other mostly highly compensated executive officers (collectively, our Named Executive Officers (“NEOs”)).  For fiscal year 2020, our NEOs and their respective titles were as follows:

 

Name

Title

Richard M. McVey

Chairman of the Board, Chief Executive Officer (“CEO”)

Christopher R. Concannon

President and Chief Operating Officer (“President”)

Antonio L. DeLise

Chief Financial Officer (“CFO”)

Kevin McPherson

Global Head of Sales (“Head of Sales”)

Nicholas Themelis

Chief Information Officer (“CIO”)

 

We did not make any changes or adjustments to our executive compensation program as a result of the Pandemic. Any consideration given to the impact of the Pandemic by the Compensation Committee in their evaluation of a NEO’s performance during 2020 is described below in “How We Determine Pay Levels—Individual Performance”.  

Responding to stockholders; evolving pay practices

 

Say-on-Pay Support

Our annual say-on-pay vote (“Say-on-Pay”) is one of our opportunities to receive feedback from stockholders regarding our executive compensation program. At the 2020 Annual Meeting of Stockholders (the “2020 Meeting”), approximately 93.7% of the votes cast approved the Say-on-Pay proposal, an increase from 73% in 2019.  Management and the Board had conducted extensive outreach with our stockholders before and following our 2019 Annual Meeting of Stockholders to better understand investors’ perspectives on our compensation program. As a result of investor feedback, the Compensation Committee approved several changes to our compensation program for 2020 in an effort to enhance the performance-based nature of the program, while retaining the key elements of the program that have been highly successful for both our executives and our stockholders for many years.

2020 Stockholder Engagement

Since the 2020 Meeting, we reached out to stockholders who collectively represented over 60% of our outstanding common stock and had conversations with eight stockholders who requested engagement representing more than 21% percent of our outstanding common stock.  During our outreach, we discussed a range of relevant topics with stockholders, including the changes to our executive compensation programs that were put into place in 2020, for which we received consistently positive feedback.  Most of the meetings also covered a variety of ESG matters. Stockholder feedback was relayed directly to the Board of Directors.

During our meetings with stockholders, we heard strong support for the performance of the Company, our CEO and senior management team, as well as appreciation of our outreach efforts. Stockholders also generally reacted positively to our decision to directly tie 50% of each NEO’s target annual cash incentive award to the Company’s operating income goals and 50% to the NEO’s delivery against individual goals and key strategic initiatives for the Company.  In general, stockholders preferred that we disclose more details, and provide more transparency around the use of individual performance metrics for each NEO, including how such metrics are determined and how they relate to the Company’s strategic goals.  We also received positive feedback on the implementation of a three-year measuring period for performance equity awards beginning with the performance shares awarded in 2020.  

With regard to non-compensation matters, the stockholders with whom we spoke welcomed the continued refreshment of the Board, the publication of our first Sustainability Report and the success of our Trading-for-Trees initiative. As our ESG program evolves, certain stockholders also requested that the Company implement a formal ESG disclosure framework and provide more disclosure relating to the diversity of our Board.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Actions in 2020

We took the following actions and implemented the following changes to our executive compensation program for performance year 2020:

 

NEO’s Annual Cash Incentive Compensation Program – Beginning in 2020, 50% of the NEO’s targeted annual cash incentive is tied to the Company’s Adjusted Operating Income performance for the fiscal year based on the 2020 budget, while 50% is tied to the executive’s delivery against individual goals and key strategic initiatives for the Company.

 

Annual Equity Award Performance Share Metrics Beginning in 2020, the performance shares granted in January, representing 50% of our NEOs’ annual equity award in relation to prior year performance, are awarded with a three-year performance period based on a combination of operating margin and market share metrics.  Performance targets for years two and three will be based off of previous years’ actual results.

 

Continued Committee Refreshment – In January 2020, the Chair of the Compensation Committee was rotated to Mr. Begleiter, and Ms. Altobello joined the Compensation Committee.  In addition, as a result of updating its responsibilities and charter to include talent management and succession planning, the Committee also formally changed its name to the Compensation and Talent Committee (although referred to as the Compensation Committee in this CD&A).  In addition, the Compensation Committee updated its charter.

 

Business and financial performance

 

MarketAxess 2020 Performance

Performance year 2020 marked our 12th consecutive year of record financial results driven by estimated market share gains across all of our global credit products and a healthy increase in U.S. credit market volumes.  The 2020 results reflect record volume and revenue in U.S. high-grade, U.S. high-yield, emerging market corporate and sovereign bonds, European credit, U.S. municipal bonds and U.S. treasuries. In 2020, we continued to invest in new protocols, technology and platform functionality, new product areas and expanding our geographic reach. To support our investment agenda, our global staff count increased to 606 at year end 2020, a 15% increase year-over-year.  The headcount growth was largely concentrated in technology, customer facing and business support areas.  We also completed the acquisition of Regulatory Reporting Hub in November 2020, which further expands and enhances our transaction and trade reporting services across a broader European client base, particularly in Germany, France and the Nordics.

How COVID-19 Impacted Performance

As a result of the Pandemic, we experienced significant changes in our daily operations in 2020. In mid-March 2020, we successfully implemented a global work from home mandate for all our employees and we were able to continue to provide our trading platforms and other services to our clients without interruption. In particular, we believe that Open Trading liquidity has been increasingly essential to the functioning of credit markets during the Pandemic, and MarketAxess has played a valuable role keeping our clients connected to the market as traders moved from their centralized trading floors to home offices. During the first several months of the Pandemic, we helped over 10,000 individual users connect to our trading platforms from their homes. Although we have reprioritized certain technology projects due to the changing needs of our clients in the current market environment, we have largely continued with our hiring plans, capital expenditures and the expansion of our trading platforms and services into new jurisdictions.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Our performance in key metrics include:

 

Revenue:  This was our 12th consecutive year of record revenue with our core four products producing record revenues.  Total revenues exceeded $689 million, up 35% from 2019.   Commission revenues were over $634 million, up 37% from 2019.

 

Volume Growth:  We delivered credit trading volumes of $2.6 trillion, up 26% from 2019.  This included record volumes in all four of our core products.  We delivered record estimated U.S. high-grade and U.S. high-yield market share of 21.6% and 17.1%, respectively.  We have 1,823 active global institutional clients, up almost 6% from 2019.  Our 899 active international institutional clients increased 8% from 2019, representing almost 29% of our trading volume in 2019.

 

 

 

 

 

 

 

Earnings Growth:  This was our 12th consecutive year of record operating income.  Operating income of almost $375 million was up 49% from 2019.  Diluted earnings per share of $7.85 was up over 45% as compared to 2019.

 

Stock Price and Capital Returns:  In addition to a 50% increase in stock price, we increased our annual dividend from $2.04 to $2.40 per share, or 18%, and returned over $107 million of capital to stockholders through our stock buyback and dividend programs.

 

 

 

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Relative Performance

For 2020, we evaluated our year-over-year financial growth as compared to our Peer Group (as defined below under How We Determine Pay Levels – Peer Group).  For the period ending December 31, 2020, our operating income growth outperformed all of our 18 peers in the Peer Group.  We ranked third out of 18 in year-over-year revenue growth, fifth in EPS growth, fourth in year-over-year stock price growth and third in three- and five-year stock price growth.  

Our share price growth as compared to the following indices for the one-, three-, and five-year periods ended December 31, 2020 was as follows:

 

Share Price Growth

 

 

MKTX

 

 

Russell 1000

 

 

NASDAQ Comp.

 

 

S&P 500

 

 

 

 

Stock

Return

 

 

Stock

Return

 

 

MKTX

Outperformance

 

 

Stock

Return

 

 

MKTX Outperformance

 

 

Stock

Return

 

 

MKTX Outperformance

 

 

1-year

 

 

50.5

%

 

 

18.9

%

 

 

31.6

%

 

 

43.6

%

 

 

6.9

%

 

 

16.3

%

 

 

34.2

%

 

3-year

 

 

182.8

%

 

 

43.1

%

 

 

139.7

%

 

 

86.7

%

 

 

96.1

%

 

 

40.5

%

 

 

142.3

%

 

5-year

 

 

411.3

%

 

 

87.4

%

 

 

323.9

%

 

 

157.4

%

 

 

253.9

%

 

 

83.8

%

 

 

327.5

%

 

10-year

 

 

2641.8

%

 

 

204.3

%

 

 

2437.4

%

 

 

385.8

%

 

 

2255.9

%

 

 

198.7

%

 

 

2443.1

%

 

 

In 2020, we continued to deliver long-term value for our stockholders as evidenced by ranking 188th in five-year total stockholder return (TSR”) (approximately 89th percentile) and 12nd in ten-year TSR (approximately 99th  percentile) of all 2,236 U.S. public companies with over $1 billion in market capitalization (as reported by FactSet).

How 2020 Performance Affected Executive Compensation

A significant portion of each NEO’s compensation is dependent on our financial performance. The Company generated $423.6 million of Adjusted Operating Income in 2020, which was above our 2020 internal target Adjusted Operating Income goal of $334.3 million.  Accordingly, the accrual under our cash incentive plan was higher than budgeted, resulting in higher cash incentive compensation for our NEOs.  Further details about how the Adjusted Operating Income affected the NEO’s cash incentive can be found in Annual Cash Incentive Awards below.

The Compensation Committee considered the Company’s relative outperformance in determining the size of the equity awards granted in January 2021 for 2020 performance.

The chart below shows the change in base salary, total cash (which includes base salary and incentive cash) and total direct compensation (“TDC”) (which includes cash payments, annual equity awards made in relation to prior year performance (e.g., January 2021 awards for 2020 performance) and the annualized value of multi-year equity awards) for each NEO (see Annual Cash Incentive Awards and Total Direct Compensation below).  The figures in the chart below differ from those shown in the Summary Compensation Table in Executive Compensation, as the Summary Compensation Table (“SCT”) reflects the full grant date value of any multi-year performance equity award received by the NEOs in the year actually granted (as required by the SEC).  Additionally, the SCT includes equity awards granted in January 2020 for 2019 performance, which are included in the 2019 data in the below chart.  

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

 

Base Salary

 

Total Cash Compensation

 

Total Direct Compensation

 

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

($ in thousands)

Richard M. McVey, CEO (1)

 

500

 

500

 

0%

 

2,750

 

500

 

450%

 

8,500

 

7,750

 

10%

Christopher R. Concannon, President

 

500

 

500

 

0%

 

2,000

 

2,000

 

0%

 

5,500

 

5,250

 

5%

Antonio L. DeLise, CFO

 

300

 

300

 

0%

 

1,200

 

1,175

 

2%

 

2,400

 

2,085

 

15%

Kevin McPherson, Head of Sales

 

300

 

300

 

0%

 

1,500

 

1,400

 

7%

 

2,850

 

2,500

 

14%

Nicholas Themelis, CIO

 

300

 

300

 

0%

 

1,500

 

1,500

 

0%

 

3,200

 

2,800

 

14%

 

(1)

In 2019, the CEO received a commensurately higher equity award in lieu of a cash incentive.  

How we make compensation decisions

 

Executive Compensation Principles and Strategy

Our executive compensation program is designed to promote the following core principles that are aligned with our Company’s business strategy:

Alignment: we align and reward Company and individual performance and decision-making with long-term stockholder value creation;

Retention: attract, reward and retain high caliber executives;

Motivation: motivate high performance from our NEOs by offering greater incentives for superior performance and reduced awards for underperformance;

Prudence: discourage imprudent risk taking by avoiding undue emphasis on any one metric or short-term goals; and

Fairness: be transparent and fair to both our NEOs and our stockholders.

We believe these principles have served us well for many years, and we are continuing to refine them in response to input from our stockholders.

Our compensation principles place a majority of our executive officers’ compensation at risk and emphasize incentives tied to individual and Company performance, as well as continued service. As a result, the only fixed compensation paid is base salary, which represented 6% of our CEO’s total compensation and no more than 12% of the other NEO’s total compensation in 2020.  We also seek to promote long-term commitments from our NEOs because we believe that continuity of the Company’s leadership team benefits both the Company and our stockholders. As such, we utilize long-term (three- to five-year) equity incentives in conjunction with short-term incentives (performance-based annual cash awards). Ultimately, the value realized by our NEOs from our equity incentive awards will depend on our financial performance, changes in our Common Stock price, and satisfaction of an award’s vesting schedule. Taken together, we believe these factors help create a comprehensive scheme that both reinforces our long-term performance-based orientation and is aligned with the interests of our stockholders.

To assess the financial impact of our compensation programs and ensure alignment with the interests of our stockholders, we focus on managing our aggregate compensation and benefits expense expressed as a percentage of our total annual revenues (“C&B Ratio”). We believe that monitoring this measure improves our overall profitability.  The NEOs’ annual incentive payments are a component of aggregate compensation expense.  Additionally, the C&B Ratio provides a normalized efficiency measure by which we can compare our compensation structure to those maintained by our peers and other financial and technology industry companies.  Since 2012, our C&B Ratio has been below 30%, which we believe is an appropriate target given our current revenues, employee base and strategic plans.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Best Practices in Compensation Governance

Our pay practices align with our compensation principles and facilitate our implementation of those principles.  They also demonstrate our commitment to sound compensation and governance policies.

 

Compensation Policies and Practices

 

What We Do

 

 

What We Avoid

Emphasis on performance-based compensation

 

X

No guaranteed bonuses except for new hires

Use of clawbacks

 

X

No pension / SERP plans

Stock ownership guidelines

 

X

No single-trigger change in control benefits

Use of long-term equity awards that align with

 

X

No §280G excise tax “Gross-Up” Benefits

 

stockholder interests

 

X

No recycling of shares

Automatic reduction of severance payments subject

 

X

No dividends on performance shares until earned

 

to §280G excise tax

 

X

No "repricing" underwater options without

Engage with investors

 

 

stockholder approval

Dividends and dividend equivalents on restricted

 

X

No hedging or pledging of MarketAxess stock

 

stock and RSUs are paid only when the awards vest

 

X

Limited perquisites and personal benefits

Engage independent compensation consultants

 

 

 

 

 

 

 

 

Role of the Compensation Committee

The Compensation Committee administers the compensation program for our NEOs.  The Compensation Committee reviews all components of remuneration (both cash and equity) and decides which elements of compensation, if any, should be adjusted or paid based on corporate and individual performance results and competitive benchmark data. The Compensation Committee also determines performance award payouts for the prior fiscal year based on actual results against performance goals.

In performing its duties, the Compensation Committee:

annually reviews competitive compensation data, recent compensation trends and any other relevant market data obtained by its compensation consultants and considers the impact on our compensation architecture, policies and strategies;

reviews all compensation, including equity holdings (both vested and unvested amounts) earned by each NEO, including each NEO’s past wealth realization and future equity incentive opportunities as well as a sensitivity analysis to help assess the Company’s ability to retain and motivate each NEO;

consults with the compensation consultants and full Board regarding market and performance data when considering decisions concerning the structure and amount of our CEO’s compensation;

considers the recommendations of our CEO relating to the performance of our NEOs (other than himself) and the recommendations of its compensation consultants relating to market data and compensation trends when considering decisions concerning the structure and amount of compensation of our NEOs.

The Compensation Committee’s function is fully described in its charter, which is available on our corporate website at www.marketaxess.com under Investor Relations – Corporate Governance.  In performing its duties, the Compensation Committee receives assistance from management and our independent compensation consultants. The Compensation Committee’s decisions relating to compensation for our NEOs are reviewed by our full Board of Directors.

Role of Independent Compensation Consultants

Pursuant to its charter, the Compensation Committee may retain and terminate any consultant or other advisor, as well as approve the advisor’s fees and other engagement terms. For fiscal year 2020, the Compensation Committee retained FW Cook (“FW Cook”) as its independent compensation consultant for purposes of advising on executive

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

compensation.  Representatives from FW Cook attended Compensation Committee meetings, participated in executive sessions and communicated directly with the Compensation Committee.  During 2020, FW Cook provided the following services to the Compensation Committee:

Executive Compensation Design – Provided the Compensation Committee with executive compensation design suggestions and alternatives;

Pay Analysis Reviewed and benchmarked competitive market pay levels and conducted retention analyses with respect to 2020 compensation for our NEOs;

Peer Group Construction – Reviewed and recommended changes to the Company’s peer group composition (as discussed below in Peer Group);

Equity Plan – Advised on the structure and terms of the MarketAxess Holdings Inc. 2020 Equity Incentive Plan (the “Equity Incentive Plan”) that was approved by the Company’s stockholders at the 2020 Meeting, as well as the Company’s usage of authorized shares (i.e., “burn rate”); and

General Advice/Compliance – Provided general compensation-related recommendations to the Compensation Committee and performed other services, including providing advice regarding regulatory and advisory compliance issues, and other governance issues.

Grahall Partners LLC advised the Compensation Committee with regard to the compensation for our Board of Directors and our non-executive employee population.

Each compensation consultant reported directly, and is directly accountable, to the Compensation Committee. The Compensation Committee assessed the independence of Grahall and FW Cook pursuant to SEC rules and determined that their work did not raise any conflicts of interest. The Compensation Committee will continue to monitor the independence of its compensation consultants on an annual basis.

Role of Senior Management

Senior management, including the CEO, President, and Head of Human Resources, set the agendas and prepare the materials for Compensation Committee meetings and attend those meetings, other than during executive session.  Other senior managers, such as the CFO and General Counsel, may also assist in the preparation or presentation of relevant material.  The CEO recommends annual compensation for the NEOs, other than himself, to the Compensation Committee for consideration, but the Compensation Committee is responsible for the final recommendations.  No member of management is present in the Compensation Committee meetings when matters related to their individual compensation are under discussion.  

Compensation Risk Assessment

The Compensation Committee is responsible for reviewing and assessing potential risk arising from the Company’s compensation policies and practices.  The Compensation Committee regularly reviews the Company’s compensation policies and practices to ascertain any potential material risks that may be created by the Company’s compensation programs. FW Cook provided the Compensation Committee an assessment of the effectiveness of all major components of the Company’s compensation programs, including the mix between annual and long-term compensation; short and long-term incentive program design; incentive plan performance criteria and corresponding objectives; the Company’s severance and change-in-control policies; its claw-back policy; and its stock ownership guidelines. The Compensation Committee’s review includes the compensation practices for our entire employee base to ensure that our pay practices, compensation programs and business strategies do not motivate imprudent risk-taking by any employee.  

The Compensation Committee considered these items in determining the appropriate compensation programs for the Company.  The Company utilizes many design features that mitigate the likelihood of encouraging excessive risk-taking behavior. Among these design features are:

Significant use of equity compensation with long-term vesting (three to five years);

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Use of holding periods or cliff vesting for long-term equity awards;

Strong compensation recoupment policy;

Stock ownership and retention guidelines that meet market standards;

The Compensation Committee’s ability to exercise downward discretion in determining payouts, including after consideration of regulatory, compliance and legal issues; and

Training on our Code of Conduct and other policies that educate our employees on appropriate behaviors and the consequences of taking inappropriate actions.

Based on the foregoing, the Compensation Committee and management agree that our compensation policies and practices do not encourage excessive risk-taking or create risks that are reasonably likely to have a material adverse effect on the Company. We believe that our compensation programs do not provide incentives that encourage risk-taking beyond the Company’s ability to effectively identify and manage significant risks and is compatible with the internal controls and the risk management practices of the Company.

How we determine pay levels

 

Peer Group

The Compensation Committee assesses the Company’s financial performance and executive compensation competitiveness against a group of peer companies that it selects based on input from FW Cook.  A key objective of our executive compensation program is to ensure that the total compensation package and structure that we provide to our NEOs is competitive with the companies with whom we compete for executive talent. The 2020 peer group consisted of companies that are similar to the Company in terms of competitive positioning, financial size, operating characteristics, market sector or industry classification. FW Cook engages with the Compensation Committee to review the peer group annually and periodically make changes.

In 2020, FW Cook completed an annual review of the composition of our peer group. Factors considered in determining the peer group (“Peer Group”) included:

financial size – market cap and revenues, generally based on a methodology similar to the method used by Institutional Shareholder Services (“ISS”) of +/- 2.5 times the Company’s most recent annual revenues and +/- 5 times the Company’s most recent market capitalization;

whether companies compete with us for clients, executives or other employee talent;

market sector, asset class or product offering;

peers of peers, as well as peers designated by ISS in its annual review; and

reviewing the broader market for additional firms in financial services, IT services and software industries, based on relative revenue, market capitalization and operating income similarity.

For the 2020, our Peer Group was comprised of the following firms:

 

2020 Peer Group

ACI Worldwide, Inc.

 

Cohen & Steers, Inc.

 

MSCI Inc.

Alliance Bernstein Holding L.P.

 

Envestnet, Inc.

 

Nasdaq Inc.

Aspen Technologies, Inc.

 

Factset Research Systems, Inc.

 

SEI Investments Company

BGC Partners, Inc.

 

Fair Isaac Corporation

 

Tradeweb Markets Inc.

Black Knight, Inc.

 

Guidewire Software, Inc.

 

Virtu Financial, Inc.

Cboe Global Markets, Inc.

 

Morningstar, Inc.

 

Verisk Analytics, Inc.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

In 2020, we added Aspen Technologies, Inc., Nasdaq Inc., SEI Investments Company and Verisk Analytics to our Peer Group.  We removed GAMCO Investors, Hercules Technology Growth Capital, Main Street Capital, Virtus Investment Partners, and Wisdom Tree Investments.

Benchmarking – Importance and Process