A significant number of the changes were based on a comprehensive set of recommendations following months of research and analysis by leading global consulting firm Towers Perrin. The organizational plan, recommended by Towers Perrin to the exchange's Board Steering Committee, and the Board committee charters, recommended by the Governance Committee, are designed to reflect public company best practices and enhance CME's capabilities as a public company.
The changes approved by the Board include the adoption of formal charters for Board committees and implementation of a new organizational structure and CEO succession plan to ensure a strengthened governance and leadership model within CME Holdings and its exchange subsidiary, Chicago Mercantile Exchange Inc. (CME).
The company has approved charters for the following Board committees: Audit, Board Steering, Compensation, Electronic Transition, Governance, Marketing and Public Relations Advisory, and Strategic Implementation.
Included in the changes are a new organizational structure, effective immediately, that creates an Office of the CEO, consisting of James J. McNulty, the President and Chief Executive Officer, and Craig S. Donohue, who will assume the title of Executive Vice President and Chief Administrative Officer. A 13-year veteran of CME, Donohue most recently served on the management team as Managing Director and Chief Administrative Officer.
CME Holdings Chairman Terrence A. Duffy said, "Our Board's adoption of these policies represents the next step in our continued efforts to strengthen our capabilities as a public company and ensure that we have the appropriate processes and people to execute our strategy on a long-term basis. We are seeking to adopt the best practices of public companies, while recognizing that our unique structure as a financial exchange provides us with challenges many other public companies don't face."
Succession Plan
Duffy said that as part of its intensive review of organizational issues, the Board Steering Committee worked closely with Towers Perrin on identifying key issues that would contribute to the strongest organizational structure. "A solid CEO succession plan is an important ingredient of success for highly regarded public companies," Duffy said. "Our new management structure gives us two seasoned executives with complementary strengths leading our company during this critical juncture in our history."
McNulty said, "Shareholders want companies to have thoughtful succession plans to ensure a depth of knowledge and strategic decision-making capability in the event of any transition. Craig brings to the new role in the Office of the CEO a broad and deep knowledge of our business and operations, as well as the competitive landscape in which we operate. He has contributed greatly to our success over the past few years, in particular, as he spearheaded the development and execution of a comprehensive plan to demutualize the exchange and as he helped create business plans to energize the growth of our GLOBEXâ electronic trading platform."
Donohue said, "CME has undergone a dramatic transformation in the past few years from a not-for-profit membership institution to a for-profit corporation as we became the first U.S. financial exchange to demutualize. We have successfully made that transition while managing significant growth, particularly in electronic trading. I believe that Jim and I will apply our complementary skill sets to make the most of the innovative ideas and strategic direction that our talented Board members and employees can offer."
Under the new structure, McNulty will continue to have overall responsibility for managing the exchange and will oversee the Clearing House, Finance, Technology, Operations and Products and Services divisions. He was elected to the Board of Directors in April. He has been President and CEO since February 2000. In his new role, Donohue will manage relations with the Board of Directors and Board committees and oversee Corporate Development, Legal Affairs, Government Relations and Organizational Development.
The management team will have two new positions reporting to Donohue. One of these, the new General Counsel position, will oversee the Legal, Regulatory Affairs, Office of the Secretary, and Shareholder Relations and Membership Services areas. The other position, Managing Director, Corporate Development, will oversee Strategic Planning and Research, Business Development, the Office of Project Management and Corporate Relations. Product Research and Development and Technology ASP Services will also move from the Products and Services Division to Corporate Development.
Donohue has been General Counsel for the exchange since October 1998 and has been responsible for the Business Development, Strategic Planning, Legal, Market Regulation, Shareholder Relations and Membership Services, Corporate Relations and Government Relations areas of CME. He holds a master of management degree from Northwestern University's J.L. Kellogg Graduate School of Management, a juris doctor from John Marshall Law School, a master of laws degree in financial services regulation from IIT Chicago-Kent College of Law, and a bachelor of arts degree from Drake University.
Chicago Mercantile Exchange Holdings' Board committee charters are published on the Web at http://www.cme.com/about_cme/investor_information/index.cfm.
Chicago Mercantile Exchange Holdings Inc. is the parent company of Chicago Mercantile Exchange Inc. (www.cme.com), the largest futures exchange in the United States based on notional value, trading volume and open interest. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX around-the-clock electronic trading platform. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moves about $1.5 billion per day in settlement payments and manages $27.1 billion in collateral deposits.
