Terrence A. Duffy
About Terrence A. Duffy
Terrence A. Duffy, age 66, is Chairman and Chief Executive Officer of CME Group (combined role since November 2016) and a director since 1995; he previously served as Executive Chairman and President (2012–2016) and Executive Chairman (2006–2012). He attended the University of Wisconsin-Whitewater and holds honorary doctorates from Saint Xavier University and DePaul University . Under his leadership, CME delivered record 2024 results: revenue $6.1B (+10% y/y), record ADV 26.5M (+9%), net income $3.5B, adjusted operating margin ~68%, and total 2024 TSR of ~+15% (stock +10% plus dividends); cash earnings used for incentives totaled $3.865B .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| CME Group | Chairman & CEO | Nov 2016–present | Oversees world’s leading derivatives marketplace; led Google Cloud partnership, M&A execution, and regulatory engagement . |
| CME Group | Executive Chairman & President | May 2012–Nov 2016 | Senior leadership during product/tech expansion . |
| CME Group | Executive Chairman | Oct 2006–May 2012 | Governance and strategic oversight . |
| CME/CME Holdings | Chairman of the Board | Since Apr 2002 | Guided demutualization/public listing and subsequent transactions . |
| CME Holdings/CME | Vice Chairman | 1998–Apr 2002 (CME); Aug 2001–Apr 2002 (CME Holdings) | Board leadership through demutualization . |
| TDA Trading, Inc. | President | 1981–2002 | Trading leadership; industry expertise . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Federal Retirement Thrift Investment Board (FRTIB) | Board Member | 2003–2013 | Senate-confirmed; oversees federal Thrift Savings Plan . |
| Mayo Clinic Greater Chicago Leadership Council | Co-Chair | Current | Civic/health leadership . |
| CME Group Foundation | Vice Chairman | Current | Education/philanthropy focus . |
Fixed Compensation
| Component | 2024 Target | 2024 Actual | Notes |
|---|---|---|---|
| Base Salary | $2,000,000 | $2,000,000 | Per employment agreement . |
| Annual Bonus Target | 200% of base ($4,000,000) | $7,452,800 (186.32% of target) | Plan max 400% of base ($8,000,000) . |
| Long-Term Equity Target (grant-date value) | 600% of base ($12,000,000) | $13,512,333 grant-date fair value accounting (mix RS/PS) | Accounting fair value reflects RS/PS valuation methods . |
Performance Compensation
Annual Bonus – Funding Metric and Outcome (2024)
| Metric | Threshold | Target | Maximum | Actual | Outcome |
|---|---|---|---|---|---|
| Cash Earnings (bonus definition) | $2.473B | $3.296B | $3.956B | $3.865B (117.3% of target) | Payout factor 186.32%; Duffy bonus $7,452,800 . |
Cash Earnings formula and committee adjustment framework detailed in CD&A; plan funds only above threshold and is capped at maximum achievement .
Long-Term Incentives – 2024 Grants and Design
| Vehicle | Weight | Performance Period | Metric/Goal Design | Payout Structure | 2024 Duffy Award Detail |
|---|---|---|---|---|---|
| Restricted Stock (RS) | 50% of annual LTI | 4-year, ratable vest (25%/yr) | Time-based | Time-based vesting | 27,456 RS shares granted 9/16/24 . |
| Performance Shares (PS) – Relative TSR (S&P 500) | 50% of PS (i.e., 25% of total LTI) | 2025–2027 | Relative TSR vs S&P 500; if absolute TSR negative, payout capped at 100% | 0–200% of target; 50th pct = 100% | Target 13,728 sh; Thresh 6,864; Max 27,456 . |
| Performance Shares (PS) – Absolute Net Income Margin | 50% of PS (i.e., 25% of total LTI) | 2025–2027 | Absolute net income margin vs pre-set target; goals disclosed after period | 0–200% of target (threshold/target/maximum ladder) | Target 13,728 sh; Thresh 6,864; Max 27,456 . |
Recent PSU vesting result: 2022–2024 TSR PSUs paid at 108.7% of target; Duffy earned 25,887 shares (vested March 2025) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (Class A) | 83,205 shares; none of the directors/executive officers owns ≥1% of any class . |
| 2024 Shares Vested | 72,815 shares vested; value realized $16,241,689 (aggregate 2024) . |
| Unvested/Unearned Awards at 12/31/24 (Duffy) | PS (TSR 2025–2027): 6,864 sh (threshold value shown); PS (NIM 2025–2027): 6,864 sh; PS (TSR 2024–2026): 7,253 sh; PS (NIM 2024–2026): 7,253 sh; PS (TSR 2023–2025): 15,726 sh; PS (TSR 2022–2024): 25,887 sh (earned at 108.7%, vested Mar-2025) . |
| Ownership Guidelines | CEO must own shares ≥ $10 million; senior management guidelines also specify CEO ≥5x base salary; all NEOs satisfied guidelines as of 2024 review . |
| Hedging/Pledging | Hedging prohibited; pledging of Class A by directors/executive officers restricted; currently none pledged . |
Potential selling pressure: significant vesting at 12/31/2024 (100% of then-outstanding RS per contract) and PSU settlements can create liquidity windows; hedging/pledging restrictions mitigate risk-signaling distortions .
Employment Terms
| Term/Provision | Summary |
|---|---|
| Agreement Term | Amended and restated Nov 6, 2024; runs through Dec 31, 2026 . |
| Compensation Targets | Minimum base salary $2,000,000; annual bonus target 200% of base; annual LTI target 600% of base . |
| Severance (Company without Cause) | Lump sum equal to 2x base salary ($4,000,000) plus equity treatment: time-based equity vests; PSUs vest or forfeit based on actual performance over full term; continued benefits up to four years or until comparable coverage; subject to release . |
| Death/Disability | Time-based equity vests; PSUs vest at target; payable within 30 days (death) or per plan (disability) . |
| Change of Control | Single-trigger for Duffy: unvested time-based equity vests; PSUs vest or forfeit based on actual performance over full term (more favorable award/plan terms, if any, apply) . |
| Year-End Vesting/LTI Treatment | If employed on Dec 31, 2025, all unvested time-based equity vests and PSUs continue on actual-performance basis; if employed on Dec 31, 2026, time-based vests; PSUs ending 2026 vest by performance; remaining PSUs vest at target on Dec 31, 2026; bonus continued-employment condition waived for 2025/2026 (subject to release) . |
| Non-Compete | One year post-employment (executive/managerial roles or similar services to competitors prohibited) . |
| Clawback | SEC/Nasdaq-compliant recoupment policy for executive officers (restatement recovery); additional recoupment policy for senior non-executive officers . |
| Perquisites | Limited (parking, security, executive physicals); aggregate < $10,000 per NEO in 2024; no tax gross-ups except life insurance gross-up for Duffy beneficiaries . |
| Pension/Deferred Comp (FY2024) | Pension present value $576,179 (17 yrs credited); deferred comp aggregate balance $10,196,090; 2024 company “make‑whole” contributions $910,284 . |
Board Governance (dual-role implications)
- Role and independence: Duffy is not independent (employee); board uses a combined Chair/CEO model with an independent Lead Director (Dennis A. Suskind) with defined authorities (presides over independent sessions, CEO evaluation, agenda/scheduling input, special meeting authority) .
- Committees: Duffy serves on the Executive Committee; all principal standing committees (Audit, Compensation, Nominating & Governance, Risk, Finance, Market Regulation Oversight, Clearing House Oversight) are 100% independent; 2024 saw 52 committee meetings with ~99% average attendance .
- Board independence/attendance: 95% of directors are independent; all directors attended >75% of board/committee meetings; six regular and one special board meeting in 2024 .
- Executive sessions: Independent directors meet quarterly without management .
Performance & Track Record (selected 2024 highlights)
| Metric | 2024 Result |
|---|---|
| Revenue | $6.1B (+10% y/y) . |
| Adjusted Operating Income | $4.2B (+12% y/y) . |
| Net Income | $3.5B . |
| Adjusted Diluted EPS | $10.26 (+10% y/y) . |
| ADV | 26.5M contracts (+9% y/y) . |
| Cash Earnings (bonus metric) | $3.865B . |
| Dividends Returned | $3.8B (regular + variable) . |
| 2024 TSR (incl. dividends) | ~+15% . |
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay support: ~87% approval after multi-year outreach and program enhancements .
- Recent changes responsive to feedback: added absolute net income margin to PSUs; capped relative TSR PSU payout at 100% if absolute TSR is negative; moved equity plan to double-trigger vesting for awards after Mar 1, 2024 (not affecting Duffy’s contract terms) .
Compensation Peer Group (benchmarking posture)
- Peer group includes exchanges/financial/transaction/tech firms (e.g., ICE, Nasdaq, S&P Global, Mastercard, Schwab, Moody’s, Cboe, T. Rowe, etc.); CME targets ~50th percentile total compensation, with discretion based on performance and market conditions .
Compensation Committee Oversight
- Composition entirely independent; seven meetings in 2024; uses independent consultant Meridian and legal counsel (Skadden) for CEO contract; management also retained Exequity for technical support .
Risk Indicators & Red Flags
- Single-trigger equity vesting for Duffy upon change of control (mitigated by robust Lead Director role and 95% independent board) .
- Life-insurance tax gross-up for Duffy beneficiaries (narrow-scope, legacy feature) .
- CEO pay ratio: 144:1 for 2024 (median employee $166,074) .
- Anti-hedging/anti-pledging policy and executive clawbacks in place (shareholder-friendly) .
- Insider selling pressure watchpoints: large year-end vesting per contract (12/31/2024) and PSU settlements (e.g., 2022–2024 cycle vested Mar-2025) could create discretionary sale windows; no pledging permitted .
Investment Implications
- Strong pay-for-performance alignment: Annual cash incentives are tied to cash earnings that also anchor dividend policy; LTI mix balances shareholder returns (relative TSR) with controllable profitability (absolute net income margin) and includes a downside cap when absolute TSR is negative—supportive for long-term owners .
- Retention risk appears low near-term: Employment agreement extended through 12/31/2026 with year-end vesting constructs and non-compete (1 year), plus ongoing succession oversight by the board; watch for 2025 and 2026 year-end vesting triggers as potential transition signposts .
- Trading signals: Monitor Form 4 activity around March (PSU settlements), September (annual grants), and December (contract-driven vesting) windows; hedging/pledging prohibitions and recoupment policy reduce adverse governance optics if sales occur within policy .