William R. Shepard
CME GROUPAbout William R. Shepard
Independent director of CME Group, age 78, serving on the board since 1997. Founder and President of Shepard International, Inc. (futures commission merchant); previously CME’s Second Vice Chairman (2002–2007). Deep risk oversight credentials: initial chair of the Clearing House Oversight Committee (2016–Aug 2021), currently Co‑Chair of the clearing house risk committee and member of the interest rate swaps risk committee .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| CME Group | Second Vice Chairman | 2002–2007 | Senior leadership role supporting exchange governance |
| CME Group | Chair, Clearing House Oversight Committee | 2016–Aug 2021 | Initial chair; oversight of clearing house risk management program and senior management of the Clearing House |
| CME Group | Co‑Chair, Clearing House Risk Committee | Current | Functional risk oversight; complements board risk governance |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Shepard International, Inc. | Founder & President | Not disclosed | Futures commission merchant; long‑time market participant background |
Board Governance
| Item | Details |
|---|---|
| Committee memberships (board) | Clearing House Oversight Committee (member); Finance Committee (member); Risk Committee (member) |
| Functional committees | Co‑Chair, clearing house risk committee; member, interest rate swaps risk committee |
| Committee meeting frequency (2024) | CHOC: 8; Finance: 5; Risk: 5; each committee 100% independent |
| Independence | Identified as Independent in director biography; board applies categorical standards exceeding Nasdaq criteria |
| Attendance | Board held 6 regular and 1 special meeting; each director attended >75% of combined board+committee meetings in 2024 |
| Years of service on this board | Director since 1997 |
Fixed Compensation
| Component (2024 non‑exec director package) | Amount | Notes |
|---|---|---|
| Annual cash stipend | $95,000 | Directors may elect shares in lieu of cash |
| Board committee member retainer | $12,000 | Per committee, annually |
| Committee chair retainer | $25,000 | For non‑exec director chairs |
| Annual equity stipend | $145,000 | Granted in stock; no vesting restrictions |
| Lead Director stipend | $50,000 | If applicable |
| Functional committee meeting fees | $1,000–$1,250 | Per meeting (e.g., clearing house risk, interest rate swaps risk) |
| 2024 Director Compensation (Shepard) | Amount |
|---|---|
| Fees earned or paid in cash | $102,668 |
| Stock awards (grant‑date fair value) | $240,102 |
| Total | $342,770 |
| Valuation basis for 2024 director stock grant | Closing price $194.10 on June 25, 2024; awards not subject to vesting |
Performance Compensation
| Performance‑linked element | Detail | Applies to Directors? |
|---|---|---|
| Performance metrics tied to director pay | None disclosed; director equity is a fixed stipend, not performance‑based; no vesting restrictions | No |
| Election to receive equity in lieu of cash | Directors may receive some/all cash stipend in shares; excess stock award values reflect such elections | Yes |
| Options/PSUs/vesting schedules | No director option grants or PSU vesting disclosed for 2024; single annual stock award fully vested at grant | No |
Other Directorships & Interlocks
| Category | Disclosure |
|---|---|
| Current public company boards (past five years) | Not disclosed in biography; proxy indicates public directorships would be noted in bios (none listed for Shepard) |
| Private/non‑profit boards | Not disclosed |
| Interlocks/conflicts via market participation | See Related Party/Conflict section below |
Expertise & Qualifications
- Founder and President of an FCM; investor in a major clearing firm; decades‑long market participant experience supporting oversight of clearing house risk management .
- Extensive risk oversight engagement across CHOC and risk committees, aligning with CME’s core clearing and market risk profile .
- Independence affirmed; governance framework exceeds Nasdaq independence criteria .
Equity Ownership
| Security Class | Beneficially Owned Shares | Notes |
|---|---|---|
| Class A common | 259,237 | Includes 256,805 shares held in trust; includes 495 shares shared joint ownership and voting power |
| Class B‑1 | 5 | Held in trust |
| Class B‑2 | 2 | Held in trust |
| Class B‑3 | 1 | Held in trust |
| Ownership % of any class | <1% | None of directors/NEOs own ≥1% of any class |
| Stock ownership guidelines | 2× total annual retainer ($480,000 for 2024); 5‑year compliance window; all directors with ≥5 years have satisfied the guideline | Shepard meets guideline (≥5 years) |
| Hedging/pledging | Insider trading policy prohibits short selling, hedging, and pledging of Class A shares by directors/executives |
Governance Assessment
- Board effectiveness: Shepard’s long tenure and functional co‑chair role in clearing house risk oversight add institutional knowledge and risk governance depth in CME’s core clearing activities . His current board committee memberships (CHOC, Finance, Risk) reinforce oversight across clearing risk, capital structure, and enterprise risk .
- Independence and attendance: Identified as Independent; board applies categorical independence standards exceeding Nasdaq and confirmed >75% attendance across board+committees for each director in 2024, supporting engagement .
- Compensation alignment: 2024 mix skewed to equity via election ($240,102 stock vs. $102,668 cash), signaling higher equity alignment; however, director equity is a fixed stipend without vesting or performance conditions (no PSUs/options), limiting pay‑for‑performance linkage for directors .
- Ownership alignment: Significant beneficial holdings across Class A and B shares, with trust holdings and joint ownership noted; meets stock ownership guideline given tenure, enhancing alignment .
- Potential conflicts and controls: As owner/minority investor in trading firms that paid CME >$120,000 in 2024 via clearing firms, there is inherent conflict risk; mitigants include published fee schedules, categorical independence review, conflict‑of‑interest policy, and pre‑approval under the audit committee’s related‑party policy .
- Compliance signals: Section 16(a) filings were timely in 2024 for all directors except Mr. Durkin; no delinquency noted for Shepard .
RED FLAGS
- Related‑party exposure from market participation (payments >$120,000) warrants ongoing monitoring, albeit pre‑approved under policy and conducted at published rates .
- Very long tenure (since 1997) can raise entrenchment concerns in some governance frameworks; balanced by continued independence determinations and active risk oversight roles .
- Director equity lacks performance‑based features or vesting conditions, limiting pay‑for‑performance signals for non‑executive directors .