Business as usual but no mention of ‘the elephant in the room’ at CME annual meeting

 

CME Group’s annual meeting was held at the exchange operator’s headquarters at 20 S. Wacker Drive.
CME Group’s annual meeting was held at its headquarters at 20 S. Wacker Drive.

It was a much quieter affair at CME Group Inc.’s annual shareholder meeting this year. As some three dozen shareholders gathered May 22 at the exchange operator’s headquarters on South Wacker Drive, there were no signs of the aggressive protestors who repeatedly disrupted last year’s meeting.

Stepping up to the podium, CME Group Executive Chairman Terrance A. Duffy reminded the half-empty room, “Our goal today is to conduct an effective and orderly meeting during which everyone has an opportunity to be heard.”

And business did proceed in an orderly manner. Attendees sat quietly as they waited to hear the preliminary voting results for the six proposals on this year’s agenda. It was a sharp contrast with last year when protesters complained loudly about state tax breaks CME received in exchange for a commitment to keep its headquarters in Chicago.

As expected, shareholders ratified the appointment of Ernest & Young LLP as the exchange operator’s independent auditor and approved the compensation packages of executive officers.

However, a shareholder proposal from Norges Bank for “the inclusion of shareholder-nominated candidates for the board of directors” failed to garner sufficient support.

After adjourning formal proceedings, Duffy shifted his attention to CME Group’s performance in 2012. He said, “Total company volume was 30 billion contracts traded, which generated more than $1.2 billion in cash from operations.”

“Reflecting this strength, we raised our regular quarterly dividend by 10 percent in 2012,” Duffy added.

However, Duffy made no mention of CME Group’s top and bottom lines for 2012 before he abruptly proceeded to highlight his company’s “global growth strategy” and its “successful acquisition of the Kansas City Board of Trade last year.”

That was likely because the exchange operator’s financial performance was far from impressive in 2012. In all four quarters last year, both total revenue and net income for CME Group shrunk by double-digit percentage points compared with the same quarter the previous year.

When Duffy passed the torch to CME Group CEO Phupinder Gill, he adopted a similar tactic. Choosing to focus exclusively on the CME Group’s performance in the first quarter of 2013, Gill said, “Beginning with the energy division, April saw an average daily volume of 1.9 million contracts, making it the most liquid and extensive energy complex in the world.”

As Duffy was looking to wrap up the meeting, one shareholder said what many were thinking: “Terry, I appreciate the work and effort you’ve put into all you’ve done, but it seems as we go along, ICE (Intercontinental Exchange Group Inc.) continues to gain more market share and traction than us; I’d like to get your thought on that.”

And the gist of the response from Duffy was: “In all due respect to them, it’s all been their good fortune.”

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