CBOE’s annual meeting marks quiet change of leadership

CBOE Holding Inc.’s third annual shareholder meeting on Thursday marked a quiet changing of guard at the company. William Brodsky, the executive who oversaw CBOE’s transition to a publicly held firm, presided over his final meeting as chief executive officer. The most noise during the meeting came from the trading room just beyond the observation windows.

Brodsky got right down to business, “We have three proposals on which stockholders are voting at this meeting. There will be time for discussion of the proposals after they are introduced.” But shareholders had no questions, comments or concerns.

While awaiting a preliminary report of voting results, Brodsky recapped the past year. Though total trading volume at CBOE decreased in 2012 from a year earlier, more than 1 billion contracts were traded at the exchange for the fifth consecutive year. As Brodsky noted, CBOE maintained the largest market share of any U.S. option exchange last year.

“As a result 2012 was a record financial year for our company despite a backdrop of relatively low volatility and lower trading volumes across the world’s equity markers,” Brodsky said.

Brodsky glossed over CBOE’s year-end top and bottom lines, saying the company achieved, “new all-time highs in key financial metrics set in 2012 including record revenue, operating margin and earnings per share.”

While the industry continues to see lower trading volumes this year, CBOE posted strong first quarter results. “On an adjusted basis, net income increased 33 percent to $44.4 million dollars,” Brodsky added.

Brodsky shifted focus to CBOE’s strategic initiatives for the remainder of 2013, turning the podium over to Ed Tilly, president and chief operating officer.

“Given our solid financial position and our track record of investing in future growth CBOE is well-positioned to continue to grow our business and return value to stock holders,” Tilly said.

One way the company plans to grow is by expanding the trading hours for its popular Volatility Index, known as VIX. A software bug delayed implementation of the change and caused a half-day outage in April. At the meeting Tilly assured shareholders that the delay was temporary. “We are committed to completing that very important project later this year,” Tilly noted.

After the formal presentation, preliminary voting results were revealed.

Shareholders approved the 14 directors candidates, each for a one-year term. While CBOE’s board is typically comprised of 15 directors, Brodsky reminded shareholders, “One of the director nominees described in the proxy statement, Mr. Douglas Shulman, has withdrawn his nomination to serve as director.” Shulman, a former commissioner of the Internal Revenue Service, removed his candidacy in the wake of allegations that he targeted conservative political groups that were applying for tax-exempt status.

In addition, shareholders approved compensation packages for company executives and ratified the appointment of Deloitte & Touche as the company’s independent accounting firm for fiscal 2013.

The remainder of the meeting turned into a tribute to Brodsky’s work at CBOE.

One shareholder reflected on Brodsky’s leadership when the CBOE was implementing the transition to electronic trading. “Bill was not stepping in front of the freight train of change,” Norman Freedman said, referring to how Brodsky created a hybrid system of traditional trading and electronic transactions.

Before wrapping up the meeting, lead director James Boris recounted Brodsky’s accomplishments from incorporating electronic trading and taking the company public to avoiding a merger.

“We’re able to look at ourselves, at how do we grow organically in becoming better and bigger than we are today,” Boris said. “We couldn’t do that without the kinds of changes that Bill led us through.”

At the close of the meeting Brodsky formally stepped down as CEO and Tilly assumed the CEO title.

“It has been my honor and great pleasure to have served as CEO for the last 16 and a half years,” Brodsky said. “Ed Tilly, Ed Provost and I worked closely together to ensure that our company’s leadership is well positioned to begin the next great chapter in CBOE’s history.”

The most noise at the Chicago Board Options Exchange annual meeting came from the trading floor.
The most noise at the Chicago Board Options Exchange annual meeting came from the trading floor.


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