AGM 2019

May 15, 2019

Welcome, everybody. I'm Jeff Sprecher. I'm the Chairman and Chief Executive Officer of InterContinental Exchange, and it's my pleasure to welcome you to our 2019 annual meeting. I'm going to call the meeting to order and I'm going to note that this meeting is being webcast. This gentleman in the back are helping to facilitate that. In order to comply with the legal requirements of the voting process for this annual meeting, it will be rather formal. And as a result, I'm going to read from a script. After the announcements of the voting results and after we adjourn the meeting, the other directors and I and all of our company's officers and representatives from will be available in the audience to answer questions from people that would want to come up and approach us. This meeting is largely procedural and I do want to take a moment before we start the formal process of the meeting to update you on our business. I want to highlight and focus on a couple of issues that we have and a way that we're serving our customers and trying to create shareholder value. 2018 marked our 13th year of record revenues and adjusted earnings per share. It's a strong top line contribution that came from yes, thank you. I know. It's amazing, I mean, even for us as managers that we continue to increase after year. We were able to grow our top line transaction business and that was also aided by compounding growth in our subscription business. In our futures and options markets, our global exchanges and clearinghouses handled record volume in 2018, and it was driven by the strength of our position in the global oil markets, in the global natural gas markets, and in the futures markets for financial products. At the New York Stock Exchange, our cash equities volumes increased 14% year over year and we continue to bring efficiencies to that market along with transparency. We helped 73 corporations raise $30,000,000,000 in initial public offering. And as industry participants search for greater cost efficiencies, our suite of data products are increasingly in demand and we had another year with 5% top line growth on an organic constant currency basis. So as we turn to this year 2019, we're off to a very strong start. In the Q1 and despite really muted volumes across the entire trading industry, we grew revenues and our earnings per share and free cash flow. And as we look to the future, we're really excited about the opportunities that we're focused on and we continue to feel that we'll deliver growth to stockholders. Before starting the voting portion of this meeting, I want to recognize the Intercontinental Exchange Board of Directors for their dedication and the hard work that they gave us throughout the year. Their expertise and their efforts have contributed to a strong record of corporate governance. I also want to thank Anne Karnes for her past service on our board. Anne is not standing with us today for reelection because of a potential conflict of interest that she has. And finally, and last but not least, I want to thank our stockholders for your continued confidence in us. We appreciate the dialogue that we have with you and we work every day to try to earn your continued support by delivering the best in class results. I want to introduce the other directors and executive officers of ICE who are here with us today. And if you all wouldn't mind standing when I call your name. We have Sharon Bowen, who is a Director Charlie Crist, who is a Director Darya Farooqi, a Director Jean Marc Fanari, a Director Lord William Hague of Richmond, who is a Director Fred Hatfield is a Director Tom Noonan is a Director Fred Salerno is a Director, in fact our Lead Independent Director Judy Spreiser is a Director and Vince Tisi is a Director. So they're all here in the front row if you'd like to come up after the meeting and meet them. And also with me from our management team is Chuck Weiss, our Vice Chairman Scott Hill, our Chief Financial Officer Ben Jackson, our President David Goon, our Chief Strategic Officer Andrew Certikowski, our General Counsel Mark Wasserseug, our Chief Operating Officer Stacy Cunningham, who's the President of the New York Stock Exchange Group Lynn Martin, who is the President and Chief Operating Officer of ICE Data Services Hester Serafini, who is the President and Chief Operating Officer of ICE Clear U. S. Kelly Leffler, who is Chief Executive of Bakkt Holdings. We have Doug Foley, who is our SVP of HR and Administration. Octavia Spencer is going to assist me today, who is our Corporate Secretary. Kevin Maclear is our Corporate Risk Officer. Kathy O'Connor is our Vice President of Compliance, a bigger area every year, I would say. Jeremy Namkong is our Chief Accounting Officer, excuse me, Jimmy Namkong is our Chief Accounting Officer and Warren Gardner is our Vice President of Investor Relations. Also here is Greg Stoud and Megan Duffy from So at this point, I'd like to reappoint Octavia Spencer as the secretary of the meeting and she's going to record the proceedings. Sid Rodriguez Broadridge is in the back as he has been for the last 14 years, I will comment. And he's been appointed as the Inspector of Elections. We'd like to actually put some competition in this, but Sid does a very good job and charges us accordingly. He sits in the Inspector of Elections. And among other things, he's going to ascertain the number of shares of ICE's common stock outstanding and the voting power of each share. He's going to determine the shares that are represented at the meeting and the validity of the proxies and ballots. He's going to count all the votes and ballots and he's going to certify the number of shares that are represented at the meeting and the vote for each of our proposals. So he's got a big job here. The Inspector of Elections has taken and signed an oath to faithfully execute his duties with strict impartiality and according to the best of his ability. Octavia will now say a few words about our 2019 annual meeting procedures. Thank you, Mr. Chairman. To conduct this meeting in an orderly fashion, we respectfully direct your attention to the rules of conduct you received when you entered the meeting this morning. Any stockholder or proxy holder wishing to address the meeting should at the appropriate time wait to be acknowledged by the Chairman. We thank you in advance for helping us conduct the Only stockholders of record as of March 19, 20 Only stockholders of record as of March 19, 2019 are entitled to vote at this meeting. The only securities that can be voted at this meeting are shares of ICE's common stock, which will vote together as a single class on the matters presented to the stockholders at this meeting. The voting requirements for each of the items on the agenda are described in the proxy statement. I will now read our forward looking statement disclosure and voting share information. The matters discussed at this meeting may include certain forward looking statements that represent ICE's expectations or beliefs. These statements involve substantial risks and uncertainties that may be beyond our control. Our actual results could differ materially from those projected in these forward looking statements. Additional information concerning factors that could cause actual results to be materially different is contained in the Risk Factors section of our annual report on Form 10 ks and elsewhere in ICE's filings with the Securities and Exchange Commission. We encourage you to read those distribution, the proxy vote report and the oath of the Inspector of Elections is available for inspection throughout the meeting at the registration table upfront. In addition, copies of the notice of annual meeting and proxy statement relating to this meeting are also available at that registration table. Each of you should have registered at the front door when you came in and you should have indicated on the sign in sheet whether you plan to vote in person here at the meeting. If you've already voted by proxy, you don't need to vote in person at this meeting unless you wish to change your vote. The sign in sheet indicates to us that no stockholders intend to vote in person at this meeting. Is that correct? Nevertheless, if anyone would like to vote in person, Mr. Rod Reeg in the back here can give you a blank proxy card to use as a ballot. Is there anybody in the audience that wants to change their vote to vote in person? Great. There being no share to be voted in person at this annual meeting, Ms. Spencer will now review the share information. Octavia? I have the following information regarding the number of shares to be voted today. As of the record date of March 19, 20 19, there were 565,720 2,940 8 shares of ICE's common stock outstanding and entitled to vote at this annual meeting. Such shares constitute all of the shares of ICE's capital stock entitled to vote at the meeting and record holders of such shares are entitled to one vote for each share held as of the record date. The present in person or by proxy of a majority of the shares of ICE's common stock outstanding and entitled to vote at the meeting are required for a quorum. Represented at the meeting by proxy are with regard to each of the proposals at least 510,133,008 100 and 26 shares, which is at least 90% of the total number of shares outstanding and entitled to vote. The proxies may be voted by Scott Hill, Andrew Certikowski and Octavia Spencer. Based on this information, a quorum is present and we can proceed with the business of the meeting as set forth in the notice of annual meeting and proxy statement. Great. The notice of annual meeting and proxy statement notes there are 3 items of business that we're going to vote on today by the stockholders. It is now roughly 8:40 am Eastern Time on May 17, 2019, and I'm going to formally declare the polls to be open for voting on the proposals as described in the proxy statement. The Board of Directors has recommended that you vote for each of the proposals number 1, 23. The first item on the agenda is the election of Sharon Bowen, Charles Crisp, Doria Farooqi, Jean Marc Fanari, Lord Hague of Richmond, Frederick Hatfield, Thomas Noonan, Frederick Salerno, myself Jeffrey Sprecher, Judith Spreiser and Vincent Tisi C. To serve on the Board of Directors of Intercontinental Exchange. If elected that they will serve 1 year and it will expire at the 2020 Annual Meeting of Stockholders or until his or her earlier resignation or removal. You can find out more information about each of the director nominees in our proxy statement. The Board has recommended that you vote for each of our nominees. Do we have any discussion from the floor regarding any of our director nominees? Great. So let's proceed to the next item on the agenda. The second item is the advisory vote on our executive compensation as set forth in our proxy statement. Again, the Board has recommended that you vote for the advisory resolution to approve the compensation of our executive officers as set forth in our proxy statement. Are there any questions regarding the advisory vote on compensation? Thank you. And third, we're going to now proceed to the next item. The final item on our agenda, which is the ratification of the appointment of as independent registered public accounting firm for fiscal year 2019. As set forth in the proxy statement, the Audit Committee of our Board of Directors has appointed as our independent registered public accounting firm for the fiscal year that ends December 31, 2019. The audit committee and the Board has recommended that you ratify their appointment. As mentioned earlier, representatives of are with us today in the back here to my left to answer any questions related to the ratification of their appointment. Are there any questions regarding the appointment of independent registered public accountants? Great. So let's proceed with the proxy voting. Now that all the proposals have been presented as proxy excuse me, Andrew, I'm going to ask you. Yes, exactly. Not at all the proposals have been presented as proxy representing shares at the meeting, I hereby vote the shares that I represent through proxy and authorize the delivery of a ballot and corresponding proxies to the Inspector of Elections, so that the shares represented thereby shall be voted in accordance therewith with respect to proposal 1 through proposal 3. Perfect. Thank you. So that now concludes the voting on the proposals. I have the time at 8:43 am Eastern Time on May 17, 2019 and the polls on those matters are now officially closed. We'll announce the results of the voting. Ms. Spencer, do you have the totals for me? Yes. Before reading the vote totals, I would like to state that we have a sworn affidavit of distribution from Broadridge Financial Solutions Inc. The affidavit states that Broadridge caused the mailing of the information related to the annual meeting on March 28, 2019. The information was delivered to stockholders of record as of the close of business on March 19, 2019. The voting results are as follows. Each director nominee received more votes cast for such nominees' election than votes cast against such nominees' election. And therefore, Sharon Bowen, Charles Chris, Doria Farooqi, Jean Marc Fornieri, Lord Hague of Richmond, Frederick Hatfield, Thomas Noonan, Frederick Salerno, Jeffrey Sprecher, Judith Spreiser and Vincent Tisi are duly elected as directors of the company. 453,874,845 shares were voted in favor of the 2nd item on the agenda, which is the affirmative vote of the majority of votes cast for or against the advisory resolution on our executive compensation, so the advisory resolution on executive compensation is approved. And 504,754,000 744 shares were voted in favor of the 3rd item on the agenda, which is the affirmative vote of the majority of votes cast for or against the proposal to ratify the appointment of as independent registered public accounting firm for the fiscal year ending December 31, 2019. So the appointment of is ratified. The final vote results will be filed with the SEC on a current report on Form 8 ks in the next few days. The certificate and report of the Inspector of Elections, which contains the vote totals will be filed with the minutes of this meeting. Great. Thank you, Octavia. We're now going to adjourn the formal portion of the meeting. And can I have a motion? I move that the meeting be adjourned. I second the motion. Thank you. All in favor of adjournment, please say aye. Aye. Any opposed, nay. I'm going to shortly open the meeting up for questions. But before I do, I want to acknowledge our long time colleague and friend, Ian McDonald of T. Rowe Price. When this company went public 14 years ago, we went through a process of meeting people and discussing our vision for the future. We met Ian in that process And T. Rowe, under Ian's guidance, has continued to be one of our largest shareholders for 14 years. Ian recently stepped away from T. Rowe because of health issues and I want on behalf of the management team to send our strong regards to he and his family as he's battling some issues and thank him for his support over many, many years. Let me open up the floor now for questions. Is there anybody that would like to ask a question? Please and if you wouldn't mind stepping to the mic and introducing yourself. Thank you, Mr. Sprecher. My name is James Rothenberg, and I am the Management Director of Complex Enterprises Inc. That holds in excess of 45,000 shares. Great. Thank you. I wanted to inquire about current litigation and specifically the fee litigation where the SEC denied the last fee request and whether we refiled that fee request. And also understanding the opposition to the fee request by various entities. That's the first matter. The second matter is the litigation filed by ICE against the SEC and specifically against certain proposed rules also joined in opposition by other exchanges and make a request that all these documents that are public documents be either attached to 10 Qs, the annual report and 10 ks, so that shareholders can, on their own, review what the specific issues are. Thank you, Mr. Chairman. Great. Thank you. I'll take your request under advisement. I'll talk to our team, both our public facing team and our legal team about doing that on your behalf and on behalf of other shareholders. So there are really two issues that are embedded in there. They're highly related actually, which is the SEC focus on fees. On data fees, what the SEC has said is, in the future, they want us to demonstrate that there's competition. They have an obligation to make sure that the markets are competitive and they want us as filers to provide more evidence that whenever we're filing for fee increase, decrease or even a new service that has no prior history, that there's competition. We believe there is strong competition. We believe that it will be easy for us to demonstrate that honestly. And we know that there will be other people that want lower fees. And so this will be a relatively litigious process, which is essentially what happens these days at the SEC. On the second part of your question, you're correct in that we are in litigation with the SEC over a fee pilot where the SEC in our view is trying to assert price controls for which they we don't believe they have jurisdiction. And the reason we say that is that they'd like to put some temporary price controls on the market and then see how the market reacts. And we don't believe that the U. S. Capital markets are a petri dish where we should be trying experiments. And we don't believe that the commission has the authority to try experiments in the market. We believe that their authority is to make sure that they're fair and orderly markets, but not to experiment with markets. So all of those matters relatively intertwined and relatively complex, unfortunately, are going through legal processes. And you're correct that there's a fair amount of documentation that we could provide that is in the court system that might be of interest to shareholders to further amplify, if you will, our views. So thank you, James. Thank you for that clarification. What forum is this litigation taking place? Is it taking place administratively within the SEC or is it in the District Court or the District of Columbia? Yes. It's both. The process at the SEC is essentially a staff driven process, then escalated to the full commission, then escalated there from internal SEC judges and then potentially then outside into the court system, which is where we are on the fee pilot right now. Having worked at the SEC, it's their home territory. They lost a big case on their administrative judges recently in the DC Circuit. So yes, it's clearly a better form to be in the court system than the administration. Although in fairness, we won our case set with the administrative judges, but that still doesn't seem to That's why I'm pointing to the court advantage. Yes, the commissioners can reverse and has reversed. Judges, I prefer and I assume ICE prefers to be an impartial form. Thank you. Thank you so much. Appreciate seeing you again. Are there any other questions from the audience? Well, as I mentioned before, after the meeting is concluded, we're going to stay around and we'd love to talk to people privately, get to know you. And so feel free to approach us in any way you can. And as mentioned earlier, we appreciate very much the support of our shareholders. It was a really good year for us. We're starting out really well this year. And I hope next year we'll be back with more positive news for you. So with that, I'll conclude the meeting. Gentlemen, you can stop the webcast and thank you very much.