AGM 2018

May 18, 2018

And gentlemen, thank you for standing by, and welcome to the Intercontinental Exchange 2018 Meeting of Stockholders. I will now turn the call over to Jeff Sprecher, Chairman and CEO. Please go ahead, sir. Okay, good. Good morning, everybody, and welcome. I'm Jeff Sprecher. I'm the Chairman and Chief Officer of InterContinental Exchange. And it's my pleasure to welcome you to the 2018 Annual Meeting. I'm going to now call the meeting to order. And this meeting, as I mentioned, is being webcast by our colleagues in the back of the room. In order to comply with the legal requirements and the voting processes for this annual meeting, it's going to be rather formal and as a result, I'm going to read from a script or do my best to read from the script. After the announcement of the voting results and the adjournment of the meeting, the other directors and I together with the company's officers and the representatives of Ernst and Young will be available to answer questions people in the room. I want to take a moment before the formal portion of the meeting to update you on our business and I want to highlight and focus on creating shareholder value by serving our customers. In 2017, it was our 12th year of record earnings and record revenues and we credit this track record of growth to consistent vision which we have to uncover and solve for inefficiencies that exist across markets and to enhance the productivity and the workflows for customers in these markets. In an increasingly uncertain world, the need for the state of the art risk management tools, real time information, trading efficiency and global market connectivity is really paramount for our customers. And in all these areas and across multiple asset class, we've become a proven leader. The secular trends towards automation, towards passive investing are driving demand for our real time fixed income pricing solutions, for our reference data, for our exchange data and for our connectivity and our execution against these trends generated record ICE Data Services revenues in 2017. We're also delivering on the continued growth of our listings business where the New York Stock Exchange remains the world's premier listing venue. And we served 38 of the last 40 IPOs that were greater than $700,000,000 which our industry is considered a large IPO. And while the U. S. Equity market volatility was pretty muted last year, our global connectivity, our financial futures, our options markets, our commodity markets were not and as a result volatility drove higher levels of participation across our global oil and interest rate markets. Having 7 clearing houses in 5 major market centers, we uniquely positioned ourselves to facilitate risk management needs of our growing customer base. I'm pleased to report that 2018 is off to a really strong start for us and we believe that our balance of recurring and transaction based revenues continue to generate consistent growth through the cycle. Because we're not levered to any one cyclical trend and we're not levered to any one region, we've led our peer group for growth over the last decade, a trend that we appear poised to build on this year in 2018 and beyond. Before starting the formal portion of the meeting, I want to recognize our Board of Directors for their dedication and their hard work throughout the year. Their expertise and their efforts have produced strong results with an excellent track record of corporate governance. And finally and not least of which I want to thank our stockholders for your continued confidence in our company. We appreciate the dialogue that we have with you. We strive to earn your continued support and we work to deliver best in class results to keep your support. Let me pause to introduce the other directors and executive officers that are with me today in the room. And if when I call your name, if you would just briefly stand up and then you can sit right down. Sharon Bowen is here, who is a Director Charles Crisp in the front row is a Director Duryea Farooqi is a Director The Lord Hague of Richmond is a Director and also titled. He has a relationship with the Queen that we don't have. Fred Hatfield is a Director. Tom Noonan is a Director. Frederick Salerno is a Director. Judith Spreiser is a Director and Vincent Teasy is a Director. So welcome to the Board. And my management colleagues, Chuck Vice, in the front row here is our Vice Chairman Scott Hill is our Chief Financial Officer our new President, Ben Jackson is here David Goon is here, who is our Chief Strategy Officer Jonathan Short, our General Counsel is here. Lynn Martin, who runs our data business, she is the President and Chief Operating Officer of ICE Data Services. Hester Serafini, who runs our U. S. Clearing Operations, she's the President and Chief Executive Officer of ICE Clear US. Kelly Leffler, our public face, who is our Chief Communications and Marketing Officer. Many of you may have met Andrew Sertkowski, who is our Senior Vice President and Associate General Counsel, also has a big role in preparing this meeting and writing my script. Kevin Maclear is here. He's our Vice President, but he's our Chief Risk Officer. Jimmy Namcom, where's Jimmy? There he is, is our Chief Accounting Officer. David Underwood, in charge of audit. He's our Chief Audit Executive Warren Gardner, who is over here, is now our Vice President of Investor Relations and many shareholders that are listening today know Warren. And Cathy O'Connor is here. She's our Chief Compliance Officer and Vice President. Also from Ken Marshall is here, Greg Stoude and Megan Duffy. And so if you have any questions for our auditors, they're here in the room. We have 2 directors, Ann Karnes and Jean Marc Funeri, who couldn't physically be here today. Both are Europeans, but they are listening and available on the webcast. I would now want to appoint Andrew Certikowski as Secretary of the meeting and he will record the proceedings. Sid Rodrigue is here as has been now for how many years? Many, 10 plus years of Broadridge, which is an independent company that's been appointed as the Inspector of Elections for the meeting to among other thing ascertain the number of shares of our 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 in the ballots. He's going to count all the votes in the ballots. He's going to certify the number of shares represented at the meeting and the vote for each of our proposals. The Inspector of Elections has taken and signed an oath faithfully execute his duties with strict impartiality and according to the best of his ability. Andrew Sertakowski is now going to say a few words about our 28th Annual Meeting procedures. Thank you, Jeff. To conduct the 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 an orderly meeting. Only stockholders of record as of March 20, 2018 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 together voting together as a single class on the matters presented to 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. 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 in our Annual Report on Form 10 ks and elsewhere in ICON filings with the Securities and Exchange Commission. We encourage you to read those materials. Thank you, Andrew. We're now going to proceed with the formal items of business for this meeting. The record date stockholder list, the affidavit of distribution, the proxy vote report and the oath of Inspector of Elections is available for inspection throughout the meeting. It's at the registration table just outside the doors. In addition, copies of the notice of annual meeting and proxy statement related to this meeting are also available at that registration table. Each of you should have registered when you came in the front door and indicated on the sign in sheet whether you plan to vote in person at today's meeting. If you've already voted by proxy, you won't need to vote in person at the meeting unless you want to change your vote. The sign in sheet indicated to us that no stockholders intend to vote in person at the meeting. Is that correct, Andrew? Correct. Nevertheless, anyone who would like to vote in person, Mr. Rodriq, in the back here Sid will give you a blank proxy card and a ballot. So anybody in here that wants to change their vote and vote in person? Great. Thank you. There being no shares to be voted in person, Mr. Certikowski can now review the share information that we have. Thank you. I have the following information regarding the number of shares to be voted today. As of the record date of March 20, 2018, there were 580,976,087 shares and entitled to vote at this 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 1 vote for each share held. The presence in person or by proxy of majority of the shares of ICE's common stock outstanding and entitled 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 519,160,360 shares, which is at least 89% of the total number of shares outstanding in an Topgolfo. The proxies may be voted by Scott Hill, Jonathan Short or Andrew Czerodkowski. Based on this information, a quorum is present and we proceed with the business of the meeting as set forth in the notice of annual meeting and proxy statement. Thank you, Andrew. The notice of annual meeting and proxy statement includes 4 items of business that we're going to vote on by our shareholders today. It's now 8:41 am on May 18, 2018, and we can formally declare the polls open for voting on the proposals as described in the proxy statement. The Board of Directors has recommended that you vote for each of these proposals, proposal number 1, 2, 3 and 4. So let me start with proposal number 1. The first item on this agenda is the election of Sharon Bowen, Ann Cards, Charles Crisp, Doria Farooqi, Jean Marc Funeri, Lord Hague of Richmond, Fred Hatfield, Thomas Noonan, Frederick Salerno, myself, Jeff Sprecher, Judy Spreiser and Vincent Teasy to serve as Directors of InterContinental Exchange. If we're elected, we'll serve a 1 year term, it will expire at the 2019 Annual Meeting of Shareholders or until his or her resignation or removal. You can find more information about each of our director nominees in our proxy statement and the Board has recommended that you vote for each of our nominees. Is there any discussion by anybody in the room regarding the director nominees? Great. I'll now proceed to the next item on the agenda, which is proposal number 2. The second item is the advisory vote on our executive compensation that's set forth in the proxy statement. The Board recommended that you vote for the advisory resolution that approved the compensation of our executive officers that as it was set forth in the proxy statement. Do I have anyone in the room that has any questions about the advisory vote on compensation. Good. Moving on to proposal 3, the 3rd item on our agenda is the approval of our 2018 employee stock purchase plan. You can find more information about the 2018 employee stock purchase plan in our proxy statement. The Board has recommended that you vote for the 2018 employee stock purchase plan. Are there any questions on the stock purchase plan? Good. And now the last item on the agenda, proposal 4, is the ratification and appointment of as the independent registered public accounting firm for fiscal year 2018. As set forth in our proxy statement, the audit committee of our Board of Directors has appointed Ernst and Young as our independent public accounting firm for the fiscal year ended December 31, 2018. The audit committee and the Board has recommended that you ratify this appointment. As mentioned earlier, representatives of are with us today to respond to any questions related to the ratification of their appointment. Are there any questions regarding the appointment of as our independent registered public accounting firm? So now let's get into the voting. Jonathan? Now that all of the proposals have been presented as proxy representing shares of 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 that the shares represented thereby shall be voted in accordance therewith with respect to proposal 1 through proposal 4. Great. Thank you. So I'm now going to conclude the voting on the proposals. It's now 8:43. So that was a 2 minute process on May 18, 2018, and we're going to close the polls on each of the matters. We're going to announce the results of voting and Andrew Sturdakowski has the vote totals. Yes. Before reading the vote totals, I'd like to state that we have a sworn affidavit of distribution from Broadridge. The affidavit states that Broadridge caused the mailing of the information relating to the annual meeting on March 29, 2018. The information was delivered to stockholders of record as close of business on March 20, 2018. 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, Anne Carnes, Charles Crisp, Darya Farooqi, Jean Marc Feneri, Lord Haegel Richmond, Frederick Hatfield, Thomas Noonan, Frederick Salerno, Jeffrey Sprecher, Judy Spreiser and Vincent Teasey are duly elected as Directors of the company. For proposal 2, 466,407,707 shares were voted in favor of the item on the agenda, which is the affirmative vote of majority of votes cast for or against the advisory resolution on our executive compensation. So the advisory resolution on executive compensation is approved. 480,009,590 shares were voted in favor of the 3rd item on the agenda, which is the affirmative vote of majority of votes cast for or against the approval of the 2018 employee stock purchase plan. So the 2018 employee stock purchase plan is approved and 511,849,835 shares were voted in favor of the 4th item on the agenda, which is the affirmative vote of majority of votes cast for or against the proposal to ratify the appointment of Ernst and Young as independent registered public accounting firm for the fiscal year ending December 31, 2018, so the appointment of Ernst and Young is ratified. The final results will be filed with the SEC on our 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, Andrew. So we'd now like to adjourn the formal voting portion of the meeting. Do I have a motion? I move the meeting be adjourned. I second the motion. Great. All in favor say aye. Aye. Those with microphones were loudest. Any opposed? All right. The Annual Shareholders Meeting is now adjourned and that concludes the announced items for the meeting as specified in the notice of annual meeting and proxy statement. I'm now going to open the floor up to questions from our stockholders. And in doing so, I would ask that you reference the rules of conduct that we provided today. The question and answer session is being webcast. And if you'd like to ask a public question, you can step forward to the microphone that's located in the center aisle of the room, introduce yourself and please speak clearly so the people listening on the webcast can hear you. As I mentioned earlier, the ICE Board of Directors, our management team and will mingle through the audience following the meeting to allow stockholders to privately ask questions of us if you'd like. So is there anyone that would like to ask a question? Please. James? Good morning, Mr. Sprecher, members. It wouldn't be annual meeting if I didn't get to see you in front of that microphone. Welcome, by the way. Thank you. My name is James Rothenberg. I am the managing member of a entity that controls excess of 45,000 shares. Thank you for that. It's a vote of confidence in your record and the Board's record as well. A couple of things, I had an opportunity to meet with Scott and with Mr. Sertkowski. Thank you. Got it close to right at least. Prior to the beating, I had a number of concerns. I think in substantial respect they've been answered. One is technical. The anti hedging policy as described in the proxy describes the prohibition against employees. In discussing this before the meeting, I understand that it extends significantly further to dependents, spouses, other peoples in control. My suggestion there is you just say that just to show that it's that some thought has been given to that issue. It's consistent with brokerage practice. I recommend that you just supplement your disclosure there. The major issue is created by the 2017 Tax Act, which created a 30% limitation on debt as defined by income. And looking at your statements that looked on the face of it that you might be in excess of that limitation, I've been assured that that's not the case. And I'm apparently going to have some meetings with tax people associated with it. But I would recommend that since there's no discussion of that in the 10 ks or in proxy or in other information that you can you have some discussion of the implication of that of the impact of that tax limitation. I suggested that there is a problem. I wrote a letter on December 27 last year to the corporate secretary as outlined in your statement. I've not received a response yet, but I will. I understand. And that if there is a problem with that, that the Board consider a convertible preferred exchange offering, which would raise the equity, reduce the debt. Given your high standing of credit and you could put a conversion price, let's say, of $80 a share, which presumably you'd be happy to do at this point, That that the at least there'd be some discussion of that. It's a very significant piece of tax less inflation. I know the treasury is going to come out with regulations on this. And I know that there's going to be a further limitation specified in the Act in 2025 or certain items that are currently covered or not. So it's in my mind, it's a material matter that affects the business of the ICE. And as a securities attorney for 47 years, I think it's worth some discussion. And if you're in full compliance, great, just say that you are and that should cover it. But I don't think there should be a complete absence of discussion. It wasn't discussed in your analyst meeting. It's not in your public statements. And I think it would be worthwhile to have some statement of your policy, where you are, where you intend to be in the future, if you should make offerings of additional equity, would you still be in compliance? All that range of issues. So I appreciate the discussions that I've had prior to meeting that there'll be future contact with me on this issue and wish to congratulate you on your continuing success. Thank you. Thank you, James. And we'll take that on board. Thanks for pointing that out. We do try, particularly because we're the owner of the New York Stock Exchange to give tremendous amount of disclosure around these financial issues in our Qs and Ks. And you are rightly correct in that there are a number provisions in the new U. S. Tax laws that haven't been fully vetted and worked out by other agencies and government. So you may have seen that Scott Hill, our CFO, in our last earnings call mentioned that we took a provision for some additional tax because we weren't able to actually fully define some of these undefined issues that we hope will ultimately break our way. But we'll take that on board and thank you. Thank you as always for your input. Any other shareholders like to ask a question? Okay, great. With that then I'll close the meeting. As I mentioned, we're going to all stay in the room here to enjoy the company of each other and anybody that has a private question you'd like to ask me or anyone on the Board or management team or auditors will be here to accommodate you. And with that, thank you as always for your confidence in us and another great year.