AGM 2015

May 15, 2015

I'm the Chairman and Chief Executive Officer of ICE, and it's my pleasure to welcome you to our 2015 Annual Meeting, and I will now call the meeting to order. Before we get started, let me note that the meeting is being webcast, which is why I have a microphone here. Also to comply with legal requirements, the voting process for the annual meeting is rather formal. And as a result, I will be reading from a script for the formal portion of the meeting. After the announcement of voting results, I'll give a brief report on the business. The other directors and I, together with the company's officers and representatives of Ernst and Young, will be available to answer questions from people in the room after the meeting. I'd like to now introduce you to the other directors and the executive officers of ICE who are here with us today. All of the directors that are attending this meeting nominees and I'd like my fellow directors to please stand when I introduce them. Charles Crisp, who is a Director Jean Marc Fanari, who is a Director Fred Hatfield, who is a Director Doctor. Terence Martell, who is a Director Sir Colin McCarthy, who is a Director Sir Bob Reed, who is a Director Fred Salerno, who is a Director Judith Spreiser, who is a Director Vincent Tisi, who is a Director and now our management team, Chuck Weiss, who is our President and Chief Operating Officer Scott Hill, who is our Chief Financial Officer David Goon, who is our Chief Strategic Officer Tom Farley, who is the President of the New York Stock Exchange Jonathan Short, who is our General Counsel Kelly Leffler, who is our Senior Vice President of Corporate Communications, Marketing and Investor Relations Doug Foley, who's our Senior Vice President of Human Resources and Administration Andrew Certikowski, who's our Senior Vice President, Associate General Counsel. Also in attendance are Carol Lloyd, Ken Marshall and James Douglas of Ernst and Young LLP. So I'd now like to appoint Andrew Certikowski as the Secretary of this meeting to record the proceedings. Sid Rodrigue of Broadridge makes his annual appearance actually has been appointed as the Inspector of Elections for this meeting to ascertain the number of shares of ICE's common stock outstanding and the voting power of each, to determine the shares represented at the meeting and the validity of the proxies and ballots to count all votes and ballots and to certify the number of shares that are represented at the meeting and to vote for each of those proposals. The Inspector of Election has taken and signed an oath to faithfully execute his duties with strict impartiality and according to the best of his ability. The record date of our stockholder list affidavit of distribution, proxy vote report and the oath of the Inspector of Elections will be available for inspection throughout the meeting at the registration table. In addition, copies of the notice of annual meeting and proxy statement relating to this this meeting are also available at the registration table. Only stockholders of record as of March 17, 2015 are entitled to vote at this meeting. The only securities that can be voted at this meeting consist of ICE's common stock, which will vote together as a single class on the matters presented to the stockholders in the proxy statement. So I'd now like to ask Andrew Certikowski to read out the forward looking statement disclosure and the voting share information. Thank you, Jeff. The matters discussed at this meeting may include certain forward looking statements that represent ICE's expectations or beliefs. These statements involve substantial 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 are contained in the Risk Factors section of our annual report on Form 10 ks and elsewhere in ICE's filings with the SEC. We encourage you to read those filings. Each of you should have registered at the front door when you came in and indicated on the signing sheet whether you plan to vote in person at the meeting. If you've already voted by proxy, you don't need to vote in person at this meeting. The sign in sheet indicates that no stockholders intend to vote in person at this meeting. A few of you gave us your proxy cards at the beginning of the meeting, and I've given those to Sid Rodri. Based on the fact that there are no shares to be voted in person at the annual meeting, I have the following information regarding the number of shares we voted today. As of the record date of March 17, 2015, there were 111,753,630 2 shares of Icen's common stock outstanding and entitled to vote at the meeting. Such shares constitute all of the shares of Icen Capital stock entitled to vote at the meeting and the record holders of such shares are entitled to 1 vote for each share held as record date. The presence in person or by proxy of a majority of the shares of ICE's common stock outstanding and atopic vote at the meeting are required for a forum. Represented at the meeting by proxy are, with regard to each of the proposals, at least 95,385,048 shares, which is at least 85% of the total number of shares outstanding and are titled to vote. The proxies may be voted by Scott Hill, Jonathan Short or me. Based on this information, a quorum is present and we can now proceed with the business of the meeting as set forth in the notice of the annual meeting and proxy statement. Thank you, Andrew. The annual the notice of annual meeting and proxy statement notes 4 items of business that we're going to vote on by the stockholders. It is now 8:37 a. M. On May 15, 2015, and I 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 these proposals. So the first item on the agenda is the election of 10 directors that are specified in the proxy statement. If elected, they will serve a 1 year term expiring at the 2016 Annual Meeting of Stockholders or until his or her various resignation or removal. You can find more information about each of our director nominees in the proxy statement, The Board has recommended that you vote for each of our nominees. I'll entertain a motion at this time that the following resolution be adopted by our stockholders. Resolved that Charles Kris, Jean Marc Feneri, Fred Hatfield, Terence Martell, Sir Colin McCarthy, Sir Bob Reid, Frederick Salerno, Jeffrey Sprecher, Judith Spreiser and Vincent Tisi are hereby elected as Directors of InterContinental Exchange Incorporated to serve a 1 year term expiring at the 2016 Annual Meeting of Stockholders. Is there any discussion of our Director nominees? Great. Is there a motion to approve this resolution? As proxy representing shares, I so move. As proxy representing shares at the meeting, I second the motion and 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 the election of directors. Since there are no stockholders voting in person, I now declare the polls to be closed as to the election of directors and will now proceed to the next proposal. The second item on our agenda is the advisory vote on our executive compensation as set forth in the proxy statement. The Board recommends that you vote for the advisory resolution resolution approving the compensation of our executive officers. At this time, I'll entertain a motion that the following resolution be adopted by the stockholders. Resolved, that the advisory resolution to approve the executive compensation for the ICE named executive officers as specified in the proxy statement is hereby approved. Are there any questions regarding advisory vote on compensation? Is there a motion to approve this resolution? As proxy representing shares of the meeting, I so move. As proxy representing shares of the meeting, I second the motion and 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 the advisory vote on executive compensation. Great. The 3rd item on our agenda is the excuse me, since there's no stockholders voting in person, I'll declare the polls closed on that second proposal. The 3rd item on our agenda is the ratification of the appointment of Ernst and Young as independent registered public accounting firm for the fiscal year of 2015. As set forth in the proxy statement, the Audit Committee of our Board of Directors has appointed Ernst and Young as our independent registered public accounting firm for the fiscal year that would end December 31, 2015. The Audit Committee and the Board have recommended that you ratify this appointment. As mentioned earlier, representatives of Ernst and Young are here with us today, in the back row I note, to respond to any questions related to the ratification of their appointment. At this time, I'll entertain a motion that the following resolution will be adopted by the stockholders. Resolve that the appointment of the by the Audit Committee of Board of Directors of the firm of Ernst and Young as independent registered public accounting firm for the fiscal year ended December 31, 2015, is hereby approved and ratified. Are there any questions regarding the appointment of Ernst and Young as our independent registered public accounting firm? Great. Is there a motion to approve this resolution? As proxy representing shares of the meeting, I so move. As proxy representing shares of the meeting, I second the motion and 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 the ratification of Ernst and Young. Since no stockholders are voting in person, I'll declare the polls to be closed as to the ratification of Ernst and Young and move on to the final and 4th item on our agenda, which is the approval of an amendment and restatement of ICE's certificate of incorporation to delete those provisions that are no longer applicable to ICE following our sale of Euronext as described in the proxy statement. The Board recommends that you vote for these changes. This time, I'll entertain a motion that the following resolution be adopted by our stockholders. Resolved, that the proposal to amend and restate the certificate of incorporation to delete provisions no longer applicable to ICE following the sale of Euronext as specified in the proxy statement is hereby approved. Are there any questions with regard to amending these and restating the certificate of incorporation? Great. Is there a motion to approve this resolution? As proxy representing shares of the meeting, I so move. As proxy representing shares of the meeting, I second the motion and 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 the amended and restated certificate of incorporation. Great. So since no stockholders are voting in person, I'll declare the polls closed as to the approval of the amended and restated certificate of incorporation, and that concludes the voting on the proposals that are on our agenda. We're going to now announce the results of the voting. And Mr. Certikowski, do you have the vote totals? I do. Before we vote totals, I'd like to state that we have a sworn affidavit of distribution from Broadridge Financial Solutions, Inc. The affidavit states that Broadridge calls the mailing of information relating to the annual meeting on March 30, 2015. The information was delivered to stockholders of record as we closed the business on March 17, 2015. The reporting results are as follows: Each director received a minimum of 81,525,000 shares voted in favor of their election, which in each case represents a majority of the shares voted for the election of directors and each nominee has been reelected. 86,761,286 shares were voted in favor of Proposal 2, which is the affirmative vote of the majority of votes cast for or against the advisory resolution on our executive compensation, so the executive compensation is approved. 94,475,029 shares were voted in favor of proposal 3, which is the affirmative vote of the majority votes cast 4 are against the proposal to ratify the appointment of Ernst and Young as independent registered public accounting firm for the fiscal year ending December 31, 2015. And 95,047,322 shares were voted in favor of proposal 4, which is the affirmative vote of all the outstanding shares on our common stock entitled to vote at the meeting. So the amended and restated certificate of incorporation is approved. The final vote results will be filed with the SEC on the current report on Form 8 ks in the next few days. The certificate and report with the Inspector of Elections, which contains the vote totals, will be filed with the minutes of this meeting. Thank you, Andrew. I'd now like to and congratulations, everybody, on your election. I'd now like to adjourn the formal portion of the meeting, and I would ask for a motion. I move that the meeting be adjourned. I second that motion. Okay. All in favor, aye, please. Aye. Any opposed? Great. So the Annual Stockholders Meeting is now adjourned and that concludes the announced items for the meeting specified in the notice of annual meeting and proxy statement. I'd now like to give you a written and formal report on the progress of ICE over the past year and then I'm going to open the floor for questions from our shareholders. So while we're well into 2015, I'm pleased to report on InterContinental Exchange's 2014 results, which was a record year virtually across all of our key metrics. We achieved record revenues and we grew our adjusted earnings for the 9th consecutive year, which comprises our track record as a public company. On a compound annual growth rate, that's earnings growth of nearly 20% per year over that period. In 2014, ICE's consolidated revenues less transaction based expenses were 3 point $1,000,000,000 and they were up 3% year over year on a pro form a basis. But our adjusted earnings per share from continuing operations rose 15% over the prior year to $9.63 We also generated record operating cash flows of $1,500,000,000 which was more than double prior year records. While the environment in which we were and our customers were operating had a great deal of uncertainty due to the globally evolving regulatory landscape, our performance was driven by a diverse range of our businesses. This included solid growth in trading and listings revenue at the New York Stock Exchange, growth in data services, CDS clearing and our global energy futures complex. Thus in a dynamic and dynamic economic and regulatory environment, the demand for trading and risk management and capital raising continues to increase. We reached a number of milestones in 2014 that included record volume across our benchmark crude Brent crude oil futures contract and the options market for the 18th consecutive year. We recorded a record year in data services revenue and in CDS clearing. And also in 2014, the New York Stock Exchange again led all exchanges in capital raising and initial public offerings, which marked the 4th proceeds than the next two exchanges combined. Amid this growth, we continue to drive efficiency in the NYSE's trading and listings business to enhance the operations of this very important and very cash generative business. What makes these overall results more notable is that our team delivered this performance while executing on multiple strategic initiatives. We completed the seamless transition of Life's futures and options markets onto our exchanges. We divested Euronext in a successful IPO and we sold off non core technology businesses. By year end, we achieved $290,000,000 in expense synergies, which is over 50% of our targeted acquisition synergies. We also reduced our net debt by nearly $2,000,000,000 We made strategic acquisitions in data, trading and clearing, and we returned nearly $1,000,000,000 to shareholders in the form of share buybacks and dividends. With our acquisition of the Singapore Mercantile Exchange and of super derivatives, we're working on expanding opportunities in clearing and data that we see there. And our team established the ICE Benchmark Administration, which began administering LIBOR and other benchmarks. So as you can see, our team at ICE accomplished a great deal in 2014, including record results, solid execution on our strategic objectives and strong shareholder returns. This strong momentum from 2014 has continued. Earlier this month, we reported our absolute best quarter in our history. In the Q1 of 2015, we delivered record revenues, record adjusted operating income and record adjusted earnings. We continue to expand our operating margins and deliver on expense synergies that we have forecast, while making disciplined investments in our growth. All of this drove our earnings per share growth, an impressive 26% over last year's Q1. And as of the Q1, we have returned nearly $1,300,000,000 to shareholders since we began our first dividend payment just 16 months ago. We also announced a 15% increase in our quarterly dividend starting in the current quarter. In closing, I'm pleased to say that after nearly 10 years as a public company, InterContinental Exchange remains a growth leader in the global exchange sector. Our commitment is to growing our trading, listings, market data and clearing businesses by working with our customers regardless of the market cycle. I'd like to recognize our Board of Directors today for their leadership and for their hard work throughout the year. Your efforts have produced very strong records for us and very good corporate governance. And I want to thank our shareholders for your continued support. I'm going to open the floor up for a question and answer session. And in doing so, I'd ask if you would reference the guidelines that we provided today, which is one question and one follow-up per shareholder. Question and answer session is being webcast. So please step forward to the microphone in the center of the aisle and please introduce yourself and speak clearly to the people that will be listening to you on this webcast so that they can hear your question. The ICE Board of Directors, the management team and I will mingle through the audience after we adjourn this meeting if you would prefer to talk to us in private. At this point, I'd now like to open the question and answer session. Good morning, Mr. Sprecher. Yes. Thank you. Members of the Board of Directors. My name is James Rothenberg. I'm a securities attorney and consultant. My question and comment deals with the issue of fragmentation. And I know that you've directly intervened with the SEC on trade ad and other proposals. I want to suggest a study and a plan for your consideration. I understand there's been a great deal of work analyzing the spread of the trades that as we move to penny markets or less, the trade spread declines, investors on a trade by trade analysis have done better. The question is that I have not seen is whether and this is the study on an overall execution of a large quantity of stock given the fragmentation of markets are investors paying substantially more because they cannot execute with the high frequency traders at a price that they previously were able to do. That's the study. The plan is different. I want to suggest whether this makes sense to you. Right now the ICE directly intervenes with the SEC on a variety of proposals. An indirect approach may also produce better results. An indirect approach is going to investors, typically large institutional investors, pension funds, mutual funds, bank collective funds and see whether they are obtaining better executions. That's the study. With those results to go to the Congress of the United States, if we are facing opposition from the SEC and try to reduce fragmentation, we can try to obtain that objective indirectly. And then through a 19b proposal with approval of institutional investors and others seek to change the rules by obtaining congressional support. I want to suggest that an indirect approach may bear fruit where the direct approach is not and ask whether you have thoughts with regard to that type of plan? Thank you. First of all, it's a very good question, obviously very knowledgeable about the current state. A couple of things. First of all, we have advocated for and just got within the last 2 weeks approval by the SEC to do a pilot program called the TIC pilot. And it's not directly on top of your question, but it's somewhat related. The TIC pilot, for those that haven't followed this, will take 1200 stocks, which we're in the process of selecting and we'll put them in 3 different buckets of 400. And we will operate and trade using different protocols for those stocks and then measure the results. And one of those these are really came out of the Jobs Act that Congress passed trying to help promote business coming out of the economic downturn. So it's focused on small cap stocks. But we are cautiously optimistic that the data that we'll receive there will be applicable to a broader set of companies, including one bucket of those stocks that will have a trade out rule that will bias trades back towards the public markets and allow trade to be done off market only if there's substantially better price or quantity. And in that sense, market makers are telling us that if they have a better opportunity in the public markets that they can make tighter quotes and we hope that it will be a virtuous circle that will bring more and more liquidity back to public markets and sort of eliminate some of the fragmentation that's going on. With respect to your comment about approaching institutional investors, we have just put together at the New York Stock Exchange a revised group where we meet quarterly with the major institutional investors in a closed meeting to talk about our mutual interest and what we can do together. I normally attend those meetings and as does Tom Farley, our President of New York Stock Exchange and interact directly with the buy side. The complicating thing that we find is that the buy side have a complicated relationship with each other and that their competitors when they're in the room. And they have intermediaries that are largely their brokers and banks that manage their business, who also provide them with research, access to IPOs, access to management, on roadshows and those kinds of things. And so there's a very complicated relationship in the industry that people want the market to be better, but they don't want to harm the relationships that they already have and the benefits that they're receiving out of those. So it's very hard to pick the one issue that you and I are both concerned about, which is how the stocks trade on the public market from all of these other issues. And this debate, as you may know, is going on globally. Canada has taken some steps along these lines. Australia has taken some steps along these lines. Europe is in the process of promulgating some information. So I tend to agree with you by the way. I take the point and I will do this. I will bring up this comment when we next meet with the institutional investors and see if I could develop some support because it's not a bad idea. Yes, please. Yes. Part of the problem here is rule 10b10, which discloses to shareholders that rebates are being made, but does not pass through the benefits of those rebates, just a disclosure item, except for preemption, I was involved in our litigation. You get no benefit from that. The brokers retain all the payments. In fact, the whole structure of the industry, including the rebates made to market makers on the floor, as well as rebates throughout the brokerage industry is pernicious. In fact, in their state law, it would be corporate bribery. I think a major effort needs to be made, not at the commission, but at the Congress to eliminate this artificial displacement of order flow, not for competitive reasons, but for artificial reasons. So I think that that's part of the discussion as well. Thank you. Yes, I take the point and I think it would be helpful for more people like you spoke out frankly, because Congress tends to listen to large institutions and there are many people that are comfortable with the status quo because they develop franchises that benefit from the status quo. Our company has always benefited from change, honestly. And so we're not afraid of change. And so we tend to embrace it because we figure that we are smart enough and agile enough to figure out how to reposition our firm as change happens. So it's why we feel comfortable advocating for change. Thank you very much for your question. Any other questions? All right. Well, as I mentioned, when we closed the formal portion of this meeting, my management team, my Board, myself, my colleagues are all being in the room and like to say hello to everybody. We appreciate you coming. We appreciate your support throughout the year. We're really doing well right now. So it's a nice time to stand in front of you and represent the company. Thank you all very much.