April 29, 2004
Thank you for your continued support since we put in place our new governance architecture last
November. You are cordially invited to attend the 2004 Annual Meeting of members to be held
on Thursday, June 3, 2004 at 4:15 pm at the NYSE, 11 Wall Street, New York, New York, in the
The Annual Meeting will begin with a report on our operations, followed by discussion and
voting on the matters set forth in the accompanying Notice of Annual Meeting and Proxy
Statement and discussion of other business matters properly brought before the meeting.
At the Annual Meeting, you will be asked to consider and vote on a proposal to elect seven
Directors to hold office until the 2005 Annual Meeting, to elect two individuals to serve as
Trustees of the Gratuity Fund, and to adopt amendments to the Certificate of Incorporation and
the Constitution described in the accompanying Proxy Statement.
I urge you to read the enclosed material carefully. Whether or not you plan to attend, you can be
sure your interest is represented at the meeting by promptly voting and submitting your proxy by
phone, by internet, or by completing, signing, dating and returning your proxy form by fax or in
the enclosed envelope.
John S. Reed
Chairman of the Board
This Proxy Statement and the accompanying proxy card are being mailed to NYSE members
beginning April 30, 2004.
NEW YORK STOCK EXCHANGE, INC.
11 Wall Street
New York, New York 10005
NOTICE OF ANNUAL MEETING
to be held at 4:15 pm, June 3, 2004 at
the NYSE Boardroom
To the members:
Proposal 1. Election of seven (7) Directors.
Proposal 2. Election of two (2) Trustees of the Gratuity Fund.
Proposal 3. Amendment of the Certificate of Incorporation as set forth at page 22 in the
accompanying Proxy Statement.
Proposal 4. Adoption of the Constitutional amendments set forth at pages 22 through 26
in the accompanying Proxy Statement.
Only members of record and in good standing at the close of business on June 3, 2004 will be
entitled to vote at this meeting or at any adjournments thereof.
Darla C. Stuckey
April 29, 2004
IMPORTANT: To ensure that you are represented at the Annual Meeting, please vote in
one of these ways:
• USE THE TOLL-FREE NUMBER shown on your proxy card;
• VISIT THE WEBSITE noted on your proxy card to vote via the Internet;
• MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the
postage-paid envelope to IVS Associates, Inc., 111 Continental Drive, Suite 210,
Newark, Delaware 19713, or by FAX to 302-369-8486; OR
• VOTE IN PERSON by appearing at the Annual Meeting and submitting a ballot at
TABLE OF CONTENTS
GENERAL ...................................................................................................................................... 1
The Proposals.............................................................................................................................. 1
Vote of Members; Notice; Quorum ............................................................................................ 1
Proxies; Revocation .................................................................................................................... 2
Confidential Voting..................................................................................................................... 2
Scope of Disclosure .................................................................................................................... 3
NYSE GOVERNANCE.................................................................................................................. 3
NYSE Governance Guidelines.................................................................................................... 3
Director Independence ................................................................................................................ 4
Member and Investor Recommendation Procedures .................................................................. 4
Member and Investor Communication with Directors ............................................................... 5
Code of Ethics for Directors ....................................................................................................... 5
BOARD OF EXECUTIVES ........................................................................................................... 5
Board of Executives .................................................................................................................... 5
STANDING COMMITTEES ......................................................................................................... 5
Nominating & Governance Committee ...................................................................................... 5
Audit Committee......................................................................................................................... 6
Regulatory Oversight & Regulatory Budget Committee............................................................ 8
Human Resources & Compensation Committee ........................................................................ 8
COMPENSATION ......................................................................................................................... 9
Director Compensation & Indemnification................................................................................. 9
Executive Compensation........................................................................................................... 10
Summary Compensation Table................................................................................................. 11
Retirement Plans ....................................................................................................................... 12
Pension Plan Table.................................................................................................................... 13
Savings Plans ............................................................................................................................ 14
Employment Agreements for the Five Most Highly Compensated Officers............................ 15
ADDITIONAL INFORMATION................................................................................................. 15
Charitable Activities ................................................................................................................. 15
Political Activities..................................................................................................................... 16
PROPOSAL 1: ELECTION OF DIRECTORS ........................................................................... 17
Current Board Membership and Independence Standards........................................................ 17
The Nominees ........................................................................................................................... 17
Meeting Attendance .................................................................................................................. 20
Certain Relationships and Director Independence.................................................................... 20
PROPOSAL 2: ELECTION OF TRUSTEES OF THE GRATUITY FUND ............................. 21
The Nominees ........................................................................................................................... 21
Description of the Gratuity Fund .............................................................................................. 21
PROPOSAL 3: ADOPTION OF THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION ...................................................................................................................... 22
PROPOSAL 4: ADOPTION OF THE CONSTITUTIONAL AMENDMENTS ........................ 22
Proposal 4.1 – Amendment to Article III, Section 1................................................................. 23
Proposal 4.2 – Amendment to Article IV, Section 14(b).......................................................... 24
Proposal 4.3 – Amendment to Article IX, Section 3 ................................................................ 24
Proposal 4.4 – Amendment to Article IX, Section 6 ................................................................ 25
Proposal 4.5 – Amendment to Article XV, Section 9............................................................... 25
CONSTITUTIONAL AMENDMENTS PROVIDED FOR NOTICE ONLY ............................. 26
ANNEX A - NYSE GOVERNANCE GUIDELINES................................................................ A-1
ANNEX B - INDEPENDENCE POLICY OF THE EXCHANGE BOARD OF
ANNEX C – NYSE CERTIFICATE OF INCORPORATION .................................................. C-1
This Proxy Statement is furnished to members in connection with the solicitation of proxies by
the New York Stock Exchange, Inc. (“NYSE” or the “Exchange”) on behalf of the Board of
Directors (the “Board”) for the 2004 Annual Meeting of members. The purpose of the Annual
Meeting is for you to elect seven (7) Directors of the Board and two (2) individuals to serve as
Trustees of the Gratuity Fund, and to adopt amendments to the Certificate of Incorporation and
You can ensure that your membership interest is voted at the meeting by submitting your
instructions by phone or by Internet, or by completing, signing, dating and returning the enclosed
proxy form by mail in the envelope provided or by fax. Submitting your instructions by any of
these methods will not affect your right to attend and vote at the Annual Meeting.
Vote of Members; Notice; Quorum
Each regular member in good standing shall be entitled to one vote on each position to be filled
and on the proposal to adopt the amendments to the Certificate of Incorporation and the
Constitution. Each physical access member in good standing shall be entitled to one vote, and
each electronic access member in good standing who became such prior to March 30, 1986 shall
be entitled to one-half vote, provided, however, that such physical and electronic access
members shall not be entitled to vote on any election or amendment concerning the Gratuity
Fund or the Trustees of the Gratuity Fund. All members of record in good standing on the date
of the mailing of notice are entitled to notice of the Annual Meeting, and those members in good
standing as of the date of such meeting, or at any adjournment, are entitled to vote at the
meeting. As of the date of this notice, there are, in good standing, 1365 regular members, 3
physical access members, and 2 electronic access members who became such prior to March 30,
1986 (one-half vote each).
In determining those nominees who have been successfully elected to serve as Directors or
Trustees of the Gratuity Fund, those nominees receiving the highest number of votes shall be
declared elected. In the case of a tie vote, the names of the nominees involved shall be referred
to the Board, where an affirmative vote of the majority of the entire Board shall determine
election. The proposals to adopt the amendments to the Certificate of Incorporation and the
Constitution shall be authorized by a majority of the votes cast by the members entitled to vote
thereon. Members entitled to cast a majority of the total number of votes entitled to be cast,
present in person or by proxy, will constitute a quorum.
You may either vote for or withhold authority to vote for each nominee for the Board, and each
nominee for Trustee of the Gratuity Fund. If you withhold authority to vote with respect to any
nominee, your interests will be counted for purposes of establishing a quorum, but will have no
effect on the election of that nominee. Any failure to vote with respect to any nominee will have
no effect on the election of that nominee. You may vote for or against or you may abstain on the
other proposals. If you abstain from voting on the other proposals, your interests will be counted
as present for purposes of establishing a quorum, but the abstention will have the same effect as a
vote against that proposal. A failure to vote on the other proposals will not affect the adoption of
If you vote by signing a proxy, your votes at the Annual Meeting will be cast as you indicate on
your proxy card. If no instructions are indicated on your signed proxy card, your votes will be
cast FOR the election of the new Directors and Trustees and FOR the adoption of the
amendments to the Certificate of Incorporation and to the Constitution. If you cast your vote
through the Internet or by telephone, your vote will be cast at the Annual Meeting as instructed.
You may revoke your proxy at any time before the proxy is voted at the Annual Meeting. A
proxy may be revoked prior to the vote at the Annual Meeting in any of three ways:
• by submitting a written revocation dated after the date of the proxy that is being revoked
to the Secretary of the New York Stock Exchange, Inc., 11 Wall Street, New York, NY
• by submitting a later-dated proxy by telephone, Internet, mail or fax; or
• by attending the Annual Meeting and voting by paper ballot in person.
Attendance at the Annual Meeting will not, in itself, constitute revocation of a previously granted
The NYSE will pay the costs associated with printing this Proxy Statement and soliciting proxies
for the Annual Meeting. NYSE officers and employees may solicit proxies by telephone, mail or
the Internet or in person. The Exchange has retained MacKenzie Partners, Inc. to assist in the
solicitation of proxies, using the means referred to above, and will pay fees of up to $8,000, plus
reimbursement of out-of-pocket expenses.
If no quorum of members present or represented by proxy exists, the Annual Meeting will be
adjourned to reconvene at the same time and place on the day two weeks thereafter by members
who are present or represented by proxy. At the adjourned meeting, if a quorum is present or
represented by proxy, the members may transact any business that might have been transacted at
the original meeting.
It is the Exchange’s policy that all proxies, ballots and voting tabulations that identify members
be kept confidential. The Exchange has engaged IVS Associates, Inc. (“IVS”) to count the votes
represented by proxies and ballots. An employee of IVS will serve as Inspector of Election. The
Exchange will pay IVS a fee of $5,500 plus reasonable out-of-pocket expenses.
Scope of Disclosure
The Annual Report of the NYSE accompanying this Proxy Statement presents an integral part of
the disclosures relevant to the matters coming before the Annual Meeting. The Annual Report is
also available on our website at www.nyse.com/annualreport2003.1
Because this Proxy Statement is principally concerned with the general performance of the
Board that you elected at your meeting on November 18, 2003, and with the Board’s progress in
implementing the reformation of the governance and management architecture that you approved
at that time and which the SEC approved on December 17, 2003, the disclosures in this Proxy
Statement generally begin with that Board taking office in December and extend through the
April Board and committee meetings.
However, certain matters disclosed in this Proxy Statement – including matters pertaining to
compensation, to the political contributions activity of the NYSE, and to the charitable
contributions of the NYSE and The New York Stock Exchange Foundation, Inc. (the “NYSE
Foundation”) – pertain to the entire calendar year 2003. In regard to those matters, please note
the discussion of the investigations relating to the compensation of the former Chairman and
CEO of the Exchange found in Note 8 to the financial statements that the Annual Report
NYSE Governance Guidelines
The NYSE Governance Guidelines (the “Guidelines”) outline the responsibilities, operations,
qualifications and composition of the Board. All elected Directors, and the Chairman if he or she
is not also the CEO, must be independent. The full text of the Guidelines, as approved by the
Board, is attached as Annex A to this Proxy Statement.
Directors, other than the Chairman and the CEO, are to be elected annually from a slate of
nominees chosen by the Board based upon recommendations by the Nominating & Governance
Committee. The Nominating & Governance Committee has adopted a policy to receive nominee
recommendations from investors in equity securities and Exchange members in accordance with
Article V, Section 12(a)(1) of the Constitution. The Board also receives recommendations for
candidates from the Industry Members of the Board of Executives as set forth in Article IV,
Section 2, and Article V, Sections 1 and 2(b).
Directors serve for a term of one year, and there is no mandatory retirement age.
If you do not have access to the Internet, paper copies of all documents available on our website may be obtained
on request from Darla C. Stuckey, Secretary, New York Stock Exchange, Inc., 11 Wall Street, New York, NY
10005, or by fax to (212) 656-3939, or by phone at (212) 656-2060, or by email at email@example.com.
The Board meets at least four times each year. The Chairman or one-third or more of the current
Directors can call a special meeting of the Board. Directors are expected to attend Board
meetings, meetings of committees on which they serve and at least three meetings annually of
the Board of Executives. The positions of Chairman of the Board and Chief Executive Officer
are currently held by separate individuals.
The Guidelines also describe the four standing committees. These committees are discussed in
this Proxy Statement under “Standing Committees,” and a description of the responsibilities of
each committee is available in the Constitution and in the Committee charters, each of which is
available on our website at www.nyse.com/committees.
The Board has adopted an Independence Policy of the Exchange Board of Directors (the
“Independence Policy”) in accordance with the Constitution to ensure the independence of its
elected Directors and its non-executive Chairman. Under the policy, an elected Director will not
be considered independent unless he or she meets the independence standards required of a
director of an NYSE listed company. Additional requirements address independence from
Exchange constituents. The Independence Policy is attached as Annex B to this Proxy
Statement. Under Article IV, Section 2 of the Constitution, the policy must be filed with and
approved by the SEC. The Board will follow this policy pending SEC action; SEC consideration
of the policy could result in changes.
Member and Investor Recommendation Procedures
Members of the Exchange and investors in equity securities may recommend Director candidates
who meet applicable criteria for consideration by the Nominating & Governance Committee of
the Board. A copy of the Candidate Nomination Policy is available on our website at
Pursuant to that policy, the Nominating & Governance Committee actively seeks candidates
committed to serving the interests of the public and to strengthening the Exchange as a public
securities market. Director candidates are solicited on the basis of outstanding achievement in
their professional careers, broad experience, wisdom, personal and professional integrity, and
their ability to make independent analytical inquiries. The Committee believes that Director
candidates must have the experience necessary to gain a basic understanding of: (1) the self-
regulatory functions of the Exchange; (2) the principal operational, financial and strategic
objectives and plans of the Exchange; (3) the results of operations and financial condition of the
Exchange and of its significant subsidiaries or business segments; (4) the position of the
Exchange and its business segments relative to its competitors; and (5) the functioning of a board
and the practices that lead to sound governance. Candidates also must have a perspective that
will enhance the Board’s strategic discussions, be capable of and committed to devoting
adequate time to Board duties, and be available to attend Board and committee meetings.
The Candidate Nomination Policy also provides that at least one member of the Board should
have the qualifications and skills necessary to be considered an “Audit Committee financial
expert” under the Sarbanes-Oxley Act of 2002, for the purpose of serving on the Audit
Committee. Board candidates must also be independent from NYSE members, member
organizations, listed companies and certain other broker/dealers under the Independence Policy
established by the Board. Among other things, at a minimum, no candidate may be employed by
an NYSE listed company or a member organization. The Committee does not discriminate on
the basis of race, color, national origin, gender, religion, disability or sexual preference in
selecting Director candidates.
Member and Investor Communication with Directors
The Exchange encourages members and investors to communicate concerns, opinions and ideas
to its non-management Directors. Communications may be directed by mail or email to the
Secretary at the address at footnote 1 on page 3 of this Proxy Statement.
Code of Ethics for Directors
The Board has adopted a Code of Ethics for Directors. A copy of the Code of Ethics is available
on our website at www.nyse.com/pdfs/codeofethics.pdf.
BOARD OF EXECUTIVES
Since its formation, the Board of Executives has met three times and, in accordance with its
mandate, has made recommendations and provided insight to the Board. It has addressed listed
company relations, transparency, market share and market structure -- both policy and the
practical components. The Board of Executives has specifically engaged with Exchange
management on measures necessary to improve the speed and certainty of order execution. In
addition, it reviewed the Exchange’s 2004 budget, and was briefed on the 2003 financial results.
There are four standing committees, each of which consists solely of Directors other than the
CEO. The Board reviews and adopts the charter for each of its Committees annually. The
following summaries describe the work of these committees since adoption of the new
Nominating & Governance Committee
The members of the Nominating & Governance Committee are: Directors Albright, who chairs
the Committee, Allison, Baird (until his resignation, as discussed at “Current Board Membership
and Independence Standards,” below) Carter, Jackson, McDonald, Shapiro and Weatherstone,
and Chairman Reed. The Committee’s responsibilities include recommending Director
candidates to the Board in accordance with Article IV, Section 2 of the Constitution and
candidates for Trustees of the Gratuity Fund; recommending to the Board candidates for the
Board of Executives; conducting the Board’s annual governance review; reviewing and
recommending the Guidelines; establishing an appropriate process for, and overseeing
implementation of, the Board’s self-assessments (including Board self-assessment, committee
self-assessments and Director assessments) and the Board of Executives’ self-assessment;
recommending Director compensation; and succession planning. The Committee considers
member and investor recommendations for candidates for the Board.
Report of the Nominating & Governance Committee. The Committee reviewed and
recommended for adoption the Guidelines, a Director compensation policy, the Independence
Policy, and the Directors Code of Business Conduct and Ethics, and discussed the issue of
succession of the Chairman. It established procedures for the solicitation of input from the
various Exchange communities regarding candidates for appointment to the Board of Executives.
In addition, the Committee reviewed and discussed each Director’s relationships and affiliations
under the Independence Policy and recommended the slate of candidates for election at the
Furthermore, the Committee established a mechanism to solicit input from equity investors and
NYSE members regarding Board candidates. Pursuant to that mechanism, the Committee
received over 100 recommendations from the public as a result of its solicitation in March. The
unexpectedly large response made it difficult for the Committee to give proper consideration to
all of the individuals during the short time before the Board’s slate of candidates had to be
announced to the members on April 5. As a result, the Committee developed the following
procedure for processing public recommendations for candidates to the Board. All
recommendations properly received will be acknowledged in writing, and for qualified
candidates the Committee will confirm with the nominating member or investor that the
candidate is aware and approves of his/her recommendation. In addition to meeting NYSE tests
for independence and the absence of conflicts-of-interest, individual candidates will be evaluated
on a number of attributes, including: professional background and experience; analytical skill;
understanding of market structure, governance and self-regulation; financial knowledge; and
international corporate experience. Qualified candidates will be contacted for further
information, ultimately resulting in an interview for some candidates by one or more members of
the Nominating & Governance Committee. The Committee will also review the submitted
recommendations for possible appointment to the Board of Executives and advisory committees.
The current Audit Committee was formed in December 2003 and its members are: Directors
McDonald, who chairs the Committee, Allison and Shapiro. A predecessor Audit Committee
was appointed in June 2003 and, prior to that, a combined Finance & Audit Committee was
appointed to oversee the financial and audit affairs of the Exchange. No members of the
predecessor committees were NYSE officers or employees. The Committee is responsible for
assisting the Board in its oversight of the integrity of the Exchange’s financial statements, the
Exchange’s compliance with legal and regulatory requirements, and the independent auditor’s
qualifications and independence. The Committee is directly responsible for (1) hiring, firing and
compensating the independent auditor, (2) overseeing the independent auditor’s engagement, (3)
meeting regularly in executive session with the auditor, (4) reviewing the auditor’s reports with
respect to the Exchange’s internal controls, (5) pre-approving all audit and non-audit services
performed by the auditor and (6) determining the budget and staffing for the Internal Audit Unit.
The Committee charter contains additional duties and responsibilities comparable to those
required of the audit committees of issuers listed on the Exchange.
The Audit Committee consists exclusively of elected Directors who are financially literate. In
addition, Directors Allison and Shapiro are considered Audit Committee financial experts as
defined by the SEC.
Report of the Audit Committee. The Audit Committee or its predecessor committees
(the “Audit Committee”), reviewed the qualifications and approved the selection of the
Exchange’s independent accountants and has ensured their accountability to the Audit
Committee and the Board. The Audit Committee reviewed proposed changes, if any, in
significant accounting policies, reports of the NYSE's independent accountants, the basis and
scope of their engagement, and their independence. It also received a report on the scope of
work to be performed by the Corporate Audit Department in 2004 and an executive summary of
reports completed by that department. The Audit Committee monitored the financial and
accounting operations of the NYSE through the review and discussion of current operating
results and other matters of a financial or accounting nature.
The Audit Committee has reviewed the fees for services performed by the independent
accountants for the NYSE. The audit committee of Securities Industry Automation Corporation
(“SIAC”) has reviewed the fees pertaining to SIAC. The details are enumerated in the following
NYSE SIAC TOTAL
2003 2002 2003 2002 2003 2002
Audit services (1) $351,000 $302,000 $240,000 $192,000 $591,000 $494,000
Audit-related services (2) 79,000 73,000 60,000 95,000 139,000 168,000
Tax compliance services 53,000 62,000 140,000 161,000 193,000 223,000
Tax advisory service 190,000 363,000 150,000 289,000 340,000 652,000
Other (3) - - - 125,000 - 125,000
Total $673,000 $800,000 $590,000 $862,000 $1,263,000 $1,662,000
(1) Audit services include the year-end audit for the NYSE, SIAC and Sector, Inc. (a wholly-
owned subsidiary of SIAC).
(2) Audit-related services include the audit of the pension and the savings plans for both the
NYSE and SIAC, and other required audits, including those of the NYSE Foundation,
The New York Stock Exchange Fallen Heroes Fund, and the market data consortium in
which the NYSE participates.
(3) Represents consulting work performed for SIAC in conjunction with the upgrade of its
PricewaterhouseCoopers LLP (“PwC”), independent accountants, has audited, in accordance
with auditing standards generally accepted in the United States of America, the consolidated
financial statements of the New York Stock Exchange, Inc. and its subsidiaries for the years
ended December 31, 2003 and 2002, and their report is included in the Annual Report. Their
audits included a review of internal accounting controls and appropriate tests of transactions to
the extent they were considered necessary to arrive at an opinion on the fairness of the
consolidated financial statements. The Audit Committee has met with management to discuss
the financial statements contained in the Annual Report and with representatives of PwC, with
and without management present, to discuss the results of its audits under auditing standards
generally accepted in the United States; the accounting estimates utilized by management in the
preparation of these financial statements; and other accounting, auditing and financial matters.
The Audit Committee also discussed with PwC that, during the course of the audit, PwC did not
propose any material adjustments which have not been reflected in these financial statements.
As a result of these discussions, the Audit Committee has given approval that the financial
statements of the NYSE be included in the Annual Report.
Regulatory Oversight & Regulatory Budget Committee
The members of the Regulatory Oversight & Regulatory Budget Committee are: Directors
Carter, who chairs the Committee, Jackson and Weatherstone. The Committee is responsible for
(1) assuring the effectiveness, vigor and professionalism of the Exchange’s regulatory program,
(2) determining the budget for the Regulatory Group, the Listings and Compliance Unit, the
Hearing Board, the Arbitration Unit and the Regulatory Quality Review Unit and (3) overseeing
the Regulation, Enforcement & Listing Standards Committee and the Regulatory Quality Review
Unit. The Committee determines the Exchange’s regulatory plan, budget and staffing annually
and is responsible for assessing the Exchange’s regulatory performance and recommending
compensation and personnel actions involving senior regulatory personnel to the Human
Resources & Compensation Committee for action.
Report of the Regulatory Oversight & Regulatory Budget Committee. The Committee
has (1) retained an Independent Consultant to review the Exchange’s specialist surveillance,
compliance and disciplinary programs, (2) overseen the implementation of the separation of the
regulatory and marketplace functions, (3) reviewed and recommended proposed rule
amendments to the Board for adoption, (4) heard appeals and received reports while serving as
part of the Regulation, Enforcement & Listing Standards Committee, and (5) received reports
from the Regulatory Quality Review Unit. The Committee also was briefed on several issues,
including the Exchange’s and SEC’s investigations of specialists’ trading.
Human Resources & Compensation Committee
The members of the Human Resources & Compensation Committee are: Directors Baird (until
his resignation), who chaired the Committee, Allison, Albright, Carter, Jackson, McDonald,
Shapiro and Weatherstone, and Chairman Reed. During Director Baird’s absence due to illness,
Chairman Reed has chaired the Committee.
The Committee has four primary responsibilities: (1) reviewing and approving corporate goals
and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of
those goals and objectives, and determining and approving such compensation, (2) reviewing and
approving recommendations regarding compensation and personnel actions involving senior
Exchange personnel, including such recommendations involving senior regulatory personnel
received from the Regulatory Oversight & Regulatory Budget Committee, (3) reviewing the
NYSE broad-based compensation program and employee benefits plans, including retirement
plans, and (4) reporting annually to the members and the public on the compensation of the five
most highly compensated officers of the Exchange (as well as Director compensation) and on the
compensation philosophy and methodology used to award that compensation (including
information relating to appropriate comparisons, benchmarks, performance measures and
evaluation processes consistent with the mission of the Exchange).
Report of the Human Resources & Compensation Committee. The Committee
approved compensation decisions relating to 2003 performance and dealt with a variety of
compensation issues that followed the former Chairman and CEO’s departure.
The Committee determined to allow the existing NYSE compensation programs to function for
the year 2003 even though it was assumed that these would be modified for 2004. The key
decision related to the NYSE annual bonus program (the Incentive Compensation Plan or “ICP”)
that functions throughout the organization. The year 2003 was seen to have been a bad one as a
result of: (1) the events leading to the former Chairman and CEO’s departure, (2) problems with
the specialist units, including important criticisms of their trading activities and interpositioning,
and criticism of the Exchange’s regulatory response to such activities, and (3) weakness in the
Exchange’s market share and franchise position. As a result of this assessment, bonuses were
reduced from management’s recommendations as follows: by 20 percent (i.e., paid out at 80
percent of par) throughout the organization, by 25 percent for senior management, and by 30
percent for the two Presidents and Co-Chief Operating Officers. Also in early 2004, routine
promotions and compensation decisions that were recommended by management were approved,
as was the compensation of CEO John A. Thain. The Board also reduced the interest rate
applicable to the Capital Accumulation Plan (“CAP”) awards for the year 2003 to 3.83 percent,
the interest rate of the 10-year U.S. Treasury Note in effect on the last business day of the prior
calendar year (2002). Director and executive compensation and benefit plan information is
During the fourth quarter 2003, in keeping with promises made by the prior Board,
comprehensive compensation information for the senior management team was made public.
Director Compensation & Indemnification
Upon written request, Directors other than Mr. Reed and Mr. Thain become entitled to an annual
fee of $60,000. Directors are further reimbursed for out-of-pocket travel expenses.
The Constitution provides indemnification to Directors and others against all liability arising
from their service to the full extent permitted by law. To insure this exposure, the Exchange has
obtained a Directors' and Officers' Liability insurance policy as provided in Section 726 of the
New York Not-for-Profit Corporation Law.
The former Chairman and CEO received a salary of $1,116,111 for the 2003 period ending
September 17, 2003. In each of 2002 and 2001, he received an aggregate base salary of
$1,400,000. He received a 2002 bonus of $7,066,666 and a 2001 bonus of $16,100,000. He also
received a CAP Award of $3,533,333 in 2002 and $8,050,000 in 2001. In 2003, he received a
payment of $139,500,000 including amounts accumulated from previously accrued retirement
benefits, deferred incentive compensation awards and savings account balances. In addition, he
received $725,222 representing appreciation on amounts previously deferred.
Mr. Reed served as interim Chairman since September 21, 2003. On April 1, 2004, he accepted
the position of Chairman with the understanding that he would serve until the 2005 Annual
Meeting. He will be compensated by the payment of $1 at the end of his service. The Exchange
has incurred expenses of $91,000 for secretarial support, car and driver, travel and entertainment
expenses for Mr. Reed. The Exchange also incurred $3,730,000 for search fees (initiated by the
prior board) and for legal fees related to the events surrounding the former Chairman and CEO’s
Mr. Thain was hired as CEO in January 2004. Please see “Employment Agreements for the Five
Most Highly Compensated Officers” below for further compensation information.
Summary Compensation Table
The table below sets forth compensation for the Exchange’s five most highly compensated
executive officers, including salaries and bonuses paid during each of the last three years. Titles
are current; ages are as of December 31, 2003.
Annual Compensation All Other Compensation
Name, Age and Title Year Salary ($) Bonus($) Plan ($) Other ($)
(a) (b) (c)
Britz, Robert G. (53) 2003 $750,000 $525,000 $262,500 $78,395
President & Co-COO 2002 $749,423 $1,966,667 $983,334 $72,591
2001 $600,000 $2,300,000 $1,150,000 $65,099
Kinney, Catherine R. (51) 2003 $750,000 $525,000 $262,500 $69,726
President & Co-COO 2002 $749,423 $1,966,667 $983,334 $63,922
2001 $600,000 $2,300,000 $1,150,000 $63,980
Bernard, Richard P. (53) 2003 $525,000 $525,000 $131,250 $47,013
Exec Vice Pres/General Counsel 2002 $528,846 $625,000 $156,250 $47,274
2001 $475,000 $850,000 $212,500 $42,575
Edgar, Richard A. (58) 2003 $525,000 $375,000 $93,750 $56,853
Exec Vice President 2002 $514,096 $600,000 $150,000 $59,063
2001 $431,904 $655,000 $163,750 $50,514
Seaman III, Bryant W. (50) 2003 $554,231 $350,000 $87,500 $36,152
Group Executive Vice President 2002 $21,154 $0 $101,269
2001 $0 $0 $0
(a) Amounts awarded as ICP are included in this column.
(b) Under the CAP, each year, participating executives have been credited with a percentage of
their ICP award. Award levels vary by individual. Mr. Britz and Ms. Kinney currently
participate at a rate of 50 percent of their ICP award, and Messrs. Bernard, Edgar and
Seaman at a 25 percent rate. The award is treated as a book entry earning 3.83 percent/year
(the interest rate of the 10-Year U.S. treasury note in effect on the last business day of the
prior calendar year) until it is vested. Vesting is based solely on the age of the participant.
Once vested, the awards are transferred to a Rabbi Trust where the rate of return is based on
the individual participant’s selection of investment vehicles. Participants may currently
choose from nine mutual funds as investment vehicles. Participants may elect to receive
their vested account balances in a lump sum distribution or annual installments following
termination of employment. The current vesting schedule is shown below:
Age % Vested
The vesting schedule for amounts credited through the year 2000 provided similar percentage
vesting but over an age range from 50 to 55 years of age.
(c) Includes (i) NYSE company match to the executive’s Employee Savings Plan account and
Supplemental Executive Savings Plan account, and (ii) taxable term life insurance premiums.
The Exchange permits all employees with five weeks of vacation (those with 18 or more
years of service) to “cash in” up to five vacation days per year. The Exchange also permits
all employees to similarly “cash in” up to six sick days per year. These amounts, if any, for
the named executives are also included in this column. Mr. Seaman’s signing bonus is also
included in this column.
For 2003, Senior Vice Presidents and above, other than the named executives below (16 persons)
received in the aggregate base salary of approximately $5,600,000 and ICP of approximately
$3,230,000. The five persons in this group who participate in CAP received awards under that
plan aggregating $230,625 for 2003. All other officers (34 persons) received in the aggregate
base salary of $6,550,000 and ICP of $2,007,000 for 2003.
The Retirement Plan is a funded, tax-qualified, noncontributory defined-benefit pension plan that
covers Exchange employees generally, including the named executives. Benefits under the
Retirement Plan are based on a set percentage of the participant’s base salary for each year of
service, subject to certain alternative calculations to mirror a final average compensation plan.
Since 1989, that percentage has been 2.35 percent. For employees hired after June 30, 2002,
benefits under the Retirement Plan are equal to a percentage of their final average compensation
(FAC) multiplied by years of service. That percentage is 1.25 percent for FAC up to covered
compensation and 1.45 percent for FAC in excess of covered compensation. For 2003 covered
compensation is $42,000. The amount of annual compensation that may be considered in
calculating benefits under the Retirement Plan is limited by law. For 2003, the limit is $200,000.
The NYSE maintains a Supplemental Executive Retirement Plan (“SERP”) for its employees
who earn salary above a threshold ($166,360 for 2003) to supplement benefits under its
Retirement Plan. The SERP provides a base benefit to participants who are employed by the
NYSE through age 55 with at least three years of service, based upon years of service and the
participant’s best three consecutive years of salary (and for senior officers, ICP) within the final
ten years of employment. Other than amounts payable on death, vested benefits do not become
payable until an employee retires. The benefit under the SERP is offset by benefits paid under
the Retirement Plan and Social Security benefits, and a reduced benefit is provided for early
retirement. Participants may elect to receive their account balances in a lump sum distribution,
specified annuities or annual installments following termination of employment. If the
participant selects an installment payout, the account is credited with earnings based on a
measurement alternative selected by the participant from among a choice of funds.
Pension Plan Table
The following table shows, for the relevant compensation and years of service indicated, the
annual pension benefit payable commencing upon retirement at age 65 under the present benefit
formula of the Retirement Plan and the SERP (including Social Security) for the named
executives. Compensation covered by the SERP for the named executives is equivalent to the
amounts set forth in the “Salary” and “Bonus” columns of the Summary Compensation Table
above. The estimated retirement benefits have been computed on the assumptions that
compensation remains level, retirement is at age 65 and benefits are paid in a single life annuity.
Amounts shown in the table are subject to reduction for Social Security benefits received by the
participants. As of December 31, 2003, the years of service for each named executive are as
follows: Mr. Britz, 31 years; Ms. Kinney, 29 years; Mr. Bernard, 8 years; Mr. Edgar, 36 years;
and Mr. Seaman, 1 year.
Earnings Years of Credited Service
10 15 20 25 30 35 40 45
$ 750,000 187,500 262,500 337,500 393,750 450,000 487,500 525,000 562,500
1,000,000 250,000 350,000 450,000 525,000 600,000 650,000 700,000 750,000
1,250,000 312,500 437,500 562,500 656,250 750,000 812,500 875,000 937,500
1,500,000 375,000 525,000 675,000 787,500 900,000 975,000 1,050,000 1,125,000
1,750,000 437,500 612,500 787,500 918,750 1,050,000 1,137,500 1,225,000 1,312,500
2,000,000 500,000 700,000 900,000 1,050,000 1,200,000 1,300,000 1,400,000 1,500,000
2,250,000 562,500 787,500 1,012,500 1,181,250 1,350,000 1,462,500 1,575,000 1,687,500
2,500,000 625,000 875,000 1,125,000 1,312,500 1,500,000 1,625,000 1,750,000 1,875,000
2,750,000 687,500 962,500 1,237,500 1,443,750 1,650,000 1,787,500 1,925,000 2,062,500
3,000,000 750,000 1,050,000 1,350,000 1,575,000 1,800,000 1,950,000 2,100,000 2,250,000
3,250,000 812,500 1,137,500 1,462,500 1,706,250 1,950,000 2,112,500 2,275,000 2,437,500
3,500,000 875,000 1,225,000 1,575,000 1,837,500 2,100,000 2,275,000 2,450,000 2,625,000
Under the Exchange’s SERP, a retiree may elect a lump sum payment in lieu of a single life
annuity. The following is an estimate of the lump sum payable at retirement under SERP for the
named executives. The estimate is based on the following assumptions: (1) a specific retirement
date when known, and otherwise an assumed retirement at age 65; (2) a final average
compensation equal to the 2003 base salary and bonus except for Mr. Edgar, whose average is
based on his compensation in 2001, 2002 and 2003; and (3) a discount rate of 4.5 percent. This
rate reflects an average of the discount rates applicable under the SERP over the last 60 months.
Name Estimated SERP Lump Sum at Retirement
R. Britz $9,547,000
C. Kinney $9,135,000
R. Bernard $4,281,000
R. Edgar $7,368,000
B. Seaman $3,087,000
For Mr. Britz, Ms. Kinney and Mr. Bernard, the above lump sum amounts do not reflect pay
earned prior to 2003. This is because at their current ages these employees are more than ten
years prior to their retirement at age 65. If any of these executives were to retire at an earlier
date, so that pay earned prior to 2003 was included, their lump sums would be different, with Mr.
Britz and Ms. Kinney receiving a substantially higher amount. As an example, we show below
lump sums assuming retirement at age 55.
Estimated SERP Lump Sum
Name Assuming Age 55 Retirement
R. Britz $ 19,533,000
C. Kinney $ 18,978,000
R. Bernard $ 3,086,000
B. Seaman $ 1,208,000
Mr. Edgar’s amount remains constant under the terms of an employment agreement described
Employee Savings Plan. Under the Employee Savings Plan (the “Savings Plan”), a tax-qualified
retirement savings plan (401(k) plan), participating employees may contribute up to 25 percent
of base salary into their Savings Plan accounts, of which 6 percent is matched by the NYSE,
subject to limitations under the Internal Revenue Code on the annual amount of contributions
that participants may make and the amount of annual compensation that may be taken into
account in computing benefits under the Savings Plan.
Supplemental Executive Savings Plan. The NYSE maintains a Supplemental Executive Savings
Plan (“SESP”) to provide deferred compensation opportunities, and a match on the first 6 percent
of base salary deferred, to employees who earn compensation over the limit set by the Internal
Revenue Code, including the named executives, to supplement benefits under the Savings Plan
that are subject to limitations under the Internal Revenue Code, as well as permit additional
deferrals. The account is also credited with earnings based on a measurement alternative
selected by the participant from among specified alternatives. Participants may elect to receive
their account balances in a lump sum distribution or annual installments following termination of
employment. The Exchange also maintains plans permitting Senior Vice Presidents and above to
defer amounts otherwise paid to them as bonus. There is no Exchange match under these other
Employment Agreements for the Five Most Highly Compensated Officers
Mr. Reed has no employment agreement.
John A. Thain became CEO in January 2004 at an annual salary of $4,000,000 and is party to a
letter agreement with the Exchange. Mr. Thain is not eligible for an incentive award and does
not participate in CAP, SERP, SESP, the Savings Plan or the Retirement Plan. He is eligible to
participate in the Exchange's medical indemnity plan and its executive medical spending
account. In addition, the Board determined to provide Mr. Thain a retirement benefit that will
consist of an additional 3% of deferred compensation ($120,000) which will be matched by an
additional 3% from the Exchange, all to be invested in the vehicles delineated under SESP. This
money may be withdrawn only after Mr. Thain reaches age 60. Mr. Thain disclosed to the
Exchange his equity securities holdings in the letter agreement. Consistent with his
responsibilities under the NYSE Officers’ and Employees’ Statement of Business Conduct and
Ethics, the letter agreement reiterates his obligation to recuse himself from matters pertaining to
his former employer, The Goldman Sachs Group, Inc. (“Goldman Sachs”). The employee ethics
statement also precludes employees from owning equity securities of member organizations and
requires new employees to divest any such securities within six months of employment. At the
time he accepted the position of CEO, Mr. Thain had significant holdings of Goldman Sachs
equity securities. The Board determined to waive the divestiture requirement and, instead, to
require Mr. Thain to place the securities in a blind trust.
Although because of interest rates prevailing in October 2003 it would have been economically
advantageous to Mr. Edgar to retire at that time, the Exchange desired to retain his services
beyond that date. Accordingly, the Exchange has agreed with Mr. Edgar that if he remains
employed with the Exchange until September 30, 2004 and retires on October 1, 2004, he will be
afforded a benefit under the Exchange’s SERP that will be equal to the greater of the benefit
amount he would have had if he had retired on October 1, 2003, or the benefit amount he would
have retiring on October 1, 2004.
The Exchange, as part of its responsibilities as a corporate citizen, contributes to qualified
charitable organizations whose missions further understanding of and public confidence in the
financial markets, or improve the quality of life in the greater New York City area. During 2003
the NYSE made contributions totaling $3,987,035 to 280 eligible organizations and programs, in
dollar amounts ranging from $200 to $125,000. A list of corporate contributions paid in 2003 is
available at www.nyse.com/pdfs/contributions2003.pdf.
Other philanthropic activities were undertaken by the NYSE Foundation, a private foundation
created in 1983 for exclusively charitable and educational purposes within the meaning of
Section 501(c)(3) of the Internal Revenue Code. During 2003 the NYSE Foundation granted a
total of $3,130,635 in support of 63 eligible organizations and programs, in dollar amounts
ranging from $1,000 to $350,000. Two of these programs, the Matching Gifts Program and the
grant to the United Way of New York City, match the personal contributions made by NYSE
employees and Directors to eligible educational, arts and cultural organizations and to the United
Way’s annual campaign. These programs accounted for grants of $159,000 to the Matching
Gifts Program and $93,135 to the United Way of New York City. A full description of the
NYSE Foundation and a list of grants paid in 2003 is available at
Additionally, the NYSE provided the use of its premises and other in-kind assistance to the
following charitable organizations for fundraising events: Cancer Research & Treatment Fund,
Inc.; Congressional Medal of Honor Foundation; FDNY Fire Safety Education Fund, Inc.;
Members Handicapped Childrens Fund; New York City Police Foundation; Rainbow PUSH
Coalition; and Tomorrows Children's Fund/CJ Foundation for SIDS/Imus Ranch, among others.
The NYSE provides administrative support services to the NYSE Foundation and to The New
York Stock Exchange Fallen Heroes Fund, a publicly-supported charitable organization
established in 1999 to provide assistance to the surviving spouse, or surviving children, or a
qualified charitable organization in memory of police officers, firefighters and other employees
of the New York City Police and Fire Departments who were killed in the line of duty, and also
police officers of the Port Authority of New York and New Jersey who were killed in connection
with the September 11, 2001 attacks on the World Trade Center.
During 2003 the federal political action committee (PAC) of the NYSE made only one
contribution: to ARMPAC, a political action committee chaired by the Majority Leader of the
U.S. House of Representatives. Additional commitments totaling $16,500 were pledged to
members of Congress in 2003 but have yet to be honored because of the continuing pause in
PAC activity initiated upon the departure of the former Chairman and CEO on September 17,
2003. There were no contributions made during 2003 from the state political action committee
of the NYSE.
During 2003, staff from the NYSE's Government Relations division assisted with arrangements
for three fundraising events hosted in the Stock Exchange Luncheon Club, a privately-owned
facility, by NYSE members on behalf of U.S. Senator Chris Dodd (D-CN), U.S. Senator John
McCain (R-AZ), and U.S. Senator Ron Wyden (D-OR). Government Relations staff also
attended separate fundraising events held elsewhere in New York City for President George W.
Bush, for U.S. Senator John McCain (R-AZ) and for U.S. Senator Richard Shelby (R-AL).
PROPOSAL 1: ELECTION OF DIRECTORS
Current Board Membership and Independence Standards
The Board currently consists of nine Directors, seven of whom are elected as provided in Article
IV of the Constitution. On April 5, 2004, the Board distributed its annual nominating report
listing as its nominees to be elected by the members the eight Directors so elected last
November. On April 23, 2004, Director Baird resigned. Due to the timing of Director Baird’s
resignation, the Board determined to reduce the number of Directors to be elected by the
members from eight to seven pursuant to Article IV, Section 2 of the NYSE Constitution.
Elected Directors must be independent of the management of the Exchange, members, member
organizations and issuers of securities listed on the Exchange, and must include Directors who
will enable the Exchange to comply with the requirements of Section 6(b)(3) of the Exchange
Act of 1934 (the “Act”). In addition to the seven elected Directors, the Chairman and the CEO
are also members of the Board. As required by Article VI, Section 1, Chairman Reed satisfies all
At the 2004 Annual Meeting, seven Directors are to be elected to hold office until the 2005
Annual Meeting and until their successors have been elected and have qualified.
The following provides information about each nominee as of April 28, 2004, including his or
her business background. All Director nominees are currently serving on the NYSE Board of
Directors and were recommended by the Nominating & Governance Committee and by the
Industry Members of the Board of Executives, as appropriate, as provided in Article IV, Section
2 of the Constitution.
The Board recommends a vote “FOR” all of the nominees listed below for election as
Directors (Proposal 1 on the proxy card).
MADELEINE K. ALBRIGHT ................................................................................................ 66
Dr. Albright served as the 64th Secretary of State of the United States. She was the first female
Secretary of State and is the highest-ranking woman in the history of the U.S. government. Her
autobiography was published in September 2003. Dr. Albright is the founder of The Albright
Group LLC, a global strategy firm. Dr. Albright is the first Michael and Virginia Mortara
Endowed Distinguished Professor in the Practice of Diplomacy at the Georgetown School of
Foreign Service and the first Distinguished Scholar of the William Davidson Institute at the
University of Michigan Business School. She is also the Chairman of The National Democratic
Institute for International Affairs, Chair of The PEW Global Attitudes Project and President of
the Truman Scholarship Foundation. From 1993–1997, Dr. Albright served as the United States
Permanent Representative to the United Nations and as a member of the President’s Cabinet and
National Security Council. In 1995, she led the U.S. delegation to the UN’s Fourth World
Conference on Women in Beijing, China. Dr. Albright was the Director of Women in Foreign
Service Programs and a Research Professor of International Affairs at Georgetown University
during the decade prior to her return to public service. From 1989–1992, she was President of
the Center for National Policy, a non-profit public policy organization based in Washington D.C.
From 1978–81, Dr. Albright was a member of President Carter’s National Security Council and
White House staff. From 1976–78, she served as Chief Legislative Assistant to U.S. Senator
Edmund S. Muskie. Dr. Albright received her B.A. with Honors from Wellesley College,
Masters and Doctorate from Columbia University’s Department of Public Law and Government,
as well as a Certificate from the Russian Institute.
HERBERT M. ALLISON, JR. ................................................................................................ 60
Mr. Allison became chairman, president and chief executive officer of Teachers Insurance and
Annuity Association and College Retirement Equities Fund (TIAA-CREF) on November 1,
2002. He joined TIAA-CREF after a 28-year career at Merrill Lynch & Co., where he last
served as president and chief operating officer. After leaving Merrill Lynch in mid-1999,
Mr. Allison served as national finance chairman for Senator John McCain’s presidential
campaign. Prior to his move to TIAA-CREF, he was president and chief executive officer of the
Alliance for Lifelong Learning (AllLearn), a nonprofit distance learning venture of Oxford,
Stanford and Yale universities. He currently serves on AllLearn’s Board. Mr. Allison is vice
chairman of the United Negro College Fund and serves on the Advisory Council of the Yale
School of Management. President George W. Bush appointed him in 2002 to the Board of the
Vietnam Education Foundation, a federal agency, which he now chairs. Mr. Allison is a former
Board member of the National Association of Securities Dealers and Nasdaq and past chairman
of the Stanford Business School Advisory Council. He graduated from Yale College and served
as an officer in the U.S. Navy before earning an M.B.A. from Stanford.
MARSHALL N. CARTER ...................................................................................................... 64
Mr. Carter was the Chairman and Chief Executive Officer of the State Street Bank and Trust
Company, and of its holding company, State Street Corporation, from 1992–2001. He joined
State Street in July 1991, as President and Chief Operating Officer, became Chief Executive
Officer in 1992 and Chairman in 1993. A former Marine Corps officer who was awarded the
Navy Cross and Purple Heart during two years’ service in Vietnam, Mr. Carter served from
1975–1976 as a White House Fellow at the State Department and Agency for International
Development. Prior to joining State Street, Mr. Carter was with the Chase Manhattan Bank for
15 years. Mr. Carter is the Chairman of the Board of Trustees of the Boston Medical Center. He
is also on the Board of Directors of Honeywell International, Inc. He has previously served on
the Boards of CEDEL, Euroclear, and National Securities Clearing Corporation, and was the Co-
Chairman of the U.S. Working Group of Thirty between 1988 and 1995, which developed
recommendations for revamping world securities clearance and settlement processes. He was
also the Chair of the Massachusetts Governor’s Advisory Task Force on Logan Airport and
Massport following the events of September 11th. Mr. Carter holds a B.S. in civil engineering
from the U.S. Military Academy at West Point (1962), an M.S. in operations research and
systems analysis from the U.S. Naval Postgraduate School, Monterey, California (1970), and an
M.A. in Science, Technology and Public Policy from George Washington University (1976).
SHIRLEY ANN JACKSON .................................................................................................... 57
Dr. Jackson has been the 18th President of Rensselaer Polytechnic Institute (RPI) since 1999. In
2001, Dr. Jackson became the first African-American woman elected to the National Academy
of Engineering. She also is a Fellow of the American Academy of Arts and Sciences and the
American Physical Society, and a Life Member of the M.I.T. Corporation (Board of Trustees).
She is President of the American Association for the Advancement of Science. From 1995 to
1999, Dr. Jackson was Chairman of the U.S. Nuclear Regulatory Commission. Prior to that
appointment, she was a Theoretical Physicist at the former AT&T Bell Laboratories and a
professor at Rutgers University. Dr. Jackson serves on the Executive Committee of the Council
on Competitiveness, the U.S. Comptroller General’s Advisory Committee for the Government
Accounting Office, and formerly served on the Advisory Council for the U.S. Department of
Energy National Nuclear Security Administration. She also serves on the Boards of Trustees of
Emma Willard School, Rockefeller University, Georgetown University, Woodrow Wilson
National Fellowship Foundation, and the Brookings Institution. Dr. Jackson serves as a Director
of Federal Express Corporation, Public Service Enterprise Group Incorporated, Marathon Oil
Corporation, United States Steel Corporation, Medtronic, Inc., and AT&T. Dr. Jackson holds a
Ph.D. in theoretical physics from M.I.T., a B.S. in physics from M.I.T., and 23 honorary doctoral
JAMES S. MCDONALD.......................................................................................................... 51
Mr. McDonald is the President and Chief Executive Officer of Rockefeller & Co., Inc. He is
also a member of the Board of Directors of Rockefeller & Co., Inc. and Rockefeller Financial
Services. Prior to joining Rockefeller & Co., Inc., from 1986 to 2000, Mr. McDonald was a
senior officer and director of the Pell, Rudman organization. Among other positions, he served
as President and Chief Executive Officer of that organization, now known as “Atlantic Trust/Pell
Rudman.” Prior to joining Pell, Rudman, he was a partner with the Boston law firm of Choate,
Hall & Stewart, which he joined in 1977. In addition, Mr. McDonald is a Trustee Emeritus of
the Fessenden School, Newton, Massachusetts (President, 1993-1999), and a member of the
Investment Committees of The United States Holocaust Memorial Museum, Washington, D.C.,
the Nightingale School, New York, N.Y., and the Japan Society of New York. He is a member
of the Harvard University Committee on Asia Activities, and has been active in other community
activities. He received a J.D. in 1977 from the University of Virginia and an A.B. from Harvard
College in 1974.
ROBERT B. SHAPIRO............................................................................................................ 65
Mr. Shapiro is the former Chairman and Chief Executive Officer of Monsanto Company and the
former Chairman of Pharmacia Corporation. He became Monsanto’s President and Chief
Operating Officer in 1993; Chairman and Chief Executive Officer in April 1995; and was
appointed Chairman of Pharmacia Corporation in April 2000 following the merger of Monsanto
Company and Pharmacia and Upjohn, a position he relinquished in February, 2001. Previously,
he was Vice President, General Counsel for General Instrument Corporation and served as an
attorney with the New York law firm of Poletti, Freidlin, Prashker, Feldman & Gartner. Mr.
Shapiro served as Annual Assistant to the General Counsel and later to the Undersecretary of the
U.S. Department of Transportation. He has served under previous appointments on the
President’s Advisory Committee on Trade Policy under President Clinton; White House
Domestic Policy Review of Industrial Innovation under President Carter; the Civil Aeronautics
Board Advisory Committee on Procedure; and the Massachusetts Governor’s Task Force on
Transportation. Mr. Shapiro is a member of the American Society of Corporate Executives and
The Business Council. Mr. Shapiro has received many awards including: the 1999 Emerging
Markets Chief Executive Officer of the Year Award, the John R. Miller award as the
Outstanding Corporate Marketing Executive in 1984, and the Annual Citation for Outstanding
Achievement from Sales and Management Magazine. Mr. Shapiro is a graduate of Harvard
University and Columbia University School of Law.
SIR DENNIS WEATHERSTONE ......................................................................................... 73
Sir Dennis is past Chairman and Chief Executive Officer of J.P. Morgan & Co., having served in
those roles from 1990–1994. From 1995–2001 he served as an independent member of the
Board of Banking Supervision of the Bank of England (later the Financial Services Authority).
He began his career in 1946 at the Guaranty Trust Company. Sir Dennis is an Associate of the
Institute of Chartered Secretaries and Administrators and a Fellow of the Chartered Institute of
Bankers. He is a Director of Air Liquide and previously General Motors Corporation and Merck
& Co., Inc. Sir Dennis is a Director of the Institute for International Economics, a Trustee of the
Alfred P. Sloan Foundation, Chairman of the Royal College of Surgeons Foundation in New
York, and an Honorary Fellow of the Association of Corporate Treasurers (London). He was
recently elected a Trustee of the International Accounting Standards Committee Foundation.
Since the Board was elected by the members on November 18, the Board held five in-person
meetings and three telephonic meetings. Due to illness, Director Baird attended fewer than 75%
of the aggregate of Board and Committee meetings.
Certain Relationships and Director Independence
This section discusses certain direct and indirect relationships and transactions involving the
Exchange and the Director nominees.
Several of the Director nominees maintain brokerage accounts with NYSE member
organizations. The Exchange has determined that the maintenance by Directors of brokerage
accounts and other ordinary-course financial advisory relationships with NYSE member
organizations is categorically immaterial. Similarly, the fact that a company or organization with
which a director is affiliated engages in ordinary-course business transactions with an NYSE
member organization or listed company is categorically immaterial.
Dr. Albright’s sibling is a partner at PwC, the NYSE’s independent auditor, in an area unrelated
to services that the firm performs for the Exchange. Dr. Albright does not serve on the Audit
Committee, which is the standing committee charged with direct responsibility for the hiring,
firing and compensation of the independent auditor. Therefore, Dr. Albright does not have the
authority to affect these decisions, and will recuse herself from any Board discussion regarding
PwC. In addition, Dr. Albright on occasion receives honoraria at speaking events sponsored by
member organizations. Dr. Albright did not receive, in any of the past three years, more than
$100,000 from any member organization or 10 percent or more of her gross income from such
honoraria from member organizations in the aggregate.
As a result of his former employment with Merrill Lynch & Co., Inc., Director Allison retains a
significant equity interest in that member organization. He has been engaged in a plan of
divestment of this equity interest for almost five years, and he anticipates continuing it.
The Board considered each of the relationships described above and other information provided
by the Director nominees, and has determined that they do not create a disqualification under its
Independence Policy and are not material relationships. Accordingly, the Board has determined
that each Director nominee is independent.
PROPOSAL 2: ELECTION OF TRUSTEES OF THE GRATUITY FUND
At the 2004 Annual Meeting, two non-lessor members of the Exchange are to be elected to serve
a three-year term as a Trustee of the Gratuity Fund.
The following member nominees were nominated by the Nominating & Governance Committee,
and they currently serve as Trustees of the Gratuity Fund. Physical access and electronic access
members are not entitled to vote on this Proposal pursuant to Article III, Section 9(b)(v) of the
The Board recommends a vote “FOR” the nominees listed below for election as Trustees of
the Gratuity Fund, each to serve for a term of three years (Proposal 2 on the proxy card).
NAME POSITION COMPANY
Arthur D. Cashin, Jr. Managing Director UBS PaineWebber Inc.
Peter E. Kann Director Credit Lyonnais Securities USA
Description of the Gratuity Fund
The Gratuity Fund is a fund that collects a payment from every regular member (including lessor
members) upon the death of any member and makes a payment of up to $100,000 to the family
of the deceased member.
From Article XV, Section 9 of the NYSE Constitution:
“Sec. 9. Management of Gratuity Fund. The management and distribution
of the Gratuity Fund shall be under the charge of a Board of trustees,
acting as agent for the Exchange, to be known as the “trustees of the
Gratuity Fund,” and shall consist of six regular members of the Exchange
who are not lessor members and are elected by the membership. In case of a
vacancy among the trustees, the Board, at its next regular meeting
thereafter, shall proceed to fill the same until the next annual election
of the Exchange. Prior to filling such vacancy, the Board shall request the
Nominating Committee to submit to the Board the name of the person
recommended by the Nominating Committee to fill such vacancy.”
PROPOSAL 3: ADOPTION OF THE AMENDMENT TO THE CERTIFICATE OF
The proposed amendment to the NYSE Certificate of Incorporation updates that instrument
consistent with the Constitution and long-term practice, under which all Trustees of the NYSE’s
Gratuity Fund are elected by the membership.
The New York Not-for-Profit Corporation Law requires authorization of an amendment of
NYSE’s Certificate of Incorporation by the majority vote by members entitled to vote on the
matter. Physical access and electronic access members are not entitled to vote on this Proposal
pursuant to Article III, Section 9(b)(v) of the Constitution.
The Board recommends a vote “FOR” the amendment to the Certificate of Incorporation
(Proposal 3 on the proxy card).
Paragraph 8 of the current Certificate of Incorporation states:
8. Individual or corporate trustees may from time to time be appointed for any funds or
other property of the Exchange, including without limitation the funds known as the
Gratuity Fund and the Special Trust Fund heretofore established by the Constitution of
the Exchange. The trustees of the Gratuity Fund of the Exchange shall consist of the
Chairman of the Board of Directors and six elected trustees, of whom two shall be
elected annually for a term of three years by the members of the Exchange entitled to
vote for the election of trustees of the Gratuity Fund. Any vacancy among the six elected
trustees of the Gratuity Fund may be filled by the Board of Directors until the next
annual election of the Exchange.
The proposed amendment will delete this paragraph in its entirety to clarify that the Chairman
will not serve as a Trustee of the Gratuity Fund. The other matters that this paragraph addresses
are covered either in the Constitution or by state law. A copy of the current NYSE Certificate of
Incorporation is attached to this Proxy Statement at Annex C.
PROPOSAL 4: ADOPTION OF THE CONSTITUTIONAL AMENDMENTS
The proposed amendments to the NYSE Constitution follow the basic constructs of the
Exchange’s new governance architecture. These amendments mostly clarify the positions of the
separate Chief Executive Officer and the members of the Board of Executives under that
architecture. One proposed change allows the Board to set the annual membership meeting
earlier in the year than the June date set under the current scheme.
Under Article XIV, Section 1 of the Constitution, amendment to many Constitutional provisions
requires adoption by the members. However, amendment to certain Constitutional provisions
(generally, provisions dealing with the internal Exchange matters not directly involving the
membership or other Exchange constituent groups) may be made by the Board without the vote
of members, except that no such amendment by the Board alone can take effect without two
weeks’ notice being given to the members.
Following are descriptions of the proposed amendments to the NYSE Constitution. Physical
access and electronic access members are not entitled to vote on Proposal 4.5 below pursuant to
Article III, Section 9(b)(v) of the Constitution. The last five amendments, amendments (6) -
(10), are included for purposes of notification only pursuant to Article XIV, Section 1 of the
Constitution, and are not submitted to a member vote.
The Board recommends a vote “FOR” Constitutional amendments (1) – (5) described
below (Proposals 4.1 – 4.5 on the proxy card).
Proposal 4.1 – Amendment to Article III, Section 1
(1) Amendment to Article III, Section 1: Change of date of Annual Meeting of members. An
amendment to Article III, Section 1 is proposed to enable the Board to move up the Annual
Meeting of members closer to the end of the fiscal (calendar) year. The proposal also provides
the Board a degree of time flexibility in reporting nominations to the membership, but without
reducing the current time period for members to propose nominations by petition. The amended
section would read as follows (additions are underlined; deletions are bracketed):
Article III. Meetings of Members. Sec. 1. Annual Meeting. A meeting of the members
of the Exchange entitled to vote thereat shall be held annually for the election of directors
and other elective positions, and for the transaction of any other proper business, at such
time and date as the Board may select [on] , but in no event later than the first Thursday
in June [in each year] or, if the Exchange is not open for business on that day, on the next
succeeding business day. At such annual election, there shall be elected by the
membership by ballot:
(a) all directors to be elected by members to serve for a term of one year;
(b) two Trustees of the Gratuity Fund who shall be regular members (and not
lessor members), to serve for a term of three years; and
(c) qualified persons to fill any vacancies among the trustees of the Gratuity
The Board shall distribute its annual nominating report, which lists the nominees to serve
in the elective positions, to each member [not less than 60 days in advance of the annual
meeting] a sufficient number of days in advance of the annual meeting to take into
account the number of days for the filing of petitions by members for the proposal of
nominations for elective positions, the determination by the Board of eligibility of
persons nominated by petition and the notice to members of said annual meeting, all as
provided in this Article III.
Proposal 4.2 – Amendment to Article IV, Section 14(b)
(2) Amendment to Article IV, Section 14(b): Chief Executive Officer may not participate in
Board’s review of staff or committee determinations. An amendment to Article IV, Section
14(b) is proposed to have the Chief Executive Officer recused from participation in the review
by the Board of decisions by Exchange staff, officers and committees. Decisions appealed to the
Board include decisions in the regulatory area and decisions by the Chief Executive Officer and
those reporting to the Chief Executive Officer. Such recusal of the Chief Executive Officer is
consistent with the oversight of Exchange management by the independent Directors. The
amended section would read as follows (additions are underlined; deletions are bracketed):
Article IV. Board of Directors *** Sec. 14. Delegation. *** (b) Limitation of Delegation
Authority. A member, member organization, allied member or approved person affected
by a decision of any officer, employee or committee acting under powers delegated by
the Board may require a review by the Board of such decision, by filing with the
Secretary of the Exchange a written demand therefor[e] within 10 days after the decision
has been rendered, except as otherwise provided in Article IX, Section 6. Any and all
powers delegated by the Board may continue to be exercised by the Board
notwithstanding such delegation, and the Board may exercise such review and oversight
over the exercise of (or omission to exercise) any delegated authority as it shall at any
time determine. Notwithstanding any other provisions of this paragraph (b), the Chief
Executive Officer shall be recused from deliberations and actions of the Board with
respect to matters to be reviewed by the Board pursuant to this paragraph (b).
Proposal 4.3 – Amendment to Article IX, Section 3
(3) Amendment to Article IX, Section 3: No member of the Board of Executives may serve on
the Hearing Board. An amendment to Article IX, Section 3 is proposed to prohibit Board of
Executives members from serving on the Hearing Board in light of participation of certain Board
of Executives members on the Regulation, Enforcement & Listing Standards Committee. The
amended section would read as follows (additions are underlined):
Article IX. Disciplinary Proceedings. *** Sec. 3. Hearing Board. The Chairman of the
Board, subject to the approval of the Board, shall from time to time appoint a hearing
board to be composed of such number of members and allied members of the Exchange
who are not members of the Board or of the Board of Executives, and registered
employees and non-registered employees of members and member organizations, as the
Chairman of the Board shall deem necessary. The members of the hearing board shall be
appointed annually and serve at the pleasure of the Board. The Chairman of the Board,
subject to the approval of the Board, shall also designate from among the officers and
employees of the Exchange a chief hearing officer and one or more other hearing officers
who shall have no Exchange duties or functions relating to the investigation or
preparation of disciplinary matters and who shall be appointed annually and shall serve as
hearing officers at the pleasure of the Board.
Proposal 4.4 – Amendment to Article IX, Section 6
(4) Amendment to Article IX, Section 6: The Chief Executive Officer may not call up
disciplinary decisions for review by the Board; Chief Executive Officer may not participate in
Board’s review of disciplinary appeals. An amendment to Article IX, Section 6 is proposed to
prohibit the Chief Executive Officer from requiring reviews of disciplinary decisions and to
recuse the Chief Executive Officer from participating in reviews by the Board of disciplinary
decisions, consistent with such officer's separation from the regulatory function and consistent
with other provisions of the Constitution. The amended section would read as follows (additions
Article IX. Disciplinary Proceedings. *** Sec. 6. Review. In a disciplinary proceeding
not involving a written consent to the imposition of a specified penalty, any member,
member organization, allied member, approved person, or registered or non-registered
employee of a member or member organization, adjudged guilty of any charge, or the
division or department of the Exchange which brought the charges, or any member of the
Board or the Board of Executives, may, in accordance with procedures set forth in the
rules of the Exchange, require a review by the Board, of any determination or penalty, or
both, imposed by the hearing panel. Upon review, the Board, by the affirmative vote of a
majority of the entire Board, may sustain any determination or penalty imposed, may
modify or reverse any such determination, and may increase, decrease or eliminate any
such penalty, or impose any penalty permitted under this Article as it deems appropriate.
In a disciplinary proceeding involving a written consent to the imposition of a
specified penalty, any member of the Board or the Board of Executives may require a
review by the Board of any determination or penalty, or both, imposed by the hearing
panel. In any such proceeding, the division or department which entered into the written
consent, may require a review by the Board of any penalty, including any determination
related thereto, imposed by the hearing panel, which is less severe than the stipulated
penalty. The respondent or the division or department which entered into the written
consent may require a review by the Board of any rejection of the written consent by the
hearing panel. Any review provided in this paragraph shall be conducted in accordance
with procedures set forth in the rules of the Exchange. Upon review, the Board, by the
affirmative vote of a majority of the entire Board, may fix and impose the penalty agreed
to in such written consent or any penalty which is less severe than the stipulated penalty,
or remand the case for further proceedings.
Notwithstanding any other provisions of this Section, the Chief Executive Officer (a)
may not require a review by the Board under this Section and (b) shall be recused from
deliberations and actions of the Board with respect to matters to be reviewed by the
Board under this Section.
Proposal 4.5 – Amendment to Article XV, Section 9
(5) Amendment to Article XV, Section 9: References to “Nominating Committee” changed to
“Nominating & Governance Committee.” An amendment to Article XV, Section 9 is proposed
to correct an incomplete cross-reference in that section from “Nominating Committee” to
“Nominating & Governance Committee.” The amended section would read as follows
(additions are underlined):
Article XV. The Gratuity Fund. *** Sec. 9. Management of Gratuity Fund. The
management and distribution of the Gratuity Fund shall be under the charge of a board of
trustees, acting as agent for the Exchange, to be known as the “trustees of the Gratuity
Fund,” and shall consist of six regular members of the Exchange who are not lessor
members and are elected by the membership. In case of a vacancy among the trustees,
the Board, at its next regular meeting thereafter, shall proceed to fill the same until the
next annual election of the Exchange. Prior to filling such vacancy, the Board shall
request the Nominating & Governance Committee to submit to the Board the name of the
person recommended by the Nominating & Governance Committee to fill such vacancy.
CONSTITUTIONAL AMENDMENTS PROVIDED FOR NOTICE ONLY
As discussed above, the following amendments do not require a member vote.
(6) Amendment to Article IV, Section 12(a)(1)(vii): Eliminate the office of the Chairman as a
subject of succession planning by the Nominating & Governance Committee. Article IV, Section
12(a)(1)(vii) is amended to eliminate a non-executive Chairman as a mandated subject of
succession planning by the Nominating & Governance Committee. Under the Exchange’s new
governance architecture, the Board determines from time to time whether to continue to separate
the offices of the Chairman of the Board and the Chief Executive Officer. Succession planning
with respect to the Chief Executive Officer is the norm in corporate governance practice. The
amended section will read as follows (deletions are bracketed):
Article IV. Board of Directors *** Sec. 12. Standing Committees. The Standing
Committees and their respective Chairmen shall be appointed by the Board at its annual
organizational meeting. The Board shall adopt for each Standing Committee a charter
consistent with the duties prescribed in the subsections below, and including such
additional duties as may be considered appropriate and not inconsistent with this
Constitution. Each Standing Committee shall have the authority to engage independent
legal counsel and other advisors as it determines necessary to carry out its duties, but may
not use counsel or other advisors who advise Exchange officers or employees.
(a) Committees Consisting Solely of Directors. The Standing Committees
described in Section 12(a)(1)-(4) shall consist solely of directors, other than the Chief
Executive Officer, and shall report to the Board. Such Standing Committees may be
combined with any other such Standing Committee, be subdivided into one or more such
Standing Committees, or the Board may constitute itself as a committee of the whole in
respect of such a Standing Committee. The Chief Executive Officer shall be recused
from deliberations of the Board, whether it is acting as the Board or as a committee of the
whole, with respect to the activities of the Nominating & Governance Committee, the
Human Resources & Compensation Committee, the Audit Committee or the Regulatory
Oversight & Regulatory Budget Committee.
(1) Nominating & Governance Committee. The Nominating & Governance
Committee shall be responsible for (i) recommending to the Board candidates for Board
membership in accordance with Article IV, Section 2 and candidates for Trustees of the
Gratuity Fund, (ii) recommending to the Board candidates for Board of Executives
membership, (iii) conducting the Board’s annual governance review, (iv) reviewing and
recommending the Exchange’s corporate governance guidelines, (v) establishing an
appropriate process for, and overseeing implementation of, the Board’s self-assessments
(including Board self-assessment, committee self-assessments and director assessments)
and the Board of Executives’ self-assessments, (vi) recommending director
compensation, and (vii) succession planning for the [Chairman and] Chief Executive
Officer of the Exchange. In discharging its responsibilities under clause (i) of the
immediately preceding sentence, the Nominating & Governance Committee shall
propose persons as candidates for the Board who, in the opinion of the Committee, (a)
are committed to serving the interests of the public and strengthening the Exchange as a
public securities market; and (b) include among their number individuals at least one of
whom is intended to allow the Exchange to meet the requirements of section 6(b)(3) of
the Act concerning issuers and at least one of whom is intended to allow the Exchange to
meet the requirements of section 6(b)(3) of the Act concerning investors. In addition, the
Nominating & Governance Committee shall establish procedures to solicit the input of
investors in equity securities and members regarding Board candidates. The Nominating
& Governance Committee shall also solicit input from the various Exchange
communities regarding candidates for appointment by the Board to the Board of
Executives. Consensus recommendations for candidates to represent the groups
referenced in clauses (ii), (iii) and (iv) of Article V, Section 2(b) put forward by the
respective representatives of those groups shall be forwarded to the Board as the
recommendations of the Nominating & Governance Committee unless and to the extent
such Committee determines that a candidate does not qualify for the position.
(7) Amendment to Article IV, Section 12(b)(1): Permit the Board to add individuals to the
Regulation, Enforcement & Listing Standards Committee (“RELS Committee”) who previously
served on either the RELS Committee or its predecessor Committee for Review. Article IV,
Section 12 (b)(1) is amended to permit the Board to appoint individuals to serve on the RELS
Committee who have served previously on either the RELS Committee or the Committee for
Review but who are neither Directors nor members of the Board of Executives. The change will
assure that the RELS Committee has the experience and understanding of persons familiar with
its work and procedures notwithstanding any changes in the members of the Board or the Board
of Executives. This authority currently exists in the “2003-2004 Transition” provisions of the
Constitution, which provisions expire on June 3. The amended section will read as follows
(additions are underlined):
Article IV. Board of Directors *** Sec. 12. Standing Committees. The Standing
Committees and their respective Chairmen shall be appointed by the Board at its annual
organizational meeting. The Board shall adopt for each Standing Committee a charter
consistent with the duties prescribed in the subsections below, and including such
additional duties as may be considered appropriate and not inconsistent with this
Constitution. Each Standing Committee shall have the authority to engage independent
legal counsel and other advisors as it determines necessary to carry out its duties, but may
not use counsel or other advisors who advise Exchange officers or employees. ***(b)
Joint Committees (1) The Regulation, Enforcement & Listing Standards Committee shall
be composed of both directors (other than the Chief Executive Officer) and Board of
Executives members (including at least one Industry Member of the Board of
Executives), as selected by the Board and, to assure continuity, may also include prior
members of either said Committee or the Committee for Review who are neither
directors nor members of the Board of Executives, as selected by the Board; provided,
however, [that] a majority of the members of [such] said [c]Committee[s] voting on a
matter subject to a vote of [such] said Committee shall be directors. [Such] Said
[c]Committee shall report to the Regulatory Oversight & Regulatory Budget Committee
and shall (i) review and provide general advice with respect to the Exchange’s programs
for market surveillance, member and member organization regulation and enforcement,
and the listing and de-listing of securities, and (ii) hear appeals of disciplinary
determinations and determinations to de-list a listed company.
(8) Amendment to Article IV, Section 14(a) to correct a cross-reference in the amended
provision for delegation by the Board. Article IV, Section 14(a) is amended to correct an
erroneous cross-reference from “Article VII, Section 1” (which pertains to Exchange Contracts),
to “Article VIII, Section 1” (which pertains to regulations). The correction assures that any
committee of Directors which may be delegated authority from the Board to adopt rules relating
to regulation, including making and settling Exchange Contracts (rather than rules just relating to
“Exchange Contracts”) include at least one Director nominated by the Industry Members of the
Board of Executives. The amended section will read as follows (additions are underlined;
deletions are bracketed):
Article IV. Board of Directors *** Sec. 14. Delegation. (a) Delegation Authority. The
Board may delegate such of its powers as it may from time to time determine, subject to
the provisions of the Constitution and applicable law, to the Board of Executives, to such
officers and employees of the Exchange, and to such committees, composed either of
directors or otherwise, as the Board may from time to time authorize; provided, however,
that, except as this Constitution otherwise provides, the Board may not delegate, and no
committee may re-delegate, to the Board of Executives, to officers and employees of the
Exchange or to any committee other than a committee consisting solely of directors
(other than the Chief Executive Officer) authority either to adopt rules under Article VIII,
Section 1 or Article IX, Section 1, or to act on any subject matter described in Article IV,
Section 12(a) or (b)(1), except by effecting a rule change within the meaning of Section
19(b)(1) of the Act. Notwithstanding the foregoing, the Board may authorize an officer or
officers of the Exchange to adopt rules as aforesaid, so long as the Board is informed of
any such action at its next meeting, and the prior approval of the Chief Regulatory
Officer is obtained for any regulatory matter. Any committee of directors to which
authority is delegated to adopt rules under Article [VII] VIII, Section 1 or Article IX,
Section 1 shall include thereon at least one director nominated by the Industry Members
of the Board of Executives, as provided in Article IV, Section 2. The Board shall
diligently oversee the activities of the Board of Executives, the officers and employees of
the Exchange, and any committees to which the Board has delegated authority pursuant
(9) Amendment to Article V, Sections 2(b) and 6(a); and to Article VI, Section 2: Either the
Chairman or the CEO shall serve as Chairman of the Board of Executives. Article V, Sections
2(b) and 6(a), and Article VI, Section 2 are amended to permit either the Chairman of the Board,
or the Chief Executive Officer, as the Chairman determines from time to time, to preside over the
Board of Executives, to call meetings of the Board of Executives and to determine when
circumstances require shorter notice of meetings of the Board of Executives than otherwise
provided for that group – all in the event the Chairman is not also the Chief Executive Officer.
These changes are consistent with the function of the Board of Executives to advise the Chief
Executive Officer in the management of the operations of the Exchange.
Further amendment to Article V, Section 2(b) to clarify qualifications for non-specialist floor
members of the Board of Executives. Article V, Section 2(b) is further amended to clarify that
the Board may appoint as a non-specialist floor member of the Board of Executives any non-
specialist who spends a substantial part of his or her time on the Floor of the Exchange. (The
current description of the non-specialist floor members of the Board of Executives was carried
over from a category of “industry director” which applied under the prior Exchange governance
structure and appears to not include the entire non-specialist constituency as it exists today.) The
amendment makes clear that the selection of Board of Executive members from among the
various categories of non-specialist Floor members (e.g., “$2” brokers”, “house” brokers, “direct
access” brokers, registered competitive market makers, competitive traders, “owner-operators”
and lessees) is determined by the non-specialist Floor members seeking to make consensus
recommendations of candidates to the Nominating & Governance Committee for which Article
IV, Section 12(a)(1) of the Constitution provides. A further change in Article VI, Section 2
provides for the Chairman to make the Annual Report on the Exchange’s activities to the Board
of Executives, rather than to a “Plenary Session” of the Board and the Board of Executives. The
change is consistent with the proposed amendment described in item (10) below, which replaces
“Plenary Sessions” with a requirement that all directors engage personally with the Board of
The amended sections will read as follows (additions are underlined; deletions are bracketed):
Article V. Board of Executives. *** Sec. 2. Composition of Board of Executives. *** (b)
The Board of Executives shall consist of the Chairman of the Board [(who shall be the
Chairman of the Board of Executives)] (if such individual is not also the Chief Executive
Officer), the Chief Executive Officer [(if such individual is not also the Chairman)], and
at least 20 but no more than 25 members (“Board of Executives members”). Either the
Chairman of the Board or the Chief Executive Officer, as the Chairman of the Board
determines from time to time, shall serve as Chairman of the Board of Executives. The
Board of Executives members (other than the Chairman and Chief Executive Officer)
shall be appointed by the Board at its annual organizational meeting and shall consist of
(i) at least six individuals who are either the chief executive or a principal executive
officer of a member organization that engages in a business involving substantial direct
contact with securities customers, (ii) at least two individuals, each of whom is registered
as a specialist and spends a substantial part of his or her time on the Floor of the
Exchange, (iii) at least two individuals, each of whom spends a [majority] substantial part
of his or her time on the Floor of the Exchange [, and has a substantial part of his or her
business the execution of transactions on the Floor of the Exchange for other than his or
her own account or the account of his or her member organization], but who shall not be
registered as a specialist, (iv) at least two individuals who are lessor members who are
not affiliated with a broker or dealer in securities, (v) at least four individuals who are
either the chief executive or a principal executive officer of an institution that is a
significant investor in equity securities, at[s] least one of whom shall be a fiduciary of a
public pension fund; (vi) at least one individual intended to represent individuals who
invest in equity securities and are retail clients of member organizations, and (vii) at least
four individuals who are either the chief executive or a principal executive officer of a
listed company (the members of the Board of Executives referenced in subsections (i),
(ii), and (iii) herein collectively shall be called “Industry Members of the Board of
Executives”). If the Board increases the size of the Board of Executives it shall strive to
maintain approximately the same balance between Industry Members of the Board of
Executives and other members of the Board of Executives as is represented above. If the
Board increases the size of the Board of Executives, it shall also be free to add members
to the Board of Executives who represent other elements of the Exchange community.
Each person who is not a member of the Exchange and is appointed to the Board of
Executives shall, by the acceptance of such position, be deemed to have agreed to uphold
*** Sec. 6. Meetings. (a) Frequency of Meetings. The Board of Executives shall have
not less than six meetings each year. Special meetings of the Board of Executives may
be called by the Chairman of the Board or by the Chief Executive Officer, or pursuant to
the written request of not less than one third of the Board of Executives members then in
office, in accordance with the provision of notice of meetings, except that when in the
judgment of the Chairman of the Board or the Chief Executive Officer, emergency
requires shorter notice.
Article VI. Officers. *** Sec. 2. The Chairman. The Chairman shall preside at all
meetings of the Board [and of the Board of Executives] and shall decide all questions of
order, subject, however, to an appeal to the Board; provided, however, that if the
Chairman is also the Chief Executive Officer, he or she shall not participate in executive
sessions of the Board. If the Chairman is not the Chief Executive Officer, he or she shall
act as liaison officer between the Board and the Chief Executive Officer. In addition to
his or her usual duties, the Chairman shall make an Annual Report on the Exchange’s
activities to [a Plenary Session] the Board of Executives.
(10) Revise Article V, Section 11. To replace “Plenary Sessions” with requirements for director
engagement with Board of Executives. Article V, Section 11 is amended to replace the
requirement for Plenary Sessions of the Board and the Board of Executives with a more specific
requirement for each director to be present for at least three meetings of the Board of Executives
each year. The amended section will read as follows (additions are underlined; deletions are
Article V. Board of Executives. *** Sec. 11. [Plenary Sessions of the] Board Member
Attendance at Meetings of [and] the Board of Executives. [The Board and the Board of
Executives shall meet jointly (a “Plenary Session”)] Each member of the Board shall
attend a meeting of the Board of Executives at least [twice] three times each year. [The
Chairman of the Board shall chair all Plenary Sessions.]
NYSE GOVERNANCE GUIDELINES1
A. ROLE AND RESPONSIBILITY OF THE BOARD
The Board shall be vested with all powers necessary for the governance of the New York
Stock Exchange, Inc. (the “Exchange” or the “NYSE”), the regulation of the business conduct of
members, allied members and member organizations of the Exchange and of approved persons in
connection with their conduct of the business of member organizations, and the promotion of the
welfare, objects and purposes of the Exchange, and in the exercise of such powers may adopt
such rules, issue such orders and directions and make such decisions as it may deem appropriate.
The Board may prescribe and impose penalties for the violation of rules adopted pursuant
to the Constitution and for neglect or refusal to comply with orders, directions or decisions of the
Board or for any offense against the Exchange, the penalty for which is not specifically
prescribed by the Constitution. The Board shall have the power to hold meetings at such times
and places as it deems advisable, to appoint the Board of Executives, to appoint committees, to
appoint officers, to employ necessary employees, to authorize proper operating expenditures and
to take such other action as may be necessary or proper to carry out the purposes of the
B. BOARD COMPOSITION, STRUCTURE AND POLICIES
1. Board Size
The Board shall consist of the Chairman of the Board, the Chief Executive Officer (if
such individual is not also the Chairman), and such number of Directors elected by the members
of the Exchange as is fixed from time to time by resolution of the Board, provided that such
number shall not be less than six nor more than twelve.
2. Independence of Directors
The Directors elected by the members shall be outsiders in the sense of being removed
from active involvement in or proponents of positions, policies and activities of the Exchange,
independent of management of the Exchange, the members, and issuers of securities listed on the
Exchange, and shall include Directors who will enable the Exchange to comply with the
requirements of Section 6(b)(3) of the Securities Exchange Act of 1934 (the “Act”). Among
other things, no Director elected by the members shall be (a) a member, allied member, lessor
member or approved person; (b) an officer or employee of the Exchange; (c) a person employed
by or affiliated, directly or indirectly, with a member organization, or with a broker or dealer that
engages in a business involving substantial direct contact with securities customers; or (d) an
These Governance Guidelines must be read in conjunction with other documents affecting governance issues
herein, including the Certificate of Incorporation, the NYSE Constitution, and the Independence Policy of the
Exchange Board of Directors.
executive officer of an issuer of securities that are listed on the Exchange. In addition, no
Director shall qualify as independent unless the Board affirmatively determines that the Director
has no material relationship with the Exchange. The Board shall adopt specific standards relating
to such determination, comparable to the standards required of issuers listed on the Exchange, by
effecting a rule change within the meaning of Section 19(b)(1) of the Act.2
3. Annual Election of Directors
A meeting of the members of the Exchange entitled to vote thereat shall be held annually
for the election of Directors. Each year the Board recommends a slate of Directors for election
by members at the Annual Meeting of members. The Board’s recommendations are based upon
the recommendations of the Nominating & Governance Committee and the Industry Members of
the Board of Executives, and it also considers input of investors in equity securities and NYSE
Any Board vacancy shall be filled, after nomination by the Nominating & Governance
Committee or the Industry Members of the Board of Executives, as the case may be, by the
affirmative vote of a majority of the entire Board, unless the Board shall determine that the
vacancy need not be filled until the next annual election. A Director so elected shall serve until
the next annual election of the Exchange and until his or her successor is elected and takes office.
4. Board membership Criteria
The Nominating & Governance Committee is responsible for proposing a slate of
Directors for election by the members, except that two or three nominees will be proposed by the
Industry Members of the Board of Executives in order to comply with the requirements of the
Act regarding fair representation of members. The Nominating & Governance Committee shall
propose persons as candidates for the Board who, in the opinion of the Committee, are
committed to serving the interests of the public and strengthening the Exchange as a public
securities market. Nominees meeting the Exchange’s independence criteria will be selected on
the basis of their competence to fulfill the duties and responsibilities of a Director.
5. Limitation on Management Directors
The Chief Executive Officer is the only member of management that will serve as a
member of the Board.
6. Chairman of the Board and Chief Executive Officer
The Board has determined that it is in the best interest of the Exchange to split the
positions of Chairman of the Board and Chief Executive Officer at this time. Consistent with the
Constitution, the Board retains flexibility to allocate the responsibilities of the positions of the
Chairman of the Board and Chief Executive Officer in the way that it believes is in the best
interest of the Exchange going forward.
The standards are set forth in Annex B to this Proxy Statement.
7. Chief Regulatory Officer
Subject to the authority of the Board and the Regulatory Oversight & Regulatory Budget
Committee, and to the administrative standards and policies established by the Chief Executive
Officer made applicable to the Chief Regulatory Officer by the Regulatory Oversight &
Regulatory Budget Committee, the Chief Regulatory Officer shall be responsible for the
management and administration of the regulatory functions of the Exchange.
8. Resignation Policy
Any Director may resign at any time by giving written notice of resignation to the Board,
the Chairman of the Board or the Secretary of the Exchange. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become effective shall not be so
specified, then it shall take effect immediately upon its receipt.
9. Conflicts of Interest
No Director shall participate in the deliberation or adjudication of any matter in which he
or she is personally interested.
10. Limitations on Other Board Service
Directors must advise the Chairman of the Board and the Chairman of the Nominating &
Governance Committee in advance of accepting an invitation to serve on the board of any listed
company (other than those on which he or she served when he or she became an NYSE
Director). No Director shall serve on the board of any member organization, or of a broker or
dealer that engages in a business involving substantial direct contact with securities customers.
Exchange officers are not permitted to serve on the board of Directors of any for-profit
Directors shall serve for a term of one year (or until the end of the term of his or her
predecessor if he or she shall have been elected to succeed a person who has not completed his or
her one-year term).
12. Retirement Age for Directors
The Exchange has no mandatory retirement age.
13. Director Orientation and Continuing Education
All new Directors must participate in the NYSE’s Orientation Program, which will be
conducted promptly following the annual meeting at which new Directors are elected or
following the time the new Director otherwise joins the Board. This orientation will include
presentations by senior management to familiarize new Directors with the Exchange’s strategic
plans, its significant financial, accounting and risk management issues, its self-regulatory
responsibilities and its compliance and market surveillance programs, its Directors’ Code of
Business Conduct and Ethics, its principal officers, and its internal and independent auditors. All
continuing Directors are also invited to attend the Orientation Program. In addition, the NYSE
offers Directors continuing Director education opportunities.
14. Director Communications with Third Parties
The Board believes that the management speaks for the NYSE. As appropriate, the
Chairman speaks for the Board. Individual Directors may, from time to time, meet or otherwise
communicate in their capacity as Directors of the NYSE with various constituencies that are
involved with the NYSE. But it is expected that Directors will do this with respect to matters
that have been, are, or may come before the Board only with the knowledge of the management
and, absent unusual circumstances or as contemplated by the committee charters, only at the
request of management.
15. Member Communications with the Board
The Board recognizes the need to engage fully and substantively with the membership
through: (a) the direct election of Directors, (b) the ability to propose nominations to the Board
through their representatives on the Board of Executives and by direct petition, (c) the ability to
require special votes by the membership (including for the recall of Directors for cause), (d) their
representation on the Board of Executives and on standing committees, (e) the occasion to meet
annually through their representatives with the Board of Directors to bring special concerns of
the membership to the attention of the Board, and (f) the ability of members to come to the
annual meeting and propose resolutions on that occasion.
C. BOARD MEETINGS
1. Frequency of Meetings
The Board shall have not less than four meetings each year. Special meetings of the
Directors may be called by the Chairman of the Board, or pursuant to the written request of not
less than one-third of the Directors then in office, in accordance with the provision of notice of
meetings, except when in the judgment of the Chairman, emergency requires shorter notice.
2. Strategic Plan Review
The Board will review the NYSE’s long-term strategic plans and the principal issues that
the NYSE will face in the future during at least one Board meeting each year.
3. Attendance at Meetings
Directors are expected to attend Board meeting and meetings of committees on which
they serve, to attend at least three meetings of the Board of Executives each year, and to spend
the time needed and meet as frequently as necessary to properly discharge their responsibilities.
A majority of the entire Board shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting. Participation in a meeting
by means of a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time shall constitute presence in
person at a meeting.
4. Information Flow and Distribution of Meeting Materials
Information and data that are important to the Board’s understanding of the business to be
conducted at a Board or committee meeting should generally be distributed in writing to the
Directors before the meeting, and Directors should review these materials in advance of the
5. Selection of Agenda Items
The Chairman will establish the agenda for each Board meeting. At the beginning of the
year, the Chairman will identify agenda subjects to be discussed during the year (to the degree
this can be foreseen). Each Director is free to suggest the inclusion of items on the agenda.
Each Director is free to raise at any Board meeting subjects that are not on the agenda for that
meeting. The Chief Executive Officer will give a report at each meeting.
6. Access to Management and Independent Advisors
Directors have full and free access to officers and employees of the NYSE. Each
standing committee of the Board shall have the authority to engage independent legal counsel
and other advisors as it determines necessary to carry out its duties, but may not use counsel or
other advisors who advise Exchange officers or employees. The Board and each committee has
the power to hire, at the expense of the NYSE, independent legal, financial or other advisors as it
may deem necessary, without consulting or obtaining the approval of any officer of the NYSE in
7. Executive Sessions
The Directors will meet regularly in executive session without the Chief Executive
Officer or any staff members present, unless such staff member’s presence is specifically
requested. The Chairman will preside at these meetings. The Board shall disclose a method for
interested parties to communicate directly and confidentially with the Chairman or with the
elected Directors as a group.
D. COMMITTEES OF THE BOARD
1. Committees and Responsibilities
There are currently four standing committees:
Nominating & Governance Committee. The committee is responsible for
recommending to the Board candidates for Board membership, candidates for Trustees of
the Gratuity Fund, and candidates for the Board of Executives. The committee is also
responsible for conducting an annual governance review, reviewing corporate governance
guidelines, establishing procedures for Board self-assessment, recommending Director
compensation and succession planning.
Human Resources & Compensation Committee. The committee must approve the
overall compensation system for the NYSE proposed by its management. The committee
must assure itself that the system is properly administered and must approve specific
goals and objectives as well as the assessment of results as those relate to the overall
compensation of employees, the senior management and the Chief Executive Officer.
The committee will report annually to the members and to the public on compensation of
the five most highly compensated officers.
Audit Committee. The committee is responsible for assisting the board in its
oversight of the integrity of the Exchange’s financial statements, the Exchange’s
compliance with legal and regulatory requirements and the independent auditor’s
qualifications and independence.
The Regulatory Oversight & Regulatory Budget Committee. The committee shall
determine the Exchange’s regulatory plan, budget and staffing proposals annually and
shall be responsible for assessing the Exchange’s regulatory performance and
recommending compensation and personnel actions involving senior regulatory personnel
to the Board’s Human Resources & Compensation Committee for action.
A full description of the responsibilities of each of the committees is set forth in the
committee charters that are published on the Exchange’s website and in the Constitution, also
available on the Exchange’s website.
2. Membership and Chairs of Committees
In general, committee members will be appointed by the Board on the recommendation
of the Chairman, with the concurrence of the Nominating & Governance Committee. Although
the Board may consider rotating committee members periodically, the Board does not believe
that rotation should be mandated as a policy.
3. Committee Agendas, Meetings and Reports to the Board
The chairman of each committee, in consultation with the committee members, will
determine the frequency and length of the committee meetings consistent with any requirements
set forth in the committee’s charter. The chairman of each committee, in consultation with the
appropriate members of the committee and management, will develop the committee’s agenda.
At the beginning of the year, each committee will identify agenda subjects to be discussed during
the year (to the degree these can be foreseen). The committee chairmen will report to the Board
on each committee’s actions.
E. PERFORMANCE EVALUATION AND SUCCESSION PLANNING
1. Annual Chief Executive Officer Evaluation
The Human Resources & Compensation Committee is responsible for reviewing and
approving corporate goals and objectives relevant to Chief Executive Officer compensation,
evaluating the Chief Executive Officer’s performance in light of those goals and objectives, and,
together with the other Directors elected by the members, determining and approving such
2. Annual Chief Regulatory Officer Evaluation
The Regulatory Oversight & Regulatory Budget Committee is responsible for
determining the Exchange’s regulatory plan, budget and staffing proposals annually and shall be
responsible for assessing the Exchange’s regulatory performance and recommending
compensation and personnel actions involving the Chief Regulatory Officer to the Board’s
Human Resources & Compensation Committee.
3. Succession Planning
The Nominating & Governance Committee is responsible for succession planning for the
Chief Executive Officer of the Exchange.
4. Board and Committee Self-Evaluations
The Nominating & Governance Committee is responsible for establishing an appropriate
process for, and overseeing implementation of, the Board’s self-assessments (including Board
self-assessment, committee self-assessments and assessments of the Chairman and other
Directors) and the Board of Executives’ self-assessments.
F. BOARD COMPENSATION
The Nominating & Governance Committee is responsible for recommending Director
G. CONFIDENTIAL VOTING
It is the Exchange’s policy that all proxies, ballots, and voting tabulations, including
telephone and Internet voting, that identify members be kept confidential.
INDEPENDENCE POLICY OF THE EXCHANGE BOARD OF DIRECTORS
The purpose of this Policy is to set forth the independence requirements that shall apply
to the members of the Board of Directors (the “Board”) of the Exchange in accordance with
Article IV, Section 2 of the New York Stock Exchange Constitution.
1. Each Director elected by the members and the Chairman of the Board if not also the
Chief Executive Officer shall be independent within the meaning of this Policy. A list of the
Directors shall be maintained on the Exchange’s web site.
2. A Director shall be independent only if the Board determines that the Director does
not have any material relationships with the Exchange. When assessing a Director’s
relationships and interests, the Board shall consider the issue not merely from the standpoint of
the Director, but also from the standpoint of persons or organizations with which the Director is
affiliated1 or associated.
3. In making independence determinations, the Board shall consider the special
responsibilities of a Director in light of the status of the Exchange as a New York not-for-profit
corporation, and as a self-regulatory organization and national securities exchange subject to the
supervision of the Securities and Exchange Commission.
4. The Board shall make an independence determination with respect to each Director
elected by the members upon the Director’s nomination or appointment to the Board and
thereafter at such times as the Board considers advisable in light of the Director’s circumstances
and any changes to this Policy, but in any event not less frequently than annually. Upon
adoption of this Policy, the Board shall make an affirmative determination with respect to the
independence of each Director then serving on the Board.
5. It shall be the responsibility of each Director to inform the Chairman of the Board and
the Chairman of the Nominating & Governance Committee promptly and otherwise as requested
of the existence of such relationships and interests which might reasonably be considered to bear
on the Director’s independence.
6. Any Director elected by the members who is no longer independent due to the
existence of a relationship described in Article IV, Section 2(a)-(d) of the Constitution or whom
An “affiliate” of, or a person “affiliated” with, a specific person is a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control with, the
the Board otherwise determines not to be independent from the Exchange under this Policy shall,
pursuant to Article IV, Section 9, be deemed to have tendered his or her resignation for
consideration by the Board, and such resignation shall not be effective unless and until accepted
by the Board.
1. In making an independence determination with respect to any Director or Director
candidate, the Board shall consider the standards below with respect to relationships or interests
of the Director or Director candidate with or in (a) the Exchange or its subsidiaries, (b) members,
allied members, and lessor members, (c) member organizations of the Exchange (“Member
Organizations”) or non-member broker-dealers that engage in business involving substantial
direct contact with securities customers (“Non-Member Broker-Dealers”), and (d) companies
other than Member Organizations whose securities are listed on the Exchange (“Listed
Companies”). The standards below relating to category (a) are the same as those that the
Exchange applies to its own listed companies. The standards below relating to categories (b), (c)
and (d) stem from the differing regulatory responsibilities and roles that the Exchange exercises
in overseeing the organizations and companies included in those categories.
2. The term “approved person” used herein has the meaning set forth in the NYSE
3. The term “immediate family member” with respect to any Director has the meaning
set forth in the NYSE Listed Company Manual.
4. The following independence criteria shall apply:
Independence from the Exchange
A Director is not independent if the Director or an immediate family member of the Director has
or had a relationship or interest with or in the Exchange which, if such relationship or interest
existed with respect to a Listed Company, would preclude a Director of the Listed Company
from being considered an independent Director of the Listed Company pursuant to Section
303A.02(a) or (b) of the Listed Company Manual.2
Members, Allied Members and Lessor Members
A Director is not independent if he or she is, or within the last three years was, or has an
immediate family member who is, or within the last three years was, a member, allied member,
lessor member or approved person.
The relevant sections of the Listed Company Manual and commentary are available on the website at
A Director is not independent if the Director (a) is, or within the last three years was, employed
by a Member Organization, (b) has an immediate family member who is, or within the last three
years was, an executive officer of a Member Organization, (c) has within the last three years
received from any Member Organization more than $100,000 per year in direct compensation, or
received from Member Organizations in the aggregate an amount of direct compensation which
in any one year is more than 10 percent of the Director’s annual gross income for such year,
excluding in each case Director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not contingent in any way on
continued service), or (d) is affiliated, directly or indirectly, with a Member Organization.
A Director is not independent if the Director is employed by or affiliated, directly or indirectly,
with a Non-Member Broker-Dealer.
A Director is not independent if the Director is an executive officer of an issuer of securities
listed on the Exchange.
5. The Exchange shall make disclosure of any charitable relationship that a listed
company would be required to disclose pursuant to Listed Company Manual Section
303A.02(b)(v) and commentary. Gifts by the Exchange or by the NYSE Foundation shall not
favor charities on which any Director serves as an executive officer or member of the board of
trustees or directors or comparable governing body.
CERTIFICATE OF INCORPORATION
NEW YORK STOCK EXCHANGE, INC.
Under Section 402 of the Not-for-Profit
The undersigned, for the purposes of incorporating the New York Stock Exchange, an
existing unincorporated association, certify:
1. The name of the Corporation is:
NEW YORK STOCK EXCHANGE
The Corporation is hereinafter sometimes referred to as “the Exchange.”
2. The corporation is a corporation as defined in Subparagraph (a)(5) of Section 102
(Definitions) of the Not-for-Profit Corporation Law.
The purposes for which it is formed are:
(a) To pursue its objects as heretofore set forth in its Constitution, namely: to
furnish exchange rooms for the convenient transaction of their business by its members,
to furnish other facilities for its members, allied members, member firms and member
corporations; to maintain high standards of commercial honor and integrity among its
members, allied members, member firms and member corporations; and to promote and
inculcate just and equitable principles of trade and business;
(b) To conduct and carry on the functions of a “board of trade” within the
meaning of that term in Section 1410 (Boards of trade and chambers of commerce) of the
Not-for-Profit Corporation Law;
(c) To conduct and carry on the functions of an “exchange” within the
meaning of that term in the Securities Exchange Act of 1934; and
(d) To conduct and carry on any and all activities incidental to the foregoing
which may lawfully be conducted and carried on by a corporation of its type formed
under the Not-for-Profit Corporation Law.
It shall be a Type A corporation under Section 201 (Purposes) of the Not-for-Profit
3. The office of the Corporation within the State of New York is to be located in the City
and the County of New York.
4. The territory in which its activities are principally to be conducted is the City and the
County of New York in the State of New York.
5. The post office address to which the Secretary of State shall mail a copy of any notice
required by law is:
New York Stock Exchange, Inc.
11 Wall Street
New York, New York 10005
Attention: The Secretary
6. The approval of a justice of the Supreme Court of the First Judicial District is annexed
hereto. No other approvals or consents are required by the Not-for-Profit Corporation Law or
any other statute of the State of New York before this certificate may be filled.
7. The undersigned incorporators are, respectively, the duly qualified and acting Chairman
of the Board, Vice-Chairman of the Board and President of the existing unincorporated
association and comprise all the members of a committee duly authorized to incorporate such
association. As such incorporators, the undersigned hereby dispense with an organization
meeting and by this instrument, pursuant to Paragraph (b) of Section 405 (Organization meeting)
of the Not-for-Profit Corporation Law, hereby take the following action to be effective forthwith
upon the filing of this Certificate by the Department of State:
(a) The Constitution of the previously existing unincorporated association as
theretofore amended, including amendments thereof adopted by the members to become
effective upon incorporation of the Exchange, is adopted as the by-laws of the Corporation and
shall continue to be known and designated as its Constitution.
(b) The initial Directors of the Corporation shall be the members of the Board of
Governors of the previously existing unincorporated association in office at the aforesaid time;
they shall continue to be known and designated as Governors of the Exchange; and they shall
hold office as provided in the Constitution.
8. Individual or corporate trustees may from time be appointed for any funds or other
property of the Exchange, including without limitation the funds known as the Gratuity Fund and
the Special Trust Fund heretofore established by the Constitution of the Exchange. The trustees
of the Gratuity Fund of the Exchange shall consist of the Chairman of the Board of Directors and
six elected trustees, of whom two shall be elected annually for a term of three years by the
members of the Exchange entitled to vote for the election of trustees of the Gratuity Fund. Any
vacancy among the six elected trustees of the Gratuity Fund may be filled by the Board of
Directors until the next annual election of the Exchange.
9. The title “Governor” as used to designate the members of the governing board of the
Exchange at the time of its incorporation may be changed at any time and from time to time by
the Constitution of the Exchange to “Director” or any other appropriate title. Provisions of this
Certificate referring to the “Board of Governors” or to “Governors” shall be deemed to apply to
the governing board of the Exchange and the members thereof by whatever title it or they may
from time to time be designated.
10. [Eliminated March 3, 1972.]
11. [Eliminated March 3, 1972.]
12. The Corporation reserves the right to amend, alter, change or repeal any provision of this
Certificate in the manner nor or hereafter prescribed by law, and all rights and powers conferred
in this Certificate on members, Directors and officers are subject to this reservation.
13. Members. The classes of membership in the Exchange shall include the regular
members, presently fixed by the Constitution of the Exchange at 1366, plus annual members
having physical access to the trading floor of the Exchange, annual members having only
electronic access to such trading floor, and annual members having physical access to the trading
floor of the Exchange to engage in activities as an options market maker. The number,
classification, rights (including voting rights), duties and obligation of, and the limitations and
restrictions upon, each class of member of the Exchange, shall be as provided herein and in the
Constitution of the Exchange and the Rules of its Board of Directors.
The members of the Exchange other than the regular members thereof shall have no
interest in, and no right whatsoever to share in the distribution of, the assets of the Exchange in
the event of any voluntary or involuntary final liquidation, dissolution or winding up of the
affairs of the Exchange. In such event, after paying or making provision for the payment of all
liabilities of the Exchange, the assets of the Exchange shall be distributed equally among the then
existing regular members; provided, however, that in the event a regular member is, at the time
of such dissolution, indebted to the Exchange for any unpaid initiation fees, fines, dues,
assessments or other fees or changes, he shall nonetheless be entitled to share in the distribution
of the assets of the Exchange equally with other regular members but any such arrears shall be
deducted by the Exchange from any share to which he may be entitled.
Neither the consolidation or merger of the Exchange, nor the sale, lease or conveyance of
all or a part of its assets shall be deemed a final liquidation, dissolution or winding up of the
affairs of the Exchange within the meaning of the foregoing provisions of this Paragraph 13.
(SIGNATURES, ETC. OMITTED)