Nasdaq Sets Buyout Bonuses
By Matthew Goldstein
Senior Writer
2/10/2005 10:55 AM EST
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The Nasdaq Stock Market (NDAQ:Nasdaq - commentary - research) is taking steps to protect its top brass in the event the company is acquired.
Earlier this week, the Nasdaq's board approved a plan that will pay six top executives up to two years' salary if they lose their jobs because of a "change in control" in the ownership of the electronic market. The plan also calls for the unidentified executives to receive up to 100% of their anticipated bonuses in the year they are fired.
The so-called golden parachute was adopted just days before the Nasdaq effectively became a full-blown publicly traded company.
Before the start of trading Thursday, Nasdaq announced that the Securities and Exchange Commission had signed off on a secondary stock offering in which dozens of investors will sell 17.2 million shares to the public. In conjunction with the stock offering, Nasdaq announced that its shares, which had been trading sporadically on the OTC Bulletin Board, had begun trading on its main market under the ticker symbol "NDAQ."
Other publicly traded markets in the U.S. include the Chicago Mercantile Exchange (CME:NYSE - commentary - research), Archipelago (AX:Amex - commentary - research), Instinet (INGP:Nasdaq - commentary - research) and eSpeed (ESPD:Nasdaq - commentary - research). (Shares of Archipelago also trade on its own electronic exchange.)
In the secondary offering, Nasdaq's parent, the NASD, is selling 14 million shares, reducing its equity stake from 57% to 37%. Other significant sellers include Goldman Sachs (GS:NYSE - commentary - research), Microsoft (MSFT:Nasdaq - commentary - research), J.P. Morgan Chase (JPM:NYSE - commentary - research) and an affiliate of Knight Trading (NITE:Nasdaq - commentary - research), the biggest Nasdaq market maker.
Most of the companies and brokerages selling stock in the secondary offering purchased the shares in two private placements in 2000 and 2001. Thursday morning's offering was priced at $9 a share, about 8% below Wednesday's closing price of $9.71. In early trading, Nasdaq shares were down 10 cents, or 1%, to $9.61.
The stock sale will dramatically increase the number of Nasdaq shares available for trading. Before the offering, the only shares available were ones that investors in the private placements had sold on the OTC Bulletin Board. Those began trading on the OTCBB during the summer of 2002, after investors became frustrated by Nasdaq's repeated delay of its much-anticipated public offering.
Nasdaq CEO and President Robert Greifeld will not be eligible for the new change-in-control payment. Instead, the terms of Greifeld's old contract will apply: he gets a year's salary and any anticipated bonus if the company is bought.
A Nasdaq spokeswoman could not be reached for a comment on the change in control plan.
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