CME Group CEO Donohue to leave at end of year

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3-6-07 Craig Donahue, CEO of the Chicago Mercantile Exchange, talks to the Editorial Board Tuesday. photo by Jean Lachat/Sun-Times

CME Group Inc., owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, said Monday that Chief Executive Officer Craig Donohue will step down when his contract expires at year-end.

Donohue, 50, has been CEO since 2004 and has led the company through robust growth and transformative changes in the market, including a swift march to electronic trading and the Merc’s 2007 acquisition of the Board of Trade.

CME said his duties will be shared by Executive Chairman Terrence Duffy and President Phupinder Gill, who will get the CEO title. CME said its board has extended both men’s employment contracts.

The change comes as the exchange owner has faced criticism for its handling of the MF Global trading scandal. Some traders have said CME was slow to understand how the scandal undermined confidence in the futures markets.

About $1.6 billion in customer money is missing. CME, where most MF Global trading took place, has offered a $550 million guarantee that helped a bankruptcy trustee return some money to customers.

In an interview with the Sun-Times, Donohue called his decision a “retirement” that will let him spend more time with family and ultimately explore new ventures. MF Global, he said, had no part in what he called a “bittersweet” decision.

“I think we certainly recognized the significance of the event,” he said, adding that the scandal “is still unfolding and still being examined. Our focus was on proactively doing the things that needed to be done.”

In a statement, Duffy congratulated Donohue for his achievements. “His many contributions have helped CME transition from a membership-owned organization into a for-profit, public company that has expanded into every major asset class with the acquisitions of the Chicago Board of Trade and the New York Mercantile Exchange and has also extended its reach globally,” Duffy said.

Donohue, an attorney, worked for CME for 23 years, with prior assignments that included market regulation and strategic planning. Company reports showed Donohue got a pay package of $6.9 million in 2010, the most recent year that’s been reported.

He said his greatest accomplishment was expanding the company’s global reach. The Merc and the Board of Trade hold the dominant share of U.S. futures trading, while alliances with overseas markets have brought in more business.

Under Donohue’s leadership, CME bought the New York Mercantile Exchange and gained stakes in the stock index business of Dow Jones and Standard & Poor’s.

He said that during his tenure, the company’s average annual profit growth was 32 percent and its market capitalization grew 662 percent.

However, the stock has been a poor performer in recent years, a victim of investor worries about government regulation of trading. More recently, the MF Global collapse has been seen as a contributor, along with other market trends, in declining trading volumes.

Gill, 51, has worked for CME since 1988. He will report to Duffy, 53, who will continue to represent the company on Capitol Hill.

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