[1/3]Edward Tilly, Chairman and CEO of CBOE Global Markets, Inc., speaks during the Piper Sandler Global Exchange and FinTech Conference in New York City, U.S., June 8, 2023. Portal/Brendan McDermid/File Photo ACQUIRE LICENSE
Sept 19 (Portal) – Cboe Global Markets (CBOE.Z) CEO Edward Tilly has resigned after failing to disclose personal relationships with colleagues, the exchange operator said on Tuesday, ending his decades-long leadership of the company abruptly.
Cboe said board member Fredric Tomczyk, 68, will replace him.
Tilly resigned after a board investigation in late August and an independent outside attorney found that he had failed to disclose personal relationships with colleagues, the company said.
Cboe declined to say whether those relationships came about during Tilly’s tenure as CEO or before his tenure at the helm. The exchange operator also declined to name what triggered the investigation.
Tilly did not respond to LinkedIn messages seeking comment.
His resignation is the latest in a series of high-profile departures of CEOs whose personal behavior conflicted with company policy.
“The board found that Tilly failed to disclose personal relationships with colleagues, which violated Cboe’s policies and was in stark contrast to the company’s values,” the company said in a statement.
Shares of Cboe closed up 2.7% and are up 24% this year.
Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities, said he believes the change at the top is causing investors to speculate on a change in direction, such as the company attracting interest from potential buyers.
“I think that’s why the stock is higher here,” Bond said.
Owen Lau, senior analyst at Oppenheimer & Co, also said such deal speculation was boosting the stock. However, Lau said hurdles would include Cboe’s $16 billion market capitalization, based on the success of its business strategy and new products such as same-day options or 0DTE, as well as a stricter regulatory environment.
Cboe declined to comment on the stock move.
THROUGH THE RANKS
Tilly joined Cboe in 1987 as a stockbroker and was promoted to CEO in 2013. He was previously President and Chief Operating Officer from November 2011. He was previously Executive Vice Chairman from 2006 to 2011.
Under his leadership, Cboe shares quadrupled from $39 to $157, LSEG data shows. According to Rosenblatt’s Bond, it increased its annual revenue from $572 million to $1.7 billion last year.
“When he became CEO, he grew the business from a small options exchange to a global fintech and exchange leader. He really diversified the business. He was there to build an empire,” Bond said.
Steve Sosnick, chief strategist at Interactive Brokers, said Tilly has done a lot to make options trading more accessible to the general public.
“Probably the most significant move he made for Cboe shareholders was extending their exclusive contract with S&P, which gives Cboe a monopoly on a whole range of important products,” Sosnick said.
Cboe has the exclusive right to list flagship contracts linked to the Standard & Poor’s 500 stock index until 2032.
Tilly’s total compensation was $11.9 million in 2022. A Sept. 18 filing with the U.S. Securities and Exchange Commission shows Tilly will retain a prorated amount of stock options and performance-based restricted shares that will be paid out until he leaves.
Tomczyk, who joined Cboe’s board in July 2019, was previously CEO of TD Ameritrade Holding from 2008 to 2016.
“The silver lining is that it doesn’t look like it’s related to strategic or financial issues for the company,” Lau said of the CEO’s resignation. “The board is acting quickly to resolve this issue and new CEO Fredric Tomczyk has extensive experience in this industry.”
However, analysts said succession planning could be a focus for investors at some point in the future.
Cboe declined to comment on succession planning.
“It seems to me that the board doesn’t want to make this decision now,” said Lau. “They want to create stability for the next two or three years and then make a decision.”
Reporting by Jaiveer Singh Shekhawat in Bengaluru and Laura Matthews in New York; additional reporting by Saqib Iqbal Ahmed in New York; Editing by Arun Koyyur, Michelle Price, Megan Davies, Bill Berkrot, Nick Zieminski and Lincoln Feast.
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