Nasdaq CEO Is Paying for Botched Facebook IPO
News of Facebook’s (NASDAQ:FB) initial public offering last May took the world by storm. Much to the dismay of Nasdaq (NASDAQ:NDAQ) staff members, the IPO proved to be too much for the market operator’s system to handle, leading to frenzied moments on the trading floor and the eventual payout of $62 million in damages to affected companies. Nasdaq CEO Robert Greifeld will take part of that hit, as it was reported his bonus fell 62 percent for 2012 compared to the previous year.
Greifeld accepted blame for Nasdaq’s failure during early Facebook trading last year, acknowledging the market operator did not meet its own high standards during the offering. While analysts agree the Facebook launch demanded an unusually high amount of attention, most considered Nasdaq up for the challenge. The diminished bonus payout will not in effect lower Greifeld’s compensation, giving the move a slightly symbolic effect. According to Dealbook, Greifeld’s total earnings will be $8.9 million, compared to $7.6 million in 2011.
In a related move, Nasdaq’s board cut its top tech executive Anna Ewing’s bonus by more than 50 percent. Nasdaq made no secret of the reasoning behind the moves, saying it “explicitly considered” the Facebook debacle and its fallout when deciding how to calculate the bonuses of the chief executive and its executive VP of global technology solutions. The standard they hold for their bonuses was clearly not met…
Performance incentive cuts aside, Greifeld is enjoying a good run at the head of Nasdaq OMX Group. Nasdaq stock has risen steadily since mid-2010 and performed better than the S&P 500 in 2013. Slight drops in company stock arrived with the beginning of April, but many analysts believe the stock is currently undervalued at $29 (as of 1:30 P.M. Friday). There is evidence that growth catalysts are present for the market operator.
Investors will recognize the cut in Greifeld’s bonus as a public display of top-down accountability and will likely applaud the way the top technology executive’s bonus was cut in half. Few expect to see order forms filled out by hand — as they were on the Facebook IPO — anytime soon. Indeed, most analysts believe Nasdaq’s best days are still ahead.
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