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CME’s Donohue quitting sooner than planned

CME Group CEO Craig Donohue is leaving his post May months earlier than planned. Sun-Times file photo

CME Group CEO Craig Donohue is leaving his post in May, months earlier than planned. Sun-Times file photo

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Updated: May 28, 2012 9:04AM

Amid pressure to reduce costs and help a flagging stock price, the chief executive of CME Group Inc. said Thursday that he will resign from the company, owner of the Chicago futures markets, sooner than he planned.

CEO Craig Donohue, who said in March he planned to leave at the end of the year, told analysts he now plans to depart next month. He will hand the reins to current President Phupinder Gill.

Donohue, 50, made his announcement during a conference call covering a 42 percent drop in profit for CME’s first quarter. The result was slightly under Wall Street’s expectations and cast attention on the company’s expenses and on a stock price, $274, that’s half of what it was in 2008.

CME, owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, is fighting other battles as well. They include a slowdown in global trading because of lower volatility in the markets and trouble among European banks.

Also, traders have said the MF Global collapse has eroded confidence in the futures markets. CME has come under withering criticism from traders for not moving more quickly to protect customer funds, although the company has said its response has been adequate and beyond legal obligations.

MF Global went bankrupt in October, leaving an estimated shortfall of $1.6 billion in customer funds. A trustee said Tuesday the money has been traced but might not be fully recoverable.

Sources close to the company said Donohue was not pushed to leave, nor is he being held responsible for the MF Global backlash. “Craig’s leaving was his decision 1,000 percent,” said Jack Sandner, special policy adviser to CME’s board.

Donohue, a lawyer, worked 20 years for CME and wants to move on, the sources said. In an interview with the Sun-Times in March, Donohue described his departure as a “retirement” although he said he wanted to explore new ventures.

Filings the company made with federal regulators this week indicated unrest in the boardroom. The filings showed that Gill, as the incoming CEO, could have a slimmer pay package than Donohue last received, with a greater emphasis on hitting earnings targets and on return to shareholders relative to the Standard & Poor’s 500.

In 2011, Donohue received a pay package of $6 million, with most of it coming in stock awards and bonuses, even though the stock lost about a quarter of its value.

On the conference call, Donohue said his “close working relationship” with Gill and Chairman Terry Duffy made the earlier switch possible.

“This will give us the ability to accelerate Gill’s assumption of the CEO role and to ensure that we keep moving forward with purpose on the execution of our global growth strategy,” he said,

CME said its first quarter profit fell to $266.6 million, $4.02 a share, vs. $456.6 million, $6.81 a share, a year ago. Revenue fell just 7 percent to $774.6 million.

The company said its average daily volume during the quarter was 12.3 million contracts, down 11 percent from the same period last year.

Executives said they are cutting expenses and pointed to elimination of 35 jobs during the quarter, reducing total payroll to 2,702. Chief Financial Officer Jamie Parisi also said CME will offer a “voluntary exit incentive plan to a select group of employees.”

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