2013-11-07T12:07:36-06:00 2012-12-31 ERNST & YOUNG US LLP TWO NORTH CENTRAL AVENUE STE 2300 PHOENIX AZ 85004 990 2012-01-01 530088710 FINANCIAL INDUSTRY REGULATORY AUTHORITY INC % MARCIA E ASQUITH FINA 2027288949 1735 K STREET NW Suite WASHINGTON DC 200061506 ROB RENNER 2013-11-05 6023223000 2012 2016-02-24 21:20:13Z RICHARD G KETCHUM 1735 K STREET NW WASHINGTON DC 200061506 3872041002 false X WWW.FINRA.ORG X 1936 DE FINRA IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. 21 10 967 2 27951641 0 0 0 452040423 461159958 44984663 49476039 237857245 239789106 734882331 750425103 1500000 1500000 0 0 163535407 171250483 0 0 0 538361153 554567997 703396560 727318480 31485771 23106623 2158907693 2152653604 416132921 433249427 1742774772 1719404177 X FINRA IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. false false SEE SCHEDULE O false false false true false false false false false true true false false false true false true false false false false false false false false false true false true false false false false true true false false false false false true true true false true 227 0 true 967 true true true false false false false false X 21 10 true false false false true true true true true false false true true true true true true true true false CA X MARCIA E ASQUITH 2027288949 1735 K STREET NW WASHINGTON DC 200061506 X RICHARD G KETCHUM 60.0 X X 2555454 0 74251 JED BANDES 2.0 X 60044 0 0 JOEL R BLUMENSCHEIN 2.0 X 41305 0 0 CHARLES A BOWSHER 2.0 X 69174 0 0 JOHN J BRENNAN 4.0 X 87936 0 0 ELLYN L BROWN 2.0 X 30130 0 0 JAMES E BURTON 4.0 X 79479 0 0 KEVIN CARRENO 2.0 X 25000 0 0 MARK S CASADY 3.0 X 60441 0 0 JOHN F X DOLAN 2.0 X 58646 0 0 W DENNIS FERGUSON 3.0 X 69159 0 0 GREGORY J FLEMING 2.0 X 0 0 0 HARVEY J GOLDSCHMID 3.0 X 68915 0 0 WILLIAM H HEYMAN 3.0 X 67615 0 0 DR SHIRLEY ANN JACKSON 2.0 X 65000 0 0 KEN NORENSBERG 2.0 X 61189 0 0 RICHARD S PECHTER 3.0 X 72573 0 0 JOHN W SCHMIDLIN 2.0 X 65417 0 0 JOEL SELIGMAN 2.0 X 55066 0 0 GARY H STERN 2.0 X 59554 0 0 KURT P STOCKER 2.0 X 68033 0 0 SETH H WAUGH 2.0 X 0 0 0 JAMES D WEDDLE 2.0 X 69201 0 0 TODD T DIGANCI 60.0 X 1183826 0 62697 MARCIA E ASQUITH 60.0 X 500175 0 88972 F GREGORY AHERN 60.0 X 187131 0 113807 T GRANT CALLERY 60.0 X 1364764 0 86222 MARTIN P COLBURN 60.0 X 803369 0 66937 ROBERT L D COLBY 60.0 X 262061 0 34997 JAMES J CUMMINGS 60.0 X 923163 0 33473 LINDA D FIENBERG 60.0 X 0 877421 81552 SAMUEL H GAER 60.0 X 703879 0 125356 STEVEN A JOACHIM 60.0 X 3075939 0 95673 TRACY B JOHNSON 60.0 X 535264 0 82300 STEPHEN LUPARELLO 60.0 X 0 5281793 55075 MARC MENCHEL 60.0 X 0 3034006 218770 HOWARD M SCHLOSS 60.0 X 3342009 0 361828 STEPHEN M SCHOENEMAN 60.0 X 603575 0 124702 THOMAS M SELMAN 60.0 X 0 688191 66923 CATHY M MATTAX 60.0 X 867764 0 61996 GREGORY B RAYMOND 60.0 X 547589 0 145442 MARK A RIPPE 60.0 X 1201922 0 33136 KAREN J SANCILIO 60.0 X 649424 0 72962 ROBERT L WOOD 60.0 X 556142 0 101474 JAMES P DONOVAN X 132692 0 0 21230019 9881411 2188545 465 true true false HP ENTERPRISE SERVICES LLC 1185 AVENUE OF THE AMERICAS 31ST F NEW YORK NY 10036 TECH. CONSULTING 24145132 NASDAQ OMX GROUP 9513 KEY WEST AVENUE ROCKVILLE MD 20850 TECH. CONSULTING 16418468 TEK SYSTEMS PO BOX 198568 ATLANTA GA 30384 TECH. CONSULTING 11852083 USTAS TECHNOLOGIES INC 1901 RESEARCH BOULEVARD ROCKVILLE MD 20850 TECH. CONSULTING 4644746 CELERITY IT 8401 GREENSBORO DRIVE MCLEAN VA 22102 TECH. CONSULTING 3707623 106 0 ACTIVITY ASSESSMENT 900099 357825204 357825204 USER FEES 900099 3901283 3901283 TRANSPARENCY SERVICE FEES 900099 56889884 56889884 CONTRACT SERVICE FEES 900099 42291657 14470993 27820664 ALL OTHER PROGRAM SERVICE REVENUE 900099 251930 251930 461159958 34001606 130977 33870629 0 1645194 1645194 0 0 0 3137085641 4692 3119058964 2556935 18026677 -2552243 15474433 15474433 0 0 0 SUBSIDIARY OVERHEAD ALLOCATION 900099 238143912 238143912 238143912 750425103 671483206 27951641 50990256 1500000 0 0 0 12714092 0 110794522 22088836 18627682 7025351 3900683 3464388 1422064 760357 0 1477975 10497375 61462 10591065 71937804 0 15573993 4215526 0 1386972 0 0 36259463 2225701 ACTIVITY ASSESSMENT 357825195 INTERCOMPANY CHARGES 28814733 TEMPORARY HELP 1999212 TAXES 2426078 -272049 727318480 733736 -3508046 423791854 361219836 0 0 86233494 95731870 0 0 0 0 0 0 0 0 24147030 18608942 303809772 158153436 161662278 145656336 694720135 726370529 672617836 730298696 0 0 30409734 27476971 64591596 50798470 2158907693 2152653604 392629679 392541216 0 0 23503242 40708211 0 0 0 0 0 0 0 0 0 0 0 0 416132921 433249427 X 169005778 169005778 0 0 1573768994 1550398399 1742774772 1719404177 2158907693 2152653604 X 23106623 129589 -46606807 X false true X true false false false false 960000 960000 960000 16435481 16435481 61799343 20944411 40854932 95850879 48710597 47140282 89093463 62587672 26505791 40630606 25910756 14719850 145656336 PRIVATE INVESTMENTS 720652708 F MARKETABLE ALTERNATIVE INVESTM 5022068 F INVESTMENT IN NSCC 300000 C 725974776 0 0 X ASC 740 FOOTNOTE FROM CONSOLIDATED AUDITED FINANCIAL STATEMENTS SCHEDULE D, PART X, LINE 2 U.S. GAAP PROVIDES A TWO-STEP APPROACH FOR EVALUATING TAX POSITIONS. RECOGNITION (STEP 1) OCCURS WHEN AN ENTITY CONCLUDES THAT A TAX POSITION, BASED SOLELY ON ITS TECHNICAL MERITS, IS MORE LIKELY THAN NOT TO BE SUSTAINED UPON EXAMINATION. IN STEP 2 (MEASUREMENT), THE TAX BENEFIT IS MEASURED AS THE LARGEST AMOUNT OF BENEFIT, DETERMINED ON A CUMULATIVE PROBABILITY BASIS, THAT IS MORE LIKELY THAN NOT TO BE REALIZED UPON ULTIMATE SETTLEMENT. DURING THE YEARS FROM 2009 TO 2012, WHICH REPRESENT THE YEARS MANAGEMENT CONSIDERS TO BE OPEN FOR EXAMINATION BY TAXING AUTHORITIES, MANAGEMENT DID NOT IDENTIFY THE EXISTENCE OF ANY UNCERTAIN TAX POSITIONS. ACCORDINGLY, ALL TAX POSITIONS ARE RECOGNIZED AND MEASURED AT THEIR FULL BENEFIT IN THE CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS. true FINRA INVESTOR EDUCATION FOUNDATION 1735 K STREET NW WASHINGTON DC 20006 200863779 501(C)(4) 1500000 CONTRIBUTION 1 Form 990, Schedule I Description of Organization's Procedures for Monitoring the Use of Grants DURING 2012, FINRA, INC. MADE AN UNRESTRICTED CONTRIBUTION OF $1.5 MILLION TO THE FINRA INVESTOR EDUCATION FOUNDATION (THE FOUNDATION), A WHOLLY-OWNED SUBSIDIARY, FOR PROGRAMS AND PROJECTS CONSISTENT WITH THE FOUNDATION'S MISSION. THE FOUNDATION IS A TAX-EXEMPT ORGANIZATION UNDER SECTION 501(C)(4) AND ITS MISSION IS TO PROVIDE UNDERSERVED AMERICANS WITH THE KNOWLEDGE, SKILLS AND TOOLS NECESSARY FOR FINANCIAL SUCCESS THROUGHOUT LIFE. THE CONTRIBUTION WAS REVIEWED AND APPROVED BY THE FINANCE AND OPERATIONS COMMITTEE OF FINRA, INC.'S BOARD PRIOR TO PAYMENT. THE FINRA INVESTOR EDUCATION FOUNDATION BOARD IS RESPONSIBLE FOR APPROVING AND MONITORING ALL GRANTS. SEE THE FOUNDATION'S FORM 990 FOR ADDITIONAL DETAILS ON THE GRANT APPROVAL AND MONITORING PROCESS. X X X X X true true X X X X X true true false RICHARD G KETCHUM 978164 0 1250000 0 327290 0 47607 0 26644 0 2629705 0 0 0 TODD T DIGANCI 475476 0 680000 0 28350 0 35603 0 27094 0 1246523 0 0 0 MARCIA E ASQUITH 236093 0 240000 0 24082 0 69500 0 19472 0 589147 0 0 0 F GREGORY AHERN 75589 0 0 0 111542 0 108462 0 5345 0 300938 0 0 0 T GRANT CALLERY 285299 0 310000 0 769465 0 67262 0 18960 0 1450986 0 0 0 MARTIN P COLBURN 381850 0 400000 0 21519 0 34017 0 32920 0 870306 0 0 0 ROBERT L D COLBY 240202 0 0 0 21859 0 27500 0 7497 0 297058 0 0 0 JAMES J CUMMINGS 73912 0 220000 0 629251 0 24456 0 9017 0 956636 0 0 0 JAMES P DONOVAN 0 0 0 0 132692 0 0 0 0 0 132692 0 132692 0 LINDA D FIENBERG 0 437680 0 400000 0 39741 0 62263 0 19289 0 958973 0 0 SAMUEL H GAER 193756 0 500000 0 10123 0 115359 0 9997 0 829235 0 0 0 STEVEN A JOACHIM 345172 0 410000 0 2320767 0 57022 0 38651 0 3171612 0 710560 0 TRACY B JOHNSON 291345 0 225000 0 18919 0 72683 0 9617 0 617564 0 0 0 STEPHEN LUPARELLO 0 463890 0 690000 0 4127903 0 31309 0 23766 0 5336868 0 0 MARC MENCHEL 0 179797 0 400000 0 2454209 0 196102 0 22668 0 3252776 0 0 HOWARD M SCHLOSS 301920 0 300000 0 2740089 0 338761 0 23067 0 3703837 0 272139 0 STEPHEN M SCHOENEMAN 315608 0 265000 0 22967 0 93251 0 31451 0 728277 0 0 0 THOMAS M SELMAN 0 330745 0 335000 0 22446 0 41419 0 25504 0 755114 0 0 CATHY M MATTAX 255783 0 172000 0 439981 0 40371 0 21625 0 929760 0 0 0 GREGORY B RAYMOND 291823 0 250000 0 5766 0 110541 0 34901 0 693031 0 0 0 MARK A RIPPE 121851 0 215000 0 865071 0 20097 0 13039 0 1235058 0 0 0 KAREN J SANCILIO 259030 0 226000 0 164394 0 47076 0 25886 0 722386 0 0 0 ROBERT L WOOD 285514 0 250000 0 20628 0 75210 0 26264 0 657616 0 0 0 SUPPLEMENTAL COMPENSATION INFORMATION FOR THE HIGHEST COMPENSATED EXECUTIVES, BASE SALARY AND INCENTIVE COMPENSATION (EARNED IN THE PRIOR YEAR) REPORTED IN COLUMNS B(i) AND B(ii) ARE INDEPENDENTLY DETERMINED AND APPROVED BY THE MANAGEMENT COMPENSATION COMMITTEE OF THE BOARD OF GOVERNORS. OTHER REPORTABLE COMPENSATION (COLUMN B(iii)) IS LARGELY COMPOSED OF RETIREMENT VESTING AND/OR PAYOUT EVENTS FROM NON-QUALIFIED PLANS, AS WELL AS SEVERANCE OR SEPARATION PAYMENTS, IF APPLICABLE. IN DETERMINING SALARIES AND INCENTIVE PAY, THE COMMITTEE RELIED ON A THIRD-PARTY COMPENSATION STUDY PERFORMED BY MERCER, INC. THAT COMPARED FINRA EXECUTIVES TO INDUSTRY BENCHMARKING DATA AMONG OTHER FACTORS (SEE ADDITIONAL INFORMATION BELOW). THE MANAGEMENT COMPENSATION COMMITTEE OF THE FINRA BOARD OF GOVERNORS (THE "COMMITTEE") IS RESPONSIBLE FOR SETTING PAY FOR EXECUTIVES OF FINRA AND SUBSIDIARIES WHOSE TOTAL COMPENSATION, INCLUDING INCENTIVE COMPENSATION, MAY EXCEED $1 MILLION. THE COMMITTEE IS COMPRISED OF FOUR NON-EMPLOYEE, NON-SECURITIES INDUSTRY MEMBERS OF THE BOARD OF GOVERNORS. THE COMMITTEE MET ON JANUARY 18, 2012 AND FEBRUARY 15, 2012 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING CALENDAR YEAR 2011 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2012. AS A GENERAL POLICY, FINRA HAS DETERMINED ITS COMPETITIVE COMPENSATION POSITIONING SHOULD BE CONSIDERED AGAINST A BROAD SECTION OF FINANCIAL SERVICES/CAPITAL MARKET COMPANIES, AS THIS SECTOR IS THE MOST LIKELY FROM WHICH WE RECRUIT TALENT AND TALENT IS RECRUITED FROM US. WE ALSO BENCHMARK AGAINST GENERAL INDUSTRY POSITIONS AND LAW DEPARTMENTS FOR JOBS THAT ARE NOT UNIQUE TO THE FINANCIAL SERVICES INDUSTRY. THE COMMITTEE ENGAGED MERCER, INC. ("MERCER"), A THIRD-PARTY COMPENSATION CONSULTANT, TO PREPARE A COMPENSATION STUDY FOR REVIEW AT THESE MEETINGS. IN DETERMINING A BENCHMARKING STRATEGY FOR KEY EXECUTIVES, FINANCIAL SERVICES ORGANIZATIONS (BROKER-DEALERS, INVESTMENT BANKS, FEDERAL RESERVE BANKS, COMMERCIAL BANKS, INSURANCE COMPANIES, EXCHANGES AND REGULATORS) WERE DETERMINED TO BE THE MOST RELEVANT GROUPS FOR COMPARISON PURPOSES. THE COMMITTEE AND MERCER ENGAGED IN SUBSTANTIAL RESEARCH AND CONSIDERATION OF THE FUNCTIONS AND OPERATIONS OF SEVERAL POTENTIAL COMPARATORS AS WELL AS GENERAL COMPETITIVE CONDITIONS. IN DETERMINING SPECIFIC SALARY AND INCENTIVE COMPENSATION LEVELS FOR OFFICERS AND KEY EMPLOYEES, MANAGEMENET AND THE COMMITTEE CONSIDER: 1) OPERATIONAL RESULTS 2) STRATEGIC INITIATIVES 3) FINANCIAL HEALTH/RESULTS 4) INDIVIDUAL PERFORMANCE 5) COMPETITIVE COMPENSATION LEVELS AS PREPARED BY MERCER THE COMMITTEE'S MINUTES OF THE JANUARY 18, 2012 AND FEBRUARY 15, 2012 MEETINGS WERE REVIEWED AND APPROVED AS ACCURATE AND COMPLETE FOLLOWING THE COMMITTEE'S APPROVAL OF THE SENIOR EXECUTIVE COMPENSATION PACKAGES. THE FULL BOARD FURTHER APPROVED THE 2011 INCENTIVE COMPENSATION OF THE CEO AT ITS MEETING ON FEBRUARY 16, 2012. ALL COMPENSATION COMMITTEE MEMBERS VOTED FOR THE PROPOSED LEVEL OF EXECUTIVE COMPENSATION. FINRA OFFERS TWO NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. 1) FINRA'S SUPPLEMENTAL DEFINED BENEFIT PLAN IS A NON-QUALIFIED DEFINED BENEFIT PLAN THAT IS PROVIDED TO MEMBERS OF A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES SUCH AS THOSE DESCRIBED UNDER 201(2), 301(A)(3), AND 401(A)(1) OF ERISA. IT IS A FINRA FUNDED PLAN IN WHICH PARTICIPANTS TYPICALLY HAVE A TAXABLE ONE-TIME CLIFF VESTING EVENT AT A SPECIFIED MILESTONE BASED ON BOTH AGE AND YEARS OF SERVICE. THIS PLAN WAS CLOSED TO NEW ENTRANTS AS OF 12/31/05. 2) FINRA'S SUPPLEMENTAL DEFINED CONTRIBUTION PLAN IS A NON-QUALIFIED PLAN THAT IS OPEN TO VICE PRESIDENTS AND ABOVE WITH AN ANNUAL BASE PAY ABOVE THE QUALIFIED LIMIT. IT IS ONLY OPEN TO THOSE NOT PARTICIPATING IN THE CLOSED NON-QUALIFIED DEFINED BENEFIT PLAN DESCRIBED ABOVE. IT IS A FINRA FUNDED PLAN WITH A 3 YEAR VESTING CYCLE WITH ANNUAL VESTING BEGINNING AT AGE 62. ADDITIONAL INFORMATION CONCERNING FINRA'S RETIREMENT PLANS AND OTHER PARTICIPANTS IS PROVIDED BELOW. SCHEDULE J, PART I, LINE 1 FIRST CLASS OR CHARTER TRAVEL: THE NEXT CABIN ABOVE ECONOMY IS ALLOWED FOR INTERNATIONAL TRAVEL TO AND FROM THE U.S. INCLUDING CANADA AND MEXICO, WHERE THE FLIGHT TIME IS OVER FOUR HOURS DIRECT. IT IS ALSO ALLOWED FOR ALL TRAVEL FROM THE U.S. MAINLAND TO HAWAII AND FOR FLIGHTS WITHIN EUROPE THAT ARE OVER FOUR HOURS IN DURATION. OTHERWISE, ECONOMY CLASS IS REQUIRED. REIMBURSEMENT TO BOARD MEMBERS FOR FIRST CLASS TRAVEL EXPENSES INCURRED WHILE ATTENDING BOARD AND CORPORATE COMMITTEE MEETINGS ON BEHALF OF FINRA, FINRA REGULATION, AND FINRA DISPUTE RESOLUTION IS PERMITTED. TRAVEL FOR COMPANIONS: IN LIEU OF A WEEKEND FLIGHT HOME, A COMPANION MAY FLY TO MEET AN EMPLOYEE ON AN EXTENDED STAY AT HIS OR HER REMOTE WORK LOCATION. AIRLINE TICKETS FOR WEEKEND COMPANIONS MUST BE FOR DOMESTIC FLIGHTS, AND MUST BE PURCHASED WITH A PERSONAL CREDIT CARD. THE EMPLOYEE WILL RECEIVE REIMBURSEMENT NOT TO EXCEED WHAT THE COST OF A TICKET TO FLY THE EMPLOYEE HOME FOR THE WEEKEND WOULD HAVE BEEN. FINRA WILL NOT REIMBURSE EMPLOYEES FOR COMPANION TRAVEL TO INTERNATIONAL LOCATIONS. THE REIMBURSEMENT AMOUNT WILL BE A TAXABLE FRINGE BENEFIT TO THE EMPLOYEE, AND THE EMPLOYEE IS RESPONSIBLE FOR ALL TAXES. COMPANION WEEKEND TRAVEL MUST BE APPROVED BY THE EMPLOYEE'S DEPARTMENT DIRECTOR AND THE MANAGER OF CORPORATE TRAVEL SERVICES BEFORE THE TRIP. COMPANION MEALS, GROUND TRANSPORTATION AND AIRPORT PARKING ARE AT THE EMPLOYEE'S EXPENSE AND CANNOT BE CHARGED TO THE CORPORATE CREDIT CARD OR SUBMITTED FOR REIMBURSEMENT. WHEN COMPANIONS ARE INVITED ON BEHALF OF FINRA, FINRA REGULATION, AND FINRA DISPUTE RESOLUTION TO BOARD MEETINGS, THEIR AIRFARE IS REIMBURSABLE. TAX INDEMNIFICATION: GIFTS TO EMPLOYEES ARE CONSIDERED TAXABLE COMPENSATION UNDER THE IRS CODE. THE FAIR MARKET VALUE OF THE GIFT TO THE EMPLOYEE WILL BE INCLUDED AS WAGES ON THE EMPLOYEE'S W-2. IN GENERAL, IT IS FINRA'S PRACTICE TO "GROSS UP," OR ADJUST THE WAGES AND TAXES SO THAT THE TAX EFFECT OF RECEIVING A GIFT IS NEUTRAL TO THE EMPLOYEE. IT IS ALSO FINRA'S PRACTICE TO "GROSS-UP" EMPLOYEE RELOCATION EXPENSES, AS WELL AS FOOD AND LODGING EXPENSES INCURRED AS PART OF THE EXECUTIVE HEALTH PLAN. HEALTH AND CLUB DUES: AS PART OF ITS WELLNESS PROGRAM, FINRA OFFERS SUBSIDIZED GYM MEMBERSHIPS TO EMPLOYEES OF FINRA AND SUBSIDIARIES AT CERTAIN LOCATIONS. ALSO, THE CEO'S CONTRACT PROVIDES FOR UP TO A MAXIMUM AMOUNT OF $20,000 EACH CALENDAR YEAR FOR ADMISSION FEES, DUES AND HOUSE CHARGES OF ONE CLUB IN EACH OF THE NEW YORK CITY AND WASHINGTON, D.C. METROPOLITAN AREAS TO BE USED FOR BUSINESS PURPOSES. EXECUTIVE HEALTH PLAN: THE EXECUTIVE HEALTH PLAN IS AVAILABLE TO FINRA STAFF AT A LEVEL OF EXECUTIVE VICE PRESIDENT AND ABOVE AND OTHER EMPLOYEES AS DESIGNATED BY THE CEO. THE EXECUTIVE HEALTH PLAN COVERS PROCEDURES RELATED TO THE DIAGNOSIS AND PREVENTION OF A MEDICAL CONDITION(S). THE FINRA EXECUTIVE HEALTH PLAN PROVIDES FOR ONE ASSESSMENT PER YEAR. PERSONAL SERVICES: THE CEO'S CONTRACT PROVIDES FOR A CAR AND DRIVER IN BOTH NEW YORK CITY, NEW YORK AND WASHINGTON, D.C. TO BE USED FOR BUSINESS PURPOSES. THESE SERVICES, WHICH ARE USED PRINCIPALLY BY THE CEO, ARE USED BY OTHER FINRA EMPLOYEES FOR BUSINESS PURPOSES WHEN AVAILABLE. THE CEO'S CONTRACT ALSO PROVIDES FOR COSTS INCURRED RELATED TO PERSONAL FINANCIAL AND TAX COUNSELING, UP TO $20,000 PER CALENDAR YEAR, AS WELL AS SPOUSAL TRAVEL FOR CERTAIN BUSINESS-RELATED EVENTS. SUPPLEMENTAL COMPENSATION INFORMATION SCHEDULE J, PART I, LINES 4A AND 4B 4A) IN CONNECTION WITH JAMES P. DONOVAN'S SEPARATION FROM FINRA, HE WAS PAID $132,692 IN 2012. IN CONNECTION WITH STEPHEN LUPARELLO'S SEPARATION FROM FINRA, HE WAS PAID $300,000 IN 2012. IN CONNECTION WITH MARC MENCHEL'S SEPARATION FROM FINRA, HE WAS PAID $223,467 IN 2012. IN CONNECTION WITH HOWARD M. SCHLOSS' SEPARATION FROM FINRA, HE WAS PAID $124,615 IN 2012. 4B) FINRA OFFERS TWO NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. ANNUAL INCREASES IN BENEFIT VALUE, CLIFF VESTING EVENTS, AND PAYOUT DIFFERENTIALS ARE TAXABLE IN THE YEAR IN WHICH THEY OCCUR AND ARE REPORTED IN COLUMN B(iii) OF SCHEDULE J, PART II. UNVESTED BENEFIT AND CONTRIBUTION ACCRUALS ARE TAX DEFERRED AND ARE REPORTED IN COLUMN C OF SCHEDULE J, PART II. 1) FINRA'S SUPPLEMENTAL DEFINED BENEFIT PLAN IS A NON-QUALIFIED DEFINED BENEFIT PLAN THAT IS PROVIDED TO MEMBERS OF A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES SUCH AS THOSE DESCRIBED UNDER 201(2), 301(A)(3), AND 401(A)(1) OF ERISA. IT IS A FINRA FUNDED PLAN IN WHICH PARTICIPANTS TYPICALLY HAVE A TAXABLE ONE-TIME CLIFF VESTING EVENT AT A SPECIFIED MILESTONE BASED ON BOTH AGE AND YEARS OF SERVICE. THIS PLAN WAS CLOSED TO NEW ENTRANTS AS OF 12/31/05. PARTICIPANTS IN THE NON-QUALIFIED DEFINED BENEFIT PLAN THAT HAD A CLIFF VESTING EVENT IN 2012 INCLUDE: STEVEN A. JOACHIM - $2,297,398 CATHY M. MATTAX - $416,202 THE AMOUNTS BELOW REPRESENT THE ACCUMULATED BENEFITS RECOGNIZED IN THE CURRENT YEAR FOR FEDERAL INCOME TAX PURPOSES UPON THE INDIVIDUALS' SEPARATION FROM FINRA AND THE PLAN. THE BENEFITS WERE EARNED WITHIN THE NON-QUALIFIED DEFINED BENEFIT PLAN OVER THE DURATION OF THE INDIVIDUALS' YEARS OF SERVICE TO FINRA. THESE AMOUNTS VARY BY INDIVIDUAL BASED ON YEARS OF SERVICE, COMPENSATION LEVELS AND PAY GRADE, AGE AT SEPARATION, AND PREVIOUS VESTING EVENTS. THE LISTED INDIVIDUALS SERVED BETWEEN 10 AND 33 YEARS, MOST RECENTLY AT PAY GRADES RANGING FROM SENIOR VICE PRESIDENT TO VICE CHAIRMAN: T. GRANT CALLERY - $716,383 JAMES J. CUMMINGS - $589,212 STEPHEN LUPARELLO - $3,784,410 MARC MENCHEL - $2,203,681 HOWARD M. SCHLOSS - $2,565,135 MARK A. RIPPE - $831,470 2) FINRA'S SUPPLEMENTAL DEFINED CONTRIBUTION PLAN IS A NON-QUALIFIED PLAN THAT IS OPEN TO VICE PRESIDENTS AND ABOVE WITH AN ANNUAL BASE PAY ABOVE THE QUALIFIED LIMIT. IT IS ONLY OPEN TO THOSE NOT PARTICIPATING IN THE CLOSED NON-QUALIFIED DEFINED BENEFIT PLAN DESCRIBED ABOVE. IT IS A FINRA FUNDED PLAN WITH A 3 YEAR VESTING CYCLE WITH ANNUAL VESTING BEGINNING AT AGE 62. PARTICIPANTS IN THE SUPPLEMENTAL NON-QUALIFIED DEFINED CONTRIBUTION PLAN WITH CONTRIBUTIONS VESTING IN 2012 INCLUDE: RICHARD G. KETCHUM - $292,594 KAREN J. SANCILIO - $143,466 PARTICIPANTS IN THE SUPPLEMENTAL NON-QUALIFIED DEFINED CONTRIBUTION PLAN THAT HAD A GROSS TAXABLE PAYOUT INCLUDE: NONE VOLUNTARY COMPENSATION DISCLOSURES: SETH H. WAUGH AND GREGORY J. FLEMING WERE VOLUNTEER BOARD MEMBERS IN 2012 AND DID NOT RECEIVE COMPENSATION FOR THEIR SERVICES. KNIGHT CAPITAL AMERICAS LP SCHEDULE L, PART V 30941498 SCHEDULE L, PART V false NYSE RELATED COMPANIES SCHEDULE L, PART V 18508692 SCHEDULE L, PART V false DEUTSCHE BANK AMERICAS SCHEDULE L, PART V 15883844 SCHEDULE L, PART V false MORGAN STANLEY CO SCHEDULE L, PART V 15814191 SCHEDULE L, PART V false IBM SCHEDULE L, PART V 2618255 SCHEDULE L, PART V false MORGAN STANLEY SMITH BARNEY SCHEDULE L, PART V 1294812 SCHEDULE L, PART V false FEDEX SCHEDULE L, PART V 905461 SCHEDULE L, PART V false LPL FINANCIAL SCHEDULE L, PART V 558057 SCHEDULE L, PART V false EDWARD JONES SCHEDULE L, PART V 443305 SCHEDULE L, PART V false STERNE AGEE LEACH SCHEDULE L, PART V 283003 SCHEDULE L, PART V false BLACKROCK INC SCHEDULE L, PART V 106005 SCHEDULE L, PART V false MEGAN PELUSO SCHEDULE L, PART V 89499 SCHEDULE L, PART V false BUSINESS TRANSACTIONS INVOLVING INTERESTED PERSONS FORM 990, SCHEDULE L, PART V FINRA'S BYLAWS DO NOT CLASSIFY DIRECTORS AS INDEPENDENT OR NOT INDEPENDENT. AS A SELF-REGULATORY ORGANIZATION, BOARD MEMBERS ARE CLASSIFIED AS "PUBLIC" OR "INDUSTRY" AND A MAJORITY OF THE BOARD MUST ALWAYS MEET THE "PUBLIC" DEFINITION. ADDITIONALLY, ANY TRANSACTIONS WITH COMPANIES THAT EMPLOY A BOARD MEMBER, OR FOR WHICH A BOARD MEMBER MAY SERVE AS A MEMBER OF ITS DIRECTORATE, INCLUDING THOSE LISTED BELOW, WERE CONDUCTED IN THE ORDINARY COURSE OF BUSINESS AND DO NOT REFLECT SPECIAL ARRANGEMENTS BETWEEN INTERESTED PARTIES. HOWEVER, THE IRS DEFINITION OF AN INDEPENDENT VOTING MEMBER OF A GOVERNING BODY IS SPECIFIC TO THE FORM 990, AND APPLIES A CIRCUMSTANCES-BASED APPROACH FOCUSING ON COMPENSATION AS AN EMPLOYEE, COMPENSATION AS AN INDEPENDENT CONTRACTOR (EXCLUSIVE OF REASONABLE COMPENSATION FOR SERVING ON THE BOARD), AND A DOLLAR THRESHOLD FOR PAYMENTS MADE TO OR RECEIVED FROM ANOTHER ORGANIZATION IN THE ORDINARY COURSE OF BUSINESS. PLEASE SEE PAGE 19 OF THE 2012 FORM 990 INSTRUCTIONS FOR THE COMPLETE IRS DEFINITION. DURING TAX YEAR 2012, OR A PORTION THEREOF: ELLYN L. BROWN WAS A MEMBER OF THE BOARDS OF NYSE EURONEXT AND NYSE REGULATION, INC. AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID NYSE RELATED ORGANIZATIONS $15,367,211 FOR OCCUPANCY AND COMMUNICATION SERVICES, AND $3,142,401 FOR CERTAIN PASS-THROUGH FEES COLLECTED BY FINRA AND REMITTED TO NYSE REGULATION, INC. MARK S. CASADY WAS THE CHAIRMAN AND CEO OF LPL FINANCIAL AND JOHN J. BRENNAN WAS A DIRECTOR OF LPL FINANCIAL AND BOTH SERVED AS MEMBERS OF THE FINRA BOARD OF GOVERNORS. LPL FINANCIAL PAID FINRA $558,057 FOR REGULATORY FEES AND SERVICES, TRANSACTION AND REPORTING FEES. JOHN F.X. DOLAN WAS A SENIOR ADVISOR OF KNIGHT CAPITAL AMERICAS, L.P. AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. KNIGHT CAPITAL AMERICAS, L.P. PAID FINRA $30,941,498 FOR REGULATORY SERVICES, TRANSACTION AND REPORTING FEES. W. DENNIS FERGUSON WAS THE DIRECTOR OF CLEARING FOR STERNE, AGEE & LEACH, INC. AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. STERNE, AGEE & LEACH, INC. PAID FINRA $283,003 FOR REGULATORY FEES, TRANSACTION AND REPORTING FEES. GREGORY J. FLEMING WAS A DIRECTOR OF BLACKROCK, INC. AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. BLACKROCK, INC. PAID FINRA $106,005 FOR REGULATORY FEES AND SERVICES. GREGORY J. FLEMING WAS AN EVP OF MORGAN STANLEY & CO. AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. MORGAN STANLEY & CO. PAID FINRA $15,814,191 FOR REGULATORY FEES AND SERVICES, TRANSACTION AND REPORTING FEES. GREGORY J. FLEMING WAS DIRECTOR, CEO AND PRESIDENT OF MORGAN STANLEY SMITH BARNEY LLC AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. MORGAN STANLEY SMITH BARNEY LLC PAID FINRA $1,294,812 FOR REGULATORY FEES AND SERVICES, TRANSACTION AND REPORTING FEES. DR. SHIRLEY ANN JACKSON WAS A MEMBER OF THE BOARD OF NYSE REGULATION, INC., AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID NYSE RELATED ORGANIZATIONS $15,367,291 FOR OCCUPANCY AND COMMUNICATION SERVICES, AND $3,142,401 FOR CERTAIN PASS-THROUGH FEES COLLECTED BY FINRA AND REMITTED TO NYSE REGULATION, INC. DR. SHIRLEY ANN JACKSON WAS A DIRECTOR OF FEDEX AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID FEDEX $905,461 FOR SERVICES. DR. SHIRLEY ANN JACKSON WAS A DIRECTOR AT IBM AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID IBM $2,618,255 FOR SERVICES. RICHARD S. PECHTER WAS A MEMBER OF THE BOARD OF NYSE REGULATION, INC., AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID NYSE RELATED ORGANIZATIONS $15,367,291 FOR OCCUPANCY AND COMMUNICATION SERVICES, AND $3,142,401 FOR CERTAIN PASS-THROUGH FEES COLLECTED BY FINRA AND REMITTED TO NYSE REGULATION, INC. MEGAN E. PELUSO WAS AN EMPLOYEE OF FINRA AND THE DAUGHTER OF T. GRANT CALLERY, EVP AND GENERAL COUNSEL OF FINRA (THROUGH 10/12/12). FINRA PAID MS. PELUSO ANNUAL COMPENSATION OF $89,499. JOHN W. SCHMIDLIN WAS A MEMBER OF THE BOARD OF NYSE REGULATION, INC., AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID NYSE RELATED ORGANIZATIONS $15,367,291 FOR OCCUPANCY AND COMMUNICATION SERVICES, AND $3,142,401 FOR CERTAIN PASS-THROUGH FEES COLLECTED BY FINRA AND REMITTED TO NYSE REGULATION, INC. KURT P. STOCKER WAS A MEMBER OF THE BOARD OF NYSE REGULATION, INC., AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. FINRA PAID NYSE RELATED ORGANIZATIONS $15,367,291 FOR OCCUPANCY AND COMMUNICATION SERVICES, AND $3,142,401 FOR CERTAIN PASS-THROUGH FEES COLLECTED BY FINRA AND REMITTED TO NYSE REGULATION, INC. SETH H. WAUGH WAS CEO OF DEUTSCHE BANK AMERICAS AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. DEUTSCHE BANK AMERICAS PAID FINRA $15,883,844 FOR REGULATORY SERVICES, TRANSACTION AND REPORTING FEES. JAMES D. WEDDLE WAS THE MANAGING PARTNER OF EDWARD JONES AND A MEMBER OF THE FINRA BOARD OF GOVERNORS. EDWARD JONES PAID FINRA $443,305 FOR REGULATORY SERVICES, TRANSACTION AND REPORTING FEES. VOLUNTARY DISCLOSURE OF FINANCIAL INFORMATION THE FINANCIAL INFORMATION INCLUDED IN THE FORM 990 IS PRESENTED ON A STAND-ALONE BASIS WITH ALL SIGNIFICANT INTERCOMPANY RECEIVABLE AND PAYABLE AMOUNTS ELIMINATED AND DOES NOT REPRESENT THE CONSOLIDATED RESULTS FOR FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA) AND ITS SUBSIDIARIES. THE 2012 FORM 990 SHOULD BE READ IN CONNECTION WITH THE 2012 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. SEE ALSO SEPARATE 2012 FORM 990'S FOR RELATED ENTITIES, INCLUDING FINRA DISPUTE RESOLUTION, INC., FINRA REGULATION, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. ORGANIZATIONAL ACHIEVEMENTS AND PROGRAM SERVICES FORM 990, PART III, LINE 4 FINRA IS AN INDEPENDENT, NON-GOVERNMENTAL REGULATOR FOR ALL SECURITIES FIRMS DOING BUSINESS WITH THE PUBLIC IN THE UNITED STATES. FINRA AND ITS RELATED ENTITIES TOUCH VIRTUALLY EVERY ASPECT OF THE SECURITIES BUSINESS - FROM REGISTERING AND EDUCATING INDUSTRY PARTICIPANTS TO EXAMINING SECURITIES FIRMS; WRITING RULES; ENFORCING THOSE RULES AND THE FEDERAL SECURITIES LAWS; INFORMING AND EDUCATING THE INVESTING PUBLIC; PROVIDING TRADE REPORTING AND OTHER INDUSTRY UTILITIES; AND ADMINISTERING THE LARGEST DISPUTE RESOLUTION FORUM FOR INVESTORS AND REGISTERED FIRMS. BUSINESS AND FAMILY RELATIONSHIPS FORM 990, PART VI, LINE 2 DURING TAX YEAR 2012, OR A PORTION THEREOF: BOARD MEMBERS WILLIAM H. HEYMAN AND SETH H. WAUGH HAD A BUSINESS RELATIONSHIP. MR. WAUGH WAS CEO OF DEUTSCHE BANK AMERICAS, WHICH IS A MEMBER OF THE TRAVELERS' BANK LENDING SYNDICATE. BOARD MEMBERS JOHN J. BRENNAN AND MARK S. CASADY HAD A BUSINESS RELATIONSHIP AS MR. CASADY IS CHAIRMAN AND CEO OF LPL FINANCIAL AND MR. BRENNAN SERVES AS A BOARD MEMBER. BOARD MEMBERS JOHN J. BRENNAN AND ELLYN L. BROWN HAD A BUSINESS RELATIONSHIP AS THEY SERVED TOGETHER AS TRUSTEES OF THE FINANCIAL ACCOUNTING FOUNDATION. STEPHEN LUPARELLO (THROUGH 10/5/12) AND GARY H. STERN HAD A BUSINESS RELATIONSHIP AS THEY SERVE TOGETHER ON THE BOARD OF THE DEPOSITORY TRUST AND CLEARING CORPORATION. DURING TAX YEAR 2012, OR A PORTION THEREOF, THE FOLLOWING BOARD MEMBERS ALSO SERVED TOGETHER AS MEMBERS OF THE BOARD OF NYSE REGULATION: ELLYN L. BROWN (ALSO NYSE EURONEXT) DR. SHIRLEY ANN JACKSON (ALSO NYSE EURONEXT) RICHARD S. PECHTER JOHN W. SCHMIDLIN KURT P. STOCKER DURING TAX YEAR 2012, OR A PORTION THEREOF, THE FOLLOWING BOARD MEMBERS ALSO SERVED TOGETHER AS MEMBERS OF THE NYSE REGULATION'S COMMITTEE FOR REVIEW: ELLYN L. BROWN RICHARD S. PECHTER JOHN W. SCHMIDLIN DESCRIPTION OF CLASSES OF MEMBERS OR STOCKHOLDERS FORM 990, PART VI, LINE 6 FINRA IS ORGANIZED AS A NONSTOCK, NOT-FOR-PROFIT, MEMBERSHIP CORPORATION. NO REVENUES OR EARNINGS MAY BE USED FOR THE BENEFIT OF ANY INDIVIDUAL OR MEMBER. ANY REGISTERED BROKER, DEALER, MUNICIPAL SECURITIES BROKER OR DEALER, OR GOVERNMENT SECURITIES BROKER OR DEALER IS ELIGIBLE FOR MEMBERSHIP IN THE CORPORATION, EXCEPT FOR THOSE WHO FAIL OR CEASE TO SATISFY THE CORPORATION'S QUALIFICATION REQUIREMENTS, OR BECOMES DISQUALIFIED, OR FAILS TO FILE CERTAIN FORMS AS THE CORPORATION PRESCRIBES. THE MEMBERS OF THE CORPORATION GENERALLY HAVE NO VOTING RIGHTS, OTHER THAN TO VOTE ON (1) AMENDMENTS TO THE BY-LAWS OF THE CORPORATION, (2) BUSINESS RAISED DURING THE ANNUAL OR SPECIAL MEETINGS OF MEMBERS, (3) THE ELECTION OF THE SMALL FIRM, MID-SIZED FIRM AND LARGE FIRM GOVERNORS, OR (4) OTHERWISE PROVIDED BY THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE OR FINRA'S RESTATED CERTIFICATE OF INCORPORATION. SMALL FIRM MEMBERS (ANY BROKER OR DEALER ADMITTED TO MEMBERSHIP IN THE CORPORATION WHICH, AT THE TIME OF DETERMINATION, HAS AT LEAST 1 AND NO MORE THAN 150 REGISTERED PERSONS) ARE ENTITLED TO VOTE FOR THE ELECTION OF THE THREE SMALL FIRM GOVERNORS, MID-SIZE FIRM MEMBERS (AT LEAST 151 AND NO MORE THAN 499 REGISTERED PERSONS) ARE ENTITLED TO VOTE FOR THE ELECTION OF THE SINGLE MID-SIZE FIRM GOVERNOR, AND LARGE FIRM MEMBERS (500 OR MORE REGISTERED PERSONS) ARE ENTITLED TO VOTE FOR THE ELECTION OF THE THREE LARGE FIRM GOVERNORS. DESCRIPTION OF CLASSES OF PERSONS AND THE NATURE OF THEIR RIGHTS FORM 990, PART VI, LINE 7A SMALL FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF SMALL FIRM GOVERNORS, MID-SIZE FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF MID-SIZE FIRM GOVERNORS, LARGE FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF LARGE FIRM GOVERNORS, IN ACCORDANCE WITH THE PROCEDURES FOR SUCH A VOTE AS PROVIDED IN THE CORPORATION'S BY-LAWS. CLASSES OF PERSONS, DECISIONS REQUIRING APPROVAL & TYPE OF VOTING RIGHTS FORM 990, PART VI, LINE 7B THE CORPORATION'S MEMBERS ARE ENTITLED TO VOTE ON ANY AMENDMENT TO THE BY-LAWS OF THE CORPORATION, IN ACCORDANCE WITH THE PROCEDURES FOR SUCH A VOTE AS PROVIDED IN THE CORPORATION'S BY-LAWS. PROCESS USED TO REVIEW FORM 990 FORM 990, PART VI, LINE 11B THE FORM 990 WAS REVIEWED BY SENIOR MANAGEMENT AT VARIOUS STEPS THROUGHOUT THE PREPARATION CYCLE. THE AUDIT AND MANAGEMENT COMPENSATION COMMITTEES REVIEWED AND APPROVED THE ORGANIZATION'S 2012 FORM 990 ON SEPTEMBER 18, 2013. THE BOARD WAS PROVIDED ACCESS TO THE FINAL FORM 990 FOR REVIEW (VIA A WEBSITE FOR BOARD MEMBERS ONLY) PRIOR TO FILING. ENFORCEMENT OF CONFLICT OF INTEREST POLICY FORM 990, PART VI, LINE 12C THE ORGANIZATION HAS WRITTEN CONFLICT OF INTEREST POLICIES FOR BOARD MEMBERS AND EMPLOYEES. THE WRITTEN CONFLICT OF INTEREST POLICY FOR BOARD MEMBERS REQUIRES INITIAL DISCLOSURE OF INTERESTS THAT COULD GIVE RISE TO CONFLICTS AS WELL AS ANNUAL DISCLOSURE BY THE SAME BOARD MEMBERS. ADDITIONALLY, THE WRITTEN POLICY CONTAINS AN ONGOING OBLIGATION OF BOARD MEMBERS TO DISCLOSE POTENTIAL CONFLICTS OF INTEREST AS THEY ARISE. THE EMPLOYEE CONFLICT OF INTEREST POLICY REQUIRES EMPLOYEES TO CERTIFY ANNUALLY AS TO THEIR COMPLIANCE WITH THE WRITTEN POLICY. THE WRITTEN POLICY CONTAINS AN ONGOING OBLIGATION FOR EMPLOYEES TO INFORM FINRA OF ALL BROKERAGE ACCOUNTS IN WHICH THEY HAVE AN INTEREST AND TO ARRANGE FOR FINRA TO RECEIVE DUPLICATE ACCOUNT STATEMENTS. FINRA REVIEWS TRANSACTIONS IN EMPLOYEES' BROKERAGE ACCOUNTS TO ENSURE COMPLIANCE WITH FINRA'S INVESTMENT RESTRICTIONS. AMONG OTHER THINGS, THESE RESTRICTIONS PROHIBIT EMPLOYEES FROM HAVING AN INTEREST IN A BROKER-DEALER OR ENTITY THAT DERIVES 10% OR MORE OF ITS REVENUE, NET OF INTEREST EXPENSE, FROM BROKER-DEALER SUBSIDIARIES OR AFFILIATES. A LIST OF PROHIBITED COMPANIES IS POSTED ON FINRA'S CORPORATE INTRANET. FINRA'S DEPARTMENT HEADS HAVE ACCESS TO SEVERAL ONLINE REPORTS THAT HELP THEM AVOID ASSIGNING AN EMPLOYEE TO WORK ON A PROJECT THAT WOULD GIVE RISE TO A CONFLICT. FOR INSTANCE, A MANAGER CAN DETERMINE WHETHER AN EMPLOYEE'S STOCK HOLDINGS WOULD CONFLICT WITH A PROPOSED FINRA ASSIGNMENT (E.G., ASSIGNING AN EMPLOYEE TO NEGOTIATE A CONTRACT WITH A VENDOR IN WHICH THE EMPLOYEE HAS A SIGNIFICANT STOCK POSITION). EMPLOYEES ARE REGULARLY REMINDED OF THE RESOURCES THAT ARE AVAILABLE WHEN THEY ARE UNSURE WHAT TO DO. IN ADDITION TO TALKING TO DEPARTMENTAL MANAGEMENT, EMPLOYEES CAN DISCUSS CONFLICT-RELATED CONCERNS WITH FINRA'S OFFICE OF GENERAL COUNSEL OR ETHICS MANAGER. IF THEY ARE UNCOMFORTABLE DISCLOSING AN ISSUE AND DISCLOSING THEIR IDENTITY, THEY CAN USE FINRA'S 24-HOUR ETHICSPOINT HOTLINE TO POSE QUESTIONS OR REPORT CONCERNS. COMMUNICATIONS MADE THROUGH ETHICSPOINT ARE CONFIDENTIAL AND, IF THE EMPLOYEE WISHES, ANONYMOUS. FINRA'S WHISTLEBLOWER POLICY FORBIDS RETALIATION AGAINST EMPLOYEES WHO REPORT SUSPECTED MISCONDUCT IN GOOD FAITH, EVEN IF THE REPORT ULTIMATELY PROVES TO BE ERRONEOUS. PROCESS TO DETERMINE COMPENSATION OF TOP OFFICIALS, OFFICERS & KEY EMP. FORM 990, PART VI, LINES 15A AND 15B THE MANAGEMENT COMPENSATION COMMITTEE OF THE FINRA BOARD OF GOVERNORS (THE "COMMITTEE") IS RESPONSIBLE FOR SETTING PAY FOR EXECUTIVES OF FINRA AND SUBSIDIARIES WHOSE TOTAL COMPENSATION, INCLUDING INCENTIVE COMPENSATION, MAY EXCEED $1 MILLION. THE COMMITTEE IS COMPRISED OF FOUR NON-EMPLOYEE, NON-SECURITIES INDUSTRY MEMBERS OF THE BOARD OF GOVERNORS. THE COMMITTEE MET ON JANUARY 18, 2012 AND FEBRUARY 15, 2012 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING CALENDAR YEAR 2011 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2012. AS A GENERAL POLICY, FINRA HAS DETERMINED ITS COMPETITIVE COMPENSATION POSITIONING SHOULD BE CONSIDERED AGAINST A BROAD SECTION OF FINANCIAL SERVICES/CAPITAL MARKET COMPANIES, AS THIS SECTOR IS THE MOST LIKELY FROM WHICH WE RECRUIT TALENT AND TALENT IS RECRUITED FROM US. WE ALSO BENCHMARK AGAINST GENERAL INDUSTRY POSITIONS AND LAW DEPARTMENTS FOR JOBS THAT ARE NOT UNIQUE TO THE FINANCIAL SERVICES INDUSTRY. THE COMMITTEE ENGAGED MERCER, INC. ("MERCER"), A THIRD-PARTY COMPENSATION CONSULTANT, TO PREPARE A COMPENSATION STUDY FOR REVIEW AT THESE MEETINGS. IN DETERMINING A BENCHMARKING STRATEGY FOR KEY EXECUTIVES, FINANCIAL SERVICES ORGANIZATIONS (BROKER-DEALERS, INVESTMENT BANKS, FEDERAL RESERVE BANKS, COMMERCIAL BANKS, INSURANCE COMPANIES, EXCHANGES AND REGULATORS) WERE DETERMINED TO BE THE MOST RELEVANT GROUPS FOR COMPARISON PURPOSES. THE COMMITTEE AND MERCER ENGAGED IN SUBSTANTIAL RESEARCH AND CONSIDERATION OF THE FUNCTIONS AND OPERATIONS OF SEVERAL POTENTIAL COMPARATORS AS WELL AS GENERAL COMPETITIVE CONDITIONS. IN DETERMINING SPECIFIC SALARY AND INCENTIVE COMPENSATION LEVELS FOR OFFICERS AND KEY EMPLOYEES, MANAGEMENET AND THE COMMITTEE CONSIDER: 1) OPERATIONAL RESULTS 2) STRATEGIC INITIATIVES 3) FINANCIAL HEALTH/RESULTS 4) INDIVIDUAL PERFORMANCE 5) COMPETITIVE COMPENSATION LEVELS AS PREPARED BY MERCER THE COMMITTEE'S MINUTES OF THE JANUARY 18, 2012 AND FEBRUARY 15, 2012 MEETINGS WERE REVIEWED AND APPROVED AS ACCURATE AND COMPLETE FOLLOWING THE COMMITTEE'S APPROVAL OF THE SENIOR EXECUTIVE COMPENSATION PACKAGES. THE FULL BOARD FURTHER APPROVED THE 2011 INCENTIVE COMPENSATION OF THE CEO AT ITS MEETING ON FEBRUARY 16, 2012. ALL COMPENSATION COMMITTEE MEMBERS VOTED FOR THE PROPOSED LEVEL OF EXECUTIVE COMPENSATION. PUBLIC AVAILABILITY OF GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS FORM 990, PART VI, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS AND THE FINRA CONSOLIDATED AUDITED FINANCIAL STATEMENTS AVAILABLE UPON REQUEST. ESTIMATED AVERAGE HOURS PER WEEK FORM 990, PART VII, COLUMN B THE OFFICERS / KEY EMPLOYEES LISTED IN FORM 990, PART VII, DEVOTE AN AVERAGE TOTAL OF 60 HOURS PER WEEK TO THE FILING ORGANIZATION AND ANY OR ALL OF THE FOLLOWING RELATED ORGANIZATIONS: FINRA REGULATION, INC., FINRA DISPUTE RESOLUTION, INC. AND FINRA INVESTOR EDUCATION FOUNDATION. OTHER CHANGES IN NET ASSETS OR FUND BALANCES FORM 990, PART XI, LINE 9 OTHER CHANGES IN NET ASSETS OR FUND BALANCES PRIMARILY RELATE TO ANY OR ALL OF THE FOLLOWING: CHANGES IN NET INCOME/(LOSS), UNRECOGNIZED EMPLOYEE BENEFIT PLAN AMOUNTS AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS. FOR ADDITIONAL INFORMATION PLEASE SEE THE 2012 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. FINRA REGULATION INC 1735 K STREET NW WASHINGTON DC 20006 521959501 REGULATORY DE 501(C)(6) N/A FINRA true FINRA DISPUTE RESOLUTION INC 1735 K STREET NW WASHINGTON DC 20006 522187577 ARBITRATION DE 501(C)(6) N/A FINRA true FINRA INVESTOR EDUCATION FOUNDATION 1735 K STREET NW WASHINGTON DC 20006 200863779 EDUCATION DE 501(C)(4) N/A FINRA true NEW NASD HOLDING INC 1735 K STREET NW WASHINGTON DC 200061506 522307595 HOLDING CO DE NA C CORP 100 100 1.00000 true NATIONAL CLEARING CORPORATION 1735 K STREEET NW WASHINGTON DC 200061506 131971649 INACTIVE DE NA C CORP 100 100 1.00000 true false true false false false false false false false false false false false true true true false false FINRA INVESTOR EDUCATION FOUNDATION B 1500000 FMV FINRA INVESTOR EDUCATION FOUNDATION O 3525665 FMV FINRA INVESTOR EDUCATION FOUNDATION P 484922 FMV FINRA REGULATION INC Q 148691114 FMV FINRA REGULATION INC P 134999 FMV FINRA DISPUTE RESOLUTION INC Q 1722750 FMV