Senior executives of NYSE Euronext (NYX) are paid more than their peers despite the exchange company lagging in performance, advisory firm Glass Lewis & Co. LLC said in a report.

The report issued ahead of NYSE Euronext's April 28 shareholder meeting assigned the Big Board parent a "D" grade in linking compensation to performance and recommended investors vote out a board member overseeing compensation.

"Overall, the company paid more than its peers, but performed worse than its peers," wrote Glass Lewis analysts Daniel Weeks and David Eaton in the report, a copy of which was reviewed by Dow Jones Newswires.

A separate report from Institutional Shareholder Services rated NYSE Euronext's executive compensation as a "medium concern."

A representative of NYSE Euronext declined comment.

The advisory firms' focus on pay comes as NYSE Euronext pushes to seal an agreed merger with Deutsche Boerse AG (DB1.XE) that would see NYSE Chief Executive Duncan Niederauer as CEO of the world's largest exchange group, as part of a senior management team drawn equally from both companies.

NYSE Euronext's board last weekend rejected an unsolicited bid from IntercontinentalExchange Inc. (ICE) and Nasdaq OMX Group Inc. (NDAQ) that placed a $1.6 billion premium on NYSE by targeting higher cost savings from dividing its businesses between the potential acquirers.

Spurning the offer on strategic grounds upset some NYSE Euronext shareholders, and the April 28 meeting is being closely watched for signs of displeasure, potentially by voting against directors.

Glass Lewis recommended shareholders vote against James McNulty, former CEO of the Chicago Mercantile Exchange who heads NYSE Euronext's compensation committee over the past fiscal year, "during which time the company was deficient in linking pay with performance."

NYSE Euronext's rating has climbed since 2008, when Glass Lewis assigned an "F." NYSE Euronext has frozen executives' base salaries for the past three years and in 2010 implemented a new program linking the size of its executive bonus pool to earnings.

In a mid-March proxy statement, NYSE Euronext estimated its executives collect more pay in the form of long-term, equity-based compensation than those in a peer group that included Nasdaq OMX, ICE, CME Group Inc. (CME) and Deutsche Boerse.

Niederauer's 2010 pay of $7.2 million ranked far behind that of Nasdaq OMX CEO Bob Greifeld, who in 2009 earned an estimated $17 million, according to the Glass Lewis report. Jeff Sprecher, CEO of ICE, earned $7.4 million in 2009, the firm estimated.

Glass Lewis applies a proprietary calculation to equity awards and other incentives for its executive compensation estimates, which can deviate from figures reported by companies themselves.

Glass Lewis, which has yet to evaluate Nasdaq OMX this year, last year assigned that company a "D" rating for executive compensation, matching the grade assigned NYSE Euronext. Nasdaq OMX in 2008 earned a "C."

NYSE Euronext's compensation committee has sought to weight executives' compensation increasingly toward "variable and equity-based pay" as opposed to cash, particularly when it comes to salary, according to its March proxy statement.

Institutional Shareholder Services saw compensation as a less serious concern for NYSE Euronext investors, with its report crediting the exchange operator for disclosing a clawback provision and other shareholder-friendly measures.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com
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