Edward Tilly, the chairman and CEO of Chicago trading exchange Cboe, resigned Monday after an investigation into his alleged undisclosed personal relationships with colleagues.
The announcement Tuesday marks the abrupt end of a long run at the Cboe for Tilly, 60, who rose through the ranks to helm the options exchange in 2013. Tilly is the latest CEO to be toppled by allegations of an inappropriate personal relationship at work.
The Cboe has named board member Fredric Tomczyk, 68, the former president and CEO of TD Ameritrade, to replace Tilly effective immediately, the company said in a news release.
In late August, the board and outside counsel launched the investigation, which determined Tilly “did not disclose personal relationships with colleagues” in violation of company policies, the company said. Tilly agreed to resign from the company “without good reason,” receiving his prorated salary and benefits through the termination date but forfeiting all unvested equity incentives, according to a letter filed with the Securities and Exchange Commission.
William Farrow, a Cboe board member, was named to replace Tilly as non-executive chairman.
“Cboe strives to uphold the highest ethical standards across the organization, and fully investigates and takes appropriate action when it determines that any of its policies have been violated,” Farrow said in the news release. “Fred’s familiarity with Cboe’s business, combined with his multi-decade experience in the financial services industry, will provide stability and reinforce the company’s commitment to growth for Cboe, its associates, customers, index partners, and investors during this period of transition.”
A Cboe spokesperson declined to comment on the details of the investigation Tuesday.
The signed resignation letter includes Tilly’s agreement to refrain from making statements to a third party regarding the investigation, resignation or agreement with the Cboe. Efforts to reach Tilly for comment Tuesday were unsuccessful.
Tilly, who started on the trading floor of the Cboe in 1987, was named CEO in 2013, succeeding the exchange’s longtime leader, William Brodsky. In late 2016, Brodsky stepped down as chairman, with Tilly filling that role as well.
As part of his February 2023 employment agreement, Tilly was due to receive an annual base salary of nearly $1.27 million, with a target bonus of about $2.1 million in cash and $6.65 million in equity incentive compensation this year. Tilly will receive a prorated salary and equity incentives through his resignation date, but will forfeit millions in unvested equity incentives, according to SEC filings.
Tomczyk retired from TD Ameritrade in 2016 after eight years as president and CEO. Previously, he was president and CEO of Canadian insurance company London Life. He joined the Cboe board in 2019.
As CEO of Cboe, Tomczyk will receive an annual base salary of $1 million, with a target bonus of $1.65 million, both of which will be prorated for 2023. He will also receive an equity incentive award of $7.15 million vesting in three annual installments. The equity incentive is contingent upon Tomczyk serving as CEO for at least one year, and his continued service on the board thereafter, according to the employment agreement.
Launched as the Chicago Board Options Exchange in 1973, the CBOE spun off as a publicly traded company in 2010, growing into one of the world’s largest options exchanges and a staple of securities traders worldwide. Its signature products include the CBOE Volatility Index, or VIX, which measures the expected movement of the broader stock market.
“Cboe’s incredible success over the past 50 years is a testament to the hard work of each and every associate,” Tomczyk said in the news release. “I have the utmost confidence in the team, and I am excited to work together as we continue to build trusted markets around the globe.”
Tilly is the latest high-profile CEO to resign in recent years over allegations of inappropriate personal relations with a colleague.
In 2019, Chicago-based fast food giant McDonald’s fired CEO Steve Easterbrook after he acknowledged exchanging sexually explicit videos and text messages in a consensual relationship with an employee, a violation of company policy. Easterbrook paid back more than $105 million in equity awards and cash, settling a lawsuit brought by McDonald’s after failing to disclose the extent of his misconduct.
In February 2022, Jeff Zucker was ousted as CEO of CNN after revelations about a consensual relationship with a colleague were disclosed. His successor, Chris Licht, was fired at CNN in June amid low ratings and programming missteps at the cable news network.
Last week, BP announced that Bernard Looney resigned as CEO after acknowledging he was “not fully transparent” about alleged personal relationships with colleagues during an investigation by the company, according to a news release.