2014-11-17T00:06:29-06:00 2013-12-31 ERNST & YOUNG US LLP TWO NORTH CENTRAL AVENUE STE 2300 PHOENIX AZ 85004 990 2013-01-01 521959501 FINRA REGULATION INC % MARCIA E ASQUITH FINA 2027288949 1735 K STREET NW Suite WASHINGTON DC 20006 ROBERT A RENNER VICE PRESIDENT 2014-11-13 BRENDA D GRIESEMER P00264669 2013 2015-11-30 17:44:51Z RICHARD G KETCHUM 1735 K STREET NW WASHINGTON DC 200061506 756743585 false X WWW.FINRA.ORG X 1996 DE FINRA IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. 12 7 2678 0 35420 4802 0 0 722575229 756384367 -73452 0 129755 359218 722631532 756743585 224100 348052 0 0 428400588 437082328 0 0 0 360938585 221747268 789563273 659177648 -66931741 97565937 33863456 48496583 479280769 397605472 -445417313 -349108889 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 false false false false false false true false false false false true false true false false false true false false false false false true false true false false false false false true false false false false false true false false true 83 0 true 2678 true true true false false false false false X 12 7 true false false false true true true true true false false true true true true true true false true false CA X MARCIA E ASQUITH 2027288949 1735 K STREET NW WASHINGTON DC 200061506 X HARVEY J GOLDSCHMID CHAIR, REG POLICY COMMITTEE 3.0 X 0 72500 0 JED BANDES REGULATORY POLICY COMMITTEE 2.0 X 0 45264 0 CHARLES A BOWSHER REGULATORY POLICY COMMITTEE 2.0 X 0 71899 0 KEVIN CARRENO REGULATORY POLICY COMMITTEE 2.0 X 0 61628 0 MARK S CASADY REGULATORY POLICY COMMITTEE 3.0 X 0 65541 0 W DENNIS FERGUSON REGULATORY POLICY COMMITTEE 3.0 X 0 72229 0 DR SHIRLEY ANN JACKSON REGULATORY POLICY COMMITTEE 2.0 X 0 32597 0 KEN NORENSBERG REGULATORY POLICY COMMITTEE 2.0 X 0 66143 0 RICHARD S PECHTER REGULATORY POLICY COMMITTEE 2.0 X 0 76477 0 JOHN W SCHMIDLIN REGULATORY POLICY COMMITTEE 2.0 X 0 69254 0 JOEL SELIGMAN REGULATORY POLICY COMMITTEE 2.0 X 0 65613 0 GARY H STERN REGULATORY POLICY COMMITTEE 2.0 X 0 68757 0 KURT P STOCKER REGULATORY POLICY COMMITTEE 2.0 X 0 71439 0 JAMES D WEDDLE REGULATORY POLICY COMMITTEE 2.0 X 0 73051 0 RICHARD G KETCHUM CEO 60.0 X 0 2551022 72734 TODD T DIGANCI EXECUTIVE VP AND CFO 60.0 X 0 1178423 63965 MARCIA E ASQUITH SENIOR VP AND CORP SECRETARY 60.0 X 0 660939 58263 F GREGORY AHERN EXECUTIVE VICE PRESIDENT 60.0 X 0 666950 142197 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 60.0 X 1091066 0 69601 J BRADLEY BENNETT EXECUTIVE VICE PRESIDENT 60.0 X 1188462 0 36568 MARTIN P COLBURN EXECUTIVE VP AND CTO 60.0 X 0 4221296 18566 ROBERT L D COLBY EVP & CHIEF LEGAL OFFICER 60.0 X 0 802999 145421 CARLO DI FLORIO CHIEF RISK OFFICER 60.0 X 0 216491 46233 LINDA D FIENBERG PRESIDENT - DISPUTE RESOLUTION 60.0 X 0 838369 82663 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 60.0 X 854365 0 107533 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 60.0 X 0 854659 100847 TRACY B JOHNSON SENIOR VICE PRESIDENT 60.0 X 0 702895 36194 DEREK W LINDEN EXECUTIVE VICE PRESIDENT 60.0 X 661222 0 80316 STEVEN J RANDICH EXECUTIVE VICE PRES & CIO 60.0 X 0 394073 120752 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 60.0 X 0 794807 72167 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 60.0 X 1779519 0 68255 JONATHAN J SOKOBIN SENIOR VICE PRESIDENT 60.0 X 0 187063 30363 GRACE B VOGEL EXECUTIVE VICE PRESIDENT 60.0 X 1173889 0 69338 CAMERON K FUNKHOUSER EXECUTIVE VICE PRESIDENT 60.0 X 1361786 0 73122 EMILY P GORDY SENIOR VICE PRESIDENT 60.0 X 996792 0 69794 JOHN F MALITZIS EXECUTIVE VICE PRESIDENT 60.0 X 950936 0 49620 ROBERT A MARCHMAN EXECUTIVE VICE PRESIDENT 60.0 X 908877 0 69422 MICHAEL G RUFINO EXECUTIVE VICE PRESIDENT 60.0 X 826696 0 70951 T GRANT CALLERY EXEC VP AND GENERAL COUNSEL X 0 280926 2500 MARC MENCHEL EXEC VP AND GENERAL COUNSEL X 177233 0 3082 HOWARD M SCHLOSS EXECUTIVE VICE PRESIDENT X 0 507385 4147 11970843 15770689 1764614 1368 true true false PROMETRIC PO BOX 223608 PITTSBURGH PA 15251 TESTING SERVICES 18425268 NCS PEARSON INCORPORATED 21866 NETWORK PLACE CHICAGO IL 60673 TESTING SERVICES 7212089 VERITEXT YORK PO BOX 71303 CHICAGO IL 60694 TECH. 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CONSULTING 775702 30 0 REGULATORY FEES 900099 418620540 418620540 USER FEES 900099 199046292 199010872 35420 CONTRACT SERVICE FEES 900099 77966439 77966439 FINES 900099 60361640 60361640 ALL OTHER PROGRAM SERVICE REVENUE 900099 389456 389456 756384367 0 0 359218 359218 0 0 0 0 0 0 0 0 756743585 756348947 35420 359218 348052 0 0 0 5734873 0 310867256 71175191 28451370 20853638 2878614 424484 97100 0 0 0 24099972 17028 4067855 54094785 0 31016413 11901378 0 2548963 0 0 3517869 0 OVERHEAD ALLOCATION 83950622 TEMPORARY HELP 868083 BAD DEBT EXPENSE 1744097 PUBLICATIONS/PRINTING 366559 153446 659177648 -1180915 25194002 0 0 0 0 30675378 20505968 0 0 0 0 0 0 0 0 343399 279847 185449079 183093148 3672480 2355931 0 0 0 0 0 0 353114 160835 0 0 33863456 48496583 400425017 318838310 0 0 78855752 78767162 0 0 0 0 0 0 0 0 0 0 0 0 479280769 397605472 X 350000 350000 50000000 50000000 -495767313 -399458889 -445417313 -349108889 33863456 48496583 X 97565937 -1257513 X false true X true false 26840120 26269452 570668 9348667 9065669 282998 149260292 147758027 1502265 2355931 0 0 X 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 2010 TO 2013, 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. North America 2013 SPONSOR 15000 CHECK 1 false false false false false false true AMERICAN RED CROSS PO BOX 37243 WASHINGTON DC 20013 530196605 501(C)(3) 87552 DISASTER RELIEF APPLESEED FOUNDATION INC 727 15TH STREET NW WASHINGTON DC 20005 521835698 501(C)(3) 10000 AWARDS DINNER AUTISM SPEAKS 1 E 33RD STREET NEW YORK NY 10016 202329938 501(C)(3) 15000 AWARDS DINNER CONSUMER FEDERATION OF AMERICA 1424 16TH STREET NW WASHINGTON DC 20036 520880625 501(C)(3) 27500 2013 CONTRIBUTION COUNCIL FOR ECONOMIC EDUCATION 122 E 42ND STREET NEW YORK NY 10168 131623848 501(C)(3) 10000 AWARDS DINNER EMPLOYEE BENEFIT RESEARCH INSTITUTE 1100 13TH STREET WASHINGTON DC 20005 521190398 501(C)(3) 32500 AWARDS DINNER JUMPSTART COALITION FOR PERSONAL LITERACY 919 18TH STREET NW WASHINGTON DC 20004 522031287 501(C)(3) 20000 AWARDS DINNER OPERATION HOPE 707 WILSHIRE BLVD LOS ANGELES CA 90017 930959834 501(C)(3) 20000 2013 CONTRIBUTION SEC HISTORICAL SOCIETY 1101 PENNSYLVANIA AVE WASHINGTON DC 20004 522213646 501(C)(3) 15000 AWARDS DINNER SIFMA INVESTOR EDUCATION FOUNDATION 120 BROADWAY NEW YORK NY 10271 521087193 501(C)(3) 140000 2013 CONTRIBUTION TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA 3620 LOCUST WALK PHILADELPHIA PA 19104 522213646 501(C)(3) 10000 2013 CONTRIBUTION 11 Form 990, Schedule I VOLUNTARY DISCLOSURE FOR APPLESEED FOUNDATION CONTRIBUTION DURING 2013: RICHARD G. KETCHUM, FINRA CEO, SERVED AS A BOARD MEMBER OF THE APPLESEED FOUNDATION. SCHEDULE I, PART I, LINE 2 CHARITABLE CONTRIBUTIONS ARE REVIEWED AND APPROVED BY THE APPROPRIATE BUSINESS UNIT HEAD (OR THEIR DESIGNEE). THE ORGANIZATION MAINTAINS RECORDS TO SUBSTANTIATE THE AMOUNT AND THE PURPOSE OF THE CHARITABLE CONTRIBUTIONS. X X X X X true true true true false RICHARD G KETCHUM CEO 0 979020 0 1250000 0 322002 0 52422 0 20312 0 2623756 0 TODD T DIGANCI EXECUTIVE VP AND CFO 0 474448 0 680000 0 23975 0 38339 0 25626 0 1242388 0 MARCIA E ASQUITH SENIOR VP AND CORP SECRETARY 0 236001 0 250000 0 174938 0 29860 0 28403 0 719202 0 82712 F GREGORY AHERN EXECUTIVE VICE PRESIDENT 0 372860 0 100000 0 194090 0 98154 0 44043 0 809147 0 100000 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 368723 0 425000 0 297343 0 28117 0 41484 0 1160667 0 147474 0 J BRADLEY BENNETT EXECUTIVE VICE PRESIDENT 417411 0 450000 0 321051 0 26296 0 10272 0 1225030 0 160805 0 T GRANT CALLERY EXEC VP AND GENERAL COUNSEL 0 0 0 275000 0 5926 0 2500 0 0 0 283426 0 0 MARTIN P COLBURN EXECUTIVE VP AND CTO 0 124814 0 400000 0 3696482 0 15069 0 3497 0 4239862 0 322783 ROBERT L D COLBY EVP & CHIEF LEGAL OFFICER 0 477376 0 300000 0 25623 0 126553 0 18868 0 948420 0 0 CARLO DI FLORIO CHIEF RISK OFFICER 0 214788 0 0 0 1703 0 20250 0 25983 0 262724 0 0 LINDA D FIENBERG PRESIDENT - DISPUTE RESOLUTION 0 438644 0 360000 0 39725 0 62789 0 19874 0 921032 0 0 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 393770 0 455000 0 5595 0 77193 0 30340 0 961898 0 0 0 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 0 345163 0 485000 0 24496 0 62544 0 38303 0 955506 0 0 TRACY B JOHNSON SENIOR VICE PRESIDENT 0 292105 0 232400 0 178390 0 26467 0 9727 0 739089 0 85065 DEREK W LINDEN EXECUTIVE VICE PRESIDENT 330740 0 315000 0 15482 0 53186 0 27130 0 741538 0 0 0 MARC MENCHEL EXEC VP AND GENERAL COUNSEL 0 0 0 0 177233 0 3082 0 0 0 180315 0 177233 0 STEVEN J RANDICH EXECUTIVE VICE PRES & CIO 0 375387 0 0 0 18686 0 102950 0 17802 0 514825 0 0 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 0 318265 0 265000 0 211542 0 42403 0 29764 0 866974 0 106463 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 334634 0 340000 0 1104885 0 40895 0 27360 0 1847774 0 102238 0 JONATHAN J SOKOBIN SENIOR VICE PRESIDENT 0 160594 0 0 0 26469 0 14755 0 15608 0 217426 0 0 GRACE B VOGEL EXECUTIVE VICE PRESIDENT 349852 0 500000 0 324037 0 40401 0 28937 0 1243227 0 171210 0 CAMERON K FUNKHOUSER EXECUTIVE VICE PRESIDENT 325129 0 340000 0 696657 0 44140 0 28982 0 1434908 0 36118 0 EMILY P GORDY SENIOR VICE PRESIDENT 257498 0 182000 0 557294 0 38873 0 30921 0 1066586 0 0 0 JOHN F MALITZIS EXECUTIVE VICE PRESIDENT 329087 0 360000 0 261849 0 25273 0 24347 0 1000556 0 142901 0 ROBERT A MARCHMAN EXECUTIVE VICE PRESIDENT 319284 0 325000 0 264593 0 35653 0 33769 0 978299 0 146940 0 MICHAEL G RUFINO EXECUTIVE VICE PRESIDENT 294067 0 335000 0 197629 0 26791 0 44160 0 897647 0 0 0 HOWARD M SCHLOSS EXECUTIVE VICE PRESIDENT 0 0 0 0 0 507385 0 0 0 4147 0 511532 0 311450 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. FOR FURTHER DETAILS REGARDING HOW EXECUTIVE COMPENSATION IS ESTABLISHED, PLEASE REFER TO SCHEDULE O. 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 SIX HOURS DIRECT. IT IS ALSO ALLOWED FOR ALL TRAVEL FROM THE U.S. MAINLAND TO HAWAII AND FOR FLIGHTS WITHIN EUROPE THAT ARE OVER FIVE 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, INC., AND FINRA DISPUTE RESOLUTION, INC. IS PERMITTED. TRAVEL FOR COMPANIONS: IN LIEU OF A WEEKEND TRIP HOME, EMPLOYEES WHO ARE ON EXTENDED STAY (I.E., AN OUT-OF-TOWN HOTEL STAY OF SIX CONSECUTIVE NIGHTS OR LONGER), AND WHERE A DIRECT FLIGHT IS TWO OR MORE HOURS FROM HOME, WILL HAVE THE OPTION TO INVITE A COMPANION TO THEIR WORK DESTINATION OR TRAVEL TO AN ALTERNATE LOCATION. HOWEVER, EMPLOYEES WILL ONLY BE REIMBURSED FOR THE COST OF COACH AIRFARE FOR THE COMPANION OR TO THE ALTERNATE LOCATION. 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. 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. 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. 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. SCHEDULE J, PART I, LINES 3, 4A AND 4B LINE 3) COMPENSATION FOR THE CEO/EXECUTIVE DIRECTOR IS ESTABLISHED AT THE PARENT ORGANIZATION, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FOR FURTHER DETAILS REGARDING COMPENSATION OF OFFICERS, PLEASE REFER TO THE 2013 RETURN OF ORGANIZATION EXEMPT FROM INCOME TAX - FORM 990 FOR FINRA REGULATION'S PARENT ORGANIZATION, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY. 4A) IN CONNECTION WITH MARTIN P. COLBURN'S SEPARATION FROM FINRA, HE WAS PAID $258,494 IN 2013. IN CONNECTION WITH MARC MENCHEL'S SEPARATION FROM FINRA REGULATION, INC. HE WAS PAID $177,233 IN 2013. IN CONNECTION WITH HOWARD M. SCHLOSS' SEPARATION FROM FINRA, HE WAS PAID $511,532 IN 2013. LINE 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 (WITH SERVICE RANGING FROM 14 TO 30 YEARS) IN THE NON-QUALIFIED DEFINED BENEFIT PLAN THAT HAD A CLIFF VESTING EVENT IN 2013 INCLUDE: CAMERON K. FUNKHOUSER - $673,089 EMILY P. GORDY - $531,690 THOMAS M. SELMAN - $1,078,627 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 AMOUNT BELOW WAS ACCRUED OVER 12 YEARS OF SERVICE. MARTIN P. COLBURN - $3,366,468 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 2013 INCLUDE: MARCIA E. ASQUITH - $150,533 SUSAN F. AXELROD - $275,947 JAMES B. BENNETT - $299,975 TRACY B. JOHNSON - $159,219 RICHARD G. KETCHUM - $283,350 JOHN F. MALITZIS - $259,360 ROBERT A. MARCHMAN - $239,265 MICHAEL G. RUFINO - $176,613 STEPHEN M. SCHOENEMAN - $187,855 GRACE B. VOGEL - $301,729 PARTICIPANTS IN THE SUPPLEMENTAL NON-QUALIFIED DEFINED CONTRIBUTION BENEFIT PLAN THAT HAD A GROSS TAXABLE PAYOUT INCLUDE: NONE NYSE EURONEXTNYSE REGULATION SCHEDULE L, PART V 63828306 SCHEDULE L, PART V false LPL FINANCIAL SCHEDULE L, PART V 28028912 SCHEDULE L, PART V false EDWARD JONES SCHEDULE L, PART V 27473306 SCHEDULE L, PART V false STERNE AGEE LEACH SCHEDULE L, PART V 1240044 SCHEDULE L, PART V false STERNE AGEE FINANCIAL SERVICES SCHEDULE L, PART V 531241 SCHEDULE L, PART V false INTERNATIONAL ASSETS ADVISORY SCHEDULE L, PART V 184860 SCHEDULE L, PART V false MEGAN E PELUSO SCHEDULE L, PART V 73559 SCHEDULE L, PART V false SCHEDULE L, PART IV 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 2013 FORM 990 INSTRUCTIONS FOR THE COMPLETE IRS DEFINITION. DURING TAX YEAR 2013, OR A PORTION THEREOF: KEVIN CARRENO WAS THE GENERAL COUNSEL AND CHIEF RISK OFFICER OF INTERNATIONAL ASSETS ADVISORY, LLC AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS. INTERNATIONAL ASSETS ADVISORY, LLC PAID FINRA REGULATION, INC. $184,860 FOR REGULATORY FEES AND SERVICES. MARK S. CASADY WAS THE CHAIRMAN AND CEO OF LPL FINANCIAL AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS. LPL FINANCIAL PAID FINRA REGULATION, INC. $28,028,912 FOR REGULATORY SERVICES. W. DENNIS FERGUSON WAS VICE PRESIDENT OF STERNE AGEE FINANCIAL SERVICES AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS. STERNE AGEE FINANCIAL SERVICES PAID FINRA REGULATION, INC. $531,241 FOR REGULATORY SERVICES. W. DENNIS FERGUSON WAS THE REGISTERED PRINCIPAL FOR STERNE, AGEE & LEACH, INC. AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS. STERNE, AGEE & LEACH, INC. PAID FINRA REGULATION, INC. $1,240,044 FOR REGULATORY SERVICES. DR. SHIRLEY ANN JACKSON WAS CHAIRMAN OF NYSE REGULATION, INC., WAS A MEMBER OF THE BOARD OF NYSE EURONEXT, AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS DURING 2013. NYSE RELATED ORGANIZATIONS PAID FINRA REGULATION, INC. $56,759,742 FOR REGULATORY SERVICES. FINRA REGULATION, INC. PAID NYSE RELATED ORGANIZATIONS $289,465 FOR SUPPORT SERVICES AND $6,779,099 FOR PASS-THROUGH FINES COLLECTED BY FINRA REGULATION, INC. AND REMITTED TO NYSE. KURT P. STOCKER WAS A MEMBER OF THE BOARD OF NYSE REGULATION, INC., WAS A MEMBER OF THE BOARD OF NYSE EURONEXT, AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS DURING 2013. NYSE RELATED ORGANIZATIONS PAID FINRA REGULATION, INC. $56,759,742 FOR REGULATORY SERVICES. FINRA REGULATION, INC. PAID NYSE RELATED ORGANIZATIONS $289,465 FOR SUPPORT SERVICES AND $6,779,099 FOR PASS-THROUGH FINES COLLECTED BY FINRA REGULATION, INC. AND REMITTED TO NYSE. JAMES D. WEDDLE WAS THE MANAGING PARTNER OF EDWARD JONES AND A MEMBER OF THE FINRA REGULATION, INC. BOARD OF DIRECTORS. EDWARD JONES PAID FINRA REGULATION, INC. $27,473,306 FOR REGULATORY FEES AND SERVICES. MEGAN E. PELUSO WAS AN EMPLOYEE OF FINRA REGULATION, INC. AND THE DAUGHTER OF T. GRANT CALLERY, FORMER EVP AND GENERAL COUNSEL OF FINRA (THROUGH 10/12/12). FINRA PAID MS. PELUSO ANNUAL COMPENSATION OF $73,559. 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 FINANCIAL INFORMATION PRESENTED REFLECTS ESTIMATES OF OVERHEAD ALLOCATIONS. THE 2013 FORM 990 SHOULD BE READ IN CONNECTION WITH THE 2013 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. SEE ALSO SEPARATE 2013 FORM 990'S FOR RELATED ENTITIES, INCLUDING FINRA, FINRA DISPUTE RESOLUTION, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. 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. THROUGH FINRA REGULATION, FINRA OVERSEES NEARLY 4,100 BROKERAGE FIRMS, ABOUT 161,000 BRANCH OFFICES AND ALMOST 636,000 REGISTERED SECURITIES REPRESENTATIVES. FINRA IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. 4A) MARKET REGULATION FINRA'S MARKET REGULATION DEPARTMENT OVERSEES AND REGULATES OVER-THE-COUNTER TRADING OF EXCHANGE-LISTED AND NON-EXCHANGE-LISTED SECURITIES AND CORPORATE AND MUNICIPAL DEBT FOR COMPLIANCE WITH FINRA AND MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) AND FEDERAL SECURITIES LAWS. MARKET REGULATION ALSO PROVIDES REGULATORY SERVICES TO NASDAQ OMX, NASDAQ OMX PHLX, NASDAQ OMX BX, NYSE, NYSE ARCA AND DIRECT EDGE. IN 2013, MARKET REGULATION OPENED 5,318 REVIEWS OR INVESTIGATIONS AND 188 EXAMINATIONS. IN ADDITION, THE DEPARTMENT REFERRED 166 MATTERS TO THE SECURITIES AND EXCHANGE COMMISSION. 4B) MEMBER REGULATION FINRA'S MEMBER REGULATION DEPARTMENT HAS A COMPREHENSIVE EXAMINATION PROGRAM WITH DEDICATED RESOURCES OF NEARLY 1,100 EMPLOYEES. STAFF FROM FINRA MEMBER REGULATION CONDUCT REGULAR EXAMINATIONS ON A SCHEDULE THAT IS ESTABLISHED BASED ON A RISK-PROFILE MODEL. IN ADDITION, MEMBER REGULATION CONDUCTS TARGETED EXAMINATIONS BASED ON INVESTOR COMPLAINTS, REFERRALS FROM OTHER FINRA DEPARTMENTS, TERMINATIONS OF BROKERAGE EMPLOYEES FOR CAUSE, ARBITRATIONS AND REFERRALS FROM OTHER REGULATORS. MEMBER REGULATION ALSO DETERMINES EXAMINATION PRIORITIES AND CONDUCTS SPECIAL "SWEEPS" TO TARGET ISSUES OF IMMEDIATE CONCERN. IN 2013, FINRA MEMBER REGULATION CONDUCTED NEARLY 1,900 REGULAR EXAMINATIONS AND NEARLY 7,000 TARGETED AND SWEEP REVIEWS THAT RESULTED IN OVER 3,700 EXAMINATIONS. 4C) ENFORCEMENT FEDERAL LAW GIVES FINRA THE AUTHORITY TO DISCIPLINE SECURITIES FIRMS AND INDIVIDUALS IN THE SECURITIES INDUSTRY WHO VIOLATE THE FEDERAL SECURITIES LAWS AND RULES AS WELL AS FINRA AND MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) RULES. THROUGH ITS ENFORCEMENT AND MARKET REGULATION DEPARTMENTS, FINRA BRINGS DISCIPLINARY ACTIONS AGAINST FIRMS AND THEIR EMPLOYEES THAT MAY RESULT IN SANCTIONS INCLUDING CENSURES, FINES, SUSPENSIONS AND, IN EGREGIOUS CASES, EXPULSIONS OR BARS FROM THE INDUSTRY. IN APPROPRIATE CASES, FINRA WILL REQUIRE FIRMS AND INDIVIDUALS TO PROVIDE RESTITUTION TO HARMED INVESTORS AND OFTEN IMPOSES OTHER CONDITIONS ON A FIRM'S BUSINESS TO PREVENT REPEATED WRONGDOING. IN 2013, FINRA BROUGHT 1,535 DISCIPLINARY ACTIONS AGAINST REGISTERED INDIVIDUALS AND FIRMS AND LEVIED FINES TOTALING MORE THAN $60 MILLION. IN ADDITION, FINRA EXPELLED 24 FIRMS FROM THE SECURITIES INDUSTRY, SUSPENDED 38 FIRMS, BARRED 429 INDIVIDUALS AND SUSPENDED 670 BROKERS FROM ASSOCIATION WITH FINRA-REGULATED FIRMS. 4D) OFFICE OF FRAUD DETECTION AND MARKET INTELLIGENCE FINRA'S OFFICE OF FRAUD DETECTION AND MARKET INTELLIGENCE (OFDMI)PROVIDES A HEIGHTENED AND EXPEDITED REVIEW OF ALLEGATIONS OF SERIOUS FRAUDS, A CENTRALIZED POINT OF CONTACT INTERNALLY AND EXTERNALLY ON FRAUD ISSUES, AND CONSOLIDATES RECOGNIZED EXPERTISE IN EXPEDITED FRAUD DETECTION AND INVESTIGATION. IN ADDITION, THIS DEPARTMENT IS RESPONSIBLE FOR CONDUCTING INSIDER-TRADING AND FRAUD SURVEILLANCE FOR ALL OTC, NASDAQ-, NYSE AND NYSE AMEX- LISTED ISSUES ACROSS ALL U.S. EXCHANGES. THE DEPARTMENT HOUSES THE CENTRAL REVIEW GROUP WHICH IS RESPONSIBLE FOR THE TRIAGE REVIEW OF COMPLAINTS AND BROKER-DEALER FILINGS. OFDMI ALSO OVERSEES FINRA'S WHISTLEBLOWER PROGRAM. IN 2013, THE CENTRAL REVIEW GROUP REVIEWED OVER 26,000 FILINGS, COMPLAINTS, TIPS AND ARBITRATION-RELATED MATTERS. THE INSIDER TRADING SURVEILLANCE, FRAUD SURVEILLANCE AND WHISTLEBLOWER UNITS REFERRED CONDUCTED INVESTIGATIONS WHICH RESULTED IN OVER 660 REFERRALS TO THE SEC, OTHER FEDERAL AND STATE LAW ENFORCEMENT AGENCIES OR OTHER INTERNAL FINRA DEPARTMENTS. THESE REFERRALS INVOLVED INSIDER TRADING, MICROCAP FRAUD, PONZI-TYPE SCHEMES, ELDER FINANCIAL ABUSE, ANTI-MONEY LAUNDERING REQUIREMENTS OR OTHER POTENTIAL VIOLATIONS OF FEDERAL LAWS, STATE REGULATIONS OR FINRA RULES. 4E) REGISTRATION AND DISCLOSURE ANY PERSON ENGAGED IN THE SECURITIES BUSINESS OF THE FIRM INCLUDING PARTNERS, OFFICERS, DIRECTORS, BRANCH MANAGERS, DEPARTMENT SUPERVISORS AND SALESPERSONS MUST REGISTER WITH FINRA. THROUGH ITS REGISTRATION AND DISCLOSURE DEPARTMENT, FINRA OPERATES WEB CRD, THE CENTRAL LICENSING AND REGISTRATION SYSTEM FOR THE U.S. SECURITIES INDUSTRY AND ITS REGULATORS. IT ALSO OPERATES THE INVESTMENT ADVISER REGISTRATION DEPOSITORY ON BEHALF OF THE SEC. THESE SYSTEMS CONTAIN THE REGISTRATION RECORDS OF MORE THAN 4,100 REGISTERED BROKER-DEALERS AND MORE THAN 28,000 INVESTMENT ADVISERS, AND THE QUALIFICATION, EMPLOYMENT, AND DISCLOSURE HISTORIES OF MORE THAN 636,000 ACTIVE REGISTERED INDIVIDUALS, MAKING IT ONE OF THE LARGEST AND MOST SOPHISTICATED ONLINE REGISTRATION AND REPORTING SYSTEM. FINRA ALSO OPERATES THE BROKERCHECK PROGRAM, AN ONLINE SYSTEM FOR INVESTORS TO CHECK OUT THE BACKGROUNDS OF INVESTMENT PROFESSIONALS. BROKERCHECK CONTAINS RECORDS ON 128 MILLION CURRENT AND FORMER BROKERS AND OVER 17,500 CURRENT AND FORMER FINRA MEMBER FIRMS. FORM 990, PART VI, LINE 2 DURING TAX YEAR 2013, OR A PORTION THEREOF, THE FOLLOWING FINRA REGULATION, INC. DIRECTORS ALSO SERVED TOGETHER AS MEMBERS OF THE BOARD OF NYSE REGULATION: DR. SHIRLEY ANN JACKSON KURT P. STOCKER ROBERT L. D. COLBY AND GARY H. STERN HAD A BUSINESS RELATIONSHIP DURING 2013 AS THEY SERVED TOGETHER ON THE BOARD OF THE DEPOSITORY TRUST CLEARING CORPORATION. FORM 990, PART VI, LINE 6 FINRA IS THE SOLE NOT-FOR-PROFIT STOCKHOLDER OF FINRA REGULATION, INC. FORM 990, PART VI, LINE 7A FINRA, THE SOLE NOT-FOR-PROFIT STOCKHOLDER, ELECTS ALL MEMBERS OF THE GOVERNING BODY. FORM 990, PART VI, LINE 7B FINRA, THE SOLE NOT-FOR-PROFIT STOCKHOLDER, RETAINS THE FOLLOWING AUTHORITY AND FUNCTIONS: 1) TO EXERCISE OVERALL RESPONSIBILITY FOR ENSURING THAT THE ASSOCIATION'S STATUTORY AND SELF-REGULATORY OBLIGATIONS AND FUNCTIONS ARE FULFILLED. 2) TO DELEGATE AUTHORITY TO THE SUBSIDIARIES TO TAKE ACTIONS ON BEHALF OF THE ASSOCIATION. 3) TO ELECT THE SUBSIDIARY BOARDS OF DIRECTORS. 4) TO REVIEW THE RULEMAKING AND DISCIPLINARY DECISIONS OF THE SUBSIDIARIES. 5) TO COORDINATE ACTIONS OF THE SUBSIDIARY BOARDS AS NECESSARY. 6) TO RESOLVE ANY DISPUTES AMONG THE SUBSIDIARIES. 7) TO ADMINISTER COMMON OVERHEAD AND TECHNOLOGY OF THE SUBSIDIARIES. 8) TO ADMINISTER THE OFFICE OF INTERNAL REVIEW AS PROVIDED IN THE ASSOCIATION'S BY-LAWS. 9) TO MANAGE EXTERNAL ASSOCIATION RELATIONS ON MAJOR POLICY ISSUES. 10) TO DIRECT THE SUBSIDIARIES TO TAKE ACTION NECESSARY TO EFFECTUATE THE PURPOSES AND FUNCTIONS OF THE ASSOCIATION. 11) TO TAKE ACTION AB INITIO IN AN AREA OF RESPONSIBILITY DELEGATED TO SUBSIDIARIES. 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 2013 FORM 990 ON OCTOBER 3, 2014. THE BOARD WAS PROVIDED ACCESS TO THE FINAL FORM 990 FOR REVIEW (VIA A WEBSITE FOR BOARD MEMBERS ONLY) PRIOR TO FILING. 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 CODE OF CONDUCT 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. 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 30, 2013 AND FEBRUARY 12, 2013 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING CALENDAR YEAR 2012 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2013. 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, MANAGEMENT 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, INC., A THIRD-PARTY COMPENSATION CONSULTANT THE COMMITTEE'S MINUTES OF THE JANUARY 30, 2013 AND FEBRUARY 12, 2013 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 2012 INCENTIVE COMPENSATION OF THE CEO AT ITS MEETING ON FEBRUARY 13, 2013. ALL COMPENSATION COMMITTEE MEMBERS VOTED FOR THE PROPOSED LEVEL OF EXECUTIVE COMPENSATION. FORM 990, PART VI, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS AND THE FINRA CONSOLIDATED AUDITED FINANCIAL STATEMENTS AVAILABLE UPON REQUEST. 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: FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FINRA DISPUTE RESOLUTION, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. 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/(L0SS) ON INVESTMENTS. FOR ADDITIONAL INFORMATION PLEASE SEE THE FINRA 2013 ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. 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