Bats CEO Cedes Chairman Role as Board Said to Delay IPO

Bats Global Market CEO Joe Ratterman
Joe Ratterman, chief executive officer of Bats Global Markets Inc. Photographer: Joshua Roberts/Bloomberg

Directors at Bats Global Markets Inc. won’t consider redoing the exchange operator’s initial public offering for at least a quarter, according to a person with direct knowledge of the matter.

The decision was made during a board meeting yesterday, according to the person, who declined to be identified because the talks were private. Bats said in a statement that Chief Executive Officer Joe Ratterman will give up his chairman role after the company withdrew the IPO on March 23 because its computers couldn’t get the shares trading.

Randy Williams, a Bats spokesman, declined to comment on the directors’ meeting.

“Splitting the two is the much favored approach,” Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance, said in a phone interview yesterday. “It gives the board more authority,” he said. “It’s something you do when there’s been controversy to buoy investor confidence.”

Company founder Dave Cummings said on March 25 that Lenexa, Kansas-based Bats should try the IPO again by the end of June. Executive bonuses should be suspended at Bats, he also said that day in an e-mail addressed to the “trading community.”

IPO Compensation

While directors yesterday discussed whether bonuses would be paid, they didn’t make any decision and left it up to the board’s compensation committee, the person said. The board said that panel should weigh the IPO’s failure, the person said.

Ratterman and three executives are going to Washington this week for discussions with the U.S. Securities and Exchange Commission, according to the person. They plan to meet with commissioners, the Office of Compliance Inspections and Examinations, and executives with the Division of Trading and Markets, the person said.

Ratterman, who became chairman in 2007, will keep the positions of CEO and president and received the “unanimous support” of directors in yesterday’s meeting, which was moved up from next week, Bats said in a statement.

Bats described the “enhanced corporate governance structure” after Ratterman spent days making public appearances explaining the debacle, for which he took responsibility. Pulling the IPO denied a payday for Wall Street firms such as Morgan Stanley, Citigroup Inc. and Credit Suisse Group AG, three Bats owners who underwrote the deal.

Without Opposition

The CEO and chairman duties had been under discussion previously, and yesterday’s decision was made without opposition, according to the person familiar with the matter.

The company is likely to fill the role of chairman with someone not currently on the board, another person with direct knowledge of the meeting said. Exchange operators NYSE Euronext and Nasdaq OMX Group Inc., both based in New York, have different people in those roles.

“Joe continues to do a tremendous job as CEO of Bats,” according to a statement attributed to the board. “We fully support his leadership, vision and strategic direction as Bats continues to enhance competition and foster innovation in markets worldwide.”

The cancellation of the IPO left a $100 million dividend that was conditioned on its completion unpaid to a group of Bats’s owners, which also include automated-trading firms Getco LLC and Tradebot Systems Inc., the estate of Lehman Brothers Holdings Inc. and securities companies such as Bank of America Corp. and Deutsche Bank AG. The directors decided the payout won’t be made in the immediate future, the person said.

Bats saw its share of U.S. equity trading rise yesterday. Its two exchanges handled 10.67 percent of U.S. volume as of 5 p.m. New York time, according to data compiled by Bloomberg. That compares with 10.27 percent on March 26 and 9.2 percent on March 23, when the company failed to complete its IPO.

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