DEF 14A of Moodys Corp /De/
Filed Mar 6, 2024 · FY20230001193125-24-060138
DIRECTOR NOMINEE HIGHLIGHTS
DIRECTOR NOMINEE HIGHLIGHTS The Company strives to maintain a Board that possesses a combination of skills, professional experience, and diversity of backgrounds and tenure necessary to effectively oversee the Company’s business. As part of the search process for each new director, the Governance & Nominating Committee strives to have a diverse slate of candidates, including women and minorities, and encourages any search firm the Committee engages to do so as well. As reflected in the graphics and chart below, two director nominees have identified themselves as Hispanic/Latino and a third nominee as Black/African-American. All ten of the directors currently serving are standing for election at the Annual Meeting. Information regarding the director nominees is provided below, including individualized information presented in the matrix below regarding their experiences, skills and background.
DIRECTOR NOMINEE HIGHLIGHTS
| 4 | MOODY’S 2024 PROXY STATEMENT |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS Our director compensation program is designed to compensate our non-employee directors fairly for work required for a company of our size and scope and to align their interests with the long-term interests of our stockholders. The Compensation & Human Resources Committee annually reviews the form and amount of the compensation of directors for service on the Board and its committees and recommends any changes to the Board. As part of its 2023 review, the Compensation & Human Resources Committee reviewed and considered data provided to the Committee by Meridian regarding the form and amount of compensation paid to non-employee directors at the companies in Moody’s executive compensation peer group (as disclosed beginning on page 47 of this Proxy Statement). The comparative analysis included each element of the director pay program: the annual cash retainer, board and committee fees, and equity awards. This analysis showed that Moody’s director compensation is competitively positioned relative to the median of its peer group. The equity to cash ratio was found to be similar to the peer group average and, like many of its peers, Moody’s directors are subject to stock holdings requirements (a multiple of the cash retainer). Moody’s does not provide per-meeting fees for Board and committee meetings or any non-chairmen committee member fees.
COMPENSATION OF DIRECTORS
| 26 | MOODY’S 2024 PROXY STATEMENT |
COMPENSATION OF DIRECTORS
As a result of this review, the Compensation & Human Resources Committee adopted a small increase to the cash retainer and determined that compensation of non-employee directors is reasonable and appropriate as compared to the board members of peer companies. As noted below, our current Chairman and former Chairman of the Board received additional annual cash fees. The following table sets forth, for the fiscal year ended December 31, 2023, the total compensation of the non-management members of the Company’s Board of Directors. Mr. Fauber did not receive any compensation for serving as a Moody’s director in 2023. His compensation for services as Moody’s President and Chief Executive Officer during the year is reflected in the Summary Compensation Table on page 67 of this Proxy Statement.
COMPENSATION OF DIRECTORS
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) (3) | All Other Compensation ($) (4) | Total ($) | | Jorge A. Bermudez | 140,000 | 195,131 | — | 335,131 | | Thérèse Esperdy | 115,000 | 195,131 | — | 310,131 | | Vincent A. Forlenza | 170,000 | 265,268 | — | 435,268 | | Kathryn M. Hill | 115,000 | 195,131 | — | 310,131 | | Lloyd W. Howell, Jr. | 140,000 | 195,131 | — | 335,131 | | Raymond W. McDaniel, Jr. | 85,000 | 521,143 | — | 606,143 | | Jose M. Minaya | 115,000 | 195,131 | — | 310,131 | | Leslie F. Seidman | 140,000 | 195,131 | — | 335,131 | | Zig Serafin | 115,000 | 195,131 | — | 310,131 | | Bruce Van Saun | 115,000 | 195,131 | — | 310,131 |
COMPENSATION OF DIRECTORS
| (1) The Company’s non-management directors received an annual cash retainer of $115,000, payable in quarterly installments in 2023. The Chairmen of the Audit Committee, the Governance & Nominating Committee and the Compensation & Human Resources Committee each received an additional annual cash fee of $25,000, also payable in quarterly installments. The Chairman of the Board and the Lead Independent Director received an additional annual cash fee of $55,000 and $40,000, respectively. Mr. McDaniel served as Chairman of the Board until retiring from the Board in connection with the 2023 annual meeting of Stockholders. Mr. Forlenza was compensated as the Lead Independent Director in the first quarter of 2023 and then as the Chairman of the Board once he assumed that role, effective April 18, 2023, following the 2023 annual meeting of stockholders. There were no separate meeting fees paid in 2023. |
COMPENSATION OF DIRECTORS
| A non-management director may elect to defer receipt of all or a portion of his or her annual cash retainer until after termination of service on the Company’s Board of Directors. Deferred amounts are credited to an account and receive the rate of return earned by one or more investment options available under the Profit Participation Plan as selected by the director. Unless otherwise elected by the director at the time of deferral, upon a change in control of the Company, a lump-sum payment will be made to each director of the amount credited to the director’s deferred account on the date of the change in control. Any amount credited to the director’s deferred account from the date of the change in control to the date such director ceases to be a director will also be paid as a lump-sum within 30 days following such cessation of service. |
COMPENSATION OF DIRECTORS
| (2) On February 7, 2023, all then non-management directors, except Mr. McDaniel, received a grant of approximately $195,000 worth of RSUs issued from the 1998 Moody’s Corporation Non-Employee Directors’ Stock Incentive Plan (the “1998 Directors Plan”) which was equal to 621 RSUs. Also on February 7, 2023, Mr. McDaniel received a grant of approximately $265,000 worth of RSUs issued from the 1998 Directors Plan that was equal to 843 RSUs. The Compensation & Human Resources Committee authorized these RSU grants on December 19, 2022, the Board approved them on December 20, 2022, and the grants were effective on February 7, 2023, the fifth trading day following the date of the public dissemination of the Company’s financial results for 2022. On May 2, 2023, Mr. Forlenza received a grant of approximately $70,000 worth of RSUs issued from the 1998 Directors Plan, which was equal to 228 RSUs. This grant was made in connection with him |
COMPENSATION OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 27 |
COMPENSATION OF DIRECTORS
| assuming the role of Chairman of the Board at the 2023 annual meeting of stockholders. In each case, the number of RSUs was determined based on the award value computed in accordance with FASB ASC Topic 718. For additional information on how Moody’s accounts for equity-based compensation, see Note 16 to the financial statements as contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 14, 2024. |
COMPENSATION OF DIRECTORS
| None of the individuals who served as a non-management director of the Company during 2023, other than Mr. McDaniel, held any outstanding stock options as of December 31, 2023. The aggregate number of unvested stock awards outstanding, including any accrued dividend equivalents, as of December 31, 2023 for each individual who served as a non-management director of the Company during 2023 was as follows: |
COMPENSATION OF DIRECTORS
| Name | Number of Shares Underlying Options | Number of Shares of Unvested RSUs | | Jorge A. Bermudez (a) | — | 621 | | Thérèse Esperdy | — | 627 | | Vincent A. Forlenza | — | 856 | | Kathryn M. Hill (a) | — | 621 | | Lloyd W. Howell, Jr. (a) | — | 621 | | Raymond W. McDaniel, Jr. (b) | 119,235 | 0 | | Jose M. Minaya | — | 627 | | Leslie F. Seidman (a) | — | 621 | | Zig Serafin (a) | — | 621 | | Bruce Van Saun | — | 627 |
COMPENSATION OF DIRECTORS
| (a) Mr. Bermudez, Ms Hill, Mr. Howell, Ms Seidman and Mr. Serafin have not elected to defer any RSU awards or receive accrued cash dividends upon vesting of their RSUs. |
COMPENSATION OF DIRECTORS
| (b) The 119,235 outstanding options are exercisable options granted in 2017, 2018 and 2019, which were awarded to Mr. McDaniel while serving as Chief Executive Officer. |
COMPENSATION OF DIRECTORS
| (3) As permitted by the terms of the applicable grant agreement, the Board accelerated the vesting of unvested RSUs held by Mr. McDaniel upon his retirement. The incremental fair value of outstanding RSUs of Mr. McDaniel as of the modification date is included in the stock awards column in addition to the full grant date fair value of these awards as required by SEC disclosure rules. |
COMPENSATION OF DIRECTORS
| (4) Perquisites and other personal benefits provided to each individual who served as a non-management director in 2023 were, in the aggregate, less than $10,000 per director. Each non-management director is reimbursed for travel, meals and hotel expenses incurred in connection with attending meetings of the Company’s Board of Directors or its committees. For the meetings held at the Company’s executive offices, the Company pays for travel for each non-employee director, as well as for their accommodations, meals, Company-arranged activities and other incidental expenses. |
ITEM 1—ELECTION OF DIRECTORS
ITEM 1—ELECTION OF DIRECTORS
ITEM 1—ELECTION OF DIRECTORS
| What is being voted on | Election of ten director nominees to the Board. | | Board Recommendation | The Board of Directors recommends a vote FOR the election of each of the director nominees. |
ITEM 1—ELECTION OF DIRECTORS
The Board of Directors has nominated Jorge A. Bermudez, Thérèse Esperdy, Robert Fauber, Vincent A. Forlenza, Kathryn M. Hill, Lloyd W. Howell, Jr., Jose M. Minaya, Leslie F. Seidman, Zig Serafin and Bruce Van Saun, each for a one-year term expiring in 2025. If elected, the nominees will hold office until each of their terms expires and until a successor is elected and qualified. All of the nominees are currently members of the Board of Directors. All of the director nominees were previously elected by the stockholders. The Governance & Nominating Committee evaluates the qualifications and skills of other potential candidates in light of the Board’s current composition and consideration of the Company’s current and future business strategy and operations. The Company expects the nominees for election as director to be able to serve if elected. If a nominee is unable to serve, proxies may be voted for the election of such other person for director as the Board may recommend in the place of such nominee or just for the remaining nominees, leaving a vacancy. Alternatively, the Board may reduce the size of the Board.
QUALIFICATIONS AND SKILLS OF DIRECTORS
QUALIFICATIONS AND SKILLS OF DIRECTORS The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee the Company’s business. In addition, the Board believes that there are certain attributes that every director should possess, as reflected in the Board’s membership criteria. Accordingly, the Board and the Governance & Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future business and operations. The Governance & Nominating Committee is responsible for developing and recommending Board membership criteria to the Board for approval. The criteria, which are set forth in the Company’s Corporate Governance Principles, include, among other things, the candidate’s:
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | business experience, |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | qualifications, attributes and skills relevant to the management and oversight of the Company’s business, |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 29 |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | independence, |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | ability to represent diverse stockholder interests, |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | judgment and integrity, |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | ability to commit sufficient time and attention to Board activities, and |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| • | absence of potential conflicts or the appearance of conflicts with the Company’s business and interests. |
QUALIFICATIONS AND SKILLS OF DIRECTORS
In addition, the Board and the Governance & Nominating Committee annually evaluate the composition of the Board to assess whether the skills, experience, characteristics and other criteria established by the Board are currently represented on the Board, and to assess the criteria that may be needed in the future, given the Company’s current situation and strategic plans. The Board and the Governance & Nominating Committee seek a diversity of occupational and personal backgrounds on the Board, including diversity with respect to gender, race, ethnicity and national background, geography, and age in order to obtain a range of viewpoints and perspectives. As part of the search process for each new director, the Governance & Nominating Committee strives to have a diverse slate of candidates, including women and minorities and encourages any search firm the Committee engages to do so as well. The Committee also considers the special requirements of Moody’s Investors Service and its role in the securities markets. As an example, the Committee has not sought out individuals who by profession actively manage securities portfolios as the Committee determined that such individuals could encounter conflicts of interests or give rise to the appearance of conflicts. This annual evaluation of the Board’s composition enables the Board and the Governance & Nominating Committee to update the skills and experience they seek in the Board as a whole, and in individual directors, as the Company’s needs evolve and change over time, and to assess how the composition of our workforce allows us to benefit from diverse viewpoints and backgrounds. In identifying director candidates from time to time, the Board and the Governance & Nominating Committee may identify specific skills and experience that they believe the Company should seek in order to constitute a balanced and effective board. Recent search for potential Board candidates has focused on candidates with information, technology and cyber-related background. In addition to a diversity of backgrounds, the Board believes it is important to have diversity of tenures represented on the Board. The Company’s director nominees have varied tenure that the Board believes facilitates and ensures effective oversight by balancing fresh perspectives and in-depth experience and knowledge about the Company. In considering and nominating directors for election to the Board, the Board and the Governance & Nominating Committee have considered a variety of factors. These include the nominee’s independence, financial literacy, personal and professional accomplishments, experience in light of the needs of the Company and, for incumbent directors, past performance on the Board. In 2023, the Board retained a third-party search firm to assist the Governance & Nominating Committee in identifying and assessing potential Board candidates, based on the variety of factors and criteria considered by the Board. With respect to the Company’s director nominees standing for election, their biography as of the date of this Proxy Statement as well as their skills and qualifications that support their service on the Board are set forth below. The Board of Directors recommends a vote FOR the election as directors of each of the nominees listed below.
QUALIFICATIONS AND SKILLS OF DIRECTORS
| 30 | MOODY’S 2024 PROXY STATEMENT |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| DIRECTOR NOMINEES | | | JORGE A. BERMUDEZ Director & Audit Committee Chairman Age: 72 Director Since: April 2011 Committees: • Audit • Executive • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Significant experience in the global financial services sector, bringing a deep understanding of credit risk and years of financial expertise, as well as risk management experience. • Industry knowledge from time as the head of risk for a major global financial institution, including involvement in the debt restructuring of various sovereigns. • Familiarity with the demands of a global, regulated business, with both senior management and board experience. | | | Professional Experience • Chief Risk Officer of Citigroup Inc., a global financial services company, 2007-2008, following on from various senior positions in Citigroup’s business in the United States and Latin America (beginning in 1975) • Chairman of the Smart Grid Center Advisory Board at Texas A&M University (since January 2020) Other Company Directorships / Trusteeships Public • AB Mutual Funds (since 2020) • Citibank N.A. (2005-2008) Private Roles • Bretton Woods Committee (since 2022) • American Institute of Architects (2015) • Texas A&M Foundation Board of Trustees (2014-2021) • Electric Reliability Council of Texas (2010 to 2016) • Federal Reserve Bank of Dallas (2009-2017) • Community Foundation of Brazos Valley (since 2008) Education • Master of Agriculture, Texas A&M University 1974 • B.S. in Agricultural Economics, Texas A&M University 1973 | | THÉRÈSE ESPERDY Director Age: 63 Director Since: March 2019 Committees: • Audit • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Extensive experience in global investment banking and financial markets, providing strategic and financial expertise critical to overseeing the Company’s strategies, and insights into the Company’s key customer segments. • Expertise gained from leading a division of a major international bank, as well as the capital markets business specifically, through challenging financial climates. • Leadership and service on other public company boards provides insight and perspective in varied areas, enhancing the Board’s ability to oversee the Company’s global operations and effectively manage risk. |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 31 |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| | Professional Experience • Global Chairman of the Financial Institutions Group of JPMorgan Chase & Co., a global financial services company (2014-2015) • Several senior management positions in banking and capital markets with JPMorgan Chase & Co. (1997-2014) and at Lehman Brothers (1989-1997) Other Company Directorships / Trusteeships Public • Imperial Brands PLC (Since 2016) • National Grid plc (2014-2023) | | | Private • N/A Education • MPPM, Yale University, 1989 • B.A., Chestnut Hill College, 1983 | | ROBERT FAUBER President, Chief Executive Officer and Director Age: 53 Director Since: October 2020 Committees: • Executive | Qualifications and Expertise Provided to Our Board • Extensive knowledge of the Company’s strategy and operations from his role as Chief Executive Officer and other senior leadership positions with Moody’s and MIS, including as President of MIS, Moody’s Chief Operating Officer, and as head of the Company’s strategy and corporate development functions. • Deep understanding of the day-to-day operations of the Company and the real-time challenges that arise, including with respect to risk, regulatory supervision, emerging technologies and workforce matters. • Experience in a variety of product and strategy spaces in the financial services industry, including investment banking, corporate strategy and alternative investments. Professional Experience • Chief Executive Officer of Moody’s since 2021 • Various senior leadership positions with Moody’s and MIS, including as President of MIS and Chief Operating Officer of MCO (2005-2019) • Various roles at Citibank and NationsBank (now Bank of America) Other Company Directorships / Trusteeships Public • N/A Private • Board of College Foundation for the University of Virginia (since 2023) |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| 32 | MOODY’S 2024 PROXY STATEMENT |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| | Education • MBA, Cornell University, 1999 • B.A. in Economics, University of Virginia, 1992 | | VINCENT A. FORLENZA Chairman of the Board Age: 70 Director Since: April 2018 Committees: • Compensation & Human Resources • Executive • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Decades-long experience in various roles, including as chief executive officer, of a public, global medical technology company. • Familiarity with leading a large global business in a regulated industry, including in the context of large M&A transactions, and with expertise in strategic planning, business development and new product development. Experienced in leading major corporate transformations in response to changes in technology and customer markets. • Corporate governance expertise derived from prior board experience. Professional Experience • Chief Executive Officer of Becton, Dickinson & Company, global medical technology company (“BD”) (Director, 2011-2021; Chairman of the Board, 2012-2021) • Chief Operating Officer of BD and various other capacities, including strategic planning, business development, research and development and general management of segments and overseas departments (1980-2011) Other Company Directorships / Trusteeships Public • Becton, Dickinson and Company (2011-2021) Private • MNHI (since 2022) • HealthQuest Capital Management Co. LLC (since 2021) • MaraBio Systems Inc. (since 2021) • Board of Trustees of Lehigh University (since 2020, 2011-2017) • Trustee of The Valley Health System (since 2003) • Acuitive Technologies (since 2023) Education • MBA, University of Pennsylvania 1980 • B.S. in Chemical Engineering, Lehigh University, 1975 | | KATHRYN M. HILL Director Age: 67 Director Since: October 2011 | Qualifications and Expertise Provided to Our Board • Over 30 years of experience in business management and leading engineering and operations organizations. • Extensive leadership expertise, and a strong background in information technology and business operations from roles in executive management and on boards of directors. |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 33 |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| Committees: • Compensation & Human Resources • Governance & Nominating | • Focus on computer networking, IT and engineering brings unique technology experience and insight to the Board. • Governance expertise from service on other public company boards. | | | Professional Experience • Executive Advisor, Senior Vice President, Development Strategy and Operations and other senior positions at Cisco Systems, Inc., a communications and information technology company (1997-2013) • Various engineering roles at Ascend Communications, Newbridge Networks and Hughes Network Systems Other Company Directorships / Trusteeships Public • Celanese Corporation (since 2015) • NetApp, Inc. (since 2013) Private • N/A Education • B.S. in Mathematics, Rochester Institute of Technology, 1978 | | LLOYD W. HOWELL, JR. Director and Chairman of the Compensation & Human Resources Committee Age: 57 Director Since: March 2021 Committees: • Compensation & Human Resources • Executive • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Extensive executive leadership experience and business management expertise that span over a number of industries and both domestic and international markets. • Strong background in information systems and cyber-related matters, and significant experience in businesses involved in U.S. federal contracting. • Broader public company board service, contributing to the valued governance insights. Professional Experience • Executive Director of the NFL Players Association, the labor union representing National Football League players (since July 2023) • Executive Vice President, Chief Financial Officer and Treasurer of Booz Allen Hamilton Holding Corporation, a business management consulting company (“BAH”) (2016-2022) • Various leadership positions with BAH (1988-2016) Other Company Directorships / Trusteeships Public • KLDiscovery (since February 2023) • GE Healthcare (since January 2023) • Integra Lifesciences Holdings Corp. (2013-2021) |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| 34 | MOODY’S 2024 PROXY STATEMENT |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| | Private • Senior advisory board member at TowerBrook Capital Partners (since 2021) • Trustee at University of Pennsylvania (“Penn”) (since 2018) • Member of the Board of Overseers at Penn School of Engineering and Applied Science (since 2015) Education • MBA, Harvard University, 1993 • B.S. in Electrical Engineering, University of Pennsylvania, 1988 | | JOSE M. MINAYA Director Age: 52 Director Since: October 2022 Committees: • Audit • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Significant experience in the field of asset management, bringing a unique perspective to the Board on an important customer segment for the Company. • Various leadership roles provide valuable senior management experience and financial expertise. • Familiarity with the management of a business that covers a broad range of sectors, previously setting strategy and developing investment capabilities across multiple asset classes including real estate, agriculture, timber, infrastructure, energy, private capital and alternative credit strategies. Professional Experience • Chief Executive Officer of Nuveen, a global investment manager (since 2020) • Chief Investment Officer and President of Nuveen (2017-2020) • Lead Global Real Assets Division, and various other roles at TIAA (2004 to 2017) Other Company Directorships / Trusteeships Public • N/A Private • Investment Company Institute • National Forest Foundation • Robert Toigo Foundation • Investment Committee of the Board of Regents of the Smithsonian Institute Education • MBA, Dartmouth College • B.S. in Finance, Manhattan College | | LESLIE F. SEIDMAN Director and Chairman of the Governance & Nominating Committee Age: 61 | Qualifications and Expertise Provided to Our Board • Financial and regulatory expertise from a career of over 30 years as a CPA, serving as the Chairman of the Financial Accounting Standards Board, executive at a major bank and auditor for a major accounting firm, with significant knowledge of global accounting and financial reporting matters in addition to regulatory and senior management experience. |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 35 |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| Director Since: December 2013 Committees: • Audit • Executive • Governance & Nominating | • Additional capital markets, regulatory and technology oversight experience, from serving with the Financial Industry Regulatory Authority. • Certifications in Cybersecurity oversight (2018) and ESG oversight (2021). • Thought leadership and strong governance expertise from service on other large public company boards. | | | Professional Experience • Member of the Financial Accounting Standards Board (2003-2013), an independent organization responsible for U.S. financial accounting and reporting standards, and Public Governor of the Financial Industry Regulatory Authority (2014-2019) | | | • Founder and managing member of a financial reporting consulting firm (1999-2003) • Member, FASB staff in various roles, including Assistant Director of Technical Activities (1996-1999) • Vice President, Accounting Policy and other roles at J.P. Morgan & Company, Inc. (now JPMorgan Chase) (1987-1996) and an auditor at Arthur Young & Co. (now EY) (1984-1987) Other Company Directorships / Trusteeships Public • Janus Henderson Group plc (since 2023) • General Electric (2018-2023) Private • Financial Industry Regulatory Authority (FINRA), Public Governor (2014-2019) Education • M.S. in Accounting, New York University, 1985 • B.A. in English, Colgate University, 1984 | | ZIG SERAFIN Director Age: 50 Director Since: July 2021 Committees: • Compensation & Human Resources • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Extensive digital and technology expertise and executive management experience in the technology sector. • Substantive expertise extending to enterprise collaboration services, artificial intelligence and user experience. • Experience serving on another public company’s board of directors. Professional Experience • Chief Executive Officer (since 2020), and President and Chief Operating Officer of Qualtrics, an experience management software provider (2016-2020) • Corporate Vice President of Microsoft (2009-2016) • General Manager at Tellme Networks, Inc. (2009-2012), following acquisition by Microsoft |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| 36 | MOODY’S 2024 PROXY STATEMENT |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| | Other Company Directorships / Trusteeships Public • Qualtrics International Inc. (2020-July 2023) Private • Qualtrics International Inc. (since July 2023) Education • B.S., Brigham Young University | | BRUCE VAN SAUN Director Age: 66 Director Since: March 2016 Committees: • Compensation & Human Resources • Governance & Nominating | Qualifications and Expertise Provided to Our Board • Extensive executive, management and board experience across a number of global banks and financial services companies. • Financial and strategic expertise, management experience and experience managing a business in a highly regulated industry both in the U.S. and in Europe. • History of senior experience through significant strategic transactions, including an initial public offering and a major strategic transformation of a bank. Professional Experience • Chairman and Chief Executive Officer of Citizens Financial Group, Inc., a large regional bank (since 2013) • Group Finance Director of The Royal Bank of Scotland Group plc (2009-2013) • Various senior positions with Bank of New York (later Bank of New York Mellon) (1998-2009), and various positions at Deutsche Bank, Wasserstein Perella Group and Kidder Peabody & Co. Other Company Directorships / Trusteeships Public • Citizens Financial Group, Inc. (since 2013) Private • The Clearing House Supervisory Board (Since 2013) • Board of the Federal Reserve Bank of Boston (2018-2022) • Lloyd’s of London Franchise Board (2012-2016) Education • MBA in Finance, University of North Carolina, 1983 • B.S. in Business Administration, Bucknell University, 1979 |
QUALIFICATIONS AND SKILLS OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | 37 |
COMPENSATION DISCUSSION AND ANALYSIS
| EXECUTIVE SUMMARY The Company reported revenue of $5,916 million, reflecting growth across both segments in 2023. Moody’s Analytics, Inc. (“Moody’s Analytics” or “MA”) revenue increased 10% from 2022, driven by continued strong demand for integrated risk solutions. Moody’s Investors Service, Inc. (“Moody’s Investors Service” or “MIS”) revenue increased 6% from 2022, reflecting growth after a significant decline in issuance volumes in the prior year. 2023 financial performance highlights for the Company include: • 2023 revenue of $5,916 million, up 8% from 2022; • 2023 GAAP earnings per share of $8.73, up 17% from 2022; 2023 adjusted earnings per share of $9.90, up 16% from 2022;* • 2023 operating income of $2,137 million, up 13% from 2022; 2023 adjusted operating income was $2,597 million, up 12% from 2022. Adjusted operating income excludes the impact of depreciation and amortization, restructuring charges/adjustments;* and • achievement of 90% of the Company’s three-year profitability performance target. These operational and financial performance achievements formed the basis for the Committee’s incentive compensation determinations. • For the NEOs, 2023 cash incentive award payouts ranged from 98% of target to 104% of target. This level of payout reflects Moody’s business performance and results outlined above. • The aggregate target value of the annual long-term incentive grants awarded to the NEO group in 2023 (excluding Caroline Sullivan and Richard Steele, who were not NEOs prior to 2023, and the CEO) increased in the aggregate by approximately 12% from the target value of the annual 2022 awards. This increase brings long-term incentive levels and total target compensation for the NEOs closer to market and recognizes the Company and each NEO’s prior year performance. • The performance share cycle ended December 31, 2023 resulted in a payout of 40.4% of target for MIS, 79.5% of target for MA and 57.9% of target for Moody’s Shared Services, Inc. (“MSS”), in each case of performance shares granted for the 2021-2023 performance cycle. | | * See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” in Moody’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for information on these adjusted measures, including a reconciliation of these adjusted financial measures to the most directly comparable generally accepted accounting principles (“GAAP”) financial measures. |
COMPENSATION DISCUSSION AND ANALYSIS
| 2023 and 2024 Compensation Program Changes • During 2023, the Company updated the strategic and operational metrics under its annual cash incentive program to incorporate achievement of its generative artificial intelligence (“GenAI”) initiatives, align a portion of this pay element with the Company’s commitment to evolve its business offering with GenAI, motivate and drive employee engagement, and capitalize on opportunities in this rapidly expanding area. • In 2024, the Company updated the elements used to calculate its cash incentive payments, substituting MA Sales for Compensation Purposes (as defined under “Elements of Moody’s Compensation Program”) with MA Annual Recurring Revenue (“ARR”), as the Compensation & Human Resources Committee determined that this was an appropriate metric based on the Company’s current goals and objectives. 2024 Compensation Highlights • A preview of NEO compensation for 2024 is provided this year on page 62. It summarizes the decisions made by the Compensation & Human Resources Committee in February 2024 with respect to the annual total direct compensation of each of the NEOs. • In addition, with respect to equity awards, in order to retain and further motivate the upper ranks of management to meet or exceed various challenging medium-term financial and operational targets, the Compensation & Human Resources Committee approved the items listed below for the 2024 compensation year. Successful execution of the Company’s performance goals is intended to support significant incremental earnings and intrinsic value for the Company’s stockholders. • The Presidents of MA and MIS, as well as other key executives, were each granted a 2024 Growth Accelerator Award for their leadership role in their respective businesses. The performance share unit component of these grants will reward only exceptional performance tied to achievement of challenging performance goals aligned with the Company’s medium-term financial targets. The time-based components have deferred vesting to enhance retention. • Certain senior executives of the Company (other than the CEO and the presidents of MA and MIS) received targeted 2024 Strategic Incentive Awards comprised of performance share units with special performance criteria. Please see “2024 Compensation Preview—2024 Growth and Strategic Incentive Awards” for additional information regarding the 2024 Growth Accelerator Awards and the 2024 Strategic Incentive Awards. |
EXECUTIVE COMPENSATION GOVERNANCE HIGHLIGHTS
| What We Do | | | | Balanced Mix of Equity Awards–NEOs generally are granted a balanced mix of annual long-term equity awards split 20% in stock options, 20% in restricted stock units (“RSUs”) and 60% in performance shares. | | | Long-Term Performance-Based Shares–The Company grants performance share awards that vest after three years based on the attainment of a range of performance goals which for the 2023-2025 performance shares were comprised of earnings per share, adjusted for certain non-recurring items as approved from time to time (“MCO EPS for Compensation Purposes”), Moody’s Investors Service’s ratings accuracy performance (“MIS Ratings Performance”), and MA Cumulative Revenue. |
EXECUTIVE COMPENSATION GOVERNANCE HIGHLIGHTS
| | Minimum One-Year Vesting Period for Equity Awards–The Company’s 2001 Key Employees’ Stock Incentive Plan, as amended (the “2001 Stock Incentive Plan”) imposes a minimum one-year vesting period for all equity awards granted under such plan, subject to certain limited exceptions. | | | Clawback Policy–The Company’s clawback policy goes beyond the minimum requirements of NYSE listing standards. The Company is obligated or, in some circumstances, has the right to require forfeiture of, or seek to recoup, all or any portion of the value of the proceeds from annual cash incentive awards, performance-based share awards and other equity awards in the case of (i) a material financial restatement (without regard to misconduct), (ii) a material restatement resulting from unlawful activity, fraud or other misconduct, or (iii) material financial harm to the Company resulting from unlawful activity, fraud or intentional or willful misconduct. | | | Stock Ownership Guidelines–The Company has robust stock ownership guidelines for its executives (including the NEOs) and non-management directors, as well as a requirement that executives who are subject to the Company’s guidelines retain a significant percentage (75%) of the net shares received through equity awards until satisfying their ownership goals. | | | Anti-Hedging and Anti-Pledging Policy–The Company prohibits executive officers, directors and their family members from (i) making “short sales” of Moody’s securities; (ii) engaging in short-term or speculative transactions or entering into any transaction (including purchasing or selling forward contracts, equity swaps, puts or calls) that are designed to offset any decrease in the market value of or is otherwise based on the price of Moody’s securities; (iii) holding Moody’s securities in margin accounts or buying Moody’s securities on margin; and (iv) pledging Moody’s securities as collateral for a loan. |
EXECUTIVE COMPENSATION GOVERNANCE HIGHLIGHTS
| What We Don’t Do | | | | No Dividend on Unvested Equity–Dividends do not accrue on unvested performance shares. In addition, dividend equivalents on RSUs are not paid unless and until the underlying RSU has vested. | | | No Executive Employment Agreements–The Company does not maintain employment agreements with its U.S. executives, including the NEOs. | | | No Single-Trigger Payments upon a Change in Control–The Company does not provide “single-trigger” cash payments that are prompted solely by a change in control, and unvested equity awards granted to the Company’s executive officers do not provide for accelerated vesting or settlement solely upon a change in control when the surviving company assumes the equity awards. | | | Limited Executive Perquisites– The Company generally does not provide perquisites or other personal benefits with an aggregate incremental cost to the Company of more than $10,000 to any of its NEOs, other than one benefit described in the Summary Compensation Table. | | | No Tax Gross-Ups on Perquisites or Change in Control Payments–The Company generally does not provide any tax gross-ups on perquisites or change in control payments to Moody’s executive officers, other than one tax gross-up described in the Summary Compensation Table. |
PHILOSOPHY OF THE EXECUTIVE COMPENSATION PROGRAM
| • | awarding the NEOs annual cash incentive compensation that is based on the Company’s performance against financial objectives specified at the beginning of the performance year and an evaluation of individual, qualitative and largely operational (non-financial) accomplishments and performance during that year; |
PHILOSOPHY OF THE EXECUTIVE COMPENSATION PROGRAM
| • | using Company performance as the primary factor in determining the annual cash incentive compensation payouts; |
PHILOSOPHY OF THE EXECUTIVE COMPENSATION PROGRAM
| • | establishing the targeted annual long-term equity award mix for NEOs generally comprised of 20% options, 20% RSUs and 60% performance shares, in order to tie realizable compensation directly to pre-established performance goals and future increases in stockholder value; |
PHILOSOPHY OF THE EXECUTIVE COMPENSATION PROGRAM
| • | providing long-term equity-based incentives in the form of (i) performance shares that are earned following the completion of a three-year performance period only if certain performance goals are met or exceeded, (ii) stock options that deliver value to the executives only if our share price increases from the date the awards are granted and (iii) RSUs that help to retain executives over a four-year vesting period and increase or decrease in value with share price appreciation or depreciation; and |
PHILOSOPHY OF THE EXECUTIVE COMPENSATION PROGRAM
| • | establishing a range of performance goals for performance shares, which for the 2023-2025 performance shares included MCO EPS for Compensation Purposes, MIS Ratings Performance and MA Cumulative Revenue for all performance share recipients. |
PEER AND MARKET REVIEW
PEER AND MARKET REVIEW In setting total target compensation levels for the NEOs, the Committee reviews the compensation practices and pay levels of executives with similar roles and responsibilities within the Company’s peer group. Meridian, the Committee’s independent compensation consultant, annually reviews the peer group. Based on the consultant’s review, management makes recommendations for changes to the composition of the peer group subject to Committee approval. As a result of the Committee’s review in 2022, Invesco was removed and Marsh & McLennan Companies was added to the group for use in benchmarking 2023 compensation levels. Invesco was removed due to its limited comparability as a traditional asset management business, as opposed to Marsh & McLennan Companies, which is better aligned for comparison in terms of market capitalization and its focus on risk and analytics. The balance of the peer companies was deemed to continue to be appropriate with regard to a comparison of the size, revenue and market capitalization of Moody’s. For 2023, the peer companies were:
ELEMENTS OF MOODY’S COMPENSATION PROGRAM
| Annual Cash Incentives | | | Form | At Risk Compensation in Cash | | Objectives and Basis | Annual cash incentives are intended to reward Company and individual performance and assist in motivation and retention of management. Award payouts are finalized at the Committee’s February meeting following the performance year in question; payouts primarily reflect: (i) the Company’s financial performance measured by (a) MIS operating income, (b) MA operating income and (c) Moody’s Analytics’ cumulative sales (including sales from entities acquired in acquisitions) (“MA Sales for Compensation Purposes”), with adjustments to exclude the effects of foreign exchange rate fluctuations, the cost of restructuring and other material non-recurring or unusual items applied to all three metrics and (ii) a qualitative assessment of certain strategic and operational metrics. Award payouts on occasion have been reduced or modestly increased based upon the outcome of an extensive review of each NEO’s performance against his or her annual objectives. Actual payouts are typically made at the beginning of March following the performance year in question. Awards customarily are made under the 2004 Moody’s Corporation Covered Employee Cash Incentive Plan, as amended (the “2004 Plan”), although the Committee retains discretion to pay cash incentives outside of the 2004 Plan when circumstances warrant. |
ELEMENTS OF MOODY’S COMPENSATION PROGRAM
| Long-Term Incentive Compensation | | | Form | At Risk Compensation in Stock Options, Performance Shares and RSUs | | Objectives and Basis | To help balance the need to motivate the NEOs to drive long-term stockholder value, retain the NEOs, manage the number of shares used to deliver equity awards, and allow the Company to reward the achievement of a broader set of long-term goals, the Committee delivers equity incentive compensation through a combination of stock options, performance shares and RSUs. Stock options have a strike price of no less than 100% of the average of the high and the low market price of the Common Stock on the date of grant and vest based on continued service over four years in annual 25% increments, which means that executives: (i) will realize value from their awards only if the market price of the | | | Company’s stock has appreciated above the options’ exercise price after the options have vested, and (ii) will be motivated to remain with the Company due to the multi-year vesting schedule. Stock options expire 10 years after the applicable grant date. Performance shares are earned following the completion of a three-year performance period only if pre-established performance goals are met or exceeded. For the 2023-2025 performance period, these performance goals are based on MCO EPS for Compensation Purposes (weighted at 50%), MIS Ratings Performance (weighted at 25%) and MA Cumulative Revenue (weighted at 25%). At the discretion of the Committee, the number of performance shares that vest and the corresponding number of shares actually issued to an employee as payout at the end of the three-year performance period may be less than the number determined by the performance goal formula. |
ELEMENTS OF MOODY’S COMPENSATION PROGRAM
| RSUs vest equally in four annual installments, provided there is continued employment through each such vesting date. Such awards motivate executives to remain with the Company due to the multi-year vesting schedule and align executive and stockholder interests. In 2023, equity award grants were made three business days after the filing of the Company’s annual report on Form 10-K. |
WEIGHTING OF ELEMENTS—FIXED VERSUS “AT RISK” COMPENSATION
WEIGHTING OF ELEMENTS—FIXED VERSUS “AT RISK” COMPENSATION The Committee, based on the recommendations of the CEO (excluding with respect to his own pay) and the Committee’s independent compensation consultant, Meridian, determined that the large majority of an NEO’s total direct compensation package (which includes salary, long-term incentive compensation and target annual cash incentive compensation) should be “at risk,” meaning the amounts that may ultimately be realized by an executive can vary based on performance. The “at risk” elements of an NEO’s direct compensation are delivered in the form of annual cash incentives and long-term equity awards consisting of stock options, RSUs and performance shares. A larger portion, 93%, of our CEO’s 2023 total direct compensation is “at risk,” as compared to only 7% that is fixed. For the other NEOs (excluding Mr. Steele and Ms Sullivan, as explained below), the Committee concluded that approximately 16% to 24% of target total direct compensation should be fixed and approximately 76% to 84% should be in the form of “at risk” compensation for 2023 as illustrated below. All percentages are based on salary and target cash incentive and equity award figures as of December 31, 2023.
WEIGHTING OF ELEMENTS—FIXED VERSUS “AT RISK” COMPENSATION
| | Total Target Direct Compensation (1) | | | | | Name | % that is Base Salary | % that is Target Annual Incentive | % that is Target Equity | % that is At Risk (2) | | Robert Fauber | 7% | 14% | 79% | 93% | | Mark Kaye | 17% | 22% | 61% | 83% | | Caroline Sullivan | 35% | 22% | 43% | 65% | | John J. Goggins | 24% | 22% | 54% | 76% | | Richard Steele | 40% | 37% | 22% | 60% | | Stephen Tulenko | 16% | 25% | 59% | 84% | | Michael West | 16% | 28% | 56% | 84% |
WEIGHTING OF ELEMENTS—FIXED VERSUS “AT RISK” COMPENSATION
| (1) Total Target Direct Compensation is the sum of the base salary, target annual cash incentive and grant date fair value of equity awards. Percentages for the NEOs at year-end 2023 are based on salary and target annual cash incentive figures as of December 31, 2023, and for Mr. Goggins and Mr. Kaye are based on annualized base salary and target annual cash incentive figures as of their respective departure dates in September 2023. |
WEIGHTING OF ELEMENTS—FIXED VERSUS “AT RISK” COMPENSATION
| (2) Includes annual cash incentive target award amount and grant date fair value of equity awards. |
2023 Annual Cash Incentives
2023 Annual Cash Incentives Cash incentives for 2023 were paid out to NEOs at 98% to 104% of target based upon financial, strategic and operational Company performance and individual performance.
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | Financial Performance Goals. Two thirds of the cash incentive payout for each NEO is based on the Company’s financial performance against pre-established Company financial goals. For 2023, the portion of the potential cash incentive payout associated with the Company’s financial performance for all NEOs was based on MIS Operating Income, MA Operating Income and MA Sales for Compensation Purposes.** |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
For 2023, the financial performance goals were based on the Company’s annual budget plan, which incorporates stretch objectives. The Committee sets target performance goals that are intended to motivate performance by being aspirational and challenging, but achievable. When the Committee set the NEOs’ 2023 target performance goals, there was an expectation that substantially exceeding the targets would require extraordinary efforts, both individually and collectively. Therefore, in order to receive the maximum cash incentive payments, earnings performance would generally have to exceed targets by more than 20%, reflecting extraordinary performance.
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| ** While the Company reports its financial results in accordance with GAAP, financial performance targets and results under the Company’s incentive plans are based on adjusted financial measures. Adjusted financial measures are permitted by those plans and are approved by the Compensation & Human Resources Committee. Management reviews adjustments from GAAP measures to adjusted measures for compensation purposes with the Compensation & Human Resources Committee to assure the Committee that performance is evaluated in a manner that takes into account the way the goals were set and maintains executive accountability for performance. These metrics and the related performance targets are relevant only to Moody’s executive compensation program and should not be used or applied in other contexts. |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| MOODY’S 2024 PROXY STATEMENT | 53 |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | Strategic & Operational (S&O) Measures. This element represents one-third of the cash incentive payout for each NEO and is a qualitative assessment of strategic and operational metrics approved by the Committee at the beginning of the performance period that are tied to key non-financial business objectives that contribute to the Company’s business success. To perform the assessment and measure progress, the Company has defined firm-wide S&O priorities. Within each priority, specific Objectives and Key Results (OKRs) have been established and assigned owners to increase accountability. This OKR framework represents an evolution of the S&O metrics, as management thoughtfully determines the business outcomes it wants to achieve and carefully reviews key metrics to measure those outcomes. The S&O metric focus areas in 2023 were: |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | sharpen focus on customers – by evaluating any improvement in the Company’s Net Promoter Score and the Company’s ARR growth; |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | invest with intent to grow and scale – by measuring the success of acquisitions and net sales growth from new products; |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | collaborate, modernize and innovate – by advancing its cloud-based risk operating system architecture with effective platform engineering and data-interoperability, developing a multi-cloud strategy to position the company for growth and innovation and deploying new product solutions that integrate content sets; |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | developing the Company’s people, culture and sustainability – by fostering a culture of diversity, equity & inclusion, employee retention and the success of its Purpose First approach to hybrid work; |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | prudently managing risk – by maintaining key risk indicators within established risk levels, increasing the number of products covered by SOC reports, and further reducing impact hours to the business relating to systems availability; and |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | driving GenAI initiatives – by completing employee AI training and deploying certain impactful GenAI enabled applications that deliver customer and/or business value. |
Process for Determining Annual Cash Incentives – Metrics, Weightings and Adjustments
| • | Weighting of Metrics. For 2023, the financial performance measure was weighted 67% and the strategic and operational performance measures were weighted 33% for each of the NEOs. Performance in-line with the Company’s budget for MIS Operating Income, MA Operating Income and MA Sales for Compensation Purposes would result in 100% funding of the target cash incentive pool allocated to the financial metric. |
NEO Performance Metrics Weighting
NEO Performance Metrics Weighting
NEO Performance Metrics Weighting
| • | Adjustment for Individual Performance. The cash incentive amount approved for each NEO may be reduced or modestly increased from the initial determination based upon an |
NEO Performance Metrics Weighting
| 54 | MOODY’S 2024 PROXY STATEMENT |
NEO Performance Metrics Weighting
| extensive assessment of that individual’s performance against qualitative, largely operational objectives established for the year. These are described below under “Individual Performance.” |
NEO Performance Metrics Weighting
| • | Maximum and Minimum Funding. Consistent with prior years, the maximum incentive payout opportunity was 200% of target for 2023. This incorporates maximum incentive funding opportunity of 200% for each of the financial performance metric and the Strategic and Operational metrics, as described below. Subject to the Committee’s judgment, performance below an established threshold would result in no funding. The Committee continues to be rigorous in its oversight of incentive metrics, goals and the relationship between performance and pay. |
NEO Performance Metrics Weighting
| • | Peer Group Comparison. |
NEO Performance Metrics Weighting
| • | With assistance from the Committee’s compensation consultant, Meridian, the Committee conducted a review in 2023 of the sensitivity of the payout curves utilized for the cash incentive plan compared to its peer group. |
NEO Performance Metrics Weighting
| • | This 2023 review confirmed that the relationship between Company performance and cash incentive payouts is more demanding than typical market practice. For the upside incentive opportunity above target, the Company’s payout at maximum performance levels generally requires higher performance improvement than its peers and the general industry require. |
NEO Performance Metrics Weighting
| • | For the downside opportunity (“threshold” payout) below target under Moody’s plan, threshold performance generates a lower minimum payout than is typical for the Company’s peers and the general industry. |
NEO Performance Metrics Weighting
Following the conclusion of the performance period, the CEO first provides his assessment regarding the Company’s achievement within each focus area for consideration by the Committee. The Committee then evaluates the CEO’s assessment against the year’s goals, considering: (i) the specific indicators for each metric; (ii) each indicator’s relative importance and degree of difficulty; (iii) whether final performance for each indicator was directionally consistent with expectations, or above/below expectations (noting that measurement may be more or less precise, depending on the nature of the metric); and (iv) whether there were any mitigating factors (positive or negative) arising from changes in business circumstance during the year.
NEO Performance Metrics Weighting
| MOODY’S 2024 PROXY STATEMENT | 55 |
NEO Performance Metrics Weighting
Annual Incentive Financial Metrics and Plan Performance. The 2023 financial performance goal for threshold, target and maximum funding levels, as well as actual 2023 performance, are set forth below. While the Committee’s decisions are informed by these financial results, the Committee retains the ability to make adjustments to the final evaluation of performance and set funding levels accordingly.
Individual Performance Assessments
Individual Performance Assessments The Committee retains the discretion to adjust individual award payouts under the 2004 Plan based upon its subjective evaluation of the NEO’s performance against operational objectives established for the year. For 2023, the individual performance goals evaluated when determining each NEO’s actual annual incentive award payouts are described below. Following their departures from the Company in September, per the terms of his agreed retirement package, Mr. Goggins received a prorated bonus based on the target set by the Compensation & Human Resources Committee for 2023, whereas Mr. Kaye did not receive annual incentive award payouts or any similar bonus payments.
2023 Annual Cash Incentive Program Payouts
2023 Annual Cash Incentive Program Payouts The Company’s financial performance in 2023, together with any individual adjustments, each as detailed above, resulted in funding and the resulting annual cash incentive awards for the NEOs under the 2004 Plan as shown in the table below.
2023 Annual Cash Incentive Program Payouts
| Name | 2023 Target Annual Cash Incentive (1) | 2023 Actual Cash Incentive Paid (2) | Percentage of Target Paid | | Robert Fauber | $2,000,000 | $2,000,000 | 100% | | Caroline Sullivan | 298,862 | 310,845 | 104% | | John J. Goggins (3) | 500,000 | 339,726 | 67.9% | | Richard Steele | 500,000 | 500,000 | 100% | | Stephen Tulenko (4) | 1,000,000 | 976,000 | 98% | | Michael West (4) | 1,100,000 | 1,114,300 | 101% |
2023 Annual Cash Incentive Program Payouts
| (1) The maximum annual cash incentive is 200% of the target amount for each of the NEOs. |
2023 Annual Cash Incentive Program Payouts
| (2) Due to Mr. Kaye’s departure in September 2023, he did not receive any cash incentive for 2023, and is not included in the table. |
2023 Annual Cash Incentive Program Payouts
| (3) Mr. Goggins received a prorated annual cash bonus in connection with his retirement, based on his full year target and days of employment in 2023. The amount reflected as paid is equal to 100% of the target for the days worked in 2023. |
2023 Annual Cash Incentive Program Payouts
| (4) Mr. Tulenko’s target cash incentive opportunity under the 2004 Plan increased from $750,000 to $1,000,000 for 2023. Mr. West’s target cash incentive opportunity under the 2004 Plan increased from $800,000 to $1,100,000 for 2023. Similar to their base salary increases, the annual cash incentive program targets increased in 2023 for Messrs. Tulenko and West in order to bring their overall target cash compensation to a competitive level. |
2023 Long-Term Equity Incentive Compensation
2023 Long-Term Equity Incentive Compensation
2023 Long-Term Equity Incentive (“LTI”) Mix
2023 Long-Term Equity Incentive (“LTI”) Mix The Committee evaluates the long-term equity incentive mix on an annual basis to determine what arrangement best aligns the NEOs’ compensation with the interests of Moody’s stockholders and motivates the NEOs to focus on the Company’s financial and operational performance. For 2023, the Committee retained the same mix of performance shares, RSUs and stock options that it approved for 2022. Performance Shares (60% of Total Annual LTI). The performance shares granted in February 2023 will be earned following the completion of a three-year performance period if certain cumulative performance goals are met or exceeded. At the discretion of the Committee, the number of performance shares that vest and the corresponding number of shares actually issued to an employee following the end of the three-year performance period may be less than the number determined by the performance goal formula. For the 2023-2025 performance period, MCO EPS for Compensation Purposes, MIS Ratings Performance and MA Cumulative Revenue were again used as the performance metrics (no changes from the metrics used for the 2022-2024 awards). These metrics will be adjusted to exclude the net impact of restructuring charges and other material non-recurring or unusual items. MA Cumulative Revenue was retained as it aligns with the strategic growth initiatives for the MA business, while MCO EPS for Compensation Purposes and MIS Ratings Performance incent management to consider the long- and medium-term impact of business decisions. The three metrics provide a balance of financial and operational factors for business success and incentivize all NEOs to contribute to the Company’s overall profitability.
2023 Long-Term Equity Incentive (“LTI”) Mix
| MOODY’S 2024 PROXY STATEMENT | 59 |
2023 PERFORMANCE MEASURE WEIGHTINGS
2023 PERFORMANCE MEASURE WEIGHTINGS RSUs (20% of Total Annual LTI). The RSUs granted in February 2023 vest equally in four annual installments beginning on March 1, 2024, generally subject to continued service through each such vesting date. In continuing to grant RSUs in 2023, the Committee considered the need to manage the number of shares used to deliver equity awards, to closely align a portion of executive compensation directly to stock price performance, and to help provide retention incentives due to the multi-year vesting schedule. Stock Options (20% of Total Annual LTI). Stock options vest over four years in annual 25% increments, generally subject to continued service through each such vesting date, which means (i) executives will realize value from their awards only if the market price of the Company’s stock has appreciated above the options’ exercise price after the options have vested and (ii) NEOs are motivated to remain with the Company due to the multi-year vesting schedule. The Committee believes that because value is realized only if the Company’s stock price rises, stock options are performance-based compensation. Stock options expire 10 years after the grant date. 2023 LTI Grant Levels. In determining the grant date value of the total mix of equity awards granted to the NEOs, in addition to the items noted in the following paragraph, the Committee considered the share utilization practices of the Company’s peer group and endeavored to balance aligning the interests of NEOs with the interests of stockholders while also motivating the NEOs to improve the Company’s current market position. As a result, the Committee recommended (after considering a recommendation from the CEO, other than with respect to his own equity grant), and the Board approved, equity grants comprised of stock options, RSUs and performance shares, with the average individual NEO grant date value increasing approximately 14% from the individual NEO grants in 2022 (excluding grants to Mr. Steele and Ms Sullivan, who were not NEOs prior to 2023). The NEOs’ individual awards are reported in the Grants of Plan-Based Awards Table for 2023 on page 70. Because the annual equity award grants for all NEOs were made in February, each individual award determination (excluding grants to Mr. Steele and Ms Sullivan, who were not NEOs prior to 2023) considered (i) the Company’s 2022 performance, (ii) the NEO’s role in that performance, including the achievement of individual goals described above in “2023 Annual Cash Incentive Program Performance Results—Individual Performance,” and (iii) the Company’s retention objectives with respect to that NEO. The awards are intended to align the interests of NEOs with those of the Company’s stockholders. Annual awards are determined by an examination of the present period as well as by considering expectations for the future.
2021-2023 Performance Share Performance
2021-2023 Performance Share Performance The performance period for performance shares granted in 2021 ended on December 31, 2023, with the NEOs receiving between 40.4% and 79.4% of their performance share target amounts based
2021-2023 Performance Share Performance
| 60 | MOODY’S 2024 PROXY STATEMENT |
2021-2023 Performance Share Performance
on the Company’s results with respect to the performance metrics described below. The weighting that was assigned to each of the three performance goals at the time the performance shares were originally granted varied depending on each NEO’s role and responsibilities. The threshold, target and maximum performance goals, as well as actual results, for MCO EPS for Compensation Purposes and MA Cumulative Revenue performance criteria are set forth in the table below. MIS Ratings Performance is evaluated based on internally developed metrics that are proprietary and competitively sensitive, and therefore are not disclosed in the table below. The threshold, target and maximum MIS Ratings Performance goals were set to reflect a degree of difficulty that was comparable to the standard applied in setting the performance goals for the other criteria, with target performance levels being difficult but obtainable, based on historical results under this metric.
2021-2023 Performance Share Metrics and Performance(1)
2021-2023 Performance Share Metrics and Performance(1)
2021-2023 Performance Share Metrics and Performance(1)
| (1) Actual plan performance includes any increase in sales from businesses acquired after the threshold, target and maximum goals were established. As a result, while the actual plan performance exceeds the target, the funding is under 100% due to an adjustment to reflect expected sales from acquisitions, as permitted under the plan. |
2021-2023 Performance Share Payouts
2021-2023 Performance Share Payouts As a result of the level of performance that was achieved, the number of shares that vested in March 2024 (subject to continued service through the vesting date) for each NEO relative to the target number of shares granted is reflected in the table below.
2021-2023 Performance Share Payouts
| Name | 2021-2023 Performance Share Award at Target (# of shares) | 2021-2023 Performance Share Award to Vest (# of shares) | | Robert Fauber | 13,871 | 8,031 | | Mark Kaye | 5,635(1) | 0 | | Caroline Sullivan | 650 | 376 | | John J. Goggins | 2,627(2) | 1,358(2) | | Richard Steele | 533 | 309 | | Stephen Tulenko | 2,926 | 2,323 | | Michael West | 2,926 | 1,182 |
2021-2023 Performance Share Payouts
| (1) Mr. Kaye forfeited his 2021-2023 Performance Share Award at the time of his resignation from the Company in September 2023. |
2021-2023 Performance Share Payouts
| (2) Mr. Goggins’ prorated target, reflecting the number of days he worked during the three-year performance period of 2021-2023, was 2,346. The 1,358 performance shares to vest was also a prorated figure. |
2021-2023 Performance Share Payouts
Each NEO’s outstanding performance share awards are reported in the Outstanding Equity Awards at Fiscal-Year End Table For 2023 on page 72.
2021-2023 Performance Share Payouts
| MOODY’S 2024 PROXY STATEMENT | 61 |
CHIEF EXECUTIVE OFFICER COMPENSATION
CHIEF EXECUTIVE OFFICER COMPENSATION The Committee begins its analysis of total direct compensation for the CEO by analyzing the compensation of executive officers at companies included in its peer group, as well as in the broader financial services market. It also reviews the CEO’s pay as compared to the other NEOs. On February 13, 2023, during the Committee’s annual review of all NEO compensation, the Committee set Mr. Fauber’s compensation for 2023 as President and CEO under the Company’s existing executive compensation program. Specifically, the Committee approved a base salary for 2023 of $1,000,000 and a target annual cash incentive opportunity of $2,000,000, each of which is unchanged from the levels in effect for 2022. In terms of his equity grants, 20% of Mr. Fauber’s 2023 equity award was comprised of stock options, 20% was comprised of RSUs and 60% was comprised of performance shares. Mr. Fauber’s target “at risk” compensation was 93%. This percentage is in line with the Committee’s objective of continuing to align the vast majority of the CEO’s compensation with long-term Company performance. In 2023, as it does every year, the Committee reviewed the relationship between realized/realizable CEO compensation and Company performance across a range of financial and total return metrics relative to peers. The Committee concluded that the structure of the Company’s incentive plans was appropriate and was helping to deliver pay-for-performance alignment. In light of the individual achievements listed beginning on page 56, the description of the Company’s performance on page 43 and the value of Mr. Fauber’s pension plans, the Committee believes Mr. Fauber’s total direct compensation package to be appropriate. Pension Value. The change in Mr. Fauber’s pension value in 2023 is higher than in the prior year primarily because of his additional accruals under the Retirement Account and PBEP, being one year closer to retirement and lower discount rates.
2024 COMPENSATION PREVIEW
| Name | Base Salary(1) | Target Annual Cash Incentive(1)(2) | Annual Long-Term Incentive Award | Total Target 2024 Compensation(3) | | Robert Fauber | $1,100,000 | $2,200,000 | $12,700,000 | $16,000,000 | | Caroline Sullivan (2) | 460,000 | 315,000 | 450,000 | 1,225,000 | | Richard Steele | 540,000 | 500,000 | 1,200,000 | 2,240,000 | | Stephen Tulenko | 750,000 | 1,250,000 | 3,500,000 | 5,500,000 | | Michael West | 750,000 | 1,250,000 | 3,500,000 | 5,500,000 |
2024 COMPENSATION PREVIEW
| (1) The base salary and annual cash incentive program targets increased in 2024 for Messrs. Fauber, Tulenko and West in order to bring their overall target cash compensation to a competitive level. Base salary increases are effective on July 1, 2024. |
2024 COMPENSATION PREVIEW
| (2) The maximum annual cash incentive is 200% of the target amount for each of the NEOs. These awards do not include a cash payment made to Ms Sullivan in connection with her role as Interim Chief Financial Officer in 2024. |
2024 COMPENSATION PREVIEW
| (3) Excludes 2024 growth and strategic incentive awards, which are described below. |
2024 Growth and Strategic Incentive Awards
2024 Growth and Strategic Incentive Awards In order to retain and further motivate the upper ranks of management to meet or exceed various challenging medium-term growth targets, the Compensation & Human Resources Committee approved
2024 Growth and Strategic Incentive Awards
| 62 | MOODY’S 2024 PROXY STATEMENT |
2024 Growth and Strategic Incentive Awards
the items listed below for the 2024 compensation year. Successful execution of the Company’s performance goals is intended to support significant incremental earnings and intrinsic value for the Company’s stockholders.
2024 Growth and Strategic Incentive Awards
| • | 2024 Growth Accelerator Awards. The Presidents of MA and MIS each received a 2024 Growth Accelerator Award for their leadership role of their respective businesses. The performance share unit component of these special grants will reward only exceptional performance tied to the achievement of challenging performance goals aligned with the Company’s medium-term financial targets, and the time-based components have deferred vesting to enhance retention. Specifically: |
2024 Growth and Strategic Incentive Awards
| • | As part of the award, the MA President and certain key executives were granted MA Growth Accelerator Awards composed of 67% performance share units and 33% stock options. The performance share units will be earned at between zero and 200% of target based on achievement of a combination of (i) ARR reflecting double-digit compound annual growth rate (“CAGR”) in ARR and (ii) Adjusted Operating Margin performance goals, each over a four-year performance period ending December 31, 2027. With stretched target setting, the awards will only pay out at target or above when the MA business meets or exceeds medium-term financial targets. |
2024 Growth and Strategic Incentive Awards
| • | As part of the award, the MIS President and certain key MIS executives also were granted MIS Growth Accelerator Awards composed of 67% performance share units and 33% stock options. The performance share units will be earned at between zero and 130% of target based on achievement of MIS Adjusted Operating Margin in the low sixties percent range, consistent with medium-term financial targets, over a four-year performance period ending December 31, 2027. |
2024 Growth and Strategic Incentive Awards
| • | In each case, 50% of the stock options vest two years from the date of grant and 50% vest four years from the date of grant. |
2024 Growth and Strategic Incentive Awards
| • | 2024 Strategic Incentive Awards. Based on information regarding competitive market pay, expectations around realized and realizable compensation, and key technology initiatives, the Compensation & Human Resources Committee approved special performance share retention grants in February 2024 for certain key personnel, including executives other than the CEO and the MIS and MA Presidents. To drive achievement of the key financial and strategic performance objectives, these awards are 100% performance-based, measured by the Company’s achievement of (i) its medium-term Organic Recurring Revenue goal (combined MIS and MA) and (ii) a set of specific goals in executing on the Company’s GenAI initiatives and platform engineering, each over a 24-month period ending on December 31, 2025. |
2024 Growth and Strategic Incentive Awards
For each NEO, the grant date fair values of these 2024 awards are reflected in the table below. These grants will be reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table in the Company’s 2025 Proxy Statement.
2024 Growth and Strategic Incentive Awards
| Name | MA Growth Accelerator Award | MIS Growth Accelerator Award | 2024 Strategic Incentive Awards | | Caroline Sullivan | — | — | $113,000 | | Richard Steele | — | — | $113,000 | | Stephen Tulenko | $10,000,000 | — | — | | Michael West | — | $5,000,000 | — |
2024 Growth and Strategic Incentive Awards
| MOODY’S 2024 PROXY STATEMENT | 63 |
Anti-Hedging and Anti-Pledging Policy; Short Sales and Other Speculative Trades
| • | engaging in short-term or speculative transactions or entering into any transaction (including purchasing or selling forward contracts, equity swaps, puts or calls) that is designed to offset any decrease in the market value of or is otherwise based on the price of Moody’s securities; |
Employment Agreements
Employment Agreements Moody’s does not enter into employment agreements with its U.S. executives, including the NEOs. All of the Company’s U.S. executives are “at will” employees. For additional information, see “Potential Payments Upon Termination or Change in Control” on page 77.
Severance Policy
Severance Policy Moody’s provides severance benefits to NEOs under the Moody’s Career Transition Plan, as amended (the “Moody’s Career Transition Plan” or “CTP”) and the Moody’s Corporation Change in Control Severance Plan, as amended (the “Moody’s Corporation Change in Control Severance Plan” or the “CICP”), each of which is described below. The NEOs are not entitled to receive any severance benefits other than those provided under the CTP and CICP.
Severance Policy
| MOODY’S 2024 PROXY STATEMENT | 65 |
Career Transition Plan
Having such a plan in place serves the best long-term interest of stockholders by helping the Company attract and retain superior talent and encouraging strong performance and compliance with Company policies, as no severance is payable under the CTP where an individual is terminated by the Company for Cause, including termination of employees whose performance falls more significantly below expectations or who have engaged in conduct that is detrimental to the Company and its stockholders. CTP benefits are based on position as well as tenure and the potential benefits for NEOs under the CTP upon termination of employment without Cause are more fully described beginning on page 78.
Change in Control Severance Plan
Change in Control Severance Plan The purpose of the CICP is to offer its participants, which include the Company’s executive officers and other key employees selected by the Committee, protection in the event of a termination of employment in connection with a Change in Control (as defined in the CICP). The CICP has been adopted to enhance the alignment of the interests of management and stockholders by allowing executive officers to remain objective when evaluating the prospect of a sale that could potentially result in job elimination. Under the CICP, participants are entitled to severance benefits only if a participant’s employment is terminated within 90 days prior to or two years following a Change in Control of the Company by the Company or its successor without Cause, or by the participant for Good Reason (both terms as defined in the CICP) (i.e., a “double-trigger”). For the CEO, severance benefits under the CICP consist of a lump-sum cash payment equal to three times the sum of his base salary and target annual incentive for the year of termination, plus three years of continued coverage under the Company’s medical and dental insurance plans. For all other participants in the CICP, the severance benefits consist of a lump-sum cash payment equal to two times the sum of their base salaries and target annual incentives for the year of termination, plus two years of continued medical and dental coverage. Executive officers are not entitled to receive (either under the CICP or any other arrangement) a “golden parachute” excise tax gross-up with respect to change in control benefits under the CICP or any other Company plan, agreement or arrangement.
Change in Control Severance Plan
| 66 | MOODY’S 2024 PROXY STATEMENT |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table sets forth, for the years ended December 31, 2023, 2022 and 2021, as applicable, the total compensation of the Company’s Named Executive Officers. The Named Executive Officers include (i) Moody’s Principal Executive Officer and individuals who served as its Principal Financial Officer (including any person who served in such roles during the most recent fiscal year), (ii) the three most highly compensated executive officers of the Company (other than the Principal Executive Officer and Principal Financial Officer) who were serving as executive officers at the end of the last completed fiscal year, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to the preceding provision but for the fact that the individual was not serving as an executive officer at the end of the last completed fiscal year. Following the departure of Mr. Goggins as General Counsel and Mr. Kaye as Chief Financial Officer on September 4, 2023 and 5, 2023, respectively, Mr. Steele was named as General Counsel and Ms Sullivan was named as Interim Chief Financial Officer, in addition to her roles as Chief Accounting Officer and Controller. For this reason, compensation disclosure for all four individuals is included below.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (5) | All Other Compensation ($) (6) | Total ($) | | Robert Fauber | 2023 | $1,000,000 | | $8,799,948 | $2,200,036 | $2,000,000 | $366,643 | $21,032 | $14,387,659 | | President and Chief Executive Officer | 2022 2021 | 975,000 900,000 | — — | 7,200,141 5,120,156 | 1,799,969 1,279,993 | 1,628,000 2,210,000 | — 225,904 | 16,663 14,104 | 11,619,773 9,750,157 | | Mark Kaye | 2023 | 525,609 | | 2,179,831 | 545,015 | 0 | — | 98,573 | 3,349,028 | | Executive Vice President and Chief Financial Officer | 2022 2021 | 709,872 575,000 | — — | 2,079,816 2,079,899 | 519,963 519,991 | 814,000 910,000 | 0 0 | 117,840 95,858 | 4,241,491 4,180,748 | | Caroline Sullivan | 2023 | 455,000 | | 455,930 | 114,014 | 310,845 | — | 42,963 | 1,378,752 | | Interim Chief Financial Officer, Chief Accounting Officer and Controller | | | | | | | | | | | John J. Goggins (7) | 2023 | 373,013 | | 1,453,963 | 575,398 | 339,726 | 55,003 | 12,684 | 2,809,787 | | Executive Vice President and General Counsel | 2022 2021 | 550,000 550,000 | — — | 969,821 969,771 | 242,436 242,370 | 375,000 677,500 | — 0 | 11,976 11,764 | 2,149,233 2,451,405 | | Richard Steele | 2023 | 462,470 | | 239,808 | 60,021 | 500,000 | 112,256 | 34,608 | 1,409,163 | | Senior Vice President and General Counsel | | | | | | | | | | | Stephen Tulenko | 2023 | 625,000 | | 1,879,775 | 470,037 | 976,000 | 357,432 | 12,962 | 4,321,206 | | President of Moody’s Analytics | 2022 2021 | 581,250 525,000 | — — | 1,599,959 1,079,953 | 399,965 270,004 | 840,000 780,000 | — 79,613 | 26,709 11,626 | 3,447,883 2,746,196 | | Michael West | 2023 | 625,000 | | 1,800,036 | 449,967 | 1,114,300 | — | 67,998 | 4,057,301 | | President of Moody’s Investors Service | 2022 2021 | 581,250 525,000 | — — | 1,439,898 1,079,953 | 359,994 270,004 | 434,400 892,100 | — — | 92,632 78,860 | 2,908,173 2,845,916 |
SUMMARY COMPENSATION TABLE
| (1) The amounts reported in the “Bonus” column represent discretionary bonuses, if any, paid to the NEOs. Payments under the Company’s annual cash incentive program are reported in the “Non-Equity Incentive Plan Compensation” column. |
SUMMARY COMPENSATION TABLE
| (2) The amounts reported in the “Stock Awards” column represent the full grant date fair market value of performance share and RSU grants. The full grant date fair value is based on the fair market value of the stock underlying the award, which is defined as the arithmetic mean of the high and low prices of the Common Stock on the date of grant. All grants of performance shares and RSUs were made under the 2001 Stock Incentive Plan. |
SUMMARY COMPENSATION TABLE
The 2021 and 2022 performance share awards are earned subject to performance measures based on EPS for compensation purposes, MA’s cumulative revenue and MIS’s ratings quality performance. Because the achievement or non-achievement of these performance metrics depends upon the occurrence of future events, the actual final payouts of these performance share awards are not known at this time. As such, the total grant
SUMMARY COMPENSATION TABLE
| MOODY’S 2024 PROXY STATEMENT | 67 |
SUMMARY COMPENSATION TABLE
date fair value of the performance shares is calculated using the target number of shares underlying these awards and the per share grant date prices on the date of grant ($295.33 on February 21, 2023 and $318.79 on September 29, 2023). Assuming that the maximum performance for the performance share awards were attained, such awards would settle at 200% of target and the value of the 2023 performance share awards for Messrs. Fauber, Kaye, Goggins, Steele, Tulenko and West and Ms Sullivan would be $13,200,070, $3,269,894, $1,454,205, $359,712, $2,819,811, $2,699,907 and $683,906, respectively. No cash dividends will be paid on such performance shares when the underlying shares vest. Cash dividend equivalents will be paid on restricted shares and RSUs at vest. For additional information on the 2023 performance share and RSU awards, see “Grants of Plan-Based Awards Table for 2024” on page 70 and the related footnotes.
SUMMARY COMPENSATION TABLE
| (3) The amounts reported in the “Option Awards” column represent the full grant date fair value of non-qualified options granted in each year indicated. The aggregate grant date fair value of the stock options granted to our NEOs in 2023 is based on the Black-Scholes value of a stock option on the grant date, as determined in accordance with applicable accounting guidance for equity-based awards. For additional information on the valuation of Moody’s option awards, see Note 16 to the financial statements as contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 14, 2024. The actual amounts realized, if any, will depend on the extent to which the stock price exceeds the option exercise price at the time the option is exercised. |
SUMMARY COMPENSATION TABLE
| (4) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent the amounts earned by the Named Executive Officers for the applicable year under the Company’s annual cash incentive program. The amounts for 2024, 2023 and 2022 were actually paid on March 1, 2024, March 3, 2023 and March 4, 2022, respectively. Mr. Goggins’ 2023 annual cash incentive was paid on September 5, 2023, following his retirement. For a description of this program, see “2023 Annual Cash Incentives” in the CD&A beginning on page 53. |
SUMMARY COMPENSATION TABLE
| (5) For 2023, the amounts reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column represent the positive aggregate change during the applicable year in the actuarial present value (if any) of the Named Executive Officers’ accumulated benefits under the Company’s Retirement Account, PBEP and SEBP. For Mr. Goggins, the only NEO covered by the SEBP in 2023, the change in the actuarial present value year-over-year is largely driven by the impact of the following variables on the SEBP component: one less year of payments since the benefit was frozen as of December 31, 2018 and the NEO being one year older, as well as annual assumption changes (such as the discount rate and the lump-sum interest rate). The change in pension value for 2023 decreased for Mr. Goggins under the SEBP primarily due to a higher lump sum discount rate at year-end 2023, which decreases the lump-sum payable from the SEBP. For all the other NEOs, who are not covered by the SEBP, the primary factors impacting the year-over-year change in pension value are pensionable pay changes from 2022 to 2023 impacting their benefit accruals during 2023, and annual assumption changes similar to those described for the SEBP. The discount rates for the Retirement Account, PBEP and SEBP that are the basis for the proxy present value calculations have decreased slightly during 2023 to 4.75% / 4.60% / 4.70%. |
SUMMARY COMPENSATION TABLE
| (6) The 2023 amounts reported in the “All Other Compensation” column comprise the following compensation items: |
SUMMARY COMPENSATION TABLE
| Name | Year | Perquisites and Other Personal Benefits (a) | Vested and Unvested Company Contributions to Defined Contribution Plans (b) | Dividends or Other Earnings Paid on Stock Awards | Total | | Robert Fauber | 2023 | $— | $9,900 | $11,132 | $21,032 | | Mark Kaye | 2023 | — | 93,504 | 5,069 | 98,573 | | Caroline Sullivan | 2023 | — | 41,982 | 982 | 42,963 | | John J. Goggins | 2023 | — | 9,900 | 2,784 | 12,684 | | Richard Steele | 2023 | 24,000 | 9,900 | 708 | 34,608 | | Stephen Tulenko | 2023 | — | 9,900 | 3,062 | 12,962 | | Michael West | 2023 | — | 65,188 | 2,810 | 67,998 |
SUMMARY COMPENSATION TABLE
| 68 | MOODY’S 2024 PROXY STATEMENT |
SUMMARY COMPENSATION TABLE
| (a) As part of his duties, and in addition to working in the Company’s San Francisco office where he is based, Mr. Steele is required to work in the Company’s New York City headquarters for extended periods. While working in New York City for certain times in 2023 following his promotion to Senior Vice President—General Counsel, Mr. Steele lived in a Company-leased apartment. The amount shown for Mr. Steele includes the Company’s actual cost of leasing the apartment plus utility costs for the days used by Mr. Steele in 2023. The Company has also agreed to reimburse Mr. Steele for any tax liability arising from the Company’s provision to him of the Company-leased apartment. For all the NEOs other than Mr. Steele, perquisites and other personal benefits provided in fiscal 2023 were, in the aggregate, less than $10,000 per individual. |
SUMMARY COMPENSATION TABLE
| (b) These amounts represent the aggregate annual Company contributions to the accounts of the Named Executive Officers under the Company’s Profit Participation Plan and the non-qualified Deferred Compensation Plan in the United States. The Profit Participation Plan and the Deferred Compensation Plan are defined contribution plans. |
SUMMARY COMPENSATION TABLE
| (7) In connection with his retirement, the Compensation & Human Resources Committee waived the continued service requirements applicable to a pro-rata portion of Mr. Goggins’ 2023 performance share awards and his 2023 stock option grant and accelerated the vesting of his 2023 RSUs. The incremental fair value of these awards as of the modification date is included in the stock awards column in addition to the full grant date fair value of these awards as required by SEC disclosure rules. Mr. Goggins did not realize such reported value in connection with his retirement. The 2023 performance share award remains subject to attainment of the applicable performance conditions as well as stock price fluctuation through delivery of the underlying shares and the options will only have value to the extent that our stock price exceeds the exercise price per share at the time of exercise. |
SUMMARY COMPENSATION TABLE
| MOODY’S 2024 PROXY STATEMENT | 69 |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023 The following table sets forth, for the year ended December 31, 2023, information concerning each grant of an award made to the Company’s Named Executive Officers in 2023 under any plan.
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| Name | Grant Date | Authorization Date (1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards ($/Sh) (6) | Closing Price of Common Stock on Grant Date ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) (7) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | Robert Fauber | 2/21/2023(3) | 2/13/2023 | | | | 5,587 | 22,348 | 44,696 | | | | | $6,600,035 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 7,449 | | | | 2,199,913 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 23,239 | $295.33 | $294.84 | 2,200,036 | | | N/A | | N/A | $2,000,000 | $4,000,000 | | | | | | | | | | Mark Kaye | 2/21/2023(3) | 2/13/2023 | | | | 1,384 | 5,536 | 11,072 | | | | | 1,634,947 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 1,845 | | | | 544,884 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 5,757 | 295.33 | 294.84 | 545,015 | | | N/A | | N/A | 1,000,000 | 2,000,000 | | | | | | | | | | Caroline Sullivan | 2/21/2023(3) | 2/13/2023 | | | | 188 | 752 | 1,504 | | | | | 222,088 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 251 | | | | 74,128 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 782 | 295.33 | 294.84 | 74,032 | | | 9/29/2023(3) | 8/1/2023 | | | | 94 | 376 | 752 | | | | | 119,865 | | | 9/29/2023(4) | 8/1/2023 | | | | | | | 125 | | | | 39,849 | | | 9/29/2023 | 8/1/2023 | | | | | | | | 375 | 318.79 | 316.17 | 39,983 | | | N/A | | N/A | 298,862 | 597,724 | | | | | | | | | | John Goggins | 2/21/2023(3) | 2/13/2023 | | | | 616 | 2,462 | 4,924 | | | | | 727,102 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 821 | | | | 242,466 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 2,560 | 295.33 | 294.84 | 242,355 | | | 8/1/2023(8) | 8/1/2023 | | | | 139 | 557 | 1,114 | | | | | 195,797 | | | 8/1/2023(8) | 8/1/2023 | | | | | | | 821 | | | | 288,598 | | | 8/1/2023(8) | 8/1/2023 | | | | | | | | 2,560 | 295.33 | 352.36 | 333,043 | | | N/A | | N/A | 500,000 | 1,000,000 | | | | | | | | | | Richard Steele | 2/21/2023(3) | 2/13/2023 | | | | 152 | 609 | 1,218 | | | | | 179,856 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 203 | | | | 59,952 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 634 | 295.33 | 294.84 | 60,021 | | | N/A | | N/A | 500,000 | 1,000,000 | | | | | | | | | | Stephen Tulenko | 2/21/2023(3) | 2/13/2023 | | | | 1,194 | 4,774 | 9,548 | | | | | 1,409,905 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 1,591 | | | | 469,870 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 4,965 | 295.33 | 294.84 | 470,037 | | | N/A | | N/A | 1,000,000 | 2,000,000 | | | | | | | | | | Michael West | 2/21/2023(3) | 2/13/2023 | | | | 1,143 | 4,571 | 9,142 | | | | | 1,349,965 | | | 2/21/2023(4) | 2/13/2023 | | | | | | | 1,524 | | | | 450,083 | | | 2/21/2023 | 2/13/2023 | | | | | | | | 4,753 | 295.33 | 294.84 | 449,967 | | | N/A | | N/A | 1,100,000 | 2,200,000 | | | | | | | | |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (1) The Compensation & Human Resources Committee authorized the grant of stock options, RSUs and performance shares for 2023 on February 13, 2023, to be effective on February 21, 2023, the third trading day following the filing of the Company’s 2022 Form 10-K. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (2) Amounts in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns consist of cash incentive award opportunities granted in 2023 under the Company’s annual cash incentive program. For additional information on the annual cash incentive program, see the CD&A beginning on page 43. These awards were earned during 2023 and are paid in March 2024. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (3) Amounts in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns consist of performance share awards granted in 2023 under the Company’s 2001 Stock Incentive Plan. The Compensation & Human Resources Committee determined the target performance share amounts and set performance measures over the three-year performance period ending December 31, 2025. Performance is based on EPS for compensation purposes, MA’s cumulative revenue and MIS’s ratings quality. For 2023, the maximum incentive payout opportunity was 200% of target. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (4) Consists of RSU awards granted in 2023 under the Company’s 2001 Stock Incentive Plan. They vest in four equal installments on March 1, 2024, March 1, 2025, March 1, 2026 and March 1, 2027. Ms Sullivan’s September 29, 2023 RSU grant vests on October 1, 2024, October 1, 2025, October 1, 2026 and October 1, 2027. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| 70 | MOODY’S 2024 PROXY STATEMENT |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (5) Consists of stock option awards made under the Company’s 2001 Stock Incentive Plan. They vest in four equal annual installments beginning on the first anniversary of the date of grant and expire on February 21, 2033 or, in the case of Ms Sullivan’s September 29, 2023 award, on September 29, 2033. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (6) The exercise price of the stock options is equal to the arithmetic mean of the high and low market price of the Company’s Common Stock on the grant date. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (7) The February 21, 2023 grant date fair value for stock options is based on the Black-Scholes option valuation model, applying the following assumptions; a stock-price volatility factor of 29.21%; a risk-free rate of return of 4.67%; a dividend yield of 0.97%; and an expected time of exercise of 5.8 years from the date of grant. The Black Scholes model is premised on the immediate exercisability and transferability of the options, neither of which applies to the options set out in the table above. The actual amounts realized, if any, will depend on the extent to which the stock price exceeds the option exercise price at the time the option is exercised. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| (8) In connection with his retirement, the Compensation & Human Resources Committee waived the continued service requirements applicable to a pro-rata portion of Mr. Goggins’ 2023 performance share awards and his 2023 stock option grant and accelerated the vesting of his 2023 RSUs. These rows reflect the incremental fair value of such 2023 awards, as of the modification date. Mr. Goggins has not realized such reported value. |
GRANTS OF PLAN-BASED AWARDS TABLE FOR 2023
| MOODY’S 2024 PROXY STATEMENT | 71 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023 The following table sets forth information concerning unexercised options, stock that has not vested and equity incentive plan awards for each of the Company’s Named Executive Officers outstanding as of December 31, 2023. The market value of the shares that have not vested is based on the closing market price of the Company’s Common Stock on December 29, 2023, the last business day of Moody’s 2023 fiscal year, on the NYSE.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| | Option Awards (1) | | | | | | Stock Awards | | | | | | Name | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) | Grant Date | | | Exercisable | Unexercisable | | | | | | | | | | | Robert Fauber | 756 | — | | 98.01 | 2/11/2015 | 2/11/2025 | 535 | 208,950 | | | 2/20/2020 | | | 2,133 | — | | 80.81 | 2/12/2016 | 2/12/2026 | 8,031 | 3,136,587 | | | 2/22/2021 | | | 3,217 | — | | 94.18 | 7/1/2016 | 7/1/2026 | 2,312 | 902,975 | | | 2/22/2021 | | | 8,701 | — | | 113.34 | 2/23/2017 | 2/23/2027 | 4,142 | 1,617,700 | 33,130 | 12,939,253 | 2/17/2022 | | | 6,322 | — | | 167.50 | 2/16/2018 | 2/16/2028 | 7,449 | 2,909,281 | 44,696 | 17,456,470 | 2/21/2023 | | | 7,889 | — | | 173.58 | 2/25/2019 | 2/25/2029 | | | | | | | | 5,401 | — | | 215.07 | 11/5/2019 | 11/5/2029 | | | | | | | | 7,434 | 2,478 | | 280.42 | 2/20/2020 | 2/20/2030 | | | | | | | | 9,495 | 9,496 | | 276.84 | 2/22/2021 | 2/22/2031 | | | | | | | | 5,347 | 16,043 | | 325.99 | 2/17/2022 | 2/17/2032 | | | | | | | | — | 23,239 | | 295.33 | 2/21/2023 | 2/21/2033 | | | | | | | Caroline Sullivan | 760 | 254 | | 280.42 | 2/20/2020 | 2/20/2030 | 55 | 21,481 | | | 2/20/2020 | | | 445 | 445 | | 276.84 | 2/22/2021 | 2/22/2031 | 376 | 146,851 | | | 2/22/2021 | | | 178 | 535 | | 325.99 | 2/17/2022 | 2/17/2032 | 109 | 42,571 | | | 2/22/2021 | | | — | 782 | | 295.33 | 2/21/2023 | 2/21/2033 | 138 | 53,897 | 1,104 | 431,178 | 2/17/2022 | | | — | 375 | | 318.79 | 9/29/2023 | 9/29/2033 | 251 | 98,031 | 1,504 | 587,402 | 2/21/2023 | | | | | | | | | 125 | 48,820 | 752 | 293,701 | 9/29/2023 | | John J. Goggins | 6,794 | — | | 113.34 | 2/23/2017 | 2/23/2027 | 1,358 | 530,380 | | | 2/22/2021 | | | 4,665 | — | | 167.50 | 2/16/2018 | 2/16/2028 | | | 2,496 | 974,838 | 2/17/2022 | | | 5,624 | — | | 173.58 | 2/25/2019 | 9/5/2028 | | | 1,114 | 435,084 | 2/21/2023 | | | 3,003 | 1,002 | | 280.42 | 2/20/2020 | 9/5/2028 | | | | | | | | 1,798 | 1,798 | | 276.84 | 2/22/2021 | 9/5/2028 | | | | | | | | 720 | 2,161 | | 325.99 | 2/17/2022 | 9/5/2028 | | | | | | | | — | 2,560 | | 295.33 | 2/21/2023 | 9/5/2028 | | | | | | | Richard Steele | 1,506 | — | | 113.34 | 2/23/2017 | 2/23/2027 | 40 | 15,622 | | | 2/20/2020 | | | 888 | — | | 167.50 | 2/16/2018 | 2/16/2028 | 309 | 120,683 | | | 2/22/2021 | | | 974 | — | | 173.58 | 2/25/2019 | 2/25/2029 | 89 | 34,760 | | | 2/22/2021 | | | 545 | 182 | | 280.42 | 2/20/2020 | 2/20/2030 | 105 | 41,009 | | | 10/1/2021 | | | 365 | 365 | | 276.84 | 2/22/2021 | 2/22/2031 | 138 | 53,897 | 1,104 | 431,178 | 2/17/2022 | | | 178 | 535 | | 325.99 | 2/17/2022 | 2/17/2032 | 894 | 349,161 | | | 7/1/2022 | | | — | 634 | | 295.33 | 2/21/2023 | 2/21/2033 | 203 | 79,284 | 1,218 | 475,702 | 2/21/2023 | | Stephen Tulenko | 1,982 | 992 | | 280.42 | 2/20/2020 | 2/20/2030 | 214 | 83,580 | | | 2/20/2020 | | | 2,003 | 2,003 | | 276.84 | 2/22/2021 | 2/22/2031 | 2,323 | 907,271 | | | 2/22/2021 | | | 1,188 | 3,565 | | 325.99 | 2/17/2022 | 2/17/2032 | 488 | 190,593 | | | 2/22/2021 | | | — | 4,965 | | 295.33 | 2/21/2023 | 2/21/2033 | 921 | 359,706 | 7,362 | 2,875,303 | 2/17/2022 | | | | | | | | | 1,591 | 621,381 | 9,548 | 3,729,067 | 2/21/2023 | | Michael West | 2,973 | 992 | | 280.42 | 2/20/2020 | 2/20/2030 | 214 | 83,580 | | | 2/20/2020 | | | 2,003 | 2,003 | | 276.84 | 2/22/2021 | 2/22/2031 | 1,182 | 461,642 | | | 2/22/2021 | | | 1,069 | 3,209 | | 325.99 | 2/17/2022 | 2/17/2032 | 488 | 190,593 | | | 2/22/2021 | | | — | 4,753 | | 295.33 | 2/21/2023 | 2/21/2033 | 828 | 323,384 | 6,626 | 2,587,851 | 2/17/2022 | | | | | | | | | 1,524 | 595,213 | 9,142 | 3,570,500 | 2/21/2023 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| (1) Option awards are exercisable in four equal, annual installments beginning on the first anniversary of the date of grant. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| (2) The RSU Grant made to Ms Sullivan on September 29, 2023 will vest in four equal installments on October 1, 2024, October 1, 2025, October 1, 2026 and October 1, 2027. The remaining portion of the RSU grants made on |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| 72 | MOODY’S 2024 PROXY STATEMENT |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| February 21, 2023 will vest in four equal installments on March 1, 2024, March 1, 2025, March 1, 2026 and March 1, 2027. The remaining portion of the RSU grants made on February 17, 2022 will vest in equal installments on March 1, 2024, March 1, 2025 and March 1, 2026. The remaining portion of the RSU grants made on February 22, 2021 will vest in equal installments on March 1, 2024 and March 1, 2025. The remaining portion of the RSU grants made on February 20, 2020 will vest on March 1, 2024. The performance shares granted on February 22, 2021 and the performance shares granted on July 1, 2022 to Mr. Steele were earned at the levels shown for the performance period ending December 31, 2023, and vest in March 2024, subject to continued service through such vesting date. Mr. Kaye is not included in the table as he forfeited his unvested securities upon his resignation in September 2023. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| (3) Value is calculated based on the closing price of the Common Stock on December 29, 2023, which was $390.56. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE FOR 2023
| (4) Represents maximum performance share awards that pay out subject to the attainment of performance objectives and vesting requirements over a three-year period. The performance shares granted on February 17, 2022 vest on March 1, 2025 for the performance period ending December 31, 2024, and the performance shares granted on February 21, 2023 and September 29, 2023 vest on March 1, 2026 for the performance period ending December 31, 2025. |
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023 The following table sets forth information concerning the number of shares of Common Stock acquired and the value realized upon the exercise of stock options and the number of shares of Common Stock acquired and the value realized upon vesting of restricted stock and RSU awards during 2023 for each of the Company’s Named Executive Officers on an aggregated basis. In the case of stock options, the value realized is based on the market price of the Company’s Common Stock on the NYSE at the time of exercise and the option exercise price; in the case of restricted stock awards and RSUs, the value realized is based on the average high and low market price of the Company’s Common Stock on the NYSE on the vesting date.
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (1)(2) | Value Realized on Vesting ($) | | Robert Fauber | 22,913 | $5,975,080 | 10,238 | $2,987,920 | | Mark Kaye | 11,326 | 817,096 | 7,301 | 2,126,710 | | Caroline Sullivan | 0 | 0 | 994 | 288,886 | | John J. Goggins | 0 | 0 | 5,578 | 1,717,559 | | Richard Steele | 873 | 224,426 | 712 | 208,306 | | Stephen Tulenko | 1,218 | 150,563 | 3,676 | 1,068,356 | | Michael West | 2,899 | 483,362 | 3,280 | 953,266 |
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023
| (1) The performance shares granted for the 2021-2023 performance period vested on March 1, 2023 and therefore are not reflected in the above table. Such shares are shown in the “Outstanding Equity Awards At Fiscal Year End Table for 2023” above. |
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023
| (2) For Mr. Goggins, the stock awards include 2,033 vested RSUs with a value of $687,276, which will have a delayed settlement in March 2024 due to the provisions of Section 409A of the Internal Revenue Code. |
OPTION EXERCISES AND STOCK VESTED TABLE FOR 2023
| MOODY’S 2024 PROXY STATEMENT | 73 |
PENSION BENEFITS TABLE FOR 2023
PENSION BENEFITS TABLE FOR 2023 The following table sets forth information with respect to each defined benefit pension plan that provides for payments or other benefits to the Named Executive Officers at, following, or in connection with retirement.
PENSION BENEFITS TABLE FOR 2023
| Name | Plan Name | Number of Years Credited Service (#) (1) | Present Value of Accumulated Benefit at 12/31/22 ($) | Payments During Last Fiscal Year ($) | | Robert Fauber | Retirement Account | 17.2500 | $419,145 | — | | | Pension Benefit Equalization Plan | 17.2500 | 1,563,858 | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — | | Mark Kaye | Retirement Account | N/A | N/A | — | | | Pension Benefit Equalization Plan | N/A | N/A | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — | | Caroline Sullivan | Retirement Account | N/A | N/A | — | | | Pension Benefit Equalization Plan | N/A | N/A | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — | | John J. Goggins | Retirement Account | 23.5833 | 792,655 | — | | | Pension Benefit Equalization Plan | 23.5833 | 1,919,509 | — | | | Supplemental Executive Benefit Plan | 19.9167 | 4,797,521 | — | | Richard Steele | Retirement Account | 16.5833 | 411,178 | — | | | Pension Benefit Equalization Plan | 16.5833 | 344,981 | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — | | Stephen Tulenko | Retirement Account | 32.5000 | 900,559 | — | | | Pension Benefit Equalization Plan | 32.5000 | 1,766,873 | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — | | Michael West | Retirement Account | N/A | N/A | — | | | Pension Benefit Equalization Plan | N/A | N/A | — | | | Supplemental Executive Benefit Plan | N/A | N/A | — |
PENSION BENEFITS TABLE FOR 2023
| (1) The credited service for the Retirement Account and the PBEP is based on service from the date the individual became a participant in the plan. Individuals become participants in the plan on the first day of the month coincident with or next following the completion of one year of service. The SEBP provides credited service from an individual’s date of hire with Moody’s through the date that benefit accruals were frozen in 2018. For Mr. Tulenko, the date of participation in the Retirement Account is based on an earlier plan provision that provided for individuals to become participants on the January 1 or July 1 following the completion of one year of service. |
PENSION BENEFITS TABLE FOR 2023
The Company provides retirement benefits to the Named Executive Officers under three defined benefit pension plans: the Retirement Account, the PBEP and the SEBP. All three of these pension plans have been closed to new participants since 2008. The Retirement Account is a broad-based, tax-qualified defined benefit pension plan. The PBEP is a non-tax-qualified defined benefit pension plan that restores benefits to participants that would otherwise be lost under the Retirement Account due to limitations under the federal income tax laws on the provision of benefits under tax-qualified defined benefit pension plans. The Retirement Account, together with the PBEP, has a “cash balance” design that provides retirement income based on a percentage of annual compensation that is credited to a notional account that is then credited with periodic interest credits. The SEBP, which was frozen to further accruals in 2018, is a non-tax-qualified supplemental executive retirement plan that provides additional pension benefits for designated senior executive officers of the Company. The PBEP and SEBP are intended to comply with the requirements of Section 409A of the Internal Revenue Code. The frozen SEBP allowed participants to elect either an annuity or a lump-sum form of payment that will apply at retirement, and the PBEP generally provides lump-sum distributions to terminated participants at the later of age 55 or six months following termination from Moody’s.
PENSION BENEFITS TABLE FOR 2023
| 74 | MOODY’S 2024 PROXY STATEMENT |
PENSION BENEFITS TABLE FOR 2023
The assumptions made in computing the present value of the accumulated benefits of the Named Executive Officers, except as described in the following sentence, are incorporated herein by reference to the discussion of those assumptions under the heading “Pension and Other Retirement Benefits” in the Management’s Discussion and Analysis and Note 15 to the financial statements as contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 14, 2024. The assumed retirement age used in computing the present value of the accumulated benefits of the Named Executive Officers was age 65 in the case of the Retirement Account and the PBEP. The material terms in effect in 2023 of the Retirement Account, the PBEP and the SEBP are described below. Future benefit accruals under these plans (if any) are subject to change.
NON-QUALIFIED DEFERRED COMPENSATION TABLE (1)
NON-QUALIFIED DEFERRED COMPENSATION TABLE (1) The following table sets forth information concerning the non-qualified deferred compensation of the Named Executive Officers in 2023.
NON-QUALIFIED DEFERRED COMPENSATION TABLE (1)
| Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | | Robert Fauber | $— | $— | $63,398 | $— | 363,089 | | Mark Kaye | 60,040 | 70,404 | 77,837 | (153,241) | 551,480 | | Caroline Sullivan | — | 17,232 | 16,090 | — | 115,993 | | John J. Goggins | — | — | 19,213 | — | 187,706 | | Richard Steele | — | — | 19,618 | — | 125,105 | | Stephen Tulenko | — | — | 64,912 | — | 489,281 | | Michael West | — | 37,138 | 73,966 | — | 517,780 |
NON-QUALIFIED DEFERRED COMPENSATION TABLE (1)
| (1) Non-qualified deferred compensation earnings are included in the “Aggregate Earnings in Last Fiscal Year” column of this table. Company contributions to the accounts of the NEOs under the Company’s non-qualified Deferred Compensation Plan also are reflected in column (b) of footnote (6) to the Summary Compensation Table. Total contributions of $510,283 for Mr. Kaye, $113,392 for Mr. Fauber, $163,685 for Mr. West, $54,818 for Mr. Goggins and $125,609 for Mr. Tulenko were reported as compensation in the Company’s Summary Compensation Tables for prior years. |
NON-QUALIFIED DEFERRED COMPENSATION TABLE (1)
| 76 | MOODY’S 2024 PROXY STATEMENT |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The information below reflects the amount of compensation that would become payable to each of the Named Executive Officers under certain existing plans and arrangements if the executive’s employment had terminated under the specified circumstances or if there had been a change in control, in each case, on December 29, 2023 (the last business day of 2023), given the Named Executive Officer’s compensation and, if applicable, based on the Company’s closing stock price on that date. These benefits are in addition to benefits that may be available to the executive prior to the occurrence of any termination of employment, including under exercisable stock options held by the executive, and benefits available generally to salaried employees, such as distributions under the Company’s tax-qualified defined contribution plan and distributions of accrued vacation pay. In addition, in connection with any event including or other than those described below, the Company may determine to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or altering the terms of benefits described below, as the Company determines appropriate. A “change in control” is defined as: (i) the date any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Moody’s Corporation possessing 50% or more of the total voting power of the stock of Moody’s Corporation, (ii) the date a majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, or (iii) the date any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| MOODY’S 2024 PROXY STATEMENT | 77 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The actual amounts that would be paid upon each such Named Executive Officer’s termination of employment can be determined only at the time of such executive’s separation from the Company. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such event, the Company’s stock price and the executive’s then current compensation.
Potential Payments and Benefits Upon a Termination of Employment
Potential Payments and Benefits Upon a Termination of Employment by Reason of a Reduction in Force, Job Elimination,
Potential Payments and Benefits Upon a Termination of Employment
Potential Payments and Benefits Upon a Termination of Employment
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT Unless otherwise provided in an applicable award agreement, the Company’s 2001 Stock Incentive Plan provides for the following vesting of outstanding stock options, restricted stock awards and RSUs under certain circumstances as follows: Death or Disability
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the death or disability of a Named Executive Officer after the first anniversary of the date of grant of a stock option, the unvested portion of such stock option will immediately vest in full and such portion may thereafter be exercised during the shorter of (a) the remaining stated term of the stock option or (b) five years after the date of death or disability; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the death or disability of a Named Executive Officer after the first anniversary of the date of grant of a restricted stock or RSU award, the award will immediately vest in full; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the death or disability of a Named Executive Officer after the first anniversary of the date of grant of the performance shares, the Named Executive Officer is entitled to receive a pro rata portion of the number of shares based on the number of days of actual service during the performance period; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
Retirement
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the retirement of a Named Executive Officer after the first anniversary of the date of grant of a stock option, the unvested portion of such stock option will continue to vest during the shorter of (a) the remaining stated term of the stock option or (b) five years after the date of retirement; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the retirement of a Named Executive Officer after the first anniversary of the date of grant of a restricted stock or RSU award, the award will immediately vest in full; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| 80 | MOODY’S 2024 PROXY STATEMENT |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of the retirement of a Named Executive Officer after the first anniversary of the date of grant of the performance shares, the Named Executive Officer is entitled to receive a pro rata portion of the number of shares based on the number of days of actual service during the performance period; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
Other Terminations of Employment
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of a termination for any reason other than death, disability or retirement, an unexercised stock option may thereafter be exercised during the period ending 30 days after the date of termination, but only to the extent such stock option was exercisable at the time of termination; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of termination for any reason other than death, disability or retirement, after the first anniversary of the date of grant of a restricted stock or RSU award, the unvested portion of the award shall be forfeited; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of a termination for any reason other than death, disability or retirement prior to the end of any applicable performance period, an NEO’s performance shares shall be forfeited, unless, subject to the 2001 Stock Incentive Plan, the Compensation & Human Resources Committee, in its sole discretion, determines otherwise; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
Change in Control
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of a change in control of the Company, the unvested portion of all outstanding stock options granted prior to January 1, 2013 vest in full; |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of a change in control of the Company, (i) unless otherwise determined by the Committee, if the acquirer assumes or substitutes an award of equivalent value, the unvested portion of all outstanding stock options and RSU awards granted on or after January 1, 2013 vest in full if the Named Executive Officer’s employment is terminated by us without “cause” or by the Named Executive Officer for “good reason” within 90 days before or two years after the change in control, or (ii) if the acquirer does not assume or substitute awards of equivalent value, the unvested portion of the awards will vest in full; and |
OTHER POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
| • | in the event of a change in control of the Company, performance shares or, in the discretion of the Committee, cash equal to the fair market value of the shares as of immediately prior to the change in control become payable at 100% of target. |
Potential Payments and Benefits Upon a Termination of
Potential Payments and Benefits Upon a Termination of
Potential Payments and Benefits Upon a Termination of
Potential Payments and Benefits Upon a Termination of
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As discussed in the Compensation Discussion and Analysis above, the Compensation & Human Resources Committee has implemented an executive compensation program designed to link a substantial part of each executive’s realized compensation to the achievement of Moody’s financial and operational objectives and to the individual executive’s performance as well as to align executives’ pay with changes in the value of stockholders’ investments. As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information regarding the compensation of the Company’s Named Executive Officers and the Company’s performance.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for Raymond W. McDaniel, Jr. | Compensation Actually Paid to Raymond W. McDaniel, Jr. (1)(2) | Summary Compensation Table Total for Robert Fauber | Compensation Actually Paid to Robert Fauber (1)(2) | Average Summary Compensation Total for Other NEOs (3) | Average Compensation Actually Paid to Other NEOs (1)(3) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($millions) | MCO EPS for Compensation Purposes (4) | | | | | | | | | Moody’s Cumulative TSR | Russell 3000 Financial Services Index Cumulative TSR | | | | 2023 | — | — | $14,387,659 | $23,499,543 | $2,887,540 | $2,635,366 | $170 | $143 | $1,607 | $9.90 | | 2022 | — | — | $11,619,773 | ($4,692,319) | $3,186,695 | ($1,700,521) | $120 | $116 | $1,374 | $8.57 | | 2021 | — | — | $9,750,157 | $21,584,082 | $3,056,066 | $7,117,461 | $167 | $136 | $2,214 | $12.29 | | 2020 | $17,270,662 | $22,264,987 | — | — | $3,869,500 | $5,653,058 | $123 | $99 | $1,778 | $10.15 |
PAY VERSUS PERFORMANCE
| (1) For each year, “Compensation Actually Paid” reflects the Summary Compensation Table (SCT) total, for the relevant Named Executive Officer(s) less the values included in the “Stock Awards” and “Option Awards” columns and the aggregate change in the actuarial present value of the NEO’s accumulated benefit under all defined benefit and pension plans as included in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column, and less the fair value of any equity compensation forfeited in the applicable fiscal year determined based on the value of such awards at the end of the prior fiscal year and adding to this : |
PAY VERSUS PERFORMANCE
| • | The fair value at the end of the year of equity compensation granted during the year that remained unvested at the end of the year; |
PAY VERSUS PERFORMANCE
| • | The fair value as of the vesting date of equity compensation granted and vested in the same year; |
PAY VERSUS PERFORMANCE
| • | The change in fair value as of the vesting date, measured from the prior year-end, of any equity awards granted in prior years that vested during the year (whether positive or negative); |
PAY VERSUS PERFORMANCE
| • | The change in fair value at year-end, measured from the prior year-end, of any equity awards granted in prior years that remained unvested as of the end of the year (whether positive or negative); and |
PAY VERSUS PERFORMANCE
| • | The pension value attributable to service in the year. |
PAY VERSUS PERFORMANCE
For the other NEOs, each of the above figures is calculated and presented on an average basis. As a result, “Compensation Actually Paid” does not reflect the value that was or may actually be realized by the NEOs. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values of RSUs did not materially differ from those disclosed at the time of the grant. In calculating the year-over-year change in the value of unvested option awards as well as the change in value to mid-year vesting dates, options were re-valued in light of SEC guidance at each measurement date using a lattice model with the following inputs. As a result, reported values differ from those disclosed in our 2023 Proxy Statement.
PAY VERSUS PERFORMANCE
| • | Stock price: based on the closing stock price on the measurement date. If a mid-year vesting date was not a trading day, the first trading day following the vesting date was used as the measurement date. If a fiscal year-end date was not a trading day (e.g., December 31, 2023), the most recent trading day prior to the fiscal year-end date was used (e.g., December 29, 2023). |
PAY VERSUS PERFORMANCE
| • | Expected life: based on the original expected life established at grant date, as used for financial reporting purposes, with adjustments to reflect the amount by which the options were in-the-money / out-of-the-money on the relevant measurement date. |
PAY VERSUS PERFORMANCE
| • | Stock price volatility: based on historical volatility for a trailing term to match the remaining contractual term as of each measurement date. |
PAY VERSUS PERFORMANCE
| MOODY’S 2024 PROXY STATEMENT | 83 |
PAY VERSUS PERFORMANCE
| • | Risk-free rate: based on an interpolated U.S. Constant Maturity Treasury yield as of each measurement date. |
PAY VERSUS PERFORMANCE
| • | Dividend yield: based on the yield as of each measurement date. |
PAY VERSUS PERFORMANCE
In valuing performance share awards, we calculated the fair value of unearned or earned but unvested awards, based on probable and/or final payout factors, as of the relevant measurement date.
PAY VERSUS PERFORMANCE
| (2) The amounts deducted and added in calculating the “Compensation Actually Paid” for Mr. Fauber for 2021 through 2023 and Mr. McDaniel for 2020 are as follows: |
PAY VERSUS PERFORMANCE
| | 2023 (Mr. Fauber) | 2022 (Mr. Fauber) | 2021 (Mr. Fauber) | 2020 (Mr. McDaniel) | | Reported SCT Total Compensation | $14,387,659 | $11,619,773 | $9,750,157 | $17,270,662 | | Subtract: Equity Award Values Reported in the SCT | $(10,999,984) | $(9,000,110) | $(6,400,149) | $(10,349,742) | | Add: Year End Fair Value of Equity Awards Granted in the Year | $16,092,220 | $4,518,780 | $12,983,536 | $8,552,443 | | Add: Value as of Vesting Date of Equity Awards Granted and Vested in the Year | $0 | $0 | $0 | $3,219,138 | | Add/Subtract: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | $3,864,109 | $(10,255,631) | $5,264,759 | $3,080,592 | | Add/Subtract: Change in Fair Value From Prior Year End to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | $342,536 | $(1,747,485) | $2,847 | $5,832,054 | | Subtract: Fair Value of Equity Compensation Forfeited in Current Fiscal Year Determined at End of Prior Fiscal Year | $0 | $0 | $0 | $(2,146,411) | | Subtract: Pension Values Reported in the SCT | $(366,643) | $0 | $(225,904) | $(3,444,752) | | Add: Pension Service Cost Attributable to Year | $179,646 | $172,355 | $208,836 | $251,004 | | Compensation Actually Paid | $23,499,543 | $(4,692,319) | $21,584,082 | $22,264,987 |
PAY VERSUS PERFORMANCE
| (3) For 2023, other NEOs include Messrs. Kaye, Goggins, Steele, Tulenko and West and Ms Sullivan. For 2022 and 2021, other NEOs include Messrs. Kaye, Goggins, Tulenko and West. For 2020, other NEOs include Messrs. Kaye, Fauber (when he served as Chief Operating Officer), Tulenko and West. |
PAY VERSUS PERFORMANCE
The amounts deducted and added in calculating the average “Compensation Actually Paid” for the other NEOs for 2020 through 2023 are as follows:
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | 2020 | | Average Reported SCT Total Compensation | $2,887,540 | $3,186,695 | $3,056,066 | $3,869,500 | | Subtract: Average Equity Award Values Reported in the SCT | $(1,703,966) | $(1,902,963) | $(1,627,986) | $(2,000,125) | | Add: Average Year End Fair Value of Equity Awards Granted in the Year | $1,364,235 | $955,436 | $3,269,224 | $2,453,588 | | Add: Average Value as of Vesting Date of Equity Awards Granted and Vested in the Year | $97,526 | $0 | $0 | $0 | | Add/Subtract: Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | $446,721 | $(3,287,996) | $2,450,535 | $1,156,031 | | Add/Subtract: Average Change in Fair Value From Prior Year End to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | $86,109 | $(703,652) | $(70,234) | $382,488 | | Subtract: Average Fair Value of Equity Compensation Forfeited in Current Fiscal Year Determined at End of Prior Fiscal Year | $(496,716) | $0 | $0 | $0 | | Subtract: Average Pension Values Reported in the SCT | $(87,449) | $0 | $(19,903) | $(264,415) | | Add: Average Pension Service Cost Attributable to Year | $41,366 | $51,958 | $59,759 | $55,991 | | Average Compensation Actually Paid | $2,635,366 | $(1,700,521) | $7,117,461 | $5,653,058 |
PAY VERSUS PERFORMANCE
| 84 | MOODY’S 2024 PROXY STATEMENT |
PAY VERSUS PERFORMANCE
| (4) MCO EPS for Compensation Purposes is the Company’s adjusted diluted earnings per share (EPS). The Company selected MCO EPS for Compensation Purposes as the company-performance measure because, as the main metric in the performance share program, it is the most important financial performance metric for executive compensation purposes. Refer to the Company’s Form 10-K reports filed in respect of the years ended December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023, for a reconciliation of diluted EPS to adjusted diluted EPS. |
PAY VERSUS PERFORMANCE
As illustrated in the table above and the charts below, the “Compensation Actually Paid” (calculated as required under SEC rules) for the Company’s Named Executive Officers over the past four fiscal years has directionally aligned with the Company’s TSR, net income and MCO EPS for Compensation Purposes. For 2022, “Compensation Actually Paid” is a negative number for both Mr. Fauber and the average of the other NEOs. Principally this reflects the impact of the change in Moody’s share price between December 31, 2021, and December 31, 2022 as well as updates to the anticipated performance share payout factors between fiscal year-ends. Along with Compensation Actually Paid, the chart below outlines our one-year, two-year, three-year and four-year TSR as compared to the one-year, two-year, three-year and four-year TSR of the Russell 3000 Financial Services Index. In each case, TSR is measured starting from December 31, 2019:
PAY VERSUS PERFORMANCE
| MOODY’S 2024 PROXY STATEMENT | 85 |
PAY VERSUS PERFORMANCE
The chart below illustrates the relationship between Compensation Actually Paid and Moody’s net income. The chart below illustrates the relationship between Compensation Actually Paid and MCO EPS for Compensation Purposes.
PAY VERSUS PERFORMANCE
| (1) Reflects Moody’s “MCO EPS For Compensation Purposes” |
PAY VERSUS PERFORMANCE
Moody’s Compensation Actually Paid is impacted by the Company’s TSR in that 79% of Mr. Fauber’s target total compensation and 57% for the Non-PEO NEOs in 2023, on average (excluding Ms Sullivan and Mr. Steele, who were not NEOs prior to 2023) is in equity-based compensation, including stock options, restricted share units, and performance shares, which increase or decrease in value tied to the performance of the Company’s stock price.
PAY VERSUS PERFORMANCE
| 86 | MOODY’S 2024 PROXY STATEMENT |
PAY VERSUS PERFORMANCE
In addition, Moody’s earnings performance (since 2019, EPS for Compensation Purposes for the performance shares granted under the long-term equity incentive compensation program) is the most heavily weighted of several performance measures that determine incentive compensation payouts for the performance share awards granted under the long-term equity incentive compensation program. Moody’s incentive compensation is not currently determined based on TSR performance relative to a peer group or market index. Net Income is not directly included in any of our incentive plans, but it is related to EPS for Compensation Purposes, which is the primary measure in the performance share plan. The Compensation & Human Resources Committee carefully monitors and selects the performance metrics used under Moody’s executive compensation programs each year. Set forth below are those metrics that the Company believes represent the most important financial performance measures used to link compensation actually paid to the NEOs to Company performance for 2023. Together, these metrics represent a balance of financial and operational factors that Moody’s considers to be key to its business success.
PAY VERSUS PERFORMANCE
| Performance Measure | | MIS Operating Income | | MA Operating Income | | MA Sales for Compensation Purposes | | MCO EPS for Compensation Purposes | | MA Cumulative Revenue | | MIS Ratings Performance |
PAY VERSUS PERFORMANCE
| MOODY’S 2024 PROXY STATEMENT | 87 |
CEO PAY RATIO
CEO PAY RATIO
CEO PAY RATIO
| The Company believes that its compensation practices should motivate its employees to create stockholder value. The Compensation & Human Resources Committee reviewed a comparison of the 2023 CEO pay to the pay of the median compensated employee. | 125:1 CEO Pay Ratio |
CEO PAY RATIO
For 2023:
CEO PAY RATIO
| • | The annual total compensation of the median compensated employee was $115,386; |
CEO PAY RATIO
| • | The annual total compensation of the CEO, as reported in the Summary Compensation Table, was $14,387,659 and |
CEO PAY RATIO
| • | Based on this information, for 2023, the ratio of the annual total compensation of the CEO to the annual total compensation of the median compensated employee was 125:1. |
CEO PAY RATIO
Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect the employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described below. To identify the median employee as well as determine the median employee’s annual total compensation, the methodology and the material assumptions, adjustments and estimates that were used are as follows:
CEO PAY RATIO
| • | The Company considered the compensation of all Moody’s employees who were employed based on the Company’s internal records as of December 31, 2023. |
CEO PAY RATIO
| • | To identify the Company’s median employee, the Company considered each employee’s: (i) base salary as of December 31, 2023; (ii) actual cash incentive paid for services in 2023; and (iii) commissions paid during fiscal year 2023. |
CEO PAY RATIO
| • | To calculate the annual total compensation of the “median employee,” the elements of such employee’s compensation for 2023 were identified and calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. |
CEO PAY RATIO
| • | With respect to the annual total compensation of the CEO, the amount reported in the “Total” column of the Summary Compensation Table on page 67 of this Proxy Statement was used. |
CEO PAY RATIO
| 88 | MOODY’S 2024 PROXY STATEMENT |
CEO PAY RATIO
ITEM 4—COMPANY PROPOSAL TO AMEND THE MOODY’S CORPORATION RESTATED CERTIFICATE OF INCORPORATION TO AUTHORIZE STOCKHOLDERS OWNING 25% OF THE COMPANY’S COMMON STOCK TO HAVE THE COMPANY CALL SPECIAL MEETINGS OF STOCKHOLDERS
CEO PAY RATIO
| What is being voted on | The Board is recommending that stockholders approve an amendment to the Moody’s Corporation Restated Certificate of Incorporation to authorize stockholders owning 25% of the Company’s common stock to have the Company call special meetings of stockholders. | | Board Recommendation | The Board of Directors recommends a vote FOR the proposal. |
BOARD OF DIRECTORS
BOARD OF DIRECTORS Section. 1. The Board of Directors of the corporation shall consist of such number of directors, not less than three, as shall from time to time be fixed exclusively by resolution of the Board of Directors. Each director’s term shall be as set forth in the Restated Certificate of Incorporation of the corporation. Each nominee for election as a director at a meeting shall be elected by the vote of the majority of the votes cast with respect to the director nominee at such meeting assuming that a quorum is present, provided that if as of a date that is fourteen days in advance of the date the corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission, the number of nominees exceeds the number of directors to be elected, the director nominees shall be elected by the vote of a plurality of the voting power present in person or represented by proxy at any such meeting and entitled to vote. A majority of the total number of directors then in office (but not less than one-third of the number of directors constituting the entire
BOARD OF DIRECTORS
| B-18 | MOODY’S 2024 PROXY STATEMENT |
BOARD OF DIRECTORS
Board of Directors) shall constitute a quorum for the transaction of business and, except as otherwise provided by law or by the corporation’s Restated Certificate of Incorporation, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Directors need not be stockholders. For purposes of this Section, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. Any director subject to election at a meeting who fails to receive, to the extent required, a majority of the votes cast, shall tender his or her resignation for consideration by the Board of Directors in accordance with the corporation’s Director Resignation Policy, as it may be in effect from time to time. Section. 2. Newly created directorships in the Board of Directors that result from an increase in the number of directors and any vacancy occurring in the Board of Directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; and the directors so chosen shall hold office for a term as set forth in the Restated Certificate of Incorporation of the corporation. Section. 3. Meetings of the Board of Directors shall be held at such place (if any) within or without the State of Delaware as may from time to time be fixed by resolution of the Board or as may be specified in the notice of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board and special meetings may be held at any time upon the call of the Chairman of the Board or the Chief Executive Officer, by oral, or written notice including, telegraph, telex or transmission of a telecopy, e-mail or other means of transmission, duly served on or sent or mailed to each director to such director’s address or telecopy number as shown on the books of the corporation not less than one day before the meeting. The notice of any meeting need not specify the purposes thereof. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting is held. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. Notice of any meeting need not be given to any director who shall attend such meeting in person (except when the director attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened), or who shall waive notice thereof, before or after such meeting, in writing or by electronic transmission. Section. 4. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock or Series Common Stock issued by the corporation shall have the right, voting separately by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of the Restated Certificate of Incorporation expressly applicable to such directorships. The number of directors that may be elected by the holders of any such series of Preferred Stock or Series Common Stock shall be in addition to the number fixed by or pursuant to the By-Laws. Section. 5. If at any meeting for the election of directors, the corporation has outstanding more than one class of stock, and one or more such classes or series thereof are entitled to vote separately as a class, and there shall be a quorum of only one such class or series of stock, that class or series of stock shall be entitled to elect its quota of directors notwithstanding absence of a quorum of the other class or series of stock. Section. 6. The Board of Directors may designate three or more directors to constitute an executive committee, one of whom shall be designated Chairman of such committee. The members of such committee shall hold such office until their successors are elected and qualify. Any vacancy occurring in the committee shall be filled by the Board of Directors. Regular meetings of the committee
BOARD OF DIRECTORS
| MOODY’S 2024 PROXY STATEMENT | B-19 |
BOARD OF DIRECTORS
shall be held at such times and on such notice and at such places as it may from time to time determine. The committee shall act, advise with and aid the officers of the corporation in all matters concerning its interest and the management of its business, and shall generally perform such duties and exercise such powers as may from time to time be delegated to it by the Board of Directors, and shall have authority to exercise all the powers of the Board of Directors, so far as may be permitted by law, in the management of the business and the affairs of the corporation whenever the Board of Directors is not in session or whenever a quorum of the Board of Directors fails to attend any regular or special meeting of such Board. The committee shall have power to authorize the seal of the corporation to be affixed to all papers which are required by the DGCL to have the seal affixed thereto. The fact that the executive committee has acted shall be conclusive evidence that the Board of Directors was not in session at such time or that a quorum of the Board had failed to attend the regular or special meeting thereof. The executive committee shall keep regular minutes of its transactions and shall cause them to be recorded in a book kept in the office of the corporation designated for that purpose, and shall report the same to the Board of Directors at their regular meeting. The committee shall make and adopt its own rules for the government thereof and shall elect its own officers. Section. 7. The Board of Directors may from time to time establish such other committees to serve at the pleasure of the Board which shall be comprised of such members of the Board and have such duties as the Board shall from time to time establish to the fullest extent permitted by law. Any director may belong to any number of committees of the Board. The Board may also establish such other committees with such members (whether or not directors) and such duties as the Board may from time to time determine. Section. 8. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Section. 9. Unless otherwise restricted by the Restated Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes or proceedings of the Board of Directors or committee in the same paper or electronic form as the minutes are maintained. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action shall be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective. Section. 10. The members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such a meeting.
BOARD OF DIRECTORS
| B-20 | MOODY’S 2024 PROXY STATEMENT |
BOARD OF DIRECTORS
Section. 11. The Board of Directors may establish policies for the compensation of directors and for the reimbursement of the expenses of directors, in each case, in connection with services provided by directors to the corporation. Section. 12. The Board of Directors shall elect one of its members to be Chairman of the Board of Directors. The Chairman of the Board shall preside at meetings of the Board of Directors at which he is present and shall have the powers and duties prescribed by law, by the By-Laws and by the Board of Directors. Section. 13. This Section 13 shall be operative during any emergency condition as contemplated by Section 110 of the DGCL (an “Emergency”), notwithstanding any different or conflicting provisions in these By-Laws, the Restated Certificate of Incorporation or the DGCL. In the event of any Emergency, or other similar emergency condition, the director or directors in attendance at a meeting of the Board of Directors or a standing committee thereof shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board of Directors as they shall deem necessary and appropriate. Except as the Board of Directors may otherwise determine, during any Emergency, the corporation and its directors and officers may exercise any authority and take any action or measure contemplated by Section 110 of the DGCL.