Proxy
Summary
This summary highlights information contained elsewhere in this Proxy
Statement. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement
carefully before voting.
MSCI
at a Glance
MSCI Inc. trades under the symbol “MSCI” on the New York Stock Exchange (“NYSE”)
and as of March 1, 2022 had a market capitalization of $40.7 billion.
As of December 31, 2021,
we employed
4,303
people and served over
6,300
clients in more than
95 countries.
We are a leading provider of critical decision support tools and solutions for the global investment
community. Our mission-critical offerings help investors address the challenges of a transforming investment landscape
and power better investment decisions. Leveraging our knowledge of the global investment process and our expertise in
research, data and technology, we enable our clients to understand and analyze key drivers of risk and return and confidently
and efficiently build more effective portfolios. |
Mission
To enable investors to build better portfolios for a better world.
Strategic Pillars of Growth
Extend leadership in research-enhanced content across asset
classes
Lead the enablement of ESG and climate investment integration
Enhance distribution and content-enabling technology
Expand solutions that empower client customization
Strengthen client relationships and grow into strategic partnerships with
clients
Execute strategic relationships and acquisitions with complementary content and
technology companies
Addressing All Participants in the Investment
Process
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Table of Contents
Strong Financial Performance
In 2021, we continued to execute a focused strategy to accelerate
growth, improve efficiency and attract the best talent. Our strong results reflect our commitment to building long-term shareholder
value. Financial highlights for the year ended December 31, 2021 include the following:
2021 Financial Highlights
OPERATING REVENUES
(in millions except percentages) |
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OPERATING EXPENSES
(in millions except percentages) |
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DILUTED EPS / ADJUSTED EPS*
(unaudited) |
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CASH FROM OPERATING ACTIVITIES
(in millions except percentages) |
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* | MSCI has presented supplemental non-GAAP financial measures as part of this Proxy Statement. Definitions of each non-GAAP measure
and a reconciliation of each non-GAAP financial measure with the most comparable GAAP measure are set forth in Annex B. The non-GAAP
financial measures presented in this Proxy Statement should not be considered as alternative measures for the most directly comparable
GAAP financial measures. The non-GAAP financial measures presented in this Proxy Statement are used by management to monitor the
financial performance of the business, inform business decision making and forecast future results. |
Table of Contents
Our Capital
Allocation Program
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~$3.1
billion Capital returned in the last five
years (as of December 31, 2021) (includes dividends) |
~11.3
million
Shares repurchased in the
last five years
(as of December 31, 2021) |
~33.3
percent
2021 increase in quarterly per-share
dividend from $0.78 quarterly to
$1.04 quarterly |
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ANNUALIZED DIVIDEND RATES
(1) | MSCI began paying quarterly dividends in September 2014 at an annualized rate of $0.72 per share. |
Capital Optimization Activities in 2021
● | Increased regular quarterly cash dividend by approximately 33.3% to $1.04 per share, representing $4.16 per share on an annualized
basis. |
● | Repurchased over 300,000 shares of our common stock at an average price of $412.25 per share for a total value of $140 million. |
● | Issued $500 million of 3.625% senior unsecured notes due 2030; leveraged lower coupon rate for pre-maturity redemption of $500
million of 4.750% senior unsecured notes due 2026. |
● | Issued $600 million of 3.625% senior unsecured notes due 2031. |
● | Issued $700 million of 3.250% senior unsecured notes due 2033; leveraged lower coupon rate for pre-maturity redemption of $500
million of 5.375% senior unsecured notes due 2027. |
Table of Contents
Total Shareholder Return
The following graph compares the cumulative total shareholders’
return (“TSR”) of our common stock, the Standard & Poor’s 500 Stock Index and the NYSE Composite Index
since December 31, 2011 assuming an investment of $100 at the closing price of each respective investment on December 31, 2011.
In calculating annual TSR, we have assumed the reinvestment of dividends, if any. The indexes are included for comparative purposes
only. They do not necessarily reflect management’s opinion that such indexes are an appropriate measure of the relative performance
of our common stock.
COMPARISON OF CUMULATIVE TEN YEAR TOTAL RETURN
The above graph is not “soliciting material,” is not to
be deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933
or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
Company
Name/Index | |
12/31/11 | |
12/31/12 | |
12/31/13 | |
12/31/14 | |
12/31/15 | |
12/31/16 | |
12/31/17 | |
12/31/18 | |
12/31/19 | |
12/31/20 | |
12/31/21 |
MSCI Inc. | |
$100.00 | |
$ |
94.11 | |
$132.77 | |
$144.65 | |
$222.77 | |
$246.44 | |
$400.77 | |
$472.71 | |
$837.61 | |
$ |
1,460.66 | |
$ |
2,017.74 |
S&P
500 Index | |
$100.00 | |
$ |
116.00 | |
$153.57 | |
$174.60 | |
$177.01 | |
$198.18 | |
$241.45 | |
$230.86 | |
$303.56 | |
$ |
359.41 | |
$ |
462.57 |
NYSE Composite Index | |
$100.00 | |
$ |
116.03 | |
$146.52 | |
$156.41 | |
$150.02 | |
$167.92 | |
$199.37 | |
$181.53 | |
$227.84 | |
$ |
243.76 | |
$ |
294.16 |
Source: S&P Global
Table of Contents
Corporate
Responsibility
We believe, and our research shows, that sound ESG and climate practices
are commonly linked to better business results. We provide the global financial community with innovative products and services
that enable investors to make better investment decisions for a better world. As a leader in providing ESG and climate solutions
to investors, we also aim to demonstrate leading corporate responsibility practices.
Our commitment to corporate responsibility is embodied in the following
four pillars:
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Better Investments
for a Better World
Offer tools and content for investors globally
to manage their ESG and climate risks and opportunities
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RECENT
HIGHLIGHTS
● ESG and Climate Research
● Published “The Role of Capital in the Net-Zero Revolution” to identify specific steps to drive to a net-zero economy by 2050
● Published the “Women on Boards Progress Report,” our annual survey on the state of women’s representation on corporate boards
● Published “Breaking Down Corporate Net-Zero Climate Targets” to provide a framework to assess companies’ decarbonization targets
● Data and Metrics Published
● Launched our Implied Temperature Rise search tool, which discloses how individual companies align with different climate pathways and decarbonization targets
● Launched the MSCI Net-Zero Tracker to gauge progress by the world’s public companies toward curbing climate risk
● Released the U.S. Racial and Ethnic Data Set to provide information on select U.S. companies’ disclosure practices and policies with regards to racial and ethnic diversity
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● Product Launches and Initiatives
● Launched our MSCI Climate Lab Enterprise product
to help investors monitor and manage climate risk across the investment process
● Expanded our toolkit of climate data and reporting
capabilities to help investors meet the requirements of the E.U. Sustainable Finance Disclosure Regulation (“SFDR”)
● Together with The Burgiss Group, LLC (“Burgiss”),
launched the Carbon Footprinting of Private Equity and Debt Funds product to measure the carbon intensity of private assets
● ESG and Climate Index Launches
● Introduced MSCI Climate Paris Aligned Indexes,
designed to support investors seeking to reduce their exposure to transition and physical climate risks
● Launched a new suite of Circular Economy Indexes
that aim to represent the performance of companies that facilitate a transition to a circular economy, addressing global
resource challenges such as energy scarcity, biodiversity loss, waste and pollution |
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Social Responsibility
Build
a highly engaged workforce, including through learning and development efforts and DE&I initiatives
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RECENT
HIGHLIGHTS
● Diversity Equity &
Inclusion (DE&I)
● Hired our first Chief Diversity Officer, responsible for operating across MSCI to align our DE&I goals with business outcomes, help embed DE&I considerations in the way we do business, attract and retain the best diverse talent and increase the impact of our internal workplace initiatives
● Published our 2020 and 2019 U.S. Consolidated EEO- 1 Report data, in addition to disclosing diversity data aligned to Sustainability Accounting Standards Board (“SASB”) categories
● Formed three new DE&I employee resource groups (“ERGs”), the Asian Support Network, All Abilities Network and Hola! MSCI
● Executed 4th Annual Global DE&I Summit, an internal event that focuses on leadership development and strategic planning |
● Compensation
● All Managing Directors created, and were held accountable for, individual DE&I Goals directly linked to their 2021 compensation
● Enhanced Executive Committee Share Ownership Guidelines to be one of the most robust in our peer group and to reflect MSCI’s deep commitment to an “owner-operator” mindset
● Employee Engagement:
In our most recent employee engagement survey (not including employees from newly acquired companies), the percentage of respondents
characterized as “fully engaged” equaled the highest since implementing the survey
● Future of
Work: Launched our Future of Work initiative that introduces increased flexibility of when and where employees work,
reimagines the use of our offices and ramps up the use of technology to enhance our interactions with clients and
employees
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Table of Contents
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Sustainable
Operations
Manage carbon emissions and climate risks, and
implement sustainable operational practices
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RECENT
HIGHLIGHTS
● New Commitments
● Committed to a goal of net-zero carbon emissions before 2040 throughout our operations, prioritizing reducing our most material and controllable emissions and engaging with our suppliers
● Committed to support all of the United Nations (“UN”) Sustainability Development Goals (“SDGs”) and aim to measure impact for SDGs relating to gender equality, decent work and economic growth, reduced inequality and climate action
● External Recognition: Improved our CDP score to reach leadership score of A-
● Expanding Alliances
● Became a founding member of the Net Zero Financial Service Providers Alliance, committing to align our relevant services and products with a 2050 net-zero emissions target
● Participated in, and met with policymakers and financial regulators at, the UN Climate Change Conference (COP26)
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● Engaging with our Suppliers
● Updated Supplier Code of Conduct to address emissions in the MSCI supply chain. Prioritized engagement with major suppliers to align net-zero goals
● Developed an internal Sustainable Supplier Management Team to support efforts to learn about our suppliers’ corporate responsibility practices and seek alignment with our own commitments
● New Reporting
● Published first SFDR report
● Published first UN SDGs report
● Updating our Policies
● Updated our Environmental Policy to include our commitment to net-zero and to environmental issues (e.g., biodiversity, waste and water)
● Updated our Travel Policy to encourage employees to prioritize virtual meetings and use of low carbon travel options |
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Robust Governance
Implement policies and practices that reflect MSCI’s commitment to strong
governance practices
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RECENT
HIGHLIGHTS
● Board Developments
● Appointed Rajat Taneja, a new director with a deep background in technology
● Enhanced Board Committee Charters to reflect leading practices and renamed the Audit and Risk Committee, Compensation, Talent and Culture Committee and Governance and Corporate Responsibility Committee to provide more clarity and transparency on Board committee-level oversight
● Conducted board education sessions to strengthen the Board’s expertise on climate, including sessions on climate science, climate investing, climate reporting solutions and net-zero commitments
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● Corporate Responsibility Governance
● Formed a Corporate Responsibility Policy Committee (“CRPC”), responsible for reviewing strategic corporate responsibility initiatives
● Expanded the Corporate Responsibility Committee (“CRC”) to include new members from DE&I,
Technology, Data Management, Client Coverage, Controllership and Financial Planning & Analysis teams.
● Risk Oversight: Integrated climate and DE&I into our risk management program, with reporting to the Audit and Risk Committee
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For additional information about our Corporate Responsibility Program,
please see page 45 of this Proxy Statement.
Table of Contents
Governance Highlights
Our Board of Directors Nominees
Each of our current directors is standing for election
to hold office until the next annual meeting of shareholders or until the director’s earlier resignation, death or removal.
The table below provides information on each of our director nominees, including which of our four standing committees the director
nominee sits on. Our four standing committees are the Audit and Risk Committee (the “Audit Committee”), the Compensation,
Talent and Culture Committee (the “Compensation Committee”), the Governance and Corporate Responsibility Committee
(the “Governance Committee”) and the Strategy and Finance Committee (the “Strategy Committee”).
Table of Contents
Proposal
1
Election of Directors |
The
Board recommends a vote
FOR each
director nominee.
SEE PAGE 20 |
Table of Contents
Engaging with our Shareholders
We believe that engaging with our shareholders, prospective
shareholders and sell-side analysts is the best way to address the issues that matter most to them. During 2021, we held over
300 meetings covering a wide range of matters. While we aim to engage with our shareholders year-round through investor meetings
and industry conferences, our key shareholder engagement activities for 2021 included our Investor Day held in February 2021 and
our Corporate Responsibility Roadshow conducted in the winter of 2021.
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Deep
Shareholder
Outreach
Team |
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Senior
Business
Leaders |
+ |
Finance and
Investor
Relations Team |
+ |
Corporate
Secretary
Team |
+ |
Human Resources
Team, including
Chief Diversity
Officer |
+ |
Corporate Responsibility
Team and Global
Corporate
Services
Team |
+ |
Board
Members
(select
meetings) |
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What We
Discussed |
OUR BUSINESS
Market Trends
Competitive Environment
Product Development
Financial Performance
Overall Outlook |
OUR CORPORATE RESPONSIBILITY EFFORTS
Corporate Responsibility Practices and Disclosures, including
ESG & Climate
Human Capital Management, including DE&I
Executive Compensation Program |
OVER 300
meetings with our shareholders, prospective shareholders
and sell-side analysts, including successful Investor Day and Corporate Responsibility Roadshow
~58% of our shares outstanding
represented across our shareholder engagement meetings in
2021 |
See “Shareholder Engagement” on page 40
for more information on our year-round shareholder engagement activities.
Table of Contents
Proposal
2
Advisory Vote to Approve
Executive Compensation (Say-on-Pay) |
The Board recommends a vote
FOR this
proposal.
SEE PAGE 55 |
Aligning Executive Compensation
with Company Strategy, Culture and Performance
We believe our executive compensation program was integral
to our successful financial performance in 2021. Our executive compensation program is designed not only to closely align the
compensation and interests of our named executive officers (“NEOs”) with the long-term interests of our shareholders,
but also to reflect the economic realities of our operating environment. MSCI’s executive compensation program emphasizes
performance-based compensation in the form of cash incentive awards under our Annual Incentive Plan (“AIP”) and equity
incentive awards under our Long-Term Incentive Plan (“LTIP”) that focus respectively on the achievement of short-
and long-term financial and strategic targets.
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SHORT-TERM
(ANNUAL INCENTIVE
PLAN CASH BONUS) |
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LONG-TERM
(EQUITY GRANTS) |
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● Restricted Stock Units (for 2021, ratable vest, and for
2022, cliff-vest after a three-year service period)
● Performance
Stock Units (earned based on absolute TSR CAGR) with a 1-year post vesting mandatory holding period for 3-Year PSUs
● Performance
Stock Options (earned based on cumulative revenue and cumulative Adjusted EPS) (new for 2022)
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2021 ANNUALIZED CEO |
2021 AVERAGE ANNUALIZED OTHER NEOS |
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In 2021, our CEO received over 90% of his compensation
in the form of “at-risk” variable compensation under the AIP and LTIP (on average, over 85% in the case of our other
NEOs).
Annual Incentive Plan
The AIP closely aligns the interests of our NEOs with
those of our shareholders by emphasizing a formulaic approach to determine annual cash incentive awards, which are based on the
achievement of specified annual financial criteria aligned with our Board-approved Operating Plan (70% of the target annual cash
bonus under the AIP), individual key performance indicators (“KPIs”) (20% of the target annual cash bonus under the
AIP) and specific DE&I goals (“DE&I Goals”) (10% of the target annual cash bonus under the AIP) that serve
to focus our senior management team on enhancing DE&I progress within the Company. The Compensation Committee regularly assesses
the components and metrics used in the AIP and the weighting of those components and metrics, in addition to taking into account
shareholder feedback.
For additional information about the 2021 AIP program,
please see the discussion on page 71 of this Proxy Statement.
Table of Contents
Long-Term Incentive Plan
The LTIP is designed to prioritize shareholder value creation and facilitate
an “owner-operator” mindset among our senior executives.
In 2021, we granted our NEOs a mix of RSUs and PSUs (including separate
awards of PSUs with a 3-year cumulative performance period (“3-Year PSUs”) and PSUs with a 5-year cumulative performance
period (“5-Year PSUs”)), the mix of which varies based on the executive’s position. Consistent with our recent
practice, each of our CEO and President & COO received 100% of his equity incentive compensation in 2021 in the form of PSUs.
In addition, for 2021, the Compensation Committee increased the proportion of our President & COO’s 5-Year PSUs from
50% to 60% of his overall equity incentive compensation (with the remaining 40% granted in the form of 3-Year PSUs), commensurate
with our CEO.
In 2022, the Compensation Committee enhanced our LTIP by introducing a
new award vehicle into the program: financial-based performance stock options (“PSOs”) that cover a cumulative three-year
performance period and replace the grant of 5-Year PSUs.
The 2022 LTIP comprises a mix of the following:
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2022
RSUs |
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Annual
grant of RSUs to our NEOs (other than our CEO and President & COO) that cliff-vest at the end of a
three-year service period. This reflects a change from ratable
vesting over three years for RSUs granted prior to 2022.
● Our
CEO and President & COO were not granted any RSUs in 2021 or 2022, and instead all of their LTIP
awards for such years were granted in the form of PSUs and PSOs
tied to performance metrics. |
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2022
PSUs |
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Annual
grant of PSUs which cover a cumulative three-year performance period.
The
3-Year PSUs are eligible to vest between 0% and 300% based on the achievement of an absolute total shareholder
return compound annual growth rate (“TSR CAGR”) performance metric.
The 3-Year PSUs include a one-year post-vest mandatory
holding period. |
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2022
PSOs |
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Annual
grant of PSOs which cover a cumulative three-year performance period.
The
PSOs are eligible to vest between 0% and 200% based on the combined level of achievement of (i) a cumulative
revenue performance goal and (ii) a cumulative adjusted EPS performance goal (each weighted at 50%). |
For additional information about the LTIP, please see
the discussion beginning on page 79 of this Proxy Statement.
Increased Stock Ownership and Retention Requirements
In 2022, in order to further enhance an “owner-operator”
mindset among senior executives, our Compensation Committee amended our existing share ownership and retention guidelines to require
that all members of our Executive Committee, including our NEOs, must hold shares equivalent, in the aggregate, to 25% of the
“net shares” they receive (i.e., after payment of taxes, exercise price and related costs) from equity awards granted
to them after January 1, 2022. The Compensation Committee also approved revisions to the minimum ownership guidelines to increase
the thresholds applicable to members of our Executive Committee, including our NEOs, to among the highest in our peer group (including
12x base salary for our CEO and President & COO). For additional information about our Share Ownership and Retention Guidelines
applicable to our NEOs, please see page 83 of this Proxy Statement.
Table of Contents
Executive Compensation Highlights
Over the past several years, we have continued to enhance
our executive compensation program to align with shareholder interests more closely and to further incentivize our executives
to focus on the long-term execution of our strategic priorities to create shareholder value. The table below highlights certain
key elements of, and enhancements to, our executive compensation program over the past several years.
2020 |
2021 |
2022 |
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● No
changes made to 2020 Operating Plan or annual cash incentive targets for 2020 under AIP in response to challenging operating
environment
● 97.8%
of the votes cast on the Say-on-Pay Advisory Vote at the 2020 annual meeting of shareholders were in support of the compensation
of our NEOs
● No
increase to CEO base salary or total target cash incentive award for 2020
● CEO
received all of his LTIP awards in the form of PSUs, and increased proportion of his 5-Year PSUs from 50% to 60% of total
CEO equity compensation for 2020
● President
& COO began receiving all of his LTIP awards in the form of PSUs |
● CEO
and President & COO received all of their LTIP awards in the form of PSUs
● Added
a 1-year post-vest mandatory holding period to 3-Year PSU awards
● 96.8%
of the votes cast on the Say-on-Pay Advisory Vote at the 2021 annual meeting of shareholders were in support of
the compensation of our NEOs
● No
increase to CEO and President & COO base salaries, total target cash incentive awards or target LTIP awards for 2021
● President
& COO increased proportion of 5-Year PSUs from 50% to 60% (commensurate with CEO)
● Linked
10% of the target AIP cash incentive for all Managing Directors globally to achievement of DE&I Goals |
● Introduced
PSOs as new equity vehicle
● CEO
and President & COO received all of their LTIP awards in the form of 3-Year PSUs and PSOs, tied to performance metrics
● Annual
grant of RSUs for other NEOs will cliff-vest at the end of a three-year service period
● Retained
1-year post-vest mandatory holding period on 3-Year PSU awards
● Increased
minimum share ownership requirements applicable to all members of our Executive Committee, including our CEO and President
& COO to 12X base salary
● Added
requirement that while members of the Executive Committee, such individuals including our NEOs, must hold shares equivalent,
in the aggregate, to 25% of the “net shares” they receive from equity awards granted to them after January
1, 2022
● No
increase to CEO and President & COO base salaries or total target cash incentive awards for 2022
● All
Executive Committee members included a climate commitment goal in their 2022 individual KPIs under the AIP |
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Response to Say-on-Pay Vote
At our 2021 annual meeting of shareholders, stockholders again expressed
overwhelming support for the compensation of our NEOs with approximately 96.8% of the votes cast approving our “Say
on Pay” advisory proposal relating to our NEO compensation. This represents the fourth consecutive year of “Say
on Pay” approval of 96% or higher. |
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To read more about what our shareholders think of
our Executive Compensation program, see the discussion on page 67 of this Proxy Statement.
Proposal
3
Ratification of the Appointment of MSCI’s Independent
Auditor |
The Board recommends a vote
FOR this
proposal.
SEE PAGE 99 |
The Audit and Risk Committee periodically reviews the
engagement of the independent auditor to assess, among other things, the skills, experience, service levels and costs associated
with conducting the annual audit of the Company’s financial statements. PwC has served as our independent auditor since
March 2014.
Table of Contents
Proposal No.
1
Election of Directors
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Our Board currently has 10 directors. Each director stands for election at each annual meeting of shareholders and holds office until his or her successor has been duly elected and qualified or the director’s earlier resignation, death or removal. All of the nominees presented beginning on page 14 of this Proxy Statement are directors of MSCI as of March 16, 2022. All directors, other than Rajat Taneja, were elected at the 2021 annual meeting of shareholders. The Board believes that each of the nominees brings strong skills and experience to the Board, giving the Board, as a group, the appropriate skills needed to exercise its oversight responsibilities and advise management with respect to the Company’s strategic initiatives.
Each nominee has indicated that he or she is willing and able to serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy vote will be cast for another person nominated by the Board, or the Board may elect to reduce its size.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast with respect to each director’s election at our 2022 Annual Meeting is required to approve Proposal No. 1. Abstentions shall not be treated as votes cast. For additional information on the consequences for directors who do not receive a majority of the votes cast, please refer to “What happens if a director does not receive a majority of the votes required for his or her re-election?” in Annex A.
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Our Board recommends that you vote
“FOR” the election of all ten nominees
named below.
Proxies solicited
by our Board will be voted “FOR” these
nominees unless otherwise instructed. |
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Table of Contents
Director Core Competencies and Diversity |
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The Governance Committee believes the director skills, experiences and backgrounds set forth in the tables below are those most relevant to the Board’s oversight responsibilities and the Company’s strategic direction and strives to ensure that the Board includes a balanced mix of qualifications and backgrounds. Additional detail on each director nominee’s experiences and qualifications follows their biographies beginning on page 23 of this Proxy Statement. |
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EXECUTIVE LEADERSHIP |
8/10 |
Public company CEO or senior executive experience managing a complex organization with oversight of strategy, corporate development, talent management, business operations and/or overall decision making, and a consistent record of executing strategy and creating shareholder value through operational excellence. |
GOVERNANCE/PUBLIC COMPANY BOARD |
8/10 |
Experience in public company corporate governance related issues, policies and best practices, serving on a public company board and familiarity with corporate board topics. |
INDUSTRY EXPERIENCE |
8/10 |
Experience working as a senior executive in the financial services industry with our client segments (e.g., asset owners, broker-dealers, hedge funds and investment managers) and investment products and support tools. |
GLOBAL PERSPECTIVE/INTERNATIONAL EXPERIENCE |
8/10 |
Experience as a senior executive working for an international company or working or living in countries outside of the U.S. |
REGULATORY COMPLIANCE/GOVERNMENT |
5/10 |
Experience in operating businesses in similarly regulated industries, interacting with regulators and policymakers and/or working in government. |
INVESTMENTS/STRATEGY AND CORPORATE DEVELOPMENT |
9/10 |
Experience in financial investment markets and investment decisions, strategy and corporate development to maximize return for our shareholders, including cross-border investment and M&A and capital markets transactions. |
FINANCIAL EXPERTISE |
10/10 |
Experience in accounting and financial reporting or experience as a financial expert and/or public company CFO, or audit partner from one of the big four audit firms. |
RISK MANAGEMENT |
9/10 |
Experience in risk management with oversight and assessment of different types of risk (including ERM, IT, credit, market, operational liquidity, business and reputational). |
CLIENT RELATIONS/SALES/MARKETING |
3/10 |
Experience in sales, marketing, brand development and interpreting client behaviors. |
INNOVATION, DATA AND TECHNOLOGY |
9/10 |
Experience with innovative technology, digital content or enterprise technology-driven issues such as privacy, cybersecurity, data management, and the regulatory landscape surrounding technological development. |
CORPORATE, ENVIRONMENTAL AND SOCIAL AFFAIRS |
9/10 |
Experience in corporate affairs, philanthropy, community development, diversity, environmental, corporate and social responsibility and/or in investor relations. |
HUMAN CAPITAL MANAGEMENT/EXECUTIVE COMPENSATION |
9/10 |
Experience with making executive compensation decisions, including understanding the regulatory and financial considerations to take into account when making such decisions, and human capital management, including issues relating to succession planning; talent development, including performance reviews of executives; diversity, equity and inclusion; and culture. |
Table of Contents
22 |
MSCI | PROPOSAL NO. 1: ELECTION OF DIRECTORS |
DIRECTOR
CORE COMPETENCIES |
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Ashe |
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Edmunds |
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Fernandez |
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Kinney |
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Perold |
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Rattray |
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Riefler |
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Smith |
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Taneja |
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Volent |
Executive Leadership |
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Governance/Public Company Board |
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Industry Experience |
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Global Perspective/International Experience |
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Investments/Strategy and Corporate Development |
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Financial Expertise |
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Risk Management |
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Client Relations/Sales/Marketing |
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Innovation, Data and Technology |
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Corporate, Environmental and Social Affairs |
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TENURE/AGE/GENDER |
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Tenure |
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8 |
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7 |
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14 |
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12 |
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5 |
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2 |
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14 |
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4 |
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<1 |
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2 |
Age |
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62 |
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66 |
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63 |
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70 |
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63 |
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52 |
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61 |
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55 |
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57 |
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65 |
Gender |
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M |
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M |
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Two or More Races |
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LGBTQ+ |
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Born Outside of the U.S. |
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Table of Contents
2022 Director Nominees
Director since: 2013
Age: 62 years old
Committees:
Audit Committee (Member)
Strategy Committee (Chair) |
|
ROBERT G. ASHE
Independent Lead Director
Mr. Ashe retired from IBM Corporation (“IBM”) in January
2012, where he had most recently served as General Manager of Business Analytics from 2010 to 2012 and before that as General Manager
of Business Intelligence and Performance Management since 2008, following IBM’s acquisition of Cognos Inc. (“Cognos”),
a Canadian provider of business intelligence and performance management software. Mr. Ashe worked for Cognos from 1984 to 2008,
holding various executive positions, including most recently President and Chief Executive Officer from 2004 to 2008, President
and Chief Operating Officer from 2002 to 2004 and Chief Corporate Officer from 2001 to 2002, during a portion of which time he
also served as Chief Financial Officer. He also held various Senior Vice President positions in Worldwide Field Operations, Products
and Application Development Tools from 1996 to 2001. Prior to that, he held various Vice President roles within Product Development
and Corporate Finance. Mr. Ashe holds a Bachelor of Commerce from the University of Ottawa. Mr. Ashe is also a Certified Public
Accountant in Canada.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
Shopify Inc. (May 2015 to present)
PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS:
ServiceSource International, Inc. (March 2013 to May 2020) and Halogen
Software Inc.
(February 2013 to April 2017)
QUALIFICATIONS:
We believe that Mr. Ashe’s over 30 years of experience in the
technology sector, including his oversight of product marketing, software development, revenue growth initiatives and strategic
transactions, render him qualified to serve as one of our directors. As a member of other public company boards and the former
CEO of a public company, Mr. Ashe also brings to the Board insight with respect to the Board’s roles and responsibilities
that are vital to his role as our Lead Director. |
Table of Contents
24 |
MSCI | PROPOSAL NO. 1: ELECTION OF DIRECTORS |
Director since: 2015
Age: 66 years old
Committees:
Audit Committee (Chair)
Compensation Committee (Member) |
|
WAYNE EDMUNDS
Independent Director
Mr. Edmunds previously served as the Interim Group Chief Executive
of BBA Aviation plc from July 2017 to March 2018. He previously served as Chief Executive Officer of Invensys plc at Invensys Systems,
Inc. (“Invensys”) from 2011 until his retirement in 2014. Previously, Mr. Edmunds was Chief Financial Officer of Invensys.
Prior to joining Invensys in 2008, Mr. Edmunds was Senior Vice President of Finance at Reuters America, Inc. from 2005 to 2008.
Mr. Edmunds served as the Chief Financial Officer of Innovance Networks Inc. (“Innovance”) from 2000 to 2004, where
he was responsible for financial planning and operations. Prior to joining Innovance, Mr. Edmunds held other senior management
roles in the technology sector, including working 17 years at Lucent Technologies, Inc., where he served as Vice President of Finance
for the Optical Networking Division and as Vice President of Marketing and Business Development and was responsible for Europe,
Middle East and Africa operations. Mr. Edmunds began his career at Amerada Hess Oil as an analyst in Corporate Treasury. Mr. Edmunds
holds a Bachelor of Arts in accounting from Rutgers University and an M.B.A. in finance from Pace University.
PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS:
Signature Aviation plc (August 2013 to June 2021), Dialight plc (February
2016 to August 2019) and Ashtead Group plc (February 2014 to September 2018)
QUALIFICATIONS:
We believe that Mr. Edmunds’ extensive insight into global companies
in the technology sector and his memberships on the Boards of multiple international companies render him qualified to serve as
one of our directors. |
Director since: 2007
Age: 63 years old |
|
HENRY A. FERNANDEZ
Chairman and CEO
Mr. Fernandez has served as Chairman of our Board since 2007 and as
our CEO and a director since 1998. He also served as head of the MSCI business from 1996 to 1998 and as President from 1998 to
October 2017. Before leading MSCI’s transition to becoming a fully independent, standalone public company in 2007, he was
a Managing Director at Morgan Stanley, where he worked in emerging markets business strategy, equity derivatives sales and trading,
mergers and acquisitions, and corporate and mortgage finance. Mr. Fernandez worked for Morgan Stanley from 1983 to 1991 and from
1994 to 2007. Mr. Fernandez holds a Bachelor of Arts in economics from Georgetown University, an M.B.A. from the Stanford University
Graduate School of Business and pursued doctoral studies in economics at Princeton University.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
Royalty Pharma plc (August 2020 to present)
QUALIFICATIONS:
We believe that Mr. Fernandez’s extensive experience and leadership
in the financial services industry as well as his unparalleled knowledge of MSCI and its business, including as our Chairman and
Chief Executive Officer, render him qualified to serve as one of our directors. |
Table of Contents
Director since: 2009
Age: 70 years old
Committees:
Governance Committee (Member) |
|
CATHERINE R. KINNEY
Independent Director
Ms. Kinney retired from NYSE Euronext in March 2009, having served
as a Co-President and Co-Chief Operating Officer from 2002 to 2008. From 2007 to 2009, she served in Paris overseeing global listings,
marketing and branding, and served as part of the integration team following the merger of NYSE and Euronext in April 2007. Ms.
Kinney joined NYSE in 1974 and rose through the ranks holding management positions with responsibility for several divisions, including:
all client relationships from 1996 to 2007, trading floor operations and technology from 1987 to 1996 and regulation from 2002
to 2004. Ms. Kinney holds a Bachelor of Arts from Iona College and has completed the Advanced Management Program at Harvard Graduate
School of Business. She has received honorary degrees from Georgetown University, Fordham University and Rosemont College.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
MetLife Inc. (April 2009 to present) and SolarWinds Corporation (October
2018 to present)
PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS:
QTS Realty Trust, Inc. (August 2013 to September 2021)
QUALIFICATIONS:
We believe that Ms. Kinney’s management experience, including
her role in overseeing a multinational business, as well as her expertise in corporate governance, including her role in developing
the NYSE corporate governance standards for listed companies, render her qualified to serve as one of our directors. |
Director since: 2017
Age: 63 years old
Committees:
Governance Committee (Chair)
Strategy Committee (Member) |
|
JACQUES P. PEROLD
Independent Director
Mr. Perold was president of Fidelity Management & Research Company,
the investment advisor for Fidelity’s family of mutual funds, until his retirement in 2014. From 2001 to 2009, Mr. Perold
was president of Geode Capital Management, LLC, a sub-advisor to Fidelity. He is currently a trustee of New York Life Insurance
Company’s MainStay mutual funds, a trustee of Partners in Health, and a co-founder, CEO and Chairman of CapShift, a company
focused on enabling impact investments from donor-advised funds and foundations. Mr. Perold holds a Bachelor of Arts degree in
economic history from the University of Cape Town and a post-graduate Bachelor of Arts Honours degree in sociology from the University
of Cape Town.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
Allstate Corporation (December 2015 to present)
QUALIFICATIONS:
We believe that Mr. Perold’s over 30 years of experience and
leadership in strategy and operations as well as experience as an investment professional at one of the world’s largest asset
management firms render him qualified to serve as one of our directors. |
Table of Contents
26 |
MSCI | PROPOSAL NO. 1: ELECTION OF DIRECTORS |
Director since: 2020
Age: 52 years old
Committees:
Audit Committee (Member)
Strategy Committee (Member) |
|
SANDY C. RATTRAY
Independent Director
Mr. Rattray retired from Man Group plc in September 2021, having served
as Chief Investment Officer from 2017 to September 2021. He previously served as Chief Executive Officer of Man AHL from 2013 to
2017 and Chief Investment Officer of Man Systematic Strategies from 2010 to 2013. Prior to holding such positions, he held several
other senior leadership positions at Man Group. Before joining GLG Partners, which was later acquired by Man Group in 2007, he
spent 15 years at Goldman Sachs where he held various positions, including Managing Director and head of the Fundamental Strategy
Group. Mr. Rattray also sits on the MSCI Advisory Council. He holds a Master’s Degree in Natural Sciences and Economics from
the University of Cambridge and a Licence Spéciale from the Université Libre de Bruxelles. He is also a governor
of the Southbank Centre in London.
QUALIFICATIONS:
We believe that Mr. Rattray’s over 25 years of experience in
the global investment industry, including his focus on the technological innovation impacting the industry, render him qualified
to serve as one of our directors. |
Director since: 2007
Age: 61 years old
Committees:
Audit Committee (Member)
Compensation Committee (Chair) |
|
LINDA H. RIEFLER
Independent Director
Ms. Riefler retired from Morgan Stanley in February 2013. Ms. Riefler
served as the Chair of Global Research at Morgan Stanley from June 2011 to February 2013 and prior to that served as the Global
Head of Research from 2008. She was the Chief Talent Officer of Morgan Stanley from 2006 to 2008. In these roles she served on
both the Management Committee and Operating Committee of Morgan Stanley. Ms. Riefler joined Morgan Stanley in 1987 in the Capital
Markets division and was appointed a Managing Director in 1998 while in the Research division. Ms. Riefler holds a Bachelor of
Arts in economics from Princeton University and an M.B.A. from the Stanford University Graduate School of Business.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
CSX Corporation (March 2017 to present)
QUALIFICATIONS:
We believe that Ms. Riefler’s in-depth knowledge of talent management,
risk management, company valuation and the global capital markets render her qualified to serve as one of our directors. |
Table of Contents
Director since: 2017
Age: 55 years old
Committees:
Compensation Committee (Member)
Strategy Committee (Member) |
|
MARCUS L. SMITH
Independent Director
Mr. Smith was the Chief Investment Officer, Canada Equity and a Portfolio
Manager, International Equities at MFS Investment Management (“MFS”) until his retirement in April 2017. As a portfolio
manager, he was responsible for managing the MFS Institutional International Equity Portfolio and the International Concentrated
Portfolio. He joined MFS in 1994 and held a variety of positions, including Chief Investment Officer (Asia) from 2010 to 2012,
based in Boston, Director of Asian Research from 2005 to 2009, based in Singapore, and Equity Analyst from 1995 to 2000, based
in London. Mr. Smith currently also serves as a trustee for certain Eaton Vance funds. Mr. Smith holds a Bachelor of Science from
the University of Mount Union and an M.B.A. from the Wharton School, University of Pennsylvania.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
First Industrial Realty Trust, Inc. (February 2021 to present)
PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS:
DCT Industrial Trust, Inc. (October 2017 to August 2018)
QUALIFICATIONS:
We believe that Mr. Smith’s extensive experience in global financial
markets and as an investment professional, including experience in Asia and Europe, render him qualified to serve as one of our
directors. |
Director since: 2021
Age: 57 years old
Committees:
Audit Committee (Member) |
|
RAJAT TANEJA
Independent Director
Mr. Taneja is currently the President of Technology for Visa Inc.
(“Visa”), a role he has held since September 2019. He joined Visa in November 2013 and served as Executive Vice President
of Technology and Operations until August 2019. Prior to joining Visa, Mr. Taneja was Executive Vice President and Chief Technology
Officer of Electronic Arts Inc. from October 2011 until November 2013. From August 1996 until October 2011, he served in various
roles at Microsoft Corporation (“Microsoft”), including as the Corporate Vice President, Commerce Division. At Microsoft,
Mr. Taneja led the development and deployment of commerce and transaction technologies across its connected services, the company’s
online digital advertising platforms and its first business online service offering. Mr. Taneja holds a Bachelor of Engineering
from Jadavpur University and a Master of Business Administration from Washington State University.
PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS:
Ellie Mae, Inc. (June 2015 to April 2019)
QUALIFICATIONS:
We believe that Mr. Taneja’s over 30 years of experience in
global technology, innovation and research and development render him qualified to serve as one of our directors. |
Table of Contents
28 |
MSCI | PROPOSAL NO. 1: ELECTION OF DIRECTORS |
Director since: 2020
Age: 65 years old
Committees:
Governance Committee (Member)
Strategy Committee (Member) |
|
PAULA VOLENT
Independent Director
Ms. Volent is currently Vice President and Chief Investment Officer
at The Rockefeller University, a role she has held since August 2021. She previously served as Senior Vice President for Investments
and Chief Investment Officer at Bowdoin College from 2006 to June 2021, Vice President for Investments at Bowdoin College from
2002 to 2006, and Associate Treasurer at Bowdoin College from 2000 to 2002. Prior to joining Bowdoin College in 2000, Ms. Volent
served as a Senior Associate at the Yale Investments Office and before focusing on endowment management, she worked as a paper
conservator. She holds an M.B.A. from Yale School of Management, a Master of Arts from the Institute of Fine Arts, New York University
and a Bachelor of Arts from the University of New Hampshire.
CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS:
1stdibs.com, Inc. (June 2021 to present)
QUALIFICATIONS:
We believe that Ms. Volent’s experience as a Chief Investment
Officer at a number of institutions and her engagement with the global investment community render her qualified to serve as one
of our directors. |
Table of Contents
Corporate
Governance
Robust Corporate
Governance Practices
MSCI’s Board of Directors adhere to governance
principles designed to ensure the continued effectiveness of the Board and excellence in the execution of its duties. The Board
has in place a set of governance guidelines reflecting these principles, including the Board’s policy of requiring a significant
majority of the Board to be comprised of independent directors; the importance of reflecting a diversity of occupational and personal
backgrounds and experience on the Board, including with respect to demographics such as gender, nationality, race, ethnicity, geography
and age; and the practice of regularly scheduled executive sessions, including sessions of independent directors without members
of management. The MSCI Corporate Governance Policies reflect our principles on corporate governance matters.
MSCI also has a Code of Ethics and Business
Conduct for directors, executive officers and employees, which is reviewed annually by the Board of Directors. Any amendment to,
or waiver of, the Code of Ethics and Business Conduct that applies to one of our directors or executive officers may be made only
by the Board or a Board committee.
Corporate Governance Highlights
|
|
|
|
● |
All director nominees except our CEO are independent. |
|
● |
Strong, independent lead director and independent Board committees. |
|
● |
One share, one vote. |
|
● |
Annual election of directors. |
|
● |
Proxy access. |
|
● |
Majority vote for uncontested elections and plurality standard for contested elections. |
|
● |
No shareholder rights plan (i.e., a poison pill). |
|
● |
Board oversight of corporate responsibility, enterprise risk management and IT/cyber risk. |
|
● |
Annual Board, committee and director evaluations, with third-party evaluation firm engaged periodically, including in
2019. |
|
● |
Executive session of independent directors held after each quarterly Board meeting. |
|
● |
Limits on multiple board service. |
|
● |
Robust director share ownership and retention guidelines (further enhanced in 2022). |
|
● |
Annual review of Code of Ethics and Business Conduct, committee charters and Corporate Governance Policies. |
|
● |
Annual off-season shareholder outreach around corporate responsibility, including regular director participation. |
|
● |
Full Board participation in succession and progression planning. |
|
● |
Targeted director education program, including leveraging in-house expertise to educate directors on climate. |
|
|
|
Table of Contents
30 |
MSCI | CORPORATE GOVERNANCE |
Composition and Board
Refreshment
Director Qualifications
The Governance Committee’s charter requires
it to review candidates’ qualifications for membership on the Board or a committee of the Board, including making a specific
determination as to the independence of each candidate based on criteria approved by the Board (and taking into account the enhanced
independence, financial literacy and financial expertise standards that may be required under applicable law or NYSE rules for
audit committee membership purposes, and heightened independence standards that may be required under law or NYSE rules for compensation
committee membership purposes). If the Governance Committee determines that adding a new director is advisable, it will recommend
such individual to the Board for appointment as a member of the Board and any committees (as applicable).
Consistent with our Corporate Governance Policies,
when appointing directors, the Board seeks members who combine sound business judgment, professionalism and a broad spectrum of
experience and expertise with a reputation for the highest standards of ethics and integrity. Directors should have experience
in positions with a high degree of responsibility, be leaders or senior managers in the companies or institutions with which they
are or were affiliated and be selected based upon contributions they can make to the Board and management and their ability to
represent and advance the interests of the Company and its shareholders. The Board will also take into account the diversity of
a candidate’s perspectives, background and other demographics. Our diversity objectives are also implemented and monitored
through periodic reviews by the Governance Committee of the composition of the Board and its committees in light of the then-current
challenges and needs of the Board, the Company and each committee, which result in determinations as to whether it may be appropriate
to make changes after considering issues of judgment, diversity, age, skills, background and experience. The composition of our
current Board demonstrates the Board’s commitment to diversity in a number of areas. Women represent 30% of our current director
nominees. Our directors also have differing backgrounds, educations, professional experiences, skills, ages, national origins and
viewpoints.
Tenure
and Board Refreshment
Our Board has shown an ongoing commitment to Board refreshment and to
having highly qualified, independent perspectives in the boardroom. Five of the Company’s director nominees have been
added to the Board since the beginning of 2017. The average tenure of the independent director nominees is currently 6.4
years. The average tenure is 7.2 years if Mr. Fernandez is included. Also, under our Corporate Governance Policies, directors
should not stand for re-election following their 72nd birthday. Since 2019, two directors have retired following their 72nd
birthday and two directors decided not to stand for re-election. These retirements and decisions have provided us with
opportunities for Board refreshment.
|
Jacques
P. Perold
appointed |
|
Marcus L.
Smith
appointed |
|
Patrick
Tierney
retired |
|
Rodolphe M.
Vallee
retired |
|
Wendy E.
Lane
retired |
|
Paula Volent
and Sandy
Rattray
appointed |
|
Alice W.
Handy and
George
W. Siguler
retired |
|
Benjamin
DuPont
retired |
|
Rajat
Taneja
appointed
to Board |
|
|
|
|
|
March 6,
2017 |
|
November 2,
2017 |
|
May 1,
2018 |
|
May 10,
2018 |
|
April 25,
2019 |
|
February 26,
2020 |
|
April 28,
2020 |
|
April 27,
2021 |
|
June 1,
2021 |
|
Director
Re-nomination
The Governance Committee also assesses the performance
of current directors in its evaluation of current directors for re-nomination to the Board or re-appointment to any Board committees.
Table of Contents
New Director
Search Process
Our newest director, Rajat Taneja, was appointed
to the Board in 2021. Mr. Taneja has extensive global technology, innovation and research and development experience. His deep
knowledge around cybersecurity and risk oversight aligned with the objective of the Audit Committee, to which he was appointed.
The appointment of Mr. Taneja was the result of the rigorous search process outlined below.
Our Board is committed to diversity within its
membership. The Governance Committee, as part of the search process for any new director, includes women and diverse talent in
the pool of candidates and any search firm it engages is instructed to identify a diverse slate of candidates. The Board takes
into account diversity of perspectives, background, and other characteristics, including diversity with respect to demographics
such as gender, nationality, race, ethnicity, geography and age.
|
|
|
|
|
|
1
DIRECTOR
RECRUITMENT
PROCESS
|
|
The Governance Committee, with the feedback of the full Board, identifies key
skills that would best serve the future needs of the Board and the Company. Pursuant to the authority granted in its charter,
the Governance Committee retains a professional search firm to assist in the process of identifying, evaluating and conducting
due diligence on potential director candidates. The Governance Committee instructs the search firm to focus on candidates
with relevant industry experience and to seek a diverse slate of candidates. Using a search firm provides additional assurance
to the Governance Committee that it is conducting a comprehensive search and evaluating a broad and diverse pool of potential
candidates. Additionally, the Governance Committee solicits input from members of management and the Board. |
|
|
2
IDENTIFICATION
AND INTERVIEW OF
CANDIDATES
|
|
From the candidates provided by the third-party search firm as well as
input from directors and management, the Governance Committee identifies
a short list of high-potential candidates, and the search firm then conducts
an initial assessment of these candidates’ skills, experience, background
and availability to commit to Board service.
The Governance Committee Chair meets with a number of candidates. Certain candidates also meet with members of the
Governance Committee, the Chairman and the Lead Director. |
|
|
3
BOARD DECISION
AND NOMINATION
|
|
The Governance Committee presents qualified candidates to the Board. In
reviewing the potential candidates, the Board takes into account the qualifications discussed in “Director Qualifications”
of this Proxy Statement. Following discussion and confirmation of the independence of such candidates, the Board formally
appoints candidates to the Board. |
|
|
4
NEW DIRECTOR
|
|
● The Board
appointed Rajat Taneja to the Board, effective June 1, 2021.
● Mr. Taneja’s Qualifications:
● Over 30 years of global technology, innovation and
research and development experience.
● Leverages his experience to provide invaluable insight
into the continuing transformation of MSCI’s data and technology capabilities.
● Prior public company board experience, including service
on the Technology and Cybersecurity Committee and Governance and Corporate Responsibility Committee. |
|
|
|
|
|
|
Proxy Access
In response to shareholder engagement, we amended
our Bylaws in 2020 to permit a shareholder, or a group of up to 20 shareholders, owning at least three percent of the Company’s
outstanding common stock continuously for at least three years to nominate and include in the Company’s annual meeting proxy
materials director nominees constituting the greater of two directors or twenty percent of the total number of directors on the
Board, provided that such shareholder(s) and nominee(s) satisfy the requirements specified in the Bylaws.
Table of Contents
32 |
MSCI | CORPORATE GOVERNANCE |
Structure
of our Board
Independent
Board |
|
|
|
|
Under the MSCI Corporate Governance Policies, the full Board affirmatively determines the independence
of directors and reviews the financial and other relationships between the independent directors and MSCI as part of its assessment
of director independence. The Governance Committee also makes specific determinations as to the independence of each candidate
when reviewing candidates’ qualifications for membership on the Board or a committee of the Board. Director independence
is also monitored by the full Board on an ongoing basis. |
|
Our Corporate Governance Policies provide that
the Board should have a significant majority of independent directors meeting the independence requirements of the NYSE. Our Board
has determined that each of Messrs. Ashe, Edmunds, Perold, Rattray, Smith, and Taneja and Mmes. Kinney, Riefler and Volent is independent
in accordance with the requirements of our Corporate Governance Policies, which follow the NYSE rules and guidelines. In making
such determinations, there were no material transactions, relationships or arrangements not disclosed herein under “Other
Matters—Certain Transactions” to be considered by the Board in determining whether each director was independent. Therefore,
9 of our 10 current directors are independent. Only Mr. Fernandez is not independent because of his position as CEO of MSCI.
All members of the Audit Committee, Compensation
Committee, Governance Committee and Strategy Committee satisfy the independence requirements of the NYSE. In addition, each member
of the Audit Committee and Compensation Committee meets the heightened independence standards of the NYSE required for audit committee
and compensation committee members, respectively.
Board
Leadership
The Governance Committee is responsible for
the continuing review of the governance structure of the Board, and for recommending to the Board those structures and practices
best suited to MSCI and its stockholders. The Governance Committee and the Board recognize that different structures may be appropriate
under different circumstances.
We believe that it is in the best interests
of MSCI and its shareholders to combine the roles of Chairman and CEO at this time, alongside a robust and independent Lead Director.
We believe Mr. Fernandez is best situated to serve as Chairman because he is the director most knowledgeable about the Company’s
products, services and industry, and is in a position to effectively identify strategic priorities, recommend appropriate agendas
and lead the execution of our strategy. We also believe that combining the role of Chairman and CEO facilitates the flow of information
between management and the Board, provides clear accountability and promotes efficient decision making, all of which are essential
to effective governance.
A strong, independent Lead Director with clearly
defined duties and responsibilities further enhances the contributions of MSCI’s independent directors, which have been and
continue to be substantial. Robert G. Ashe has been our Lead Director since April 2018. As Lead Director, Mr. Ashe has significant
authority and responsibilities to provide for an effective and independent Board. At the same time, the Company’s other independent
directors bring experience, oversight and expertise from various perspectives and disciplines.
The Board strongly believes that its leadership structure strikes the right balance of allowing
our Chairman and CEO to promote a clear, unified vision for the Company’s strategy, providing the leadership critical
for effectively and efficiently implementing the actions needed to ensure strong performance over the long term, while ensuring
robust, independent oversight by the Board and the Lead Director. The key attributes and responsibilities of the Chairman
and the Lead Director roles (which are set forth below) have evolved over time to make MSCI’s leadership both decisive
and effective, and to enable the Company to execute on its growth strategies. |
Table of Contents
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CHAIRMAN AND CEO |
|
|
LEAD DIRECTOR |
● Unparalleled historical knowledge and depth of understanding
of the Company and its businesses
● Oversees the Executive Committee (which includes all
of our executive officers) in its day-to-day management of the Company
● Chairs Board meetings and annual shareholder meeting
● Works with the Lead Director to set agendas for Board
meetings (which the Lead Director approves)
● Collaborates with the Board on the Company’s
strategy and leads management in implementing that strategy
● Meets frequently with clients and shareholders and
communicates feedback to the Board and senior management
● Manages the development of senior management and our
businesses to succeed in a dynamic and competitive landscape |
|
|
● Strong and independent leadership style
● Appointed annually by the Board’s independent
directors
● Presides at all meetings of the Board at which the
Chairman is not present and has the authority to call independent director sessions
● Approves other Board related materials (directors,
acting through the Lead Director, may propose matters to be included on the agenda for a meeting)
● Approves Board meeting agendas and schedules to assure
sufficient time for discussion of all items
● Facilitates a strong, independent oversight function
by leading executive sessions of independent directors at least after every quarterly Board meeting
● Facilitates communication between the Chairman and
independent directors
● Leads Board and individual director evaluations
● Meets directly with management other than the CEO
and President & COO
● Consults and directly communicates with shareholders
and other key constituents, as appropriate
● Collaborates with the Compensation Committee to oversee
management succession planning efforts |
While we believe that continuing to combine
the roles of Chairman and CEO is the most effective leadership structure for our Board and the Company at this time, our Bylaws
and Corporate Governance Policies also permit a structure where the CEO would not serve contemporaneously as the Chairman of the
Board should the separation of such roles be deemed appropriate and in the best interests of MSCI and its shareholders in the future.
Committees
of the Board of Directors
Our Board has adopted a written charter for each of the Audit Committee, Compensation
Committee, Governance Committee and Strategy Committee setting forth the roles and responsibilities of each committee. The Board
and each committee may, from time-to-time, form and delegate authority to subcommittees when appropriate. Each committee annually
reviews and assesses the adequacy of its charter and recommends any proposed changes to the Board for approval. You may access
these charters on our website’s Investor Relations homepage (https://ir.msci.com).
The table below provides detail on the composition
of each of our designated standing committees as of March 16, 2022.
Name
of Director |
|
Audit
Committee |
|
Compensation
Committee |
|
Governance
Committee |
|
Strategy
Committee |
Henry A. Fernandez(1) |
|
|
|
|
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|
|
|
Robert G. Ashe |
|
|
|
|
|
|
|
|
Wayne Edmunds |
|
|
|
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|
|
|
|
Catherine R. Kinney |
|
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|
|
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|
Jacques P. Perold |
|
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Sandy C. Rattray |
|
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Linda H. Riefler |
|
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Marcus L. Smith |
|
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|
Rajat Taneja(2) |
|
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Paula Volent |
|
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|
(1) |
Mr. Fernandez is not a formal member of any committee, but he attends most meetings for each committee. |
|
|
|
Chair |
(2) |
Mr. Taneja was appointed to the Board and to the Audit Committee on June 1, 2021. |
|
|
|
Member |
Table of Contents
34 |
MSCI | CORPORATE GOVERNANCE |
AUDIT AND RISK
COMMITTEE |
MEMBERS:
Wayne Edmunds (Chair)
Robert G. Ashe
Sandy C. Rattray
Linda H. Riefler
Rajat
Taneja
MEETINGS HELD
IN 2021: 9
● All
members are independent within the meaning of the NYSE standards of independence for directors and audit committee members.
● All
members satisfy NYSE financial literacy requirements, each of Messrs. Ashe, Edmunds and Rattray and Ms. Riefler have accounting
or other related financial management expertise, and Messrs. Ashe and Edmunds have been designated as “audit committee
financial experts,” as defined by SEC rules.
|
|
PRIMARY RESPONSIBILITIES:
● Oversees
the integrity of the Company’s financial statements, internal controls over financial reporting and risk assessment
and risk management (including major financial risk exposures and cybersecurity risks).
● Appoints
and determines the compensation of the independent auditor.
● Evaluates
the qualifications, independence and performance of the independent auditor, including obtaining a report of the independent
auditor describing the items set forth in the Audit and Risk Committee’s charter, including those required by the
Public Company Accounting Oversight Board.
● Pre-approves
audit and permitted non-audit services.
● Reviews and evaluates the audit plan, performance, responsibilities, budget and staffing of the Company’s internal audit function.
● Reviews
and discusses with management and the independent auditor the annual audited and quarterly unaudited financial statements
included in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively.
● Establishes
procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls
or auditing matters and (ii) the confidential, anonymous submission by the Company’s employees of concerns
regarding questionable accounting or auditing matters, and the review of any submissions received pursuant to such procedures.
● Reviews
reports from management relating to the status of compliance with legal and regulatory requirements.
● Reviews
with management (i) the Company’s key business risks, including the Company’s major regulatory, litigation
and financial risk exposures and technology and cybersecurity risks, (ii) policies and practices with respect to risk
governance, risk assessment and risk management, and (iii) the steps that have been taken to assess, monitor and control
such risks.
● Reviews
the Company’s enterprise risk management program, including its risk governance framework and risk management practices
that facilitate the identification, assessment, mitigation and public reporting of risks that may affect the Company.
KEY AREAS OF FOCUS IN 2021:
● Climate
risk considerations in light of increasing interest by stakeholders.
● Risks
associated with IT and cybersecurity.
● Risk
management and governance of data and research used in our ESG and Climate business.
The Audit Committee changed its name
in 2021 to the Audit and Risk Committee to provide greater alignment with the full duties and responsibilities outlined
in the Audit and Risk Committee’s Charter and reflect the broad scope of its oversight responsibilities.
Further
details on the role of the Audit and Risk Committee, as well as the Audit and Risk Committee Report, may be found in “Audit
Matters—Audit and Risk Committee Report” on page 97 of this Proxy Statement.
|
Effective June 1, 2021, Rajat Taneja began serving
on the Audit and Risk Committee. Mr. Taneja is independent within the meaning of the NYSE standards of independence for audit
committee members and satisfies the NYSE financial literacy requirements.
Table of Contents
COMPENSATION, TALENT AND CULTURE COMMITTEE
MEMBERS:
Linda H. Riefler (Chair)
Wayne Edmunds
Marcus L. Smith
MEETINGS HELD
IN 2021: 8
● All members are independent within the meaning of the NYSE standards of independence
for directors and compensation committee members.
● All members qualify as “non-employee directors” for purposes
of Rule 16b-3 under the Exchange Act.
|
|
PRIMARY RESPONSIBILITIES:
● Reviews the Company’s compensation strategy and reviews and approves
the Company’s compensation and benefits policies generally, including reviewing and approving any incentive compensation
and equity-based plans of the Company that are subject to Board approval and the Company’s stock ownership guidelines for
Executive Committee members.
● Identifies, reviews and approves corporate goals and objectives to be used
in the Company’s compensation programs, sets compensation for the Company’s executive officers and such other members
of senior management as the Committee determines (the “Executives”), and evaluates each Executive’s performance,
each in light of such goals and objectives.
● Reviews and approves the compensation of the Company’s CEO and each
of the Company’s other Executives, including: base salary; annual and long-term incentive compensation; employment, severance
and change in control agreements; and any other compensation, ongoing perquisites or special benefit items.
● Reviews non-employee director compensation every two years and recommends
changes to the Board, when appropriate.
● Periodically reviews, in consultation with the CEO, the Company’s management
succession planning and oversees the Company’s talent management, progression planning, career progression and retention
strategies and programs, including the Company’s learning and development and DE&I programs.
● At least annually, reviews the Company’s DE&I programs including
their key performance metrics.
● Periodically reviews the Company’s initiatives and strategies relating
to corporate culture, including considering the Company’s performance and pay-for-performance alignment when reviewing the
workplace environment and culture and periodic reviews of the results of the Company’s employee engagement and external
surveys.
● Reviews and discusses with management the “Compensation Discussion
and Analysis” section of the Company’s annual proxy statement, prepares the Compensation, Talent and Culture Committee
Report required by SEC rules and recommends to the Board the inclusion of each in the Company’s annual proxy statement (included
on pages 57 and 86 of this Proxy Statement, respectively).
● Reviews and makes recommendations to the Board with respect to the frequency
with which the Company will conduct “Say on Pay” votes, taking into account the results of the most recent shareholder
advisory vote on frequency of “Say on Pay” votes, if any, and reviews and approves the proposals regarding the “Say
on Pay” vote and the frequency of the “Say on Pay” vote to be included in the Company’s proxy statement.
● Considers the independence requirements of the NYSE prior to selecting a
compensation consultant, legal counsel or other advisor and evaluates the performance of such advisors and approves all related
fees.
● At least annually, reviews and assesses the adequacy of the Company’s
Global Human Rights Policy, including any related disclosures, and recommends any proposed changes to the Board, if required.
KEY AREAS OF FOCUS IN
2021:
● In light of the COVID-19 pandemic, received ongoing reports from management
around employee well-being, remote work resources and the transition to the Future of Work, our new way of working that provides
greater flexibility for a vast majority of our employees.
● Focused on enhancing DE&I initiatives.
● Advised management on linking target annual cash incentives to achievement
of individual DE&I goals.
● Focused on MSCI’s organizational design and development to align with
an enhanced focus on complete client-centricity.
Compensation Committee Interlocks and Insider Participation: None.
The Compensation and Talent Management Committee changed its name in 2021 to the Compensation, Talent and Culture Committee
to provide more clarity and transparency on the committee’s oversight of talent management and corporate culture and reflect
the broad scope of its oversight responsibilities.
|
Benjamin F. duPont ceased serving on the Compensation
Committee in connection with his retirement from the Board, effective April 27, 2021.
Table of Contents
36 |
MSCI | CORPORATE GOVERNANCE |
GOVERNANCE AND CORPORATE RESPONSIBILITY COMMITTEE
MEMBERS:
Jacques P. Perold (Chair)
Catherine R. Kinney
Paula Volent
MEETINGS HELD IN
2021: 5
● All members are independent within the meaning of the NYSE standards of independence
for directors.
|
|
PRIMARY RESPONSIBILITIES:
● Annually reviews the size and composition of the Board and its committees
in light of the current challenges and needs of the Board, the Company and each committee and considers the skills, background
and experience of each director in doing so.
● Oversees searches for candidates for election to the Board and recommends
criteria and individuals for appointment to the Board and its committees. As part of the search process for each new director,
focuses on identifying women and other diverse talent in the pool of candidates.
● Retains any search firm that assists the Governance Committee in identifying
candidates and maintains sole authority to approve all such search firms’ fees and other retention terms.
● Makes recommendations to the Board as to determinations of director independence.
● Oversees and approves the process and guidelines for the annual evaluation
of performance and effectiveness of the Lead Director, the Board and its committees, and individual directors.
● Oversees the Company’s policies and initiatives related to corporate
responsibility matters, including environmental stewardship (such as related to climate change) and other sustainability matters.
Reviews with Company’s management, including the Chief Responsibility Officer, the Company’s related practices, disclosures,
ratings from various providers and risks.
● Evaluates the Company’s shareholder engagement practices and considers
feedback received from shareholders.
● At least annually, reviews and assesses the adequacy of the Company’s
Corporate Governance Policies and Code of Ethics and Business Conduct and oversees compliance therewith. Reviews with Company’s
management, including the Head of Compliance, the Company’s Compliance program, priorities, initiatives, risks and mitigations.
● At least annually, reviews and assesses the adequacy of the Company’s
Related Person Transactions Policy and reviews related person transactions pursuant to the Related Person Transactions Policy.
● At least annually, reviews and assesses the adequacy of the Company’s
Corporate Political Activities Policy, including any related disclosures, and recommends any proposed changes to the Board, if
required.
KEY AREAS OF FOCUS IN 2021:
● On an ongoing basis, reviewed Board composition and Board skills needed,
with a focus on enhancing diversity in ongoing director searches and led the director search process resulting in the appointment
of one new director in 2021.
● Focused on policies and initiatives related to the Company’s carbon
commitments, including the goal of net-zero emissions before 2040.
● Drove enhancements to the Board education program by increasing informal
remote- learning sessions for deep-dives on certain areas of the Company’s business, including on ESG and climate.
The Nominating and Corporate Governance Committee changed its name in 2021 to the Governance and Corporate Responsibility Committee to provide
more clarity and transparency on the committee’s oversight of corporate responsibility, ESG and climate and other sustainability
matters and to reflect the broad scope of its oversight responsibilities.
|
Mr. duPont ceased serving on the Governance Committee
in connection with his retirement from the Board, effective April 27, 2021.
Table of Contents
STRATEGY AND FINANCE COMMITTEE
MEMBERS:
Robert G. Ashe (Chair)
Jacques P. Perold Sandy C. Rattray
Marcus
L. Smith
Paula Volent
MEETINGS HELD
IN 2021: 10
● All
members are independent within the meaning of the NYSE standards of independence for directors.
|
|
PRIMARY RESPONSIBILITIES:
● Evaluates
management’s recommendations with respect to the strategic direction of the Company and regularly consults with
the Board on the objectives of the Company’s strategic plans and management’s implementation of such plans.
● Reviews
and makes recommendations with respect to the agenda for Board strategy meetings with management, taking into account
issues important to the full Board.
● Reviews
and makes recommendations to the Board with respect to any mergers, combinations, acquisitions, divestitures, joint ventures,
minority investments and other strategic investments, and any financings for mergers, acquisitions and other significant
financial transactions, in each case requiring the Board’s approval.
● Reviews
and oversees management’s plans and objectives for the capitalization of the Company, including target leverage
levels and the structure and amount of debt and equity required to meet the Company’s financing needs.
● Oversees
the Company’s share repurchase programs, subject to Board-approved policies.
● Reviews
and recommends for approval by the Board changes to the Company’s dividend policy.
KEY AREAS OF FOCUS IN 2021:
● Advised
management on its capital allocation program, including with respect to its approach to share repurchases, refinancing
the Company’s debt and increasing the Company’s quarterly dividend.
● Focused
on the competitive landscape and advised management on merger, partnership and acquisition opportunities, with a focus
on the private asset segment, including the acquisition of Real Capital Analytics.
● Collaborated
with management on the agenda for the Board’s two-day strategy session to ensure alignment with internal investments
and growth opportunities.
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Table of Contents
38 |
MSCI | CORPORATE GOVERNANCE |
Engagement and Evaluation of
our Board
Attendance at Board Meetings and Annual Meeting
of Shareholders
|
|
|
|
|
|
EACH DIRECTOR ATTENDED AT
LEAST |
10 |
|
10 |
|
4 |
|
75% |
BOARD
MEETINGS
|
|
EXECUTIVE SESSIONS,
WHICH FOLLOWED THE BOARD MEETINGS
|
|
OCCASIONS WHERE THE
BOARD TOOK ACTION BY UNANIMOUS WRITTEN CONSENT
|
|
OF THE TOTAL BOARD MEETINGS AND COMMITTEE MEETINGS
ON WHICH THE DIRECTOR SERVED THAT WERE HELD WHILE THE DIRECTOR WAS A MEMBER
|
Our Board met ten times, held independent director
executive sessions following all ten of those meetings and took action by unanimous written consent on four occasions during 2021.
Each director attended at least 75% of the total meetings of the Board and committees on which the director served that were held
while the director was a member.
Discussions between the Board and management on
strategic direction, new business opportunities and the scope and mix of the Company’s products were held at each quarterly
Board meeting. In addition to formal meetings, members of our Board informally interact with senior management on a periodic basis
and participate in informal director education sessions.
Our Corporate Governance Policies state that directors
are expected to attend the annual meetings of shareholders. In 2021, all of our directors who were on the Board at the time attended
our annual meeting of shareholders.
Independent Director Meetings
Our Corporate Governance Policies provide that our
Lead Director will preside over non-employee director sessions. The Lead Director presided over ten independent director sessions
during 2021. The Board’s standing committees also have a practice of holding executive sessions after their quarterly meetings.
Our Corporate Governance Policies further provide that if any non-employee directors are not independent, then the independent
directors will meet at least once a year in an independent director session and the Lead Director will preside over each such
independent director session. During 2021, all non-employee directors were independent.
Director Education and Orientation Program
Directors are encouraged and provided with opportunities
to attend educational sessions on subjects that can assist them in performing their duties. Pursuant to the Director Education
Policy, the Company will reimburse directors for reasonable costs incurred from attending these sessions. In addition to external
educational opportunities, directors participate in educational sessions, including product line reviews presented by the heads
of our product lines. Directors also participate in an annual review of leading corporate governance practices by corporate governance
experts, briefing sessions on topics that present special risks and opportunities and updates on accounting topics. The Company
is also part of a peer-engaged program designed to enhance director performance, and we leverage virtual platforms to provide
deep dive sessions on certain aspects of MSCI’s business outside of quarterly meetings. In 2021, the Board held virtual
learning sessions on, among other things, climate change science, climate investments, net-zero commitments, our go-to-market
strategy and our data and technology strategy. In 2022 and following a return to in-person meetings, these virtual sessions are
expected to continue and will be used to further educate the Board on, among other things, climate-related risks and opportunities
and DE&I initiatives.
All new directors participate in a director orientation
program that includes briefings by senior management representing the heads of product lines and key functional areas on topics
that include, among others, the Company’s strategic plans, capital structure, product overviews, historical financial performance
and key policies and practices, including compliance and trading policies. New directors are also encouraged to attend all committee
meetings during their first year on the Board. In 2021, Mr. Taneja joined the Board while the Company was still in a remote working
environment. His director orientation program was conducted virtually, which allowed for more streamlined sessions with increased
global participation by senior management.
Table of Contents
Board and Individual Director Evaluations
In addition to the ongoing assessment of the functioning
of the Board, each year, our directors formally evaluate the effectiveness of the Board and its committees through a self-assessment
administered by our directors and management. Directors respond to questions designed to elicit information that will be useful
in improving Board and committee effectiveness. Such feedback is discussed during executive session and, where appropriate, addressed
with management. The process for this annual feedback is set forth below.
|
1
INITIATION OF PROCESS
|
The members of the Governance Committee provide their thoughts on the factors to be used in evaluating
the Board, its committees and individual directors. The Corporate Secretary prepares a director self-assessment questionnaire
based on these factors. In 2021, MSCI’s Chief Diversity Officer also reviewed and provided updates to the questionnaire
to ensure that it properly reflected the importance of DE&I considerations. The Governance Committee also oversees and
approves the process and guidelines for the annual evaluation of the performance and effectiveness of the Lead Director. |
|
|
2
EVALUATION
|
Each director then completes an anonymous self-assessment questionnaire covering a range of topics, including structure,
culture, and roles of the Board and its committees. The Lead Director also conducts individual director evaluations through
interviews with each director on an annual basis. |
|
|
3
DISCUSSION
|
The Corporate Secretary compiles the quantitative and qualitative data from the questionnaires and consults with the Lead
Director and the Chair of the Governance Committee on the results. The Lead Director and Chair of the Governance Committee
review the results with the full Board in executive session. |
|
|
4
FOLLOW-UP
|
The Lead Director and Chair of the Governance Committee then discuss with the management the feedback provided by the
Board and any enhancements in practices that may be warranted. |
|
|
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|
5
FEEDBACK
AND RECENT INITIATIVES
|
ENHANCED REVIEW OF STRATEGIC GOALS:
● Periodic review with Board on strategic initiatives
● Board and committee agendas increasingly focus on “forward-looking”
topics
|
INCREASED FOCUS ON ESG AND CLIMATE:
● Governance Committee assigned responsibility for ESG and climate
oversight
● Chief Responsibility Officer provides quarterly reports to the Governance
Committee
● DE&I goals required for all Managing Directors, and tied to individual compensation
● For Executive Committee members, climate commitment goals added to KPI goals
|
|
|
|
ENHANCED DIRECTOR EDUCATION PROGRAM:
● Joined peer-engaged program designed to enhance director performance
● Leveraged virtual platforms to provide deep- dive sessions on certain
aspects of MSCI’s business outside of quarterly meetings, including climate |
SUCCESSION PLANNING AND TALENT MANAGEMENT:
● President & COO meets quarterly in executive session with independent
directors
● Potential successors to senior management invited to speak at Board
meetings for additional exposure
● Succession planning at levels beyond the Executive Committee; accelerated
development of current internal candidates at all levels |
|
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|
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Table of Contents
40 |
MSCI | CORPORATE GOVERNANCE |
The Board may also periodically engage a third-party
evaluation firm as part of this process. In 2019, a third-party evaluation firm met with certain members of senior management
and members of the Board. The feedback from the third-party evaluation firm was considered by the Board and, where appropriate,
the Board recommended enhancements to its practices based on such feedback.
Shareholder Engagement
By
the Numbers: Shareholder Engagement in 2021 |
|
WE HELD OVER 300 MEETINGS with our shareholders,
prospective shareholders and sell-side analysts, during which we MET WITH SHAREHOLDERS REPRESENTING
~58% OF OUR SHARES OUTSTANDING, with participation at certain meetings by our CEO, President & COO, CFO,
Head of Investor Relations, Chief Responsibility Officer and other members of senior management |
|
10 INVESTOR CONFERENCES AND 8 NON-DEAL ROADSHOWS AND ANALYST
SPONSORED EVENTS to discuss topics including long-term growth opportunities, strategic execution, financial performance,
capital allocation and corporate responsibility |
|
|
|
SUCCESSFUL INVESTOR DAY which highlighted the
achievement of our financial performance over the last several years, as well as provided a deeper understanding of our key
strategic initiatives and an update on our long-term financial outlook |
|
REWARDING CORPORATE RESPONSIBILITY ROADSHOW where
we met with our top shareholders representing more than 40% of our outstanding shares to discuss our corporate responsibility
practices |
We believe that engaging with our shareholders,
prospective shareholders and sell-side analysts is the best way to address the issues that matter most to them. Dialogue with
these constituencies helps us understand their perspectives on the Company’s goals and expectations for performance, as
well as identify issues that might affect our long-term strategy, corporate governance and compensation practices. As such, we
offer several opportunities to provide feedback to our Board and senior management, including inviting certain shareholders to
address the Board to present their views on the Company.
Our Investor Relations team leads year-round outreach
efforts with our investors and the investment community. During these engagements, we typically discuss topics such as market
trends affecting our industry, the competitive environment, our go-to-market strategy, our financial performance and our overall
outlook for the Company. In February 2021, we hosted an Investor Day to reiterate our growth opportunities and share management’s
strategy for taking advantage of those opportunities.
We also engage with shareholders before, during
and after the proxy season, including by hosting a Corporate Responsibility Roadshow each winter, to review and receive feedback
on the Company’s governance practices, our corporate responsibility efforts and human capital management strategies and
the design of our executive compensation program. The feedback we receive from these discussions, as well as from third-party
rating agencies, is carefully considered by the Board, the Governance Committee and the Compensation Committee.
During the Corporate Responsibility Roadshow that
we hosted in the winter of 2021, our shareholders focused the discussions on, among other things, the following: (i) our corporate
responsibility practices and disclosures in light of being a leader in ESG ratings and data and our path to Net-Zero and climate
initiatives, (ii) human capital management, including the importance of efforts around DE&I, (iii) talent management and executive
and director succession planning and (iv) Board oversight and governance, including over our corporate responsibility efforts.
These meetings often included a member of our Governance Committee as well as our Head of Investor Relations, Chief Responsibility
Officer, Head of Corporate Responsibility, Chief Diversity Officer, Corporate Secretary, Head of Employer Brand and Talent Pipelines
and Global Head of Compensation and Benefits.
Additional information on our recent actions in
response to investor feedback can be found under Corporate Responsibility on page 12 and beginning on page 45 of this Proxy Statement.
Please see page 66 of this Proxy Statement for additional information on our engagement efforts specific to compensation matters.
Table of Contents
Oversight by our Board
Risk Assessment Responsibilities and Processes
Our Board discusses and receives regular updates on a wide variety
of matters affecting our firm. Our Board is responsible for, and committed to, the oversight of the business and affairs of our
firm. In carrying out this responsibility, the Board’s role in risk oversight is consistent with the Company’s leadership
structure, with management having day-to-day responsibility for identifying, evaluating and managing the Company’s risk exposure
and the Board having the ultimate responsibility for overseeing risk management governance, with a focus on the Company’s
most significant risks. In this role, the Board is responsible for ensuring that the risk-management processes designed and implemented
by management are functioning as intended and that necessary steps are taken to assess, monitor and control key business risks.
In order to maintain effective Board oversight across the entire
firm, the Board delegates to individual committees certain elements of its oversight function, as described in the example below.
The Board then receives regular updates from its committees on individual categories of risk, including strategy, reputation, operations,
climate change, corporate responsibility, people, technology and regulatory. Our Board’s focus on overseeing risk management
also enhances our directors’ ability to provide insight and feedback to senior management.
The Board is assisted in meeting its risk oversight responsibilities
by its committees as described below. The below illustration uses climate-related risks as an example of our risk oversight responsibilities
and processes.
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42 |
MSCI | CORPORATE GOVERNANCE |
Board Oversight: The Climate Example
Board
of Directors
Oversees Major Risks
On an ongoing basis, receives quarterly written reports on enterprise-level
risks, including climate-related risks.
Receives regular reports from each of the
Board’s committees on their areas of risk oversight including, from time-to-time, climate-related risks. |
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Committees |
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|
AUDIT COMMITTEE
● Receives
quarterly updates from our Enterprise Risk Management Officer, which, in 2021, included a review of the governance and
risks of ESG data integrity, as well as of opportunities related to reducing the Company's carbon footprint.
● Receives
quarterly updates from our Chief Information Security Officer on our business continuity plans and IT disaster recovery efforts
to mitigate the impact of potential disruptions, including those that could be caused by climate and extreme weather events. |
|
COMPENSATION COMMITTEE
● Oversees
the Company’s assessment of executive performance against goals, including ESG and climate related goals.
● Oversees
talent management, including talent acquisition and succession planning relating to leaders in our ESG and climate business. |
|
STRATEGY COMMITTEE
● Ensures
that management factors material climate-related risks and opportunities into the Company’s strategy.
● Monitors
and provides guidance on strategic objectives, including on sustainability-related mergers, partnerships and acquisition opportunities
such as for those related to climate-related products and services. |
|
|
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|
GOVERNANCE COMMITTEE
● Oversees
the Company’s corporate responsibility policies and initiatives, including ESG and climate initiatives.
● Receives
quarterly updates from the Chief Responsibility Officer. In 2021, these focused on MSCI’s net-zero commitment, climate-related
initiatives and Corporate Responsibility Operating Plan.
● Members
of the Governance Committee participate in the annual Corporate Responsibility Roadshow to hear and report back to the Board on
shareholders’ priorities, including climate-related risks and opportunities.
● Periodically
reviews with management requests from shareholders and the investment community for climate-related disclosures. |
|
|
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|
Management |
|
|
● Our
management team has day-to-day responsibility for identifying, assessing and managing ESG and climate-related risks and opportunities.
The Company’s Enterprise Risk Oversight Committee oversees the Company’s key risk management activities to ensure that
the Company is identifying, evaluating and managing risks that may have an impact on the Company’s ability to achieve its
operational and strategic objectives, including ongoing assessments of climate risks.
● The
Business Resiliency team assesses the severity, probability and scale of climate-related events, and implements and tests technology
systems to support our business continuity plans.
● Our
Crisis Management Team and Technology Service Operations Management Team oversee all aspects of our disaster and recovery response
efforts, including protecting the general welfare and safety of our employees, data centers, networks, applications supporting
business operations, communications systems and general technology recovery following an extreme weather incident or natural disaster.
Our Internal Audit Team periodically reviews various aspects of these programs to provide independent assessment and assurance
to management and the Board. |
|
Table of Contents
Cybersecurity and Information Security
Awareness
Our Board recognizes that the security of our technology is integral
to our products, our business processes and our infrastructure. The mission of our management-level Information and Technology
Risk Oversight Committee (“ITROC”), led by our Chief Information Security Officer (“CISO”), is to provide
oversight relating to cyber security- and technology-related risks that may present significant impact to our operations, clients,
reputation and financial position. Our IT risk program also includes an incident response plan that provides controls and procedures
for timely and accurate reporting of any material cybersecurity incident, on-going internal and external assessments of our IT
controls and security awareness training for employees.
On a quarterly basis, the Audit Committee is updated on the Company’s
IT risk program by our CISO, including an overview of risks and trends, that is also made available to the full Board. In addition,
the Audit Committee receives updates about the results of assessments conducted by outside advisors who provide independent assessments
of our IT risk program and our response preparedness. The Chair of the Audit Committee informs the Board of any key updates during
his quarterly reports to the Board.
Enterprise
Risk Awareness
Our approach to overseeing new and emerging risks across MSCI
is informed by our management-level Enterprise Risk Oversight Committee (“EROC”), chaired by our Chief Financial Officer.
The EROC provides oversight of MSCI’s risk management activities to ensure that we are identifying, evaluating and managing
risks that may have an adverse impact on our ability to achieve operational and strategic objectives. The enterprise risk management
program currently evaluates risk in numerous areas within MSCI, including technology infrastructure; clients; people, including
talent management and DE&I; financial resilience; legal, regulatory and compliance; and corporate responsibility, including
areas such as climate risk. Within each category, we seek to identify and mitigate risks, enable improved decision-making and prioritization,
and promote monitoring and reporting across functions within the Company. While the EROC captures and monitors risk management
activities regarding our IT security and technology infrastructure, primary reporting and evaluation of risks relating to our technology
infrastructure sits with the ITROC, as detailed above.
On a quarterly basis, the Audit Committee is updated on MSCI’s
enterprise risk management program by our Enterprise Risk Management Officer, including an overview of risks and trends, that is
also made available to the full Board. Quarterly presentations to the Audit Committee include more detailed discussions of emerging
topics and trends. In 2021, these discussions included topics such as ESG and climate-related risks and opportunities as well as
MSCI’s regulatory environment. The Chair of the Audit Committee informs the Board of any key updates during his quarterly
reports to the Board.
Privacy Awareness
Integrated with our IT security program and our enterprise risk
program is our global privacy program. Our privacy program is led by our Chief Privacy Officer and the members of the MSCI Privacy
Office, and it reports into our CISO. Our Privacy Steering Committee meets on a quarterly basis to review key risks and trends,
progress on key initiatives, focus topics and regulatory developments. The Privacy Steering Committee is an essential component
of our efforts to safeguard the processing of personal, sensitive and confidential data at MSCI and provides cross-functional oversight
of our privacy program.
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44 |
MSCI | CORPORATE GOVERNANCE |
Management Succession Planning
One of the Board’s principal responsibilities is to ensure
appropriate succession plans are in place for our senior management and review our executive talent including our potential leadership
bench. The Compensation Committee oversees the process for succession planning for senior management positions. Our CEO and President
& COO also meet regularly with our functions to review talent plans with an aim to identify top talent, including diverse talent,
who have the most potential to progress to the senior-most roles at MSCI.
In January 2022, as part of these efforts and following an extensive
organizational design assessment conducted in 2021, we announced a number of organizational and senior leadership changes, and
we expanded our Executive Committee to reflect MSCI’s ambition to serve as an indispensable partner to clients and the investment
community. This expansion brings together and elevates more of the senior leaders who drive MSCI’s strategy and operations
into MSCI’s primary leadership committee. The new members of the Executive Committee increase the representation from operating
functions, in particular, Research, Technology and Data, and Private Assets. Additional information on our Executive Committee
can be found on the “Our Leadership” section of our website (https://www.msci.com/who-we-are/our-leadership).
DEVELOPING
OUR NEXT GENERATION OF LEADERS |
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EXPOSURE |
|
High-potential leaders are given exposure to our directors through formal presentations at Board or committee meetings,
informal virtual education sessions, one-on-one meetings with individual directors and participation in other Board activities. |
|
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|
FORMAL SUCCESSION PLANNING |
|
Annual formal succession planning and talent review session held by the Compensation Committee, where all directors are
invited to attend. |
|
|
|
This session includes identifying successors and reviewing succession plans for all senior management positions, including
the CEO and President positions. |
|
|
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|
|
ONGOING REVIEWS |
|
The Board holds ongoing reviews of our leadership bench. |
Over the last year, the Company made the following examples of
senior management appointments from its succession pools:
|
March 2021 |
|
● |
Former Head of Japan Client Coverage promoted to Head of APAC Client Coverage and Head of APAC Analytics following predecessor’s departure |
|
January 2022 |
|
● |
Former Head of ESG and Climate promoted to Chief Product Officer and Head of Index |
|
● |
Former Head of ESG Products promoted to Head of ESG and Climate |
|
● |
Former Head of Americas Index Client Coverage promoted to Head of Client Coverage – Americas |
Table of Contents
Corporate Responsibility
As a leader in providing ESG and climate solutions to investors,
we also aim to demonstrate leading corporate responsibility practices and policies that are meaningful to our various stakeholders,
including our shareholders, clients, employees and local communities. This commitment includes our response to climate change and
how we promote DE&I in our workforce.
Our commitment to corporate responsibility is embodied in four
pillars: Better Investments for a Better World, Sustainable Operations, Social Responsibility, and Robust Governance:
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46 |
MSCI | CORPORATE GOVERNANCE |
Focus on Climate: Key Highlights
We take our commitment to climate seriously. As a leader in ESG
and climate research and applications, MSCI is also committed to do its part to address climate change. We are focused on reducing
our carbon footprint and ensuring our approach is well-aligned with our tools and solutions. Some of our recent areas of progress
on our Company’s climate considerations include the ones detailed below.
New Commitments & Policies |
New Actions |
Additional Transparency
Through Reporting |
● Announced
our commitment to the goal of Net-Zero emissions by 2040
● Became
a founding member of the Net Zero Financial Service Provider Alliance
● Announced
our commitment to support the UN SDGs and published a report demonstrating our contribution to four SDGs, using metrics
aligned with our proprietary methodology to assess the SDG alignment of corporates
● Updated
our Environmental Policy to include our net-zero commitment
● Updated
our Supplier Code of Conduct to address emissions in MSCI’s supply chain
● Updated
our Travel Policy to prioritize virtual meetings and the use of low carbon travel options |
● Developed
an internal Sustainable Supplier Management Team to support our efforts to learn about our suppliers’ corporate responsibility
practices and through engagement, seek to align them with our own climate commitments
● Enhanced
our risk management framework to include reporting on climate considerations
● Enhanced
our corporate responsibility governance by creating a Corporate Responsibility Policy Committee
● Conducted
Board education sessions on climate
● Brought
together corporates, pensions and asset managers in roundtables to discuss climate trends and corporate responsibility practices |
● Developed easy-to-access
webpage dedicated to Sustainability Reports & Policies, including:
● UN SDG
Report
● Task Force
on Climate-related Financial Disclosures (TCFD) Report
● Third CDP report,
with an improved grade of A-
● SASB guide
● Sustainable
Finance Disclosure Regulation (SFDR) Report
● Fifth UN
PRI questionnaire |
Table of Contents
Corporate Responsibility Governance
We ensure the robustness of oversight over our corporate responsibility
efforts through our governance process. Through a well-established framework and cross-functional committee structure, with leaders
from across the organization, MSCI incorporates corporate responsibility into its core strategy—reflecting our belief that
sustainable practices are essential to long-term growth. In line with this focus, the Governance Committee oversees the company’s
significant corporate responsibility matters, including corporate responsibility priorities and disclosure, with management having
day-to-day responsibility over these efforts.
In 2021, we enhanced our corporate responsibility governance by
separating our CRC, which reviews corporate responsibility issues and policy proposals, from the newly created CRPC, a smaller
group of Executive Committee members who review strategically significant proposals regarding corporate responsibility policies,
actions and disclosures.
Second, we expanded the CRC, which reports to the CRPC. The CRC
meets on a monthly basis and reviews corporate responsibility trends, shares updates on the implementation of MSCI’s Corporate
Responsibility Operating Plan and reviews MSCI’s corporate responsibility reports. The CRC also considers corporate responsibility
initiatives and makes recommendations to the CRPC on the most strategic ones.
To underscore our commitment to our corporate responsibility efforts,
in 2022, our Chief Responsibility Officer relinquished her role as Head of Index to become fully dedicated to corporate responsibility.
Our
Corporate Responsibility Oversight Framework
Our Chief Responsibility Officer leads the CRPC, where she presents
to MSCI’s key decision makers and/or internal experts on corporate responsibility-related actions that may ultimately be
recommended to our CEO, President & COO and/or the Board. As a member of the Executive Committee, she also brings corporate
responsibility considerations to senior leadership discussions on MSCI’s business strategy and operations. At the Board level,
she provides written updates to the Governance Committee in advance of each quarterly meeting on MSCI’s corporate responsibility
efforts. The full Board also has access to these updates. In addition, at least twice per year, she presents to the Governance
Committee on key initiatives and management’s performance against our Corporate Responsibility Operating Plan. In 2021, the
Corporate Responsibility Operating Plan was largely informed by feedback from our stakeholders to increase our transparency in
areas such as climate and DE&I. Key developments are shared with the full Board during the Governance Committee’s quarterly
report to the Board.
The Head of Corporate Responsibility was appointed in 2021 and
reports to the Chief Responsibility Officer. She leads our officer-level CRC in its efforts to broaden the scope of perspectives
that review the Company’s corporate responsibility actions.
Table of Contents
48 |
MSCI | CORPORATE GOVERNANCE |
The Board’s Oversight of Corporate Responsibility
Board
of Directors |
|
|
|
|
|
|
|
|
|
Chairman/CEO
Henry Fernandez |
|
Oversees
Board Process |
|
Meets
Independently
with Board |
|
President &
COO
Baer Pettit |
|
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Governance and Corporate Responsibility Committee |
|
|
Compensation, Talent and Culture Committee |
|
|
Audit & Risk Committee |
|
|
Strategy & Finance Committee |
● Chief Responsibility Officer* provides quarterly updates
● Corporate Secretary+ manages annual review
of charters and Board policies
● Head of Compliance provides annual update
● External Counsel leads annual governance review
● Governance Committee oversees shareholder engagement
on corporate responsibility matters, including participation by its members in annual Corporate Responsibility Roadshow
|
|
|
● Chief Human Resources Officer* oversees quarterly meetings
and succession and progression planning updates
● Chief Diversity Officer+ provides updates
on DE&I initiatives and strategic enhancements
● Head of Compensation & Benefits incorporates
the Compensation Committee’s recommendations into executive compensation program
● Compensation Consultant advises Compensation Committee
on risk assessment and peer and best practices |
|
|
● CFO* and Global Controller+ oversee quarterly
meetings
● Independent Auditor oversees integrity in financial reporting
● Internal Auditor reports to Audit Committee and provides
quarterly updates on audit activities, findings and assurance
● Enterprise Risk Management Officer and Chief Information
Security Officer+ provide quarterly reports |
|
|
● CFO* oversees quarterly meetings
● CFO* partners
with Strategy Committee to develop agenda for annual strategy meeting
● Heads of Product Lines*+ present strategy
at annual strategy meeting |
|
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* |
Member of Corporate Responsibility Policy Committee |
+ |
Member of or function represented on Corporate Responsibility Committee |
|
|
Risk Oversight of Corporate Responsibility
MSCI’s EROC is also integrated into our corporate responsibility
oversight framework. The EROC oversees MSCI’s risk-management governance to ensure that MSCI has an effective process designed
to identify, evaluate and manage risks that may have an adverse impact on MSCI’s ability to achieve its operational and strategic
objectives. Climate-related risks are integrated into MSCI risk reporting, including transition and physical climate risks. The
Audit Committee receives a quarterly update from the Enterprise Risk Management Officer on the work of the EROC, which includes
reporting on climate-related risks.
Additional information on our corporate responsibility efforts, including our
published sustainability reports, can be found on our Corporate Responsibility website (https://www.msci.com/who-we-are/corporate-responsibility).
Human Capital Management
We recognize that our people power our business and that our diverse
workforce and inclusive work environment are critical to our success. Our Compensation Committee’s oversight responsibilities
include our policies relating to DE&I, corporate culture and employee engagement. The Compensation Committee at least annually
receives updates on the Company’s progress on DE&I initiatives, including key performance metrics, and the Chief Diversity
Officer regularly presents to the Compensation Committee. The Compensation Committee also annually reviews MSCI’s Global
Human Rights Policy and related disclosures.
Table of Contents
Learning
and Development |
Diversity,
Equity and Inclusion |
Health
and Safety and Future of Work |
● We are committed
to creating a performance and growth culture of high employee engagement, where every employee takes personal ownership
of their performance, career and professional growth
● We offer tools
and workshops to help employees better understand how their work aligns with our overall strategy, seek and receive feedback
and coaching, successfully deliver on goals and plan and develop their careers. Recent updates include:
● 210%+(1)
increase in our investment in learning and development since 2015
● 5x(1)
growth in the number of participants in our learning and development programs from 2017 to 2021
● We support
employee learning by sponsoring and reimbursing employees for certain certifications and membership dues, ongoing education
and relevant industry conferences and seminars
● Additional
examples of programs offered include:
● Virtual training
programs to build remote capabilities
● Mystery Coffee:
connects employees across the globe for informal networking opportunities
● Career Success
at MSCI: enables employees to plan, manage and take actions aligned with their career aspirations
● Accelerated
Leadership Development: provides one-on-one coaching, leadership skills development, networking and applied learning
● Women’s
Sponsorship/Mentorship program for high performing women
● Integration
programs for new colleagues from Real Capital Analytics |
● Our people
are empowered to maximize their potential in an environment where all individuals are respected and encouraged to bring
their authentic selves to work
● In May 2021,
we appointed our first Chief Diversity Officer
● Continued
sponsorship of existing ERGs, with three new ERGs launched in 2021: Asian Support Network, All Abilities Network and Hola!
MSCI
● Linked 10%
of target annual cash incentive under AIP program to DE&I Goals for all Managing Directors, and created an Executive
Accountability Framework to establish the philosophy and process for assessing progress against DE&I Goals
● Executed 4th
Annual Global DE&I Summit, focusing on leadership development and strategic planning
● Continued
partnerships with multiple external resources for our outreach and engagement with diverse talent, including #10,000 Black
Interns and Rare Recruitment
● Launched an
inclusive internship program in New York, London and Chicago for undergraduates and masters students, sourced from partnership
organizations and key universities globally
● An employee
engagement check-in survey in December 2021 showed that 91% of respondents are proud to work at MSCI and 87% feel they
can bring their authentic selves to work(1) |
● We have a
long-standing commitment to the health, safety and well-being of our employees
● Early in the
course of the COVID-19 pandemic, we prioritized the well-being of our global workforce by having the vast majority of
our employees work from home
● At the onset
of the pandemic, we engaged a firm of global medical and safety experts to provide additional information and guidance
to all of our offices globally
● We have increased
communications about employee assistance programs that provide mental health and emotional well-being support, as well
as resources to help manage stress and care for individuals and their families
● In January
2022, we transitioned to our Future of Work at MSCI, which introduced increased flexibility to how and where employees
work, reimagined our use of our offices, and modernized technology to enhance MSCI’s interactions with clients and
employees
● To protect
the health and safety of our employees, we implemented a global vaccination policy requiring employees and visitors to
be fully vaccinated prior to entering an MSCI office or participating in an MSCI-sponsored function.
● Our Global
Human Rights Policy reflects our commitment to a safe, inclusive and diverse workplace, and is annually reviewed by the
Compensation Committee |
|
|
(1) |
On September 13, 2021, we completed our acquisition of Real Capital Analytics, a provider of data and
analytics for the properties and transactions that drive the global commercial real estate capital markets. This information
does not reflect or include these new employees from Real Capital Analytics. |
|
|
TOTAL EMPLOYEES: GENDER(1)(2) |
|
U.S. EMPLOYEES: RACE/ETHNICITY(1)(3) |
|
|
|
|
|
(1) |
Data as of December 31, 2021. |
(2) |
3% of global employees have not identified gender and are not included in the data calculations. |
(3) |
11% of U.S. employees have not identified race/ethnicity and are not included in the data calculations. |
Table of Contents
50 |
MSCI | CORPORATE GOVERNANCE |
Compensation,
Talent and Culture Governance
The Compensation Committee operates under a written charter adopted
by the Board. To provide more clarity and transparency to investors and stakeholders on Board committee-level oversight of talent
management, in 2021, the Board changed the name of its Compensation & Talent Management Committee to “Compensation,
Talent and Culture Committee.” This corresponds with changes to the Compensation Committee’s charter in 2021 to reflect
more direct oversight of talent management, including talent acquisition, development and career progression, as well as the Company’s
policies relating to DE&I, corporate culture and employee engagement. As noted above in the description of the Compensation
Committee’s responsibilities, the Compensation Committee is responsible for reviewing and approving annually all compensation
awarded to the Company’s Executives, including the CEO and our other NEOs.
The Compensation Committee also regularly engages with our CEO,
President & COO, Chief Human Resources Officer, Chief Diversity Officer and other members of senior leadership on a broad
range of human capital management topics. The Board regularly receives reports from the Compensation Committee on human capital
management topics throughout the year. The Compensation Committee annually reviews the Company’s talent management strategies
and programs with respect to senior levels in the organization, including the Company’s DE&I strategies and programs
and key performance metrics, and periodically reviews open senior management roles, future talent needs, the Company’s corporate
culture and learning and development programs, as well as the results of the Company’s employee engagement survey. See page
35 of this Proxy Statement for additional information on the Compensation Committee’s responsibilities.
The principal compensation plans and arrangements applicable to
our NEOs are described in the “Compensation Matters” section of this Proxy Statement and the executive compensation
tables included therein. The Compensation Committee may delegate the administration of these plans and arrangements, as appropriate,
including to one or more officers of the Company, subcommittees or to the Chair of the Compensation Committee, in each case, when
it deems doing so to be appropriate, in the best interests of the Company and consistent with applicable law and NYSE requirements.
The Compensation Committee has the authority to retain and terminate
any compensation consultant assisting the Compensation Committee in the evaluation of CEO or other executive officer compensation.
As further described in the “Compensation Discussion and Analysis” section included herein, during 2021, the Compensation
Committee continued to retain Semler Brossy Consulting Group, LLC (“Semler Brossy”) as its own independent compensation
consultant to review CEO and other executive officer compensation. All of the services provided by Semler Brossy to the Compensation
Committee during 2021 were to provide advice or recommendations on the amount or form of executive officer and director compensation,
and Semler Brossy did not provide any additional services to the Company during 2021. The Compensation Committee has considered,
among other things, the factors delineated in Rule 10C-1 under the Exchange Act (“Rule 10C-1”), including the NYSE
listing rules implementing Rule 10C-1 and Semler Brossy’s conflict of interest policies, and determined that the engagement
of Semler Brossy does not raise any conflict of interest or other factors that compromise the independence of its relationship
with the Compensation Committee. In developing its views on compensation matters and determining the compensation awarded to our
CEO and other executive officers, the human resources department provides data and analyses to aid the Compensation Committee in
its decisions. The CEO also makes recommendations on compensation for executive officers other than himself and the Compensation
Committee takes these recommendations into account in reaching its compensation decisions. From time to time, the Compensation
Committee may obtain input from external legal counsel, including Davis Polk & Wardwell LLP (“Davis Polk”),
on compensation award documentation and other compensation-related practices, which in 2021 was communicated to the Compensation
Committee via management, the legal department or the human resources department. In light of this relationship, the Compensation
Committee has considered, among other things, the factors delineated in Rule 10C-1, including the NYSE listing rules implementing
Rule 10C-1 and Davis Polk’s conflict of interest policies.
Table of Contents
Director Compensation and Stock Ownership Guidelines
Director Compensation
Director Compensation Best Practices
Robust Director Stock Ownership Guidelines |
|
Each non-employee director is required to own a target number of shares
of stock of the Company equal to the sum of the “net shares” resulting from the vesting of the RSUs granted to
such director for each of the last five years. |
Anti-Hedging and Anti-Pledging Policy |
|
We prohibit all directors and employees, including all NEOs, from hedging or pledging the Company’s common stock
or engaging in short sales, purchases or sales of options, puts or calls, as well as derivatives such as swaps, forwards or
futures and trading on a short-term basis in the Company’s common stock. |
Emphasis on Equity Compensation |
|
The most significant portion of non-employee director compensation is the annual RSU equity
award for service on the Board. |
Director Compensation Program
The Compensation Committee reviews non-employee
director compensation every two years and recommends changes, when appropriate, to the Board. The Compensation Committee is aided
in its review by its external independent compensation consultant, Semler Brossy. The Compensation Committee takes into account
peer benchmarking and broader general industry practices to establish non-employee director compensation.
DIRECTOR FEES |
|
COMMITTEE MEMBERSHIP FEES |
|
|
|
* |
Based on the closing price of our common stock as reported by the NYSE on the trading day prior to
grant. |
Effective May 1, 2022, the cash retainer for serving as chair of the Governance Committee will increase
by $5,000 to $25,000, for parity with the chair role of a number of our other committees. In addition, the grant date values
of the annual RSU equity awards for each non-employee director will increase by $20,000 to $185,000 and for the Lead Director
will increase to $235,000, following a review of peer company and market practice. |
Directors may elect under the terms of the MSCI Inc. 2016 Non-Employee
Directors Compensation Plan (the “Directors Plan”) to receive their cash retainer in the form of shares of our common
stock. Under the Directors Plan, non-employee directors are subject to annual limits on their cash and equity compensation, which
were approved by our shareholders at our 2016 annual meeting of shareholders, as follows: non-employee directors may not receive
in any calendar year (i) options, restricted stock, RSUs and other stock-based awards with a grant date fair value of more than
$1,000,000 (as determined in accordance with
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52 |
MSCI | DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
applicable accounting standards) and (ii) retainers and other cash-based
awards in excess of $1,000,000. These caps cannot be increased without the approval of our shareholders.
RSUs granted to non-employee directors are granted on May 1st of each
year and vest on the first anniversary of the grant date. Cash retainers and RSU awards are prorated when a director joins the
Board and/or a committee at any time other than May 1st. RSUs granted on or after May 1st vest on the next May 1st to occur following
the grant date. For example, if a director joins the Board on February 1, 2022, his or her prorated RSUs will vest on May 1, 2022.
If a director joins the Board on May 31, 2022, his or her prorated RSUs will vest on May 1, 2023.
RSUs are recognized as an expense in the Company’s financial statements
for financial reporting purposes with respect to 2021 in accordance with FASB ASC Subtopic 718-10.
Holders of these RSUs are entitled to participate in dividend equivalent
payments, and such payments may be settled in cash, shares of our common stock, or a combination thereof, to be decided by the
Company in its sole discretion. Prior to the conversion to shares, RSU holders do not have any rights as an MSCI shareholder with
respect to such RSUs, including the right to vote the underlying shares. The RSUs are generally non-transferable; however, our
Board may, in its discretion, specify circumstances under which an award may become immediately transferable and nonforfeitable
or under which the award will be forfeited. The RSUs vest and convert to shares immediately upon termination of service for reasons
of death, disability or a change in control. If service as a director terminates for any other reason, all unvested RSUs will
be cancelled and forfeited unless determined otherwise by the Board or the Compensation Committee.
Non-employee directors are reimbursed for expenses incurred in connection
with attending Board meetings and educational sessions.
Director Deferral Plan
Under the MSCI Inc. Non-Employee Directors Deferral Plan (the “Deferral
Plan”), our directors are permitted to defer receipt of shares of our common stock payable in lieu of cash retainers and/or
upon conversion of RSUs granted to the director following the year for which an election has been submitted; provided that an
election made by a director within 30 days after the director becomes eligible to receive a cash retainer or RSUs shall apply
to any common stock payable in lieu of such a cash retainer and/or upon conversion of such RSUs granted to the director following
the date on which the director makes the election. Receipt of shares of our common stock may be deferred until a future date specified
by the director, a separation from service (as defined by Treasury regulations), or the earlier of the two. While the Deferral
Plan allows for it, the Board has not yet implemented a process for the deferral of cash payments.
2021 Non-Employee Director Compensation
Name |
|
Fees Earned or
Paid in Cash(1)(2)
($) |
|
Stock
Awards(3)(4)
($) |
|
All Other
Compensation(5)
($) |
|
Total
($) |
Robert G. Ashe |
|
114,642 |
|
214,710 |
|
1,777 |
|
331,129 |
Benjamin F. duPont(6) |
|
— |
|
— |
|
9,159 |
|
9,159 |
Wayne Edmunds |
|
120,000 |
|
164,676 |
|
1,363 |
|
286,039 |
Catherine R. Kinney |
|
89,867 |
|
164,676 |
|
75,468 |
|
330,011 |
Jacques P. Perold |
|
110,000 |
|
164,676 |
|
1,363 |
|
276,039 |
Sandy C. Rattray |
|
100,000 |
|
164,676 |
|
1,363 |
|
266,039 |
Linda H. Riefler |
|
115,000 |
|
164,676 |
|
1,363 |
|
281,039 |
Marcus L. Smith |
|
100,000 |
|
164,676 |
|
1,363 |
|
266,039 |
Rajat Taneja(7) |
|
82,231 |
|
150,738 |
|
1,040 |
|
234,009 |
Paula Volent |
|
99,583 |
|
164,676 |
|
1,363 |
|
265,622 |
(1) |
Pursuant to MSCI’s Third Amended and Restated Articles of Incorporation, directors hold office
for a term expiring at the next annual meeting of shareholders. The Board term beginning on April 27, 2021 and ending on April
26, 2022 (the “2021 Board Term”) and the Board term beginning on April 28, 2020 and ending on April 27, 2021 (the
“2020 Board Term”) do not coincide with MSCI’s January through |
Table of Contents
|
December fiscal year. Amounts included in the table above represent cash earned or paid, or stock awards
granted, as applicable, during the year ended December 31, 2021. Because directors are paid for service from May 1 to April
30, prorated amounts are calculated from the applicable date to May 1st of the relevant Board term. |
(2) |
Cash amounts in this column include the annual retainers and committee fees paid during the year ended December 31, 2021.
Four of our directors elected to receive all or a portion of their annual cash retainers in stock as set forth below. The
number of shares issued was determined by dividing the aggregate value of the elected portion of the cash retainer by the
closing price of the Company’s common stock on the trading day prior to the grant date ($485.77 for Mr. Ashe and Mmes.
Kinney and Volent and $461.97 for Mr. Taneja) and rounding down to the next whole share. Mr. Taneja elected to defer receipt
of such shares until the earlier of June 1, 2025 and the 60th day after his “separation from service” as a director
under the Deferral Plan. |
Name |
|
Cash |
|
Stock |
Mr. Ashe |
|
— |
|
$ |
114,641.72 (236 shares) |
Ms. Kinney |
|
— |
|
$ |
89,867.45 (185 shares) |
Mr. Taneja |
|
— |
|
$ |
82,230.66 (178 shares) |
Ms. Volent |
|
— |
|
$ |
99,582.85 (205 shares) |
(3) |
Represents the aggregate grant date fair value of RSUs granted in 2021 in accordance with FASB ASC
Subtopic 718-10. The fair value is calculated by multiplying the closing price of our common stock on the date prior to the
grant date by the number of units awarded. For assumptions regarding these calculations, please see notes 1 and 11 to the
consolidated financial statements included in our 2021 Annual Report on Form 10-K filed with the SEC on February 11, 2022.
However, the values in this column may not correspond to the actual value that will be realized by the non-employee directors
at the time the RSUs vest. The number of RSUs awarded is determined by dividing the aggregate value of the RSU award by the
closing price of the Company’s common stock on the trading day prior to the grant date ($485.77 for Messrs. Ashe, Edmunds,
Perold, Rattray and Smith and Mmes. Kinney, Riefler and Volent and $468.13 for Mr. Taneja) and rounding down to the next whole
RSU. For the 2021 Board term, each of Messrs. Edmunds, Perold, Rattray and Smith and Mmes. Kinney, Riefler and Volent received
339 RSUs, Mr. Taneja received 322 RSUs, and Mr. Ashe received 442 RSUs. These RSUs will vest on May 1, 2022. Ms. Riefler elected
to defer receipt of such shares issuable upon vesting until the 60th day after her “separation from service” as
a director under the Deferral Plan. Mr. Taneja elected to defer receipt of such shares until the earlier of June 1, 2025 and
the 60th day after his “separation from service” as a director under the Deferral Plan. |
(4) |
As of December 31, 2021, each of our non-employee directors had the following outstanding stock awards in the form of
RSUs: Messrs. Edmunds, Perold, Rattray and Smith and Mmes. Kinney, Riefler and Volent each had 339 RSUs outstanding, Mr. Taneja
had 322 RSUs outstanding and Mr. Ashe had 442 RSUs outstanding. |
(5) |
Cash amounts in this column include dividend equivalents paid during the year ended December 31, 2021 in connection with
the Company’s payment of its quarterly cash dividend. Each of Messrs. duPont and Taneja and Mmes. Kinney and Riefler
received shares of our common stock and a cash payment for fractional shares received as a dividend equivalent payment for
outstanding RSUs and in lieu of receiving a cash dividend payment for shares, in each case subject to his or her deferral
election. The table below sets forth the amounts received by each. |
Name | |
Shares |
| Cash Received for Fractional Shares |
Mr. duPont | |
$ | 8,242.33 (19 shares) |
| |
$ | 916.43 |
Ms. Kinney | |
$ | 72,951.85 (137 shares) |
| |
$ | 1,153.87 |
Ms. Riefler | |
| — |
| |
$ | 969.54 |
Mr. Taneja | |
| — |
| |
$ | 1,040.00 |
(6) |
Mr. duPont did not stand for re-election at the 2021 annual meeting of shareholders and served on the
Board through April 27, 2021, and thus did not receive compensation for the 2021 Board Term. |
(7) |
Mr. Taneja was appointed to the Board, effective June 1, 2021. |
Non-Employee Director Stock Ownership Guidelines
Under the Company’s stock ownership guidelines
for non-employee directors, commencing on April 28, 2016, each non-employee director has been required to own a target number
of shares of stock of the Company equal to the sum of the “net shares” resulting from the vesting of the RSUs granted
to such director for each of the last five years, with such aggregate share ownership to be achieved within five years of initially
being elected or appointed to the Board and maintained thereafter. “Net Shares” means the number of shares that would
remain if the shares underlying the equity awards are sold or withheld by the Company to (i) pay the
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54 |
MSCI | DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
exercise price of a stock option, (ii) satisfy any
tax withholding obligations (assuming a tax rate of 50%) or (iii) satisfy any other applicable transaction costs.
Shares that count towards satisfaction of the target
level of stock ownership under the stock ownership guidelines for non-employee directors consist of the following:
(1) |
Shares beneficially owned individually, either directly or indirectly (including any shares beneficially
owned as a result of an election to receive a retainer (or any portion thereof) in shares); |
(2) |
Shares beneficially owned jointly with, or separately by, immediate family members residing in the same household, either
directly or indirectly; |
(3) |
Shares underlying vested and unvested RSUs granted under the Directors Plan; and |
(4) |
Shares for which receipt has been deferred (including any shares held through the Deferral Plan or any other deferred
compensation plan maintained by the Company). |
As of the date of this Proxy Statement, all of our
non-employee directors are in compliance with the Company’s stock ownership guidelines.
Table of Contents
Proposal No. 2
Advisory Vote to Approve Executive Compensation
(Say-on-Pay)
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|
|
|
The Dodd-Frank Act enables MSCI’s shareholders to vote to approve, on an advisory or non-binding basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules.
For an overview of the compensation of our NEOs and our compensation strategy, see “Compensation
Matters—Compensation Discussion and Analysis—Executive Summary” below.
We are asking for shareholder approval of the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules, which include the disclosures under “Compensation Matters—Compensation Discussion and Analysis,” the compensation tables included herein and the narrative following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and practices described in this Proxy Statement.
This vote is advisory and therefore not binding on MSCI, the Compensation Committee or the Board. The Board and the Compensation Committee value the opinions of MSCI’s shareholders. To the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider those shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. MSCI currently conducts annual advisory votes on executive compensation.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast at our 2022 Annual Meeting, at which a quorum is present, is required to approve Proposal No. 2. Abstentions shall not be treated as votes cast.
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Our
Board of Directors Recommends a vote “FOR” the approval of the compensation of MSCI’s Named Executive Officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC.
Proxies solicited by the Board will be voted “FOR” this approval unless otherwise instructed.
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Table of Contents
Compensation
Matters
Table of Contents
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis (referred to as the “CD&A”)
section summarizes our general philosophy with regard to the compensation of our Chief Executive Officer (“CEO”), our
Chief Financial Officer (“CFO”) and Treasurer, and our three next most highly paid executive officers in 2021 (collectively
referred to as “named executive officers” or “NEOs”). The CD&A provides context for the executive compensation
disclosures presented below in both tabular and narrative form. Under its charter, the Compensation Committee reviews the Company’s
compensation strategy and reviews and approves executive officer compensation as well as the Company’s compensation and benefits
program generally. The Compensation Committee approved the compensation structure and amounts for each of our NEOs for 2021 and
also approved enhancements to the long-term equity incentive component of our executive compensation program that became effective
for equity grants in 2021 following feedback we received from our shareholders.
OUR NEOS FOR 2021 ARE:
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HENRY A.
FERNANDEZ |
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ANDREW C.
WIECHMANN |
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C. D. BAER
PETTIT |
|
SCOTT A.
CRUM |
|
ROBERT J.
GUTOWSKI |
Chairman and Chief Executive Officer |
|
Chief Financial Officer and Treasurer |
|
President and Chief Operating Officer |
|
Chief Human Resources Officer |
|
General Counsel |
Highlights
Executive Summary
Our executive compensation program is designed to link pay to performance,
encourage prudent decision-making and risk management, and create a balanced focus on short-term and long-term performance that
fuels shareholder value creation. In the dynamic and competitive environment in which we operate, it is imperative that we maintain
a responsible executive compensation program that encourages and rewards our leaders for achieving short-term and long-term results.
The following table sets forth the key components of our target-based
compensation program in effect in 2021.
PHILOSOPHY
Each of the three components has a different purpose. The sum of the base salary, target annual cash incentive
and target equity incentive creates a target total compensation. Actual cash incentive and equity incentive payouts are dependent
upon the achievement of the relevant AIP and LTIP goals tied directly to the performance of the Company, the product/functional
unit and the individual.
We believe that this target-based incentive structure fosters a culture
of high performance and accountability and promotes shareholder interests by closely aligning executive compensation with objectively
measured Company performance and strategic goal attainment as further described below.
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58 |
MSCI | COMPENSATION MATTERS |
Business
Strategy and Compensation
The diagram below illustrates how our executive compensation program aligns
the strategic initiatives underlying our corporate mission to generate long-term shareholder value creation. The
metrics included in our compensation program are aligned with our strategic initiatives and are designed to measure the
achievement of objectives that not only deliver short- and medium-term returns, but also help to build the foundation for
long-term shareholder value creation.
|
Mission:
to enable investors to build better
portfolios for a better world.
Strategic Pillars
of Growth |
|
|
Extend leadership in research-
enhanced content across
asset classes |
Lead the enablement of ESG and climate
investment integration |
Enhance distribution and content-
enabling technology |
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|
Expand solutions that empower
client customization |
Strengthen client relationships
and grow into strategic
partnerships with clients |
Execute strategic relationships and
acquisitions with complementary
content and technology companies |
|
|
Performance-Based
Compensation |
|
|
SHORT-TERM
(ANNUAL INCENTIVE PLAN CASH BONUS) |
|
|
|
LONG-TERM
(EQUITY GRANTS) |
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|
|
|
|
|
● Restricted Stock Units (for 2021, ratable vest, and
for 2022, cliff-vest after a three-year service period)
● Performance Stock Units (earned based on absolute
TSR CAGR) with a 1-year post vesting mandatory
holding period for 3-Year PSUs
● Performance
Stock Options (earned based on cumulative revenue and cumulative Adjusted EPS) (new for 2022) |
|
2021 Business Highlights
Execution
on Strategic Priorities
Despite the economic uncertainties and social disruptions that continued
throughout 2021, we delivered another year of strong results. In fact, MSCI set a new bar for performance across a number of key
financial and operating metrics in 2021. Our intense client-centricity has enabled us to continue to serve as a go-to partner for
our clients, and we believe that our performance in 2021 demonstrates the strength of our execution and the results of our key
long-term investments. We achieved these results in 2021 while our employees continued to deliver exceptional performance in a
largely remote-work environment.
Table of Contents
Strong Financial Performance
OPERATING REVENUES |
|
DILUTED EPS / ADJUSTED EPS(1)
(Unaudited) |
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|
|
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|
|
NET CASH PROVIDED BY OPERATING
ACTIVITY / FREE CASH FLOW(1)
(Unaudited) |
|
NET NEW SALES(2)
(Unaudited) |
(in thousands) |
|
(in thousands) |
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|
(1) |
“Adjusted EPS” and “free cash flow” are non-GAAP financial measures. See Annex B for definitions
and reconciliations of all non-GAAP financial measures referenced herein. |
|
|
(2) |
Net New Sales is defined as gross sales (new recurring subscription sales plus non-recurring sales) less subscription
cancellations. |
For additional information about key strategic developments and milestones
during 2021, please see the details under “KPI Component and DE&I Goals Component” on page 72 of this Proxy Statement.
Table of Contents
60 |
MSCI | COMPENSATION MATTERS |
Key 2021 Compensation
Decisions
In 2021, despite the continuing complex and challenging operating
environment resulting from the ongoing COVID-19 pandemic, our employees continued to display their resilience and dedication to
our business, which was fundamental to the strong performance we achieved in 2021. The Company remained committed to nurturing
and fostering an “owner-operator,” performance-based culture among employees that aligns compensation with the shareholder
experience.
Specifically, in 2021, we granted a significant portion of our NEOs’
compensation in the form of “at-risk” variable compensation under the LTIP and the AIP. The 2021 LTIP awards granted
to our NEOs consist of a mix of grants of annual RSUs and PSUs (including 3-Year PSUs and 5-Year PSUs) that varies based on the
executive’s position, as further detailed on page 80 of this Proxy Statement. Consistent with our historical practice, Mr.
Fernandez received 100% of his equity compensation in the form of PSUs, with 60% granted in the form of 5-Year PSUs and 40% granted
in the form of 3-Year PSUs. In addition, for 2021, the Compensation Committee:
● |
Increased the proportion of Mr. Pettit’s 5-Year PSUs from 50% to 60% of his overall equity incentive compensation for 2021 (with the remaining 40% granted in the form of 3-Year PSUs), commensurate with Mr. Fernandez; |
● |
Added a one-year post-vest mandatory holding period to the 3-Year PSUs that were granted to our NEOs in 2021, where such shares, or rights with respect to such shares, may not be transferred until the expiration of such holding period; and |
● |
Under the AIP, introduced DE&I Goals for our senior leaders, linked to 10% of target annual cash bonus. |
The Compensation Committee believes that the complimentary performance
metrics and associated performance cycles utilized under the AIP and LTIP collectively encourage our senior executives to manage
our business with an “owner-operator” mindset that focuses on the long-term health of our business and the interests
of our shareholders. Specifically, we believe that PSUs encourage a longer-term orientation to managing our business, while at
the same time, the AIP serves as meaningful check and balance to ensure that our executive compensation program continues to measure
and reward for performance against core financial, operational and strategic milestones in the near-term to fuel the long-term
growth of shareholder value.
The key features of the 2021 RSUs and PSUs are as follows:
|
RSUs: |
|
|
|
● |
Granted to NEOs other than the
CEO and President & COO |
|
● |
Service-vest in three equal installments
in each of 2022, 2023 and 2024 |
|
● |
Structure of this component was unchanged from prior years |
|
● |
Long-term
value of underlying stock tied to share price |
|
|
|
3-YEAR TSR PSUs: |
|
● |
Granted to
all NEOs to facilitate an “owner-operator” mindset |
|
● |
Cliff-vest
at the end of a three-year performance cycle from February 3, 2021 to February 2, 2024, based on achievement of rigorous
absolute TSR CAGR performance metrics |
|
● |
Reflect
the right to receive between 0% and 300% of the target number of shares based on achievement of the TSR CAGR performance
metric over the applicable performance period |
|
● |
Realize meaningful
value only to the extent that shareholders also realize value |
|
● |
Include a
one-year post-vest mandatory holding period, where such shares, or rights with respect to such shares, may not be transferred
until the expiration of such holding period |
Table of Contents
|
5-YEAR TSR PSUs:
|
|
● |
Granted to all NEOs
to facilitate an “owner-operator” mindset |
|
● |
Cliff-vest at the
end of a five-year performance cycle from February 3, 2021 to February 2, 2026, based on achievement of rigorous absolute TSR CAGR
performance metrics |
|
● |
Reflect the right
to receive between 0% and 200% of the target number of shares based on achievement of the TSR CAGR performance metric over the
applicable performance period |
|
● |
Provide “stretch”
opportunity to reward for exceptional long-term value creation over a longer-than-typical performance period |
|
|
|
Key 2022 Compensation
Decisions
In 2021, with the help of its external independent compensation consultant,
Semler Brossy, the Compensation Committee undertook a comprehensive process to research and evaluate an appropriate design for
our 2022 LTIP that applies across MSCI, including to our NEOs, to ensure continued alignment of the LTIP with MSCI’s go-forward
strategic objectives. As part of this review, the Compensation Committee evaluated our current LTIP design against the LTIP practices
of our peers and broader industry LTIP practices. In particular, the Compensation Committee considered the following feedback from
external and internal reviews, including the views of our shareholders:
● |
there was strong continued support for MSCI’s “owner-operator” culture that is advanced by the LTIP; |
● |
the LTIP should focus on a three-year performance period, which is more compelling because it is aligned with the timeframe of MSCI’s strategic planning; and |
● |
the Company should consider complementing the absolute TSR CAGR performance metric in the PSUs with financial metrics that are directly linked to the Company’s strategic plan. In particular, feedback to the Compensation Committee was that a focus on revenue and earnings provided the strongest links to MSCI’s go-forward strategy. |
After a thorough review and evaluation process, the Compensation Committee
designed the 2022 LTIP to further enhance our pay-for-performance culture by incorporating the above described feedback and reviews
and positioning the 2022 LTIP to support the Company’s strategic plan and the need to incentivize continued stock price appreciation.
Specifically, the Compensation Committee made the following enhancements for 2022:
● |
introduced PSOs that are earned and vest based on achievement of two equally-weighted performance metrics that are directly linked to the Company’s strategic plan—cumulative revenue and cumulative adjusted EPS—each measured over a cumulative three-year performance period. The grant of the PSOs in 2022 replaced the 5-Year PSU component of our 2021 LTIP; |
● |
revised the vesting structure of annual RSU grants to cliff-vest 100% at the end of a three-year service period (rather than annual ratable vesting over a three-year period); and |
● |
updated the Company’s share ownership and retention guidelines to provide for even more rigorous requirements. |
As a result of these changes, and as discussed in more detail below,
the Company’s 2022 LTIP consists of grants of annual RSUs, 3-year PSUs and PSOs, with the mix amongst the awards based on
the executive’s level. The LTIP mix is tiered to align according to level, with our CEO and President & COO having
the highest “at-risk” mix, by receiving 100% of their LTIP awards in the form of performance-based awards of PSUs and
PSOs.
The 2022 PSOs were designed such that the Company’s senior leaders,
including the NEOs, will only realize value from an award if our cumulative revenue and cumulative Adjusted EPS performance over
the cumulative three-year period is above threshold and if increases in our stock price are sustained above the exercise price.
As a result, the Compensation Committee believes that the PSOs will further align our executives’ interests with those of
our shareholders by helping to drive performance and by complementing the TSR-based performance metrics applicable to the 3-Year
PSUs, which will continue to reward participants for sustained exceptional growth in the Company’s stock price.
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62 |
MSCI | COMPENSATION MATTERS |
The key features of the 2022 RSUs, PSUs and PSOs are as follows:
|
RSUs: |
|
|
|
● |
Granted to NEOs other than the CEO and President & COO |
|
● |
Cliff-vest at the end of a three-year vesting period (reflects a change from our historical
practice of annual ratable vesting) |
|
● |
Long-term value of underlying stock tied to share price |
|
|
|
3-YEAR TSR PSUs:
|
|
● |
Granted to all NEOs |
|
● |
Cliff-vest at the
end of a three-year performance period from February 3, 2022 to February 2, 2025, based on achievement of rigorous absolute TSR
CAGR performance metrics |
|
● |
Reflect the right
to receive between 0% and 300% of the target number of shares based on achievement of the TSR CAGR performance metric over the
applicable performance period |
|
● |
Realize meaningful
value only to the extent that shareholders also realize value |
|
● |
Include one-year
post-vest mandatory holding period, where such shares, or rights with respect to such shares, may not be transferred until the
expiration of such holding period |
|
PSOs:
|
|
● |
Granted to all NEOs
to further facilitate an “owner-operator” mindset and focus on longer-term strategic goals |
|
● |
Vest upon satisfaction
of both a service condition and a performance condition, with the service condition satisfied on the third anniversary of the grant
date |
|
● |
Represent the right
to exercise between 0% and 200% of the target number of shares subject to the option based on the combined level of achievement
of a cumulative revenue performance goal and a cumulative adjusted EPS performance goal, each weighted at 50% and measured over
a three-year performance period |
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|
|
In addition, to further promote our “owner-operator” mindset,
the Compensation Committee updated the Company’s Stock Ownership Guidelines for Executive Committee members, including our
NEOs, to require that, in addition to existing requirements, our Executive Committee members must hold shares equivalent, in the
aggregate, to 25% of the “Net Shares” from equity awards granted to them after January 1, 2022. The Compensation Committee
also approved revisions to the minimum share ownership requirements to increase the thresholds applicable to members of our Executive
Committee, including our NEOs, to be among the highest multiples of base salary in our peer group. See page 83 of this Proxy Statement
for additional information with respect to our Executive Committee Stock Ownership Guidelines.
Table of Contents
Governance
and Administration
Executive Compensation Philosophy and
Goals
We evaluate our executive compensation structure on an annual basis to ensure
alignment with our compensation philosophy and business strategy and shareholder priorities. Our compensation philosophy centers
around maintaining a compensation program for our NEOs that is designed to promote the achievement of our short-term and long-term
financial and strategic goals. For additional information on our strategic initiatives, see page 58 of this Proxy Statement.
In addition to the principles described in the “Executive Summary”
on page 57 of this Proxy Statement, our executive compensation program is designed to:
● |
promote achievement of the Company’s financial and strategic goals and provide
alignment with the objectives of our multi-year strategic plan; |
● |
provide a framework to advance our strategic goals and encourage our NEOs to make a long-term
commitment to the Company; |
● |
base compensation determinations on the performance of the Company, the product/functional
unit and the individual; |
● |
attract, retain and engage top-level talent and provide each NEO with compensation opportunities
that are competitive with market practices and within our cost structure; |
● |
appropriately manage compensation risk in light of our business strategy; and |
● |
align the long-term interests of our senior executives with those of our shareholders by promoting actions that will allow
for sustainable top- and bottom-line growth opportunities and capital returns to shareholders and maintain an “owner-operator”
culture and strong corporate governance practices. |
Our executive compensation philosophy provides our NEOs with the opportunity
to earn a significant portion of their compensation in the form of variable compensation (i.e., annual cash incentive awards under
our AIP and long-term equity incentive awards under our LTIP), with the remaining portion of their total compensation as their
base salary. This emphasis on variable compensation is illustrated in the following pay mix charts:
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2021 ANNUALIZED CEO |
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2021 AVERAGE ANNUALIZED
OTHER NEOS |
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Table of Contents
64 |
MSCI | COMPENSATION MATTERS |
Executive Compensation Practices
Our executive compensation practices incorporate the following corporate governance
best practices that protect the interests of our shareholders and are consistent with high standards of risk management.
WHAT WE
DO |
WHAT
WE DON’T DO |
●
Emphasize variable compensation
●
Provide formula-based annual cash incentive opportunities
●
Subject equity awards to rigorous service- and performance-vesting requirements
●
Impose rigorous stock ownership guidelines and requirements on all of our NEOs and other Executive Committee
members, with guidelines among the highest multiples of base salary in our peer group
●
12x annual base salary for our CEO and President & COO
●
8x annual base salary for our other NEOs
●
4x annual base salary for other Executive Committee members
●
In addition to the above, beginning with awards granted in 2022, require members of our Executive Committee,
including our NEOs, to hold shares equivalent, in the aggregate, to 25% of the net shares they receive (after payment
of taxes, exercise price and related costs) from equity awards until they no longer serve on the Executive Committee,
reflecting MSCI’s deep commitment to an “owner-operator” mindset
●
Maintain a clawback policy for incentive based-compensation (cash and equity) with provisions that cover a
broad range of detrimental conduct and financial restatements
●
Provide for double-trigger vesting upon a change in control
●
Only pay dividend equivalents on PSUs if and when the underlying award vests
●
Make CEO’s and President & COO’s equity grant entirely in awards tied to performance metrics,
to focus on long-term shareholder value creation
●
Retain an independent compensation consultant at the direction of the Compensation Committee
●
Incorporate DE&I and climate-related considerations into our AIP program
|
●
Do not provide gross-ups to cover excise taxes
●
Do not allow any directors or employees, including all NEOs, to hedge or pledge the Company’s common
stock, engage in short sales, purchases or sales of options, puts or calls, as well as derivatives such as swaps, forwards
or futures or trade on a short-term basis in the Company’s common stock
●
Do not allow repricing of options or stock appreciation rights awards without shareholder approval
●
Do not provide for “liberal” share recycling when shares are tendered or withheld to satisfy tax
withholding obligations or as payment of an option exercise price
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Table of Contents
Executive Compensation Process
The executive compensation program described in this section is the result of
a year-long process:
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LATE JANUARY/
EARLY FEBRUARY |
|
●
Review and determine the AIP awards for prior-year performance for NEOs based on an assessment of the Company’s
achievement of the financial metrics established for the prior year, as well as the executive’s achievement of his
or her individual KPIs and DE&I Goals for such prior year. The CEO makes recommendations to the Compensation Committee
on compensation for NEOs (other than himself), and the Compensation Committee takes these recommendations into consideration
in reaching its final compensation decisions.
●
Certify achievement of TSR metrics and any other performance metrics applicable to any equity awards granted
in prior years.
●
Establish the AIP structure for the current year, including the applicable AIP financial metrics and target
AIP awards for each NEO.
●
Establish the structure and performance metrics applicable to equity awards to be granted under the LTIP for
the current year, and grant equity awards based on a number of factors, including the Company’s recent performance,
peer analysis and the executive’s individual performance and potential future contributions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARCH |
|
● Consider risks
arising from the Company’s incentive compensation plans. |
|
|
|
|
|
|
|
|
|
|
|
|
|
APRIL |
|
●
Review Say-on-Pay voting recommendations from proxy advisors and our shareholder vote at our annual meeting.
●
Review and approve KPIs for current year’s AIP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JULY TO OCTOBER |
|
●
Review our status and progress on our performance culture.
●
Review senior management fit for role and potential successors.
●
Review peer group.
●
Independent compensation consultant reports on compensation practices and trends in the industry.
●
Review design of next year’s executive compensation programs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVEMBER |
|
●
NEOs summarize preliminary results against their current-year KPIs and prepare preliminary KPIs for the upcoming
year.
●
Meet with shareholders to discuss our executive compensation policies and collect feedback.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER |
|
● Finalize design
of executive compensation program for upcoming year and review preliminary recommendations for actual and target levels of
compensation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
ONGOING |
|
●
Management provides feedback from shareholder outreach regarding our executive compensation program.
●
Review progress made on performance metrics.
●
Monitor compliance with stock ownership guidelines.
|
|
|
|
|
|
Table of Contents
66 |
MSCI | COMPENSATION MATTERS |
Independent
Compensation Consultant
The Compensation Committee selected and engaged Semler Brossy as its independent
compensation consultant to assist with a range of executive compensation matters, including the overall design of our executive
compensation program, evaluation and selection of peer group companies, provision of competitive market data and other matters
related to our NEO compensation program. During 2021, Semler Brossy was present at all Compensation Committee meetings and consulted
on executive compensation matters. The Compensation Committee recognizes that it is important to receive objective advice from
its outside advisor and regularly meets with Semler Brossy in Executive Session without management’s attendance. Semler
Brossy reports directly to the Compensation Committee, which, pursuant to its charter, maintains sole responsibility for retaining
or terminating the compensation consultant. Semler Brossy did not provide any other services to MSCI during 2021.
Executive Compensation Considerations
The Compensation Committee takes into account a range of factors in determining
compensation components and setting compensation amounts. In addition to reviewing NEO performance against annual goals, various
financial and operational metrics, KPIs and DE&I Goals, the Compensation Committee reviews peer group analyses provided by
Semler Brossy (used as a reference without benchmarking to a specified target) and shareholder feedback. The weight attributed
to each individual factor may change from time to time, depending on the circumstances of such decisions. We believe this continues
to be the best approach for the Company, as it enables the Compensation Committee to balance competing interests, address evolving
priorities and meet Company objectives.
2021 Say-on-Pay
Vote Results
In 2021, 96.8% of the votes cast on the Say-on-Pay Advisory Vote were voted
in support of the compensation of our NEOs.
|
HIGH APPROVAL FOR THE LAST 4 YEARS
|
|
|
|
|
|
Shareholder
Engagement
MSCI has established a robust process for engaging shareholders on executive
compensation. On at least an annual basis, we meet with shareholders to provide an overview of our executive compensation program
and highlight changes, if any, that have been made since our last meeting with the relevant shareholder. In 2021, the Company
met with 14 of its largest shareholders (representing approximately 41% of its outstanding shares as of September 30, 2021) in
individual meetings to discuss our corporate responsibility practices, including our executive compensation program. None of the
shareholders expressed significant concerns with the Company’s compensation program, and the shareholders generally reacted
positively to the Company’s compensation program.
Our 2021 and 2022 compensation programs reflect feedback we received from our
shareholders.
Table of Contents
|
RECENT ENHANCEMENTS IN RESPONSE TO SHAREHOLDER FEEDBACK |
WHAT WE HEARD |
WHAT WE DID |
WHY |
Support for cultivating
an “owner-operator” mindset |
Added a one-year post-vest mandatory holding period to our 3-Year PSUs granted in 2021 |
We believe that equity award features that promote an “owner-operator” culture focus our senior leaders on
long-term shareholder value creation |
Stronger linkages between ESG and our compensation program |
In 2021, introduced DE&I Goals for our senior leaders |
We believe that integrating DE&I Goals into our compensation programs ensures executive decision making that aligns
with our corporate culture |
Request for disclosure around how the COVID-19 pandemic impacted our compensation program |
In 2021, added disclosures to reflect the Compensation Committee’s decision not to make any changes to the performance
goals under the AIP or LTIP (including the target performance levels or actual achievement levels) for 2021 in response to
the pandemic, including for any currently outstanding awards |
While the Company was less severely impacted by the pandemic than those in other industries, we believe that our compensation
program is designed to reflect the economic realities of the operating environment and align with the impact of the operating
environment on our stakeholders |
Stronger
facilitation of an “owner-operator” mindset and focus on longer-term strategic goals |
In 2022, granted PSOs with a three-year performance period, based on the combined level of achievement of operating and
financial metrics, and a ten-year term. PSOs replaced the grant of 5-Year PSUs
Implemented more rigorous stock ownership
and retention guidelines |
We believe that the grant of PSOs with a focus on financial and operating metrics will complement the metrics used in
PSUs and provide greater incentives for the execution of the Company’s strategic plan
We believe our 2022 LTIP
program together with our enhanced stock ownership guidelines will further an “owner-operator” mindset |
Request for disclosure around how our Compensation Committee assessed performance for purposes
of DE&I Goals |
In 2022, added disclosure regarding NEO performance with respect to DE&I Goals as well as the Company-wide approach
to assessing performance against DE&I Goals through our Executive Accountability Framework |
We believe it is important to convey transparent information around the achievement of DE&I Goals by our senior leaders
as well as our process of assessing those goals |
The Company will continue to maintain an active dialogue with shareholders and
evaluate feedback on issues of importance to them, including the metrics that drive each of our NEO’s compensation. See
page 40 of this Proxy Statement for additional information on our shareholder engagement efforts in 2021.
Peer Groups
To ensure competitiveness of compensation structures and pay levels for our
NEOs, the Compensation Committee conducts an annual review of peer company compensation data. Each year, prior to beginning this
review, the Compensation Committee examines the composition of companies previously considered our peer companies to make certain
that the selected companies continue to be relevant as evaluated according to the following screening criteria:
● |
Scale, to reflect similar size and complexity; |
● |
Geographic footprint, to reflect business structure and international complexity; |
● |
Public ownership structure to ensure availability of data; |
● |
Competitors for talent; and |
● |
Similar business model. |
Table of Contents
68 |
MSCI | COMPENSATION MATTERS |
The peer group used to inform fiscal 2021 pay decisions for our NEOs was comprised
of 16 companies that, in aggregate, approximated MSCI’s size, scope of operations, and operating metrics. In particular,
the group was selected such that it, in aggregate:
● |
Approximated MSCI’s size on a revenue basis for fiscal 2021; |
● |
Reflected MSCI’s high-margin, high-valuation operating metrics and international reach;
and/or |
● |
Represented the competitive talent market for financial technology, research and consulting, and data systems/information
technology companies. |
|
|
Company |
GICS Classification |
MSCI Inc. |
Financials—Capital Markets—Financial Exchanges and Data |
Aspen Technology Inc. |
Information Technology—IT Services—Application Software |
Black Knight Inc. |
Information Technology—IT Services—Data Processing and Outsourced
Services |
Dun & Bradstreet |
Industrials—Professional Services—Research and Consulting Services |
Equifax Inc. |
Industrials—Professional Services— Research and Consulting Services |
FactSet Research Systems Inc. |
Financials—Capital Markets—Financial Exchanges and Data |
Fair Isaac Corporation |
Information Technology—Software—Application Software |
Gartner, Inc. |
Information Technology—IT Services—IT Consulting and Other Services |
IHS Markit Ltd. |
Industrials—Professional Services—Research and Consulting Services |
MarketAxess Holdings Inc. |
Financials—Capital Markets—Financial Exchanges and Data |
Moody’s Corporation |
Financials—Capital Markets—Financial Exchanges and Data |
Morningstar, Inc. |
Financials—Capital Markets—Financial Exchanges and Data |
SEI Investments Company |
Financials—Capital Markets—Asset Management and Custody Banks |
S&P Global Inc. |
Financials—Capital Markets—Financial Exchanges and Data |
SS&C Technologies Holdings, Inc. |
Information Technology—Software—Application Software |
TransUnion |
Industrials—Professional Services—Research and Consulting Services |
Verisk Analytics,
Inc. |
Industrials—Professional
Services—Research and Consulting Services |
Review for
2022
In its annual review of the executive compensation peer group for 2022, the
Compensation Committee undertook a holistic review of the executive compensation peer group and determined the group to be sufficiently
robust for market comparisons and balances. Accordingly, the Compensation Committee maintained the same peer group, as the selected
companies met the same criteria described above for 2021 and the group continued to be an appropriate size.
Table of Contents
Review of Our Programs
Elements of Executive Compensation
Our executive compensation program
in 2021 generally consisted of the following elements. We have also noted changes implemented in 2022 where applicable.
Compensation
Element |
|
Purpose |
|
2021 |
|
2022 |
ANNUAL
BASE
SALARY
STARTS ON PAGE
70 |
|
Provides certainty and predictability to meet ongoing living and
other financial commitments |
|
●
The only fixed component of our executive compensation program |
|
● The only fixed component of our executive compensation
program.
● In 2022, each of Messrs. Wiechmann and Gutowski received
an increase to his annual base salary after a consideration of several factors, including peer group market data and competitive
practices |
ANNUAL INCENTIVE
(Cash Bonus)
STARTS ON PAGE
71 |
|
Intended to drive one-year performance results against financial
targets and other Company, individual and leadership focused goals |
|
● Metrics vary by executive, but include:
● Revenue
● Adjusted EPS
● Net New Sales
● Free Cash Flow
● Key Performance Indicator/Leadership Effectiveness
Goals
● DE&I Goals |
|
No change to metrics |
LONG-TERM
INCENTIVES
STARTS ON PAGE
79 |
|
Fosters an “owner-operator” mindset, closely aligns management’s
interests with the long-term interests of our shareholders and promotes the retention of key members of our management team |
|
●
RSUs which ratably service vest over three years
● Grant of 3-Year PSUs and 5-Year PSUs (which vest based
on absolute TSR)
● 3-Year PSUs cover a cumulative three-year performance
period
● 5-Year PSUs cover a cumulative five-year performance
period
● Each of Messrs. Fernandez and Pettit received 100%
of their LTIP awards in the form of PSUs for 2021, with 60% of their PSUs granted in the form of 5-Year PSUs, the highest
percentage amongst all of our NEOs for 2021 (for Mr. Pettit, an increase from 50% in 2020) |
|
● RSUs which cliff vest after a three-year vesting period
● Grant of 3-Year PSUs (which vest based on absolute
TSR)
● PSOs with a three-year performance period which vest
based on the combined level of achievement of a cumulative adjusted EPS performance metric and a cumulative revenue performance
metric
● Each of Messrs. Fernandez and Pettit received 100%
of their LTIP awards in the form of performance awards, with 50% in the form of PSUs and 50% in the form of PSOs, with
other NEOs receiving a mix of 30% RSUs, 35% PSOs and 35% PSUs |
Table of Contents
70 |
MSCI | COMPENSATION MATTERS |
Fixed Compensation
Annual Base Salary
Base salary is the only fixed component
of our executive compensation program. The annual base salary element offers our NEOs a measure of certainty and predictability
to meet ongoing living and other financial commitments. In setting base salaries for our NEOs, the Compensation Committee has
sought to establish base salary rates that (i) are competitive with those provided for similar positions at companies in our peer
group and (ii) recognize the experience and performance of the NEO. The Compensation Committee reviews the base salaries of our
NEOs on an annual basis. None of our NEOs received an increase in base salary for 2021.
Name |
|
2021 Base Salary Rate ($) |
Henry
A. Fernandez |
|
1,000,000 |
Andrew
C. Wiechmann |
|
500,000 |
C.
D. Baer Pettit(1) |
|
859,819 |
Scott
A. Crum |
|
550,000 |
Robert
J. Gutowski |
|
450,000 |
(1) |
Base salary for Mr. Pettit was paid in British
pounds sterling and converted to U.S. dollars using the fiscal year average of daily spot rates of £1 to $1.37571. Mr.
Pettit’s 2021 base salary rate was £625,000. |
Variable Compensation
The variable compensation actually
paid to our NEOs is subject to performance metrics that are designed to (i) emphasize pay for performance, (ii) balance short-term
and long-term incentives, and (iii) take into account input from our shareholders. The variable elements of our target-based incentive
compensation program include:
(1) an annual cash incentive component;
and
(2) a long-term equity incentive
component.
In determining target cash and equity
incentive compensation amounts for each NEO, the Compensation Committee takes into account a number of factors, including: the
differences in relative responsibilities; experience and performance in role; the ability to impact overall Company performance;
Company, product segment and individual performance; and historical compensation and peer group analyses (used as a reference
without benchmarking to a specified target).
There is no minimum amount of variable
compensation payable to the NEOs. The Compensation Committee makes determinations, in its discretion, as to the amounts of variable
compensation awarded based on program metrics and individual performance, subject to the terms of any applicable plan or arrangement.
Table of Contents
Annual Cash Incentives
The Company awards annual cash incentives
pursuant to the Company’s AIP, which closely aligns management’s interests with those of shareholders by employing
a formulaic approach that takes into account specific financial criteria and individual KPIs and DE&I Goals when determining
cash incentives. The Compensation Committee believes that subjecting 70% of the target cash incentive to pre-established performance
targets further promotes shareholder value creation by more directly aligning executive compensation with Company performance
and strategic goal attainment. Under the AIP, each NEO is eligible to earn an annual target cash incentive and may receive between
0% and 150% of their target cash incentive opportunity based on attainment of the level of certain financial performance metrics
(together, weighted at 70%), individual KPIs (weighted at 20%) and DE&I Goals (weighted at 10%). For 2021, the target cash
incentive opportunity, metrics, and corresponding weightings for our NEOs are included in the table set forth below:
|
|
|
|
|
Financial Component—Overall Weighting of 70% |
|
|
|
|
|
|
|
|
|
MSCI Metrics |
|
|
|
|
Name |
|
2021 Target Cash Incentive ($) |
|
Revenue |
|
Adjusted
EPS |
|
Total Net
New Sales |
|
Free Cash
Flow |
|
KPIs |
|
DE&I
Goals |
Henry A. Fernandez |
|
$ |
1,400,000 |
|
20.0% |
|
30.0% |
|
40.0% |
|
10.0% |
|
20.0% |
|
10.0% |
Andrew C. Wiechmann |
|
$ |
600,000 |
|
20.0% |
|
30.0% |
|
40.0% |
|
10.0% |
|
20.0% |
|
10.0% |
C. D. Baer Pettit(1) |
|
$ |
1,238,139 |
|
20.0% |
|
30.0% |
|
40.0% |
|
10.0% |
|
20.0% |
|
10.0% |
Scott A. Crum |
|
$ |
700,000 |
|
20.0% |
|
30.0% |
|
40.0% |
|
10.0% |
|
20.0% |
|
10.0% |
Robert J. Gutowski |
|
$ |
650,000 |
|
20.0% |
|
30.0% |
|
40.0% |
|
10.0% |
|
20.0% |
|
10.0% |
(1) |
The 2021 target annual cash incentive
opportunity reflected in the table above for Mr. Pettit was converted from British pounds sterling to U.S. dollars using the
fiscal year average of daily spot rates of £1 to $1.37571 for fiscal 2021. Mr. Pettit’s actual 2021 target cash
incentive amount was £900,000. |
FINANCIAL COMPONENT
The threshold, target and maximum
for each financial component making up the AIP, as well as the actual results attained for 2021, are included in the table set
forth below.
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Actual(2) |
Metrics |
|
Target
$mm(1) |
|
%
Of
Target |
|
Payout (% Of
Opportunity) |
|
%
Of
Target |
|
Payout (% Of
Opportunity) |
|
%
Of
Target |
|
Payout (% Of
Opportunity) |
|
%
Of
Target |
|
Payout (% Of
Opportunity) |
MSCI Revenue |
|
1,894.6 |
|
95% |
|
50% |
|
100% |
|
100% |
|
105% |
|
150% |
|
107.9% |
|
150% |
MSCI Adjusted
Earnings Per Share |
|
8.37 |
|
90% |
|
50% |
|
100% |
|
100% |
|
110% |
|
150% |
|
118.9% |
|
150% |
MSCI Total Net |
|
225.3 |
|
70% |
|
50% |
|
100% |
|
100% |
|
130% |
|
150% |
|
112.3% |
|
120.4% |
New Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
687.1 |
|
85% |
|
50% |
|
100% |
|
100% |
|
115% |
|
150% |
|
128.5% |
|
150% |
(1) |
Except Adjusted EPS, which is
not stated in millions. |
(2) |
In determining the actual results attained
for the Total Net New Sales metric under the 2021 AIP, the Compensation Committee made an adjustment to the Company’s
reported results in accordance with the terms of the AIP, which permits the Compensation Committee to make adjustments, in
whole or in part, to any performance measures (and the methodologies relating to such measures) for certain events specified
in the AIP. Specifically, the Compensation Committee made an adjustment to the reported results for the Total Net New Sales
metric to recognize a one-time customer payment in 2021 of $18 million. The Compensation Committee made this adjustment because
the customer payment resulted in economic benefits to the Company similar to a non-recurring sale, but, absent this adjustment,
would not have been taken into account under the Total Net New Sales category in 2021 or future years given the nature of
the performance metrics. Non-recurring sales are credited at 75% for the Total Net New Sales category for compensation purposes
under the AIP. As a result, there was a positive adjustment to the achievement of the Total Net New Sales metric under the
2021 AIP of $13.5 million. |
Table of Contents
72 |
MSCI | COMPENSATION MATTERS |
In determining the actual cash incentive
amounts awarded under the 2021 AIP, the Compensation Committee made certain adjustments to the target financial metrics applicable
to our NEOs in accordance with the terms of the AIP, which permits the Compensation Committee to make adjustments, in whole or
in part, to any performance measures (including target performance levels) for certain events specified in the AIP. Specifically,
the Compensation Committee made adjustments to the target metrics listed below to take into account the impact resulting from
(1) the Company’s acquisition of RCA on September 13, 2021 and (2) accelerated cash tax payments that impacted the Company’s
free cash flow in 2021 and that were not originally part of the Company’s operating plan.
Metrics |
|
Original Target
$mm |
|
Adjustments
$mm |
|
Adjusted
Target
$mm |
MSCI
Revenue |
|
1,872.4 |
|
+22.1 |
|
1,894.6 |
MSCI
Total Net New Sales |
|
222.2 |
|
+3.1 |
|
225.3 |
Free
Cash Flow |
|
790.1 |
|
-103.0 |
|
687.1 |
KPI COMPONENT AND DE&I GOALS COMPONENT
The Compensation Committee believes
that including KPIs (20% of the target AIP cash bonus amount) and DE&I Goals (10% of the target AIP cash bonus amount) under
the AIP provides an opportunity to assess individual results against specific goals as well as progress against multi-year efforts.
The Compensation Committee regularly assesses the components and metrics used in the AIP and the weighting of those components
and metrics, in addition to taking into account shareholder feedback.
In 2021, we accelerated our commitment
to advancing DE&I by linking the AIP target compensation of each Managing Director, including each of our NEOs, to DE&I
progress. Our Managing Directors’ DE&I Goals are intended to ensure long-term stability at the Company, align with our
long-term strategy and enhance our DE&I objectives. In particular, our CEO’s KPIs and DE&I Goals are directly tied
to long-term strategic transformation, succession planning, new-hire onboarding and strengthening MSCI’s culture of inclusion
and belonging, all of which build a strong foundation for future growth.
We developed an Executive Accountability
Framework (“EAF”) to establish the philosophy and process to assess each Managing Director’s progress against
DE&I Goals and overall DE&I performance, considering specific goals set by each Managing Director at the beginning of
the year. The EAF stresses that creating an inclusive environment is as important as improving diverse representation; therefore,
Managing Directors are assessed on their qualitative and quantitative results with a range of potential outcomes including those
relating to talent development, retention, hiring practices and engagement. In addition, leaders are assessed as to whether they
consistently display inclusive leadership behaviors and drive activity that fosters an inclusive environment. Each NEO was assessed
individually with further calibration across all NEOs. Performance recommendations were then made to the Compensation Committee,
which reviewed and approved performance in respect of each NEO.
Table of Contents
HENRY A. FERNANDEZ, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER |
Drive exceptional financial
performance and enhance capital management |
|
●
Achieved exceptional results in 2021, demonstrating
the strength of an ambitious strategy, key long-term investments and consistent execution, along with unprecedented demand
for the Company’s solutions.
●
Highlights include the following (versus 2020):
●
2021 Full-Year Operating Revenue of $2.04 billion,
up 20.5%.
●
2021 Full-Year Net New Sales up 48.7%.
●
2021 Full-Year Adjusted EPS* up 27.1%.
●
2021 Full-Year Free Cash Flow* up 16.2%.
●
Expanded MSCI’s role as a change agent for the
global investment industry.
●
Led strategic progress in providing the common language
and tools investors use for indexation, risk management, factors, ESG, climate and other key investment categories.
●
Oversaw “triple crown” investments to help
fuel future growth and meet client demand, including through the acquisition of Real Capital Analytics, a global commercial
real estate data provider.
●
Returned capital to shareholders, including opportunistically
repurchasing approximately $140 million of MSCI common stock and returning approximately $300 million to shareholders
in the form of quarterly dividends (increase of approximately 23% versus 2020). |
Drive
shareholder value through strategic
partnerships and product launches |
|
●
Prioritized the development and introduction of new
products and services to accelerate growth, and launched new partnerships to capture emerging opportunities. Examples
include:
● Launched new ISaaS products, including Data Explorer, Climate Lab Enterprise and Index Builder.
● Entered into new partnership agreement with Royalty Pharma plc to expand MSCI’s existing thematic index suite with
new indexes that aim to represent the performance of long-term, cutting-edge companies that are expected to disrupt the
biopharmaceuticals and life sciences industries.
● Licensed China A 50 Connect Index to HKEX, leading to the most successful launch ever of an MSCI index-linked futures
contract.
● Jointly created the MSCI COLCAP Index with the Colombia Stock Exchange.
● Advanced the Company’s long-term strategy through a partnership agreement with Goldman Sachs Global Markets to distribute
portfolio-level Barra factor analytics to clients via its Marquee platform, its digital storefront for Goldman Sachs,
and select third-party content. |
Advance
MSCI’s climate capabilities and
helped clients transition to a Net-Zero
world |
|
●
Continued to steer MSCI’s leadership in providing
the transparency clients need to better integrate ESG and climate risks and opportunities into investment processes. Launched
several significant ESG and Climate tools and solutions, including:
● Net-Zero Tracker, a quarterly gauge of progress by
public companies toward curbing climate risk. The Tracker calculates the individual and aggregate emissions of all MSCI
ACWI-IMI companies and highlights leading and lagging companies and sectors in the path towards net-zero emissions.
● Climate Lab Enterprise, which helps investors monitor
and manage climate-related risks.
● Implied Temperature Rise, a search tool that computes
and discloses how the emissions trajectories of companies, portfolios and funds align with different global temperature
pathways.
● Carbon Footprinting of Private Equity and Debt Funds,
a product jointly developed with Burgiss and MSCI’s ESG team, which measures the carbon emissions of 15,000 private
companies and the carbon intensity of nearly 4,000 private equity and debt funds.
● Prioritized MSCI’s own climate goals through
a more robust commitment to corporate responsibility, including by the introduction of MSCI’s goal of net-zero carbon
emissions by 2040 throughout its global operations and by becoming a founding member of the Net Zero Financial Service
Providers Alliance. |
|
|
* |
“Adjusted EPS” and “free cash
flow” are non-GAAP financial measures. See Annex B for definitions and reconciliations of all non-GAAP financial measures
referenced herein. |
Table of Contents
74 |
MSCI | COMPENSATION MATTERS |
Strengthen MSCI’s commitment
to building a diverse, equitable and inclusive culture |
|
●
Championed and intensified the focus across MSCI on
DE&I outcomes. Amplified engagement and accountability:
●
Appointed first Chief Diversity Officer.
●
Introduced DE&I Executive Accountability Framework,
aligned with the firm’s compensation process and the introduction of individual DE&I Goals for senior leaders
tied to incentive compensation.
●
Enhanced commitment and approach to identifying and
attracting senior diverse talent, which resulted in hiring 11 Managing Directors across functions and geographies, many
from diverse or under-represented backgrounds, including four female and three Black executives.
●
Strengthened MSCI’s culture of inclusion and
belonging:
●
Conducted listening tour with 16 local offices, where
DE&I was a key topic of discussion.
●
Hosted a global conversation with the MSCI Pride ERG
leaders to gather feedback on important issues affecting the LGBTQ+ community.
●
Conducted a fireside chat at the 4th Annual Global
DE&I Summit in November, celebrating and recognizing the achievements of the Executive Diversity Council and employee
resource group leaders.
●
Focused on employee engagement and empowerment:
●
Drove MSCI’s Future of Work transformation through
the development of a forward-looking, hybrid-work strategy centered on client-centricity, trust and empowerment.
●
According to our December 2021 employee engagement
survey (not including employees from newly acquired companies), the percentage of respondents characterized as fully engaged
equaled the highest since we implemented the survey. |
Table of Contents
ANDREW C. WIECHMANN, CHIEF FINANCIAL OFFICER AND TREASURER |
Drive financial
management excellence |
|
●
Established “Finance at the Front” initiative
to drive deeper insights, enhanced decision making, proactive focus on business improvement and achievement of financial
targets.
●
Drove enhancements to overall financial management
process, including the internal capital allocation process to ensure a rigorous and intense focus on triple-crown investment
activity and firm-wide efficiencies.
●
Proactively managed investments and firm resources
to capitalize on market opportunities, drive financial performance and ensure strong execution, with a focus on value
creation, helping to drive record financial results for 2021 across key metrics. |
Champion
continued transformation of
the finance organization and firmwide
processes |
|
●
Continued intense focus on process simplification and
automation to improve efficiency.
●
Rationalized, simplified and automated internal reporting.
●
Oversaw successful deployment of enhanced revenue management
system and broader subscription revenue processes.
●
Drove alignment and enhanced decision making through
key metric visibility, improved forecasting and process discipline.
●
Incorporated risk management in operating rhythm to
ensure broader awareness around and intentionality in levels of Company risk.
●
Continued buildout of business intelligence capabilities
to enhance understanding of markets and competitors, improve decision making and optimize outcomes. |
Enhance capital
discipline and further optimize capital
structure |
|
●
Advanced firmwide focus on optimizing cash flow dynamics
of the business through proactive working capital management and enhanced client contract discipline.
●
Capitalized on attractive market opportunities to enhance
credit profile, lower cost of capital and extend maturities.
●
Executed $1.8 billion of new financing transactions, including refinancing $1 billion of outstanding debt, and extended the life of our revolving credit facility.
●
Meaningfully extended debt maturities (with the earliest maturity being eight years out) and materially reduced weighted average cost of debt.
●
Achieved an investment grade rating from Fitch and
an upgrade from Moody’s. |
Further instill
firmwide culture of mergers, partnerships
and acquisitions (“MP&A”) |
|
●
Drove enhanced firmwide focus on MP&A to accelerate
key strategic growth areas and enable further business expansion.
●
Formalized processes with product and functional leaders
to develop and manage MP&A opportunity pipeline in order to drive focus and accountability.
●
Successfully attracted and onboarded key new Strategy
and Corporate Development hire to help drive MP&A culture.
●
Successfully executed and drove value realization of
two acquisitions, two minority investments and 20+ strategic partnerships in priority areas.
●
Implemented new policies and procedures for engaging with existing and prospective partners to ensure alignment with MSCIs corporate responsibility objectives. |
Enhance diverse
representation within the finance
organization and throughout MSCI |
|
●
As a result of expanded recruiting outreach to broader
qualified talent pool, increased diversity in Finance organization globally.
●
Championed diversity in all talent development, promotion
and succession decisions in the Finance organization to ensure all talent is being appropriately considered and supported.
●
Acted as Executive Sponsor of All Abilities Network.
●
Active participant as speaker/sponsor of ERGs: Women’s
Leadership Forum, MSCI Pride, Black Leadership Network and All Abilities Network; participant in 4th Annual Global DE&I
Summit. |
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76 |
MSCI | COMPENSATION MATTERS |
BAER PETTIT, PRESIDENT & CHIEF OPERATING OFFICER |
Prioritize
investment targets to drive growth |
|
●
Drove greater investment into high growth areas and
delivered strong financial and operating results:
●
Drove record financial results and growth in 2021 across
key metrics.
●
Oversaw the execution of record sales and performance
against key operating metrics in 2021.
●
Oversaw an increase in MSCI’s footprint in private
assets through the acquisition of Real Capital Analytics.
●
Drove the 2022 Operating Plan process by emphasizing
critical growth areas, with a heightened focus on client-centricity. Continued to identify and prioritize efficiencies
to create additional investment capacity. |
Accelerate
technology transformation |
|
●
Transformed technology function by strengthening technology
leadership team through key hires in ESG and Climate and Index, and by targeting greater investment into critical technology
initiatives:
●
Directed investment into new ISaaS offerings.
●
Oversaw the development and release of new thematic
indexes via Barra Portfolio Manager.
●
Drove progress on cloud migration across multiple product
lines in a cost-efficient manner, including the complete migration of ESG and Climate applications and services. |
Focus on being
partner of choice and helping our clients
build better portfolios |
|
●
Oversaw improvements to client experience by simplifying
contract structures, promoting greater automation and adding tools to help clients find relevant content more efficiently.
●
Optimized incentive compensation programs within the
Client Coverage organization to drive focus on client-centricity.
●
Prioritized the “Wealth” client segment,
leveraging our various tools and solutions to better capitalize on the growing demand for customization in investment
processes.
●
Prioritized focus on new research, including related
to ESG and Climate and Thematics, to provide clarity on key investment problems.
●
Developed new ESG and Climate solutions, including
through the launch of the first Paris Aligned Fixed Income indexes in the market. |
Instill practices
that support an inclusive and
innovative culture |
|
●
Actively supported efforts to ensure that all Managing
Directors have, and are measured against, specific and individualized DE&I Goals.
●
Served as executive sponsor for the Pride and Allies
ERGs, including by hosting a town hall and speaking at the Pride and Allies Summit.
●
Conducted career conversations to support internal
succession planning for key roles within the Research and Product functions.
●
Supported development of a leadership profile to evaluate
candidates more objectively for assessment, selection and promotion.
●
Oversaw use of MSCI’s innovation ‘Breakthrough’
methodology in numerous areas, including talent attraction and mobility, Future of Work challenges and DE&I initiatives,
resulting in the establishment of transformational practices around recruiting and hybrid-work collaboration. |
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SCOTT A. CRUM, CHIEF HUMAN RESOURCES OFFICER |
Strengthen our
senior talent pipeline |
|
●
Significantly accelerated Executive Committee succession
and progression planning by focusing on preparing internal senior talent and identifying external pipeline of senior talent.
●
Created Managing Director and Executive Committee success
profiles, which will serve as the basis for future selection, promotion and progression decisions.
●
Developed Managing Director assessment, selection,
promotion and progression methodology.
●
Hired 11 Managing Directors in 2021, with strong diversity
across both gender and ethnicity.
●
Developed rigorous approach for identifying specific
capability gaps for converting learning programs, including our flagship leadership and management programs, to virtual.
●
Expanded learning offerings, including programs to
support our Future of Work implementation, inclusive leadership efforts and the well-being of our people. |
Advance our
culture of diversity, equity and
inclusion |
|
●
Appointed MSCI’s first Chief Diversity Officer,
responsible for operating across MSCI to align our DE&I goals with business outcomes.
●
Introduced DE&I metrics for Managing Directors
tied to 10% of target annual cash incentive compensation.
●
Hired thirty-six interns to the One MSCI internship
program in New York, Chicago and London.
●
Launched three new ERGs in 2021: Asian Support Network,
All Abilities Network and Hola! MSCI.
●
Offered unconscious bias training to all employees
globally, using a science-based approach with practical applications, to raise awareness of bias and create a more inclusive
culture.
●
Enhanced pay equity practices for all female new hires. |
Continue to
support and enhance our performance
and growth culture |
|
●
Developed and implemented our comprehensive Future
of Work program that contained vision, principles and global guidelines.
●
Led organizational design initiative, which yielded
new organizational design and senior leadership structure.
●
Redesigned our long-term incentive program to further
support an “owner-operator” culture.
●
Positioned MSCI as a place for climate-focused talent
to build their careers.
●
Using MSCI’s “Breakthrough Methodology,”
transformed the way MSCI attracts and recruits.
●
Sponsored initiatives focused on increasing speed and
quality of hiring.
●
Established Human Resources Operational Effectiveness
Team to allow various teams within the Human Resources organization to work under a singular vision of driving the creation
and adoption of innovative data, technology and operational solutions. |
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78 |
MSCI | COMPENSATION MATTERS |
ROBERT J. GUTOWSKI, GENERAL COUNSEL |
Enhance
corporate governance and responsibility
practices and profile, including advancing
ESG and climate initiatives |
|
●
Advised on and championed increased ESG reporting and
related shareholder engagement.
●
Counseled Chief Responsibility Officer and CRC on climate
initiatives, including net-zero commitments and related company policies, activities and initiatives.
●
Managed compliance with global legal requirements related
to pandemic response, including advising on return-to-work protocols and implementation of MSCI’s Future of Work program
across more than 20 countries. |
Lead
development of client contracting
efficiencies to improve client experience
and accelerate/grow sales |
|
●
Improved client contract automation processes.
●
Increased deal speed and capacity.
●
Simplified contract structures and ease of licensing
across multiple product lines under a single client contract.
●
Facilitated enterprise scale transactions and relationships.
●
Enhanced cross-functional coordination of contract
lifecycle from contract inception through signature and booking. |
Expand
engagement with regulators and policymakers |
|
●
Successfully onboarded a Head of Government and Regulatory
Affairs to coordinate proactive engagement globally.
●
Established productive relationships and open dialogues
with key regulators in multiple jurisdictions, with a focus on enhancing their understanding of the scope, role and uses
of our ESG and climate and index products.
●
Established MSCI as a trusted resource by providing
expert research, data and insights to policymakers regarding market practices. |
Embrace
technology and innovation to drive
operational improvements |
|
●
Assessed technology stack across both Compliance and
Internal Audit to improve scale and speed of monitoring and testing activities.
●
Benchmarked against market leading enabling technology
tools, which include Power BI, artificial intelligence/machine learning, data analytics and robotic process automation.
●
Evaluated program design, implementation and effectiveness
against regulatory guidance and published areas of regulatory scrutiny and focus. |
Actively
champion and promote a
department and company commitment to
a culture of DE&I that moves from awareness
to action |
|
●
Closely partnered with and advised Chief Diversity
Officer on DE&I initiatives and disclosures, including pay equity, diversity reporting, goal setting, ERG programming
and recruiting activities.
●
Served as Executive Sponsor and vocal advocate for the Black Leadership Network, an MSCI ERG focused on enhancing the
recruitment, development, retention and promotion of Black employees.
●
Raised MSCI’s DE&I leadership profile by becoming a signatory to the General Counsel Pledge to support the American
Bar Association’s Resolution 113, which aims to enhance diversity in the legal profession through law firm disclosure
of diversity data. |
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Actual cash incentives paid in respect
of 2021 were based on actual performance against the financial, KPI and DE&I targets under the AIP as set forth in the table
below. Given our strong financial performance, coupled with target payouts on the KPI goals, our NEOs received cash incentives
for 2021 that were approximately equal to their target values.
|
|
2021
Target |
|
2021 Financial Payout (70%
Weighting at Target) |
|
2021 KPI Payout (20% Weighting at Target) |
|
2021 DE&I Goals Payout (10%) |
|
2021 Total Actual Cash Incentive |
Name |
|
Cash Incentive
($) |
|
Value
($) |
|
As
% of
Target |
|
Value
($) |
|
As
% of
Target |
|
Value
($) |
|
As
% of
Target |
|
Value
($) |
|
As
% of
Target |
Henry A. Fernandez |
|
1,400,000 |
|
1,354,092 |
|
138.2% |
|
308,008 |
|
110.0% |
|
154,000 |
|
110.0% |
|
1,816,100 |
|
129.7% |
Andrew C. Wiechmann |
|
600,000 |
|
580,325 |
|
138.2% |
|
126,005 |
|
105.0% |
|
60,000 |
|
100.0% |
|
766,330 |
|
127.7% |
C. D. Baer Pettit(1) |
|
1,238,139 |
|
1,197,539 |
|
138.2% |
|
272,393 |
|
110.0% |
|
123,814 |
|
100.0% |
|
1,593,746 |
|
128.7% |
Scott A. Crum |
|
700,000 |
|
677,046 |
|
138.2% |
|
154,004 |
|
110.0% |
|
77,000 |
|
110.0% |
|
908,050 |
|
129.7% |
Robert J. Gutowski |
|
650,000 |
|
628,686 |
|
138.2% |
|
136,504 |
|
105.0% |
|
71,500 |
|
110.0% |
|
836,690 |
|
128.7% |
(1) |
The actual cash incentive bonus
amount paid to Mr. Pettit was converted from British pounds sterling to U.S. dollars using the fiscal year average of daily
spot rates of £1 to $1.37571. |
Long-Term
Equity Incentive Compensation Program
The Compensation Committee believes
that MSCI’s executive compensation program should reinforce a pay-for-performance culture that aligns the interests of our
senior executives with those of our shareholders by incorporating the achievement of multi-year performance metrics into variable
compensation awards (in addition to the annual financial metrics applicable to cash incentive awards under the AIP).
While equity-based awards are typically
granted on an annual basis under our LTIP program, we also periodically grant off-cycle LTIP awards (e.g., for new hire grants,
replacement grants, retention grants, etc.). The grant date for such awards is determined on an individual basis, typically based
on the applicable start date or the date of the event that triggered the award.
In 2021, the Company’s long-term
equity incentive compensation program largely stayed the same compared to 2020, and we followed our typical practice for granting
annual LTIP awards in early February 2021 following the regularly scheduled annual meeting of the Compensation Committee in late
January 2021.
In 2021, the Compensation Committee
continued to place a strong emphasis on pay for performance by granting a significant portion of equity incentive awards in the
form of PSUs that are subject to multi-year TSR-based performance metrics, which the Compensation Committee believes more closely
align the Executive Committee’s goals with those of the Company’s shareholders and complement the annual financial
metrics applicable to cash incentive awards under the AIP.
The Compensation Committee approved
the grant of two types of 2021 PSU awards to the members of the Company’s Executive Committee, including the NEOs: 3-Year
PSUs and 5-Year PSUs. Given the generally positive feedback on the rigor of the TSR CAGR goals we received in the past from our
shareholders, the Compensation Committee carried forward the absolute TSR CAGR performance metric for the 2021 PSUs. As detailed
below, the Compensation Committee also granted RSUs to all NEOs other than Messrs. Fernandez and Pettit.
Additionally, to further promote
our “owner-operator” mindset, the Compensation Committee added a one-year post-vest mandatory holding period to our
annual 2021 3-Year PSUs that were granted to our NEOs, where such shares, or rights with respect to such shares, may not be transferred
until the expiration of such holding period.
The Compensation Committee believes
that the grant of 2021 PSUs to the Executive Committee members provides greater incentives for the execution of the Company’s
strategic plan and the creation of additional value-enhancing corporate development initiatives.
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80 |
MSCI | COMPENSATION MATTERS |
2021 Equity Mix
The table below sets forth the allocation
of 2021 RSUs, 3-Year PSUs and 5-Year PSUs granted to the NEOs. As reflected in the table below, in 2021, Mr. Fernandez and Mr.
Pettit received 100% of their equity incentive compensation in the form of PSUs. For 2021, the Compensation Committee increased
the proportion of Mr. Pettit’s 5-Year PSUs to 60% of his overall equity compensation in 2021 (with the remaining 40% granted
in the form of 3-Year PSUs). We believe this change further aligns the interests of Mr. Pettit with those of our shareholders
and reinforce our “owner-operator” philosophy and the execution of our strategic plan.
Vehicle |
|
CEO |
|
President
& COO |
|
Other NEOs |
RSUs |
|
0% |
|
0% |
|
30% |
3-Year PSUs |
|
40% |
|
40% |
|
35% |
5-Year PSUs |
|
60% |
|
60% |
|
35% |
RSUs
RSUs are inherently aligned with
the interest of our shareholders because they are linked to share price appreciation. They also increase the retentive value of
our overall compensation program. RSUs granted in 2021 vest in equal annual installments on each of the first, second and third
anniversaries of the grant date, subject generally to continued employment with the Company. While these RSU awards do not have
explicit performance-vesting conditions, the ultimate value that will be delivered to our NEOs from these awards depends on our
future stock price performance.
PSUs
The 3-Year PSUs and 5-Year PSUs granted
in 2021 will cliff-vest on February 2, 2024 and February 2, 2026, respectively, subject generally to the executive’s continued
employment with the Company and the Company’s level of achievement of the applicable absolute TSR CAGR performance metric
measured over a three-year performance period and five-year performance period, respectively.
In determining the target value of
and appropriate mix for the 2021 PSUs, the Compensation Committee took into consideration the executive’s performance and
potential future contributions, the executive’s overall career experience, peer group analyses, and the risk profile of
the compensation program for the executive.
The table below sets forth the target
value for each NEO’s equity awards for 2021. Under SEC disclosure rules, we are required to disclose the accounting value
for the RSUs and PSUs granted to the NEOs in 2021 in the “Summary Compensation Table”. As such, the target values
reflected in the table below may differ from the amounts set forth in the Summary Compensation Table for such awards for 2021.
Name |
|
RSUs
($) |
|
3-YEAR PSUs
($) |
|
5-YEAR PSUs
($) |
Henry A. Fernandez |
|
— |
|
3,000,000 |
|
4,500,000 |
Andrew C. Wiechmann |
|
270,000 |
|
315,000 |
|
315,000 |
C. D. Baer Pettit |
|
— |
|
1,600,000 |
|
2,400,000 |
Scott A. Crum(1) |
|
360,000 |
|
420,000 |
|
420,000 |
Robert J. Gutowski |
|
270,000 |
|
315,000 |
|
315,000 |
(1) |
The table above does not reflect
one-time retention RSUs granted to Mr. Crum in early 2021 with a grant date value of $275,000, in recognition of his leadership
and dedication supporting our employees and clients during the COVID-19 pandemic. |
The 3-Year PSUs and 5-Year PSUs reflect
the ability to receive between 0% and 300% and 0% and 200%, respectively, of the target number of shares based on achievement
of the TSR CAGR performance metric over the applicable performance period.
The table below sets forth the TSR
CAGR performance percentage for the 3-Year PSUs. There will be interpolation (rounded to two decimal places) to derive a TSR CAGR
performance percentage that is not expressly set forth in the table below, and any resulting fractional shares will be rounded
down to the nearest whole share.
Table of Contents
3-Year PSU TSR
CAGR Performance Percentage
TSR CAGR (%) |
|
Performance
Percentage (%) |
≥ 30.0 (maximum) |
|
300 |
20.0 |
|
200 |
10.0 (target) |
|
100 |
9.0 |
|
50 |
8.0 (threshold) |
|
25 |
< 8.0 |
|
No Vesting |
The table below sets forth the TSR
CAGR performance percentage for the 5-Year PSUs. There will be interpolation (rounded to two decimal places) to derive a TSR CAGR
performance percentage that is not expressly set forth in the table below, and any resulting fractional shares will be rounded
down to the nearest whole share.
5-Year PSU TSR
CAGR Performance Percentage
TSR CAGR (%) |
|
Performance
Percentage (%) |
≥ 20.0 (maximum) |
|
200 |
15.0 |
|
150 |
12.5 (target) |
|
100 |
10.0 (threshold) |
|
50 |
<10.0 |
|
No Vesting |
The Compensation Committee established
the above TSR performance goal percentages applicable to the 3-Year PSUs and the 5-Year PSUs after considering historical 3- and
5-year TSR performance of S&P 500 companies and MSCI’s business projections. The Compensation Committee believes that
the applicable threshold, target and maximum goals established for both PSU vehicles in 2021 represent rigorous hurdles that would
ultimately deliver significant shareholder value creation if achieved, as evidenced by the fact that achievement of the TSR performance
goals at the threshold performance levels applicable to the 2021 3-Year PSUs and 5-Year PSUs would translate to substantial growth
in our shareholders’ investments over such performance period, as reflected in the chart below.
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82 |
MSCI | COMPENSATION MATTERS |
2019 PSU AWARD PAYOUTS
The three-year performance period
applicable to the PSUs granted to each of Messrs. Fernandez, Wiechmann, Pettit, Crum and Gutowski on February 6, 2019 concluded
on February 5, 2022 and resulted in the following level of achievement:
|
|
Performance Period:
2019-2022 |
Performance Metric |
|
Target |
|
Achievement |
|
% Payout |
TSR CAGR |
|
10.00% |
|
≥ 30.00% |
|
300% |
Following the performance adjustment,
Mr. Fernandez received 80,187 PSUs, Mr. Wiechmann received 3,021 PSUs, Mr. Pettit received 37,008 PSUs, Mr. Crum received 10,854
PSUs and Mr. Gutowski received 3,021 PSUs, which such PSUs vested and converted to shares on February 7, 2022.
2022 Long-Term
Equity Incentive Compensation Program
In order to continue to promote the
alignment of executive compensation and long-term shareholder value creation, the Compensation Committee adopted enhancements
to the Company’s long-term equity incentive compensation program for 2022, while continuing to place a strong emphasis on
maintaining and enhancing our “owner-operator” culture by granting a significant portion of equity incentive awards
in the form of performance-based awards, specifically PSUs and PSOs.
Additional information on our 2022
LTIP is provided in the section titled “Key 2022 Compensation Decisions” on page 61 of this Proxy Statement.
2022 Equity Mix
Vehicle |
|
CEO |
|
President |
|
Other NEOs |
RSUs |
|
0% |
|
0% |
|
30% |
3-Year PSUs |
|
50% |
|
50% |
|
35% |
PSOs |
|
50% |
|
50% |
|
35% |
The table below sets forth the target
value for each NEO’s 2022 annual equity awards:
Name |
|
RSUs
($) |
|
3-YEAR
PSUs
($) |
|
PSOs
($) |
Henry A. Fernandez |
|
— |
|
5,000,000 |
|
5,000,000 |
Andrew C. Wiechmann |
|
390,000 |
|
455,000 |
|
455,000 |
C.D. Baer Pettit |
|
— |
|
2,750,000 |
|
2,750,000 |
Scott A. Crum |
|
495,000 |
|
577,500 |
|
577,500 |
Robert J. Gutowski |
|
360,000 |
|
420,000 |
|
420,000 |
Benefits
The Company provides health, welfare
and other benefits to remain competitive in hiring and retaining its employees. Our NEOs are eligible to participate in these
benefit plans on the same terms and conditions as all other employees. We do not provide any special or enhanced benefits to our
NEOs.
In the United States and the United
Kingdom, the Company has established defined contribution plans for all eligible employees. Contributions by the Company to these
defined contribution plans for our NEOs for the applicable period are disclosed in the “All Other Compensation” column
in the Summary Compensation Table below.
Employment Agreements
All of the NEOs are employed on an
“at-will” basis, and the Company does not have any individual employment agreements with the NEOs providing for a
fixed duration of employment. As a result, the Company has the flexibility to alter or revise its compensation programs as circumstances
dictate.
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Under Mr. Wiechmann’s offer
letter with the Company and Mr. Pettit’s employment letter with a subsidiary of the Company, in the event of an involuntary
termination of employment without cause, each of Messrs. Wiechmann and Pettit is eligible to receive, subject to his compliance
with certain conditions, (i) a lump sum cash payment equal to the sum of his then-current annual base salary plus target annual
bonus opportunity and (ii) a prorated cash bonus under the AIP for the year of termination based on actual performance through
the date of termination (as of December 31, 2021, assuming 100% achievement of the annual bonus opportunity, such amounts would
have equaled $1,700,000 for Mr. Wiechmann and $3,336,097 for Mr. Pettit; the amount for Mr. Pettit is shown as being paid in British
pounds sterling and converted to U.S. dollars using the fiscal year average of daily spot rates of £1 to $1.37571 for fiscal
2021).
In addition, we maintain a Change
in Control Severance Plan for the benefit of eligible senior executives of the Company (including the NEOs) that provides for
severance benefits on a “double-trigger” basis—i.e., in the event of a qualifying termination of the executive’s
employment by the Company without “cause” or by the participant for “good reason” in connection with a
change in control.
Additional information on post-termination
and change in control benefits for our NEOs, assuming a qualifying event occurred as of December 31, 2021, is provided in the
section titled “Potential Payments upon Termination or Change in Control,” on page 91 of this Proxy Statement.
No Excessive Perquisites
Based on the Company’s philosophy
that its executive compensation program should be straightforward and directly linked to performance, the compensation program
for the NEOs does not include any excessive perquisites, excise tax gross-ups or supplemental executive retirement benefits.
Stock Ownership Guidelines
The Compensation Committee believes
that significant stock ownership at the senior-most levels of MSCI’s leadership (e.g., the Executive Committee), which includes
our executive officers, aligns management’s interests with those of our shareholders and encourages an “owner-operator”
mindset. As part of the Compensation Committee’s ongoing assessment of the Company’s compensation policies and practices
to ensure furtherance of the goals identified above and for alignment with best practices, effective January 1, 2019, the Compensation
Committee adopted the rigorous stock ownership guidelines detailed below. On January 25, 2022, the Compensation Committee further
amended the stock ownership guidelines to adopt more rigorous requirements that reflect among the highest multiples of base salary
in our peer group, as detailed below. As of the date of this Proxy Statement, all Executive Committee members, including our NEOs,
are in compliance with both the pre-2022 Stock Ownership Guidelines and the current Stock Ownership Guidelines. Our CEO significantly
exceeds his applicable stock ownership guidelines (see page 100 of this Proxy Statement for additional details).
Position |
|
Stock
Ownership
Guidelines (Effective 2022) |
|
Stock
Ownership
Guidelines (Pre-2022) |
Chief Executive Officer |
|
12x base salary |
|
6x base salary |
President & Chief Operating Officer |
|
12x base salary |
|
4x base salary |
Other Management Committee Members, including other NEOs |
|
8x base salary |
|
3x base salary |
Executive Committee |
|
4x base salary |
|
3x base salary |
All Executive
Committee members are required to meet the applicable ownership guidelines under the current Stock Ownership Guidelines within
five years following the date of such executive’s appointment to the Executive Committee (or, if later, five years from
January 1, 2019). For the purpose of determining whether each individual is in compliance with these stock ownership guidelines
and requirements, the following are counted towards satisfaction of the minimum ownership requirements:
(1) |
shares beneficially
owned individually, directly or indirectly; |
(2) |
shares beneficially
owned jointly with, or separately by, immediate family members residing in the same household, either directly or indirectly;
and |
(3) |
“Net
Shares” underlying unvested RSUs, unvested PSUs (solely to the extent of any award minimum—i.e., any unvested
PSUs that are subject to achievement of outstanding performance goals are not counted), “in-the money” vested
stock options and any other vested or unvested equity awards (as determined in the Compensation Committee’s discretion). |
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84 |
MSCI | COMPENSATION MATTERS |
“Net Shares” means the
number of shares that would remain if the shares underlying the equity awards are sold or withheld by the Company to (i) pay the
exercise price of a stock option, (ii) satisfy any tax withholding obligations (assuming a tax rate of 50%) or (iii) satisfy any
other applicable transaction costs.
Until the expected ownership levels
are achieved, each Executive Committee member is required to retain 50% of the Net Shares resulting from the vesting, settlement
or exercise, as applicable of all stock options, RSUs, PSUs or other equity awards granted to such executive.
The Compensation Committee determined
that increasing the share ownership multiples for the President and Chief Operating Officer and other senior leaders, including
our NEOs, better reflected alignment with the broader responsibilities of those roles.
In addition to the minimum ownership
requirements, in 2022, the Compensation Committee approved revisions to the share retention requirements of the stock ownership
guidelines to provide that until an executive ceases to serve on the Company’s Executive Committee, such executive will
be required to retain a number of shares equivalent to, in the aggregate, 25% of the “Net Shares” resulting from the
vesting, settlement or exercise, as applicable, of all equity incentive awards granted to such executive after January 1, 2022
(or, if later, the date such executive becomes a member of the Executive Committee). The Compensation Committee determined that
the addition of this 25% “Net Shares” holding requirement would further enhance our goal of ensuring an “owner-operator”
mindset among senior leaders. This approach will ensure that a portion of the Net Shares received from every award will be retained
while an individual serves on the Executive Committee.
Other Policies
Clawback Policy
In 2019, the Board expanded the Company’s
Clawback Policy beyond financial results or operating metrics that were achieved as a result of willful misconduct or intentional
or fraudulent conduct. Under the revised Clawback Policy, the Board, acting upon the recommendation of the Compensation Committee,
may to the extent permitted by applicable law, recoup any incentive compensation (cash and equity) received by members of the
Executive Committee and the Company’s Principal Accounting Officer, in the event of a restatement of financial or other
performance-based measures (regardless of whether detrimental conduct has occurred) or in the event that detrimental conduct results
in an increased level of performance goal achievement or otherwise causes material financial and/or reputational harm to the Company,
as described below.
In the case of a restatement of financial
or other performance-based measures, the Board may recover up to the amount by which the incentive compensation received exceeds
the amount that would have been received if the error had not been made within the two years preceding the date on which the Board
determines that the financial or other measure contains a material error.
In the case of detrimental conduct
that, in the sole discretion of the Board, has resulted in a level of achievement of a performance-based measure or caused material
financial or reputational harm to the Company, the Board may recover incentive compensation received by the person during the
two-year period immediately preceding the date on which such person engaged in such detrimental conduct (or the date on which
the Compensation Committee discovers that such person engaged in detrimental conduct). Detrimental conduct consists of:
● |
willful misconduct or breach
of a fiduciary duty with respect to the Company or any of its subsidiaries; |
● |
conviction of, or having entered a plea bargain
or settlement admitting guilt for, any crime of moral turpitude or felony under any applicable law with respect to the Company
or any of its subsidiaries; |
● |
commission of an act of fraud, embezzlement or
misappropriation, with respect to the Company or any of its subsidiaries; |
● |
failure to take action with respect to any acts
or conduct described above when taken by another person that such person has actual knowledge of or directing any other person
to take any of the actions described above; and |
● |
breach of any restrictive covenant to which such
person is subject contained in any applicable agreement or arrangement with the Company or any of its subsidiaries. |
The expanded Clawback Policy applies to
all incentive compensation (cash and equity) granted on or after February 7, 2019. Incentive compensation granted prior to
that date remains subject to our prior Clawback Policy.
Table of Contents
Anti-Hedging and Anti-Pledging
Policy
We prohibit all directors and employees,
including all NEOs, from hedging or pledging the Company’s common stock or engaging in short sales, purchases or sales of
options, puts or calls, as well as derivatives such as swaps, forwards or futures and trading on a short-term basis in the Company’s
common stock.
Tax Considerations
The Compensation Committee takes
into consideration the tax implications of our executive compensation program, including with respect to the tax deductibility
of compensation paid under Section 162(m) of the IRC.
In the exercise of its business judgment,
and in accordance with its compensation philosophy, the Compensation Committee continues to have flexibility to award compensation
that is not tax deductible if it determines that such award is in our shareholders’ best interests and is necessary to comply
with contractual commitments, or to maintain flexibility needed to attract talent, promote retention or recognize and reward desired
performance.
Compensation Risk
Assessment
The Compensation Committee believes
that the design, implementation and governance of our executive compensation program are consistent with high standards of risk
management. Our executive compensation program reflects an appropriate mix of compensation elements, balancing current and long-term
performance objectives, cash and equity compensation, and risks and rewards.
● |
The compensation framework
used for making compensation decisions is multi-faceted as it incorporates multiple metrics over varying time periods and
is subject to the application of informed judgment by the Compensation Committee. |
● |
To further ensure that the interests of our NEOs
are aligned with those of our shareholders, a significant portion of executive officer long-term incentive compensation is
awarded as equity subject to vesting requirements. Awards typically vest over a multi-year period, and in the case of performance-based
awards, vest based on achievement of applicable performance goals at the end of a relevant performance period. |
● |
Executive Committee members are required to meet
the applicable stock ownership guidelines described under “Stock Ownership Guidelines” on page 83 of this Proxy
Statement. |
● |
Incentive compensation is subject to the Clawback
Policy described under “Clawback Policy” on page 84 of this Proxy Statement. |
Based on these features, we believe
our executive compensation program effectively (i) ensures that our compensation opportunities do not encourage excessive risk
taking, (ii) keeps our NEOs focused on the creation of long-term, sustainable value for our shareholders and (iii) provides competitive
and appropriate levels of compensation over time.
In 2021, the Compensation Committee
reviewed our compensation policies as generally applicable to all of our employees and believes that our policies do not encourage
excessive or unnecessary risk-taking and that any level of risk they do encourage is not reasonably likely to have a material
adverse effect on the Company. Semler Brossy assisted the Compensation Committee with its review of our compensation program by
reviewing materials provided by management related to our compensation program, including the Company’s LTIP. The Compensation
Committee also reviewed materials previously prepared by a third-party consultant related to certain of the Company’s variable
incentive plans, including the AIP, from a risk and governance perspective.
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86 |
MSCI | COMPENSATION MATTERS |
Compensation,
Talent and Culture Committee Report
We, the Compensation, Talent and
Culture Committee of the Board of Directors of MSCI Inc., have reviewed and discussed with management the Compensation Discussion
and Analysis above. Based on this review and these discussions, the Compensation, Talent and Culture Committee recommended to
the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into
the Company’s 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Respectfully submitted,
Linda H.
Riefler (Chair)
Wayne Edmunds
Marcus L. Smith
Table of Contents
Executive
Compensation Tables
Summary Compensation Table
The following table sets forth
information regarding compensation paid or awarded by MSCI to the Company’s NEOs during fiscal years 2021, 2020 and 2019.
2021 SUMMARY COMPENSATION TABLE
Name
and Principal Position |
|
Fiscal
Year |
|
Salary
($)(1) |
|
Bonus
($) |
|
Stock
Awards
($)(2) |
|
Non-Equity
Incentive Plan
Compensation
($)(3) |
|
All Other
Compensation
($)(4)(5)(6)(7) |
|
Total
($) |
Henry A. Fernandez |
|
2021 |
|
1,000,000 |
|
— |
|
7,499,592 |
|
1,816,100 |
|
22,620 |
|
10,338,312 |
Chairman and |
|
2020 |
|
1,000,000 |
|
— |
|
7,499,849 |
|
1,402,210 |
|
22,080 |
|
9,924,139 |
Chief Executive Officer |
|
2019 |
|
1,000,000 |
|
— |
|
6,499,950 |
|
1,734,320 |
|
21,690 |
|
9,255,960 |
Andrew C. Wiechmann |
|
2021 |
|
500,000 |
|
— |
|
899,268 |
|
766,330 |
|
68,780 |
|
2,234,378 |
Chief Financial Officer |
|
2020 |
|
500,000 |
|
— |
|
499,836 |
|
525,970 |
|
72,364 |
|
1,598,170 |
and Treasurer |
|
2019 |
|
406,900 |
|
— |
|
849,669 |
|
564,850 |
|
32,643 |
|
1,854,062 |
C.D. Baer Pettit |
|
2021 |
|
859,819 |
|
— |
|
3,999,665 |
|
1,593,746 |
|
90,215 |
|
6,543,445 |
President and |
|
2020 |
|
802,253 |
|
— |
|
3,999,824 |
|
1,157,080 |
|
193,394 |
|
6,152,551 |
Chief Operating Officer |
|
2019 |
|
798,256 |
|
— |
|
2,999,797 |
|
1,406,743 |
|
165,788 |
|
5,370,583 |
Scott Crum |
|
2021 |
|
550,000 |
|
— |
|
1,473,932 |
|
908,050 |
|
33,857 |
|
2,965,839 |
Chief Human Resources Officer |
|
2020 |
|
550,000 |
|
— |
|
1,199,683 |
|
701,110 |
|
33,342 |
|
2,484,135 |
|
|
2019 |
|
550,000 |
|
— |
|
1,099,695 |
|
867,160 |
|
36,266 |
|
2,553,121 |
Robert J. Gutowski |
|
2021 |
|
450,000 |
|
— |
|
899,268 |
|
836,268 |
|
55,823 |
|
2,241,781 |
General Counsel |
|
2020 |
|
450,000 |
|
— |
|
399,726 |
|
475,750 |
|
61,014 |
|
1,386,490 |
(1) |
Base salary for Mr. Pettit was paid in British
pounds sterling and converted to U.S. dollars using the fiscal year average of daily spot rates of £1 to $1.375710,
$1.283605 and $1.277209 for fiscal 2021, 2020 and 2019, respectively. Mr. Pettit’s 2021 base salary rate was £625,000. |
(2) |
Represents the grant date fair value of awards granted during each
fiscal year, as computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures, and does not
reflect whether the NEO will actually receive a financial benefit from the award. The awards reported in this column were
granted in February 2019, February 2020 and February 2021 as part of the annual compensation process. The following table
represents the grant date fair value of awards granted during February 2021: |
|
|
GRANT DATE FAIR VALUE OF STOCK UNITS GRANTED
DURING 2021 ($) |
|
|
|
|
|
|
Name |
|
RSUs |
|
PSUs |
|
Total |
Henry A. Fernandez |
|
— |
|
7,499,592 |
|
7,499,592 |
Andrew C. Wiechmann |
|
269,715 |
|
629,553 |
|
899,268 |
C.D. Baer Pettit |
|
— |
|
3,999,665 |
|
3,999,665 |
Scott A. Crum |
|
634,476 |
|
839,456 |
|
1,473,932 |
Robert J. Gutowski |
|
269,715 |
|
629,553 |
|
899,268 |
|
The grant date fair value of the PSUs granted
to the NEOs during 2021 was calculated based on the probable outcome of the market conditions as of the grant date, consistent
with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date
under FASB ASC Subtopic 718-10, excluding the effect of estimated forfeitures. The grant date value of the PSUs granted to
the NEOs in 2021, assuming the highest level of performance conditions will be achieved (300% for the 3-Year PSUs and 200%
for the 5-Year PSUs), is $17,998,840 for Mr. Fernandez, $1,573,767 for Mr. Wiechmann, $9,599,203 for Mr. Pettit, $2,098,599
for Mr. Crum and $1,573,767 for Mr. Gutowski. Information regarding the assumptions used to value these awards is set forth
in note 11 to the consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K. |
(3) |
Represents the annual cash bonus paid for 2021, 2020 and 2019, as
applicable, (i) under the 2021 AIP in February 2022 with respect to the 2021 performance year, (ii) under the 2020 AIP in
February 2021 with respect to the 2020 performance year and (iii) under the 2019 AIP in February 2020 with respect to the
2019 performance year. |
(4) |
The Company does not offer defined benefit pension plans or a nonqualified
deferred compensation plan to NEOs. |
(5) |
The amounts reflected in the “All Other Compensation”
column for 2021 include Company matching contributions to the MSCI Inc. 401(k) Retirement Savings Plan of $22,620 for Mr.
Fernandez, Mr. Crum, Mr. Wiechmann and Mr. Gutowski. Company contributions to the MSCI Barra Group (UK) Personal Pension Plan
for Mr. Pettit in 2021 totaled £62,500 ($85,982). The amount of British pounds sterling was converted to U.S. dollars
using the fiscal year average of daily spot rates of £1 to $1.375710, $1.283605 and $1.277209 for fiscal 2021, 2020
and 2019, respectively. |
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88 |
MSCI | COMPENSATION MATTERS |
(6) |
The amount included in the “All Other Compensation”
column includes Company matching contributions to the 2021 UK Medical Coverage for Mr. Pettit in 2021 for £4,676 ($6,432).
The amount of British pounds sterling was converted to U.S. dollars using the fiscal year average of daily spot rates of £1
to $1.375710. |
(7) |
In connection with the Company’s payment of its quarterly cash
dividend, the “All Other Compensation” column includes for 2021 the payment to the NEOs of dividend equivalents
for outstanding RSUs and, for Messrs. Wiechmann and Gutowski, outstanding 2018 PSUs, as follows: |
2021 DIVIDEND EQUIVALENTS ($)
|
|
2018 |
|
Outstanding RSUs |
Name |
|
PSUs |
|
1Q 2021 |
|
2Q 2021 |
|
3Q 2021 |
|
4Q 2021 |
|
Total |
Henry A. Fernandez |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Andrew C. Wiechmann |
|
31,619 |
|
3,116 |
|
3,116 |
|
4,155 |
|
4,155 |
|
46,161 |
C.D. Baer Pettit |
|
— |
|
907 |
|
907 |
|
1,210 |
|
1,210 |
|
4,234 |
Scott A. Crum |
|
— |
|
2,485 |
|
2,485 |
|
3,313 |
|
3,313 |
|
11,596 |
Robert J. Gutowski |
|
28,991 |
|
980 |
|
980 |
|
1,306 |
|
1,306 |
|
33,563 |
Grants of Plan-Based Awards
The following table sets forth
information regarding awards granted to our NEOs during fiscal 2021.
2021 GRANT OF PLAN-BASED AWARDS
TABLE
|
|
|
|
|
|
|
Compensation |
|
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards(1)(2) |
|
Estimated Future Payouts
Under Equity Incentive Plan Awards |
|
All Other
Stock
Awards:
Number
of Shares
of Stock |
|
Grant Date
Fair Value
of Stock |
Name |
|
Type of
Award |
|
|
Grant
Date |
|
Committee
Action Date |
|
Threshold
(#) |
|
Target
(#) |
|
Maximum
(#) |
|
Threshold
(#) |
|
Target
(#) |
|
Maximum
(#) |
|
or Units
(#) |
|
Awards
($)(7) |
Henry A. Fernandez |
|
AIP |
|
|
— |
|
1/26/2021 |
|
— |
|
1,400,000 |
|
2,100,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
PSU |
(4) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
7,226 |
|
21,678 |
|
— |
|
2,999,657 |
|
|
PSU |
(5) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
17,420 |
|
34,840 |
|
— |
|
4,499,934 |
Andrew
C. Wiechmann |
|
AIP |
|
|
— |
|
1/26/2021 |
|
— |
|
600,000 |
|
900,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
RSU |
(3) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
647 |
|
269,715 |
|
|
PSU |
(4) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
758 |
|
2,274 |
|
— |
|
314,661 |
|
|
PSU |
(5) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
1,219 |
|
2,438 |
|
— |
|
314,892 |
C.D.
Baer Pettit(2) |
|
AIP |
|
|
— |
|
1/26/2021 |
|
— |
|
1,238,139 |
|
1,857,209 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
RSU |
(3) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
PSU |
(4) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
3,854 |
|
11,562 |
|
— |
|
1,599,872 |
|
|
PSU |
(5) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
9,290 |
|
18,580 |
|
— |
|
2,399,793 |
Scott
A. Crum |
|
AIP |
|
|
— |
|
1/26/2021 |
|
— |
|
700,000 |
|
1,050,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
RSU |
(3) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
863 |
|
359,759 |
|
|
RSU |
(3)(6) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
659 |
|
274,717 |
|
|
PSU |
(4) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
1,011 |
|
3,033 |
|
— |
|
419,685 |
|
|
PSU |
(5) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
1,625 |
|
3,250 |
|
— |
|
419,770 |
Robert
J. Gutowski |
|
AIP |
|
|
— |
|
1/26/2021 |
|
— |
|
650,000 |
|
975,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
RSU |
(3) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
647 |
|
269,715 |
|
|
PSU |
(4) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
758 |
|
2,274 |
|
— |
|
314,661 |
|
|
PSU |
(5) |
|
2/3/2021 |
|
1/26/2021 |
|
— |
|
— |
|
— |
|
— |
|
1,219 |
|
2,438 |
|
— |
|
314,892 |
(1) |
Represents the target and maximum payouts with
respect to the AIP for 2021. There are no threshold or minimum payouts under the AIP. For additional information regarding
the AIP, see “Compensation Discussion and Analysis–Variable Compensation–Annual Cash Incentives” above. |
(2) |
AIP payment for Mr. Pettit was paid in British pounds sterling and
converted to U.S. dollars using the 2021 fiscal year average of daily spot rates of £1 to $1.375710. Mr. Pettit’s
2021 AIP payment was £1,238,139. |
Table of Contents
(3) |
Represents service vesting RSUs granted during
2021. The RSUs vest in three annual installments of 34%, 33% and 33% on each of the first three anniversaries of the grant
date, subject to continued service through each applicable vesting date. |
(4) |
Represents 3-Year PSUs granted during 2021, which cliff-vest at the
end of a three-year performance cycle from February 2, 2021 to February 1, 2024, based on achievement of a TSR CAGR performance
metric and subject to continued service through the last day of the performance period. The actual number of PSUs will be
determined at the end of the performance period and may be adjusted down to 0% or up to 300% of the target amount. |
(5) |
Represents 5-Year PSUs granted during 2021, which cliff-vest at the
end of a five-year performance cycle from February 2, 2021 to February 1, 2026, based on achievement of a TSR CAGR performance
metric and subject to continued service through the last day of the performance period. The actual number of PSUs will be
determined at the end of the performance period and may be adjusted down to 0% or up to 200% of the target amount. |
(6) |
Represents one-time retention RSUs granted to Mr. Crum in early 2021
in recognition of his leadership and dedication supporting our employees during the pandemic. |
(7) |
Represents the grant date fair value of stock awards as computed
in accordance with FASB ASC Subtopic 718-10. The grant date fair value for these stock awards was based on the closing price
of MSCI’s common shares on the trading day preceding the grant date or service inception date as the case may be. For
PSUs, the grant date fair value is based on the probable outcome of the performance conditions as of the grant date, consistent
with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date
under FASB ASC Subtopic 718-10. For the values of these PSUs, assuming attainment of the maximum level of the performance
conditions, see footnote 2 to the “Summary Compensation Table” above. |
Outstanding Equity Awards at
Fiscal Year-End
The following table shows the
number of shares covered by exercisable and unexercisable outstanding RSUs and PSUs held by each of our NEOs on December 31, 2021,
which units remain subject to forfeiture and cancellation provisions.
|
|
Stock Awards |
Name |
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(1) |
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2) |
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(3) |
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
other Rights
That Have
Not Vested
($)(3) |
Henry A. Fernandez |
|
— |
|
— |
|
334,619 |
|
205,017,715 |
Andrew C. Wiechmann |
|
3,995 |
|
2,447,697 |
|
14,347 |
|
8,790,263 |
C.D. Baer Pettit |
|
1,163 |
|
712,558 |
|
150,524 |
|
92,224,550 |
Scott A. Crum |
|
3,186 |
|
1,952,030 |
|
35,444 |
|
21,716,184 |
Robert J. Gutowski |
|
1,256 |
|
769,539 |
|
13,295 |
|
8,145,714 |
(1) |
Represents unvested RSUs outstanding as of December
31, 2021. This column does not give effect to retirement provisions for Messrs. Fernandez and Pettit. Equity awards granted
to employees eligible for retirement treatment vest on the date retirement eligibility is attained. Messrs. Fernandez and
Pettit became eligible for retirement treatment by satisfying one of the following conditions: age 50 with 12 years as a Managing
Director, at age 50 with 15 years as an officer, at least age 55 with 5 years of service (the sum of age plus years of service
must equal or exceed 65) or 20 years of service. The number of RSUs included in this table vest on the following dates for
each NEO: |
|
|
Number of RSUs By Vesting
Date |
Name |
|
2/4/22 |
|
2/6/22 |
|
2/7/22 |
|
3/5/22 |
|
2/4/23 |
|
2/6/23 |
|
2/4/24 |
Henry A. Fernandez |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Andrew C. Wiechmann |
|
216 |
|
169 |
|
339 |
|
2,671 |
|
216 |
|
169 |
|
215 |
C.D. Baer Pettit |
|
— |
|
— |
|
1,163 |
|
— |
|
— |
|
— |
|
— |
Scott A. Crum |
|
508 |
|
406 |
|
852 |
|
— |
|
508 |
|
406 |
|
506 |
Robert J. Gutowski |
|
216 |
|
135 |
|
339 |
|
— |
|
216 |
|
135 |
|
215 |
(2) |
The market value of outstanding RSUs is based
on a share price of $612.69, the closing price of MSCI Inc. common stock on December 31, 2021, rounded to the nearest whole
number. |
(3) |
Represents outstanding and unvested PSUs held on December 31, 2021
that remain subject to performance adjustment and forfeiture provisions, as illustrated in the following tables. This column
does not give effect to retirement provisions for Messrs. Fernandez and Pettit. These numbers represent PSUs each NEO would
receive upon vesting, assuming maximum attainment of the applicable performance goals. |
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90 |
MSCI | COMPENSATION MATTERS |
2019, 2020 and 2021 PSU Awards,
subject to forfeiture and cancellation provisions
2019—3-Year PSU Award-Unadjusted, subject to forfeiture and cancellation
provisions
Name |
|
Number of PSUs at 300%
(Maximum) Vesting |
Henry A. Fernandez(1) |
|
80,187 |
Andrew C. Wiechmann(2) |
|
3,021 |
C.D. Baer Pettit(3) |
|
37,008 |
Scott A. Crum(4) |
|
10,854 |
Robert J. Gutowski(5) |
|
3,021 |
(1) |
Following the performance adjustment, Mr. Fernandez
received 80,187 PSUs which vested and converted to shares on February 7, 2022. |
(2) |
Following the performance adjustment, Mr. Wiechmann received 3,021
PSUs which vested and converted to shares on February 7, 2022. |
(3) |
Following the performance adjustment, Mr. Pettit received 37,008
PSUs which vested and converted to shares on February 7, 2022. |
(4) |
Following the performance adjustment, Mr. Crum received 10,854 PSUs
which vested and converted to shares on February 7, 2022. |
(5) |
Following the performance adjustment, Mr. Gutowski received 3,021
PSUs which vested and converted to shares on February 7, 2022. |
2019—5-Year PSU Award-Unadjusted,
subject to forfeiture and cancellation provisions
Name |
|
Number of PSUs at 200%
(Maximum) Vesting |
Henry A. Fernandez |
|
84,022 |
Andrew C. Wiechmann |
|
1,356 |
C.D. Baer Pettit |
|
23,266 |
Scott A. Crum |
|
5,686 |
Robert J. Gutowski |
|
1,356 |
|
|
|
2020—3-Year PSU Award-Unadjusted, subject to forfeiture and cancellation provisions |
|
|
|
|
|
Name |
|
Number of PSUs at 300%
(Maximum) Vesting |
Henry A. Fernandez |
|
42,708 |
Andrew C. Wiechmann |
|
2,490 |
C.D. Baer Pettit |
|
28,470 |
Scott A. Crum |
|
5,979 |
Robert J. Gutowski |
|
1,992 |
|
|
|
2020—5-Year PSU Award-Unadjusted, subject to forfeiture and cancellation provisions |
|
|
|
|
|
Name |
|
Number of PSUs at 200%
(Maximum) Vesting |
Henry A. Fernandez |
|
71,184 |
Andrew C. Wiechmann |
|
2,768 |
C.D. Baer Pettit |
|
31,638 |
Scott A. Crum |
|
6,642 |
Robert J. Gutowski |
|
2,214 |
|
|
|
2021—3-Year PSU Award-Unadjusted, subject to forfeiture and cancellation provisions |
|
|
|
|
|
Name |
|
Number of PSUs at 300%
(Maximum) Vesting |
Henry A. Fernandez |
|
21,678 |
Andrew C. Wiechmann |
|
2,274 |
C.D. Baer Pettit |
|
11,562 |
Scott A. Crum |
|
3,033 |
Robert J. Gutowski |
|
2,274 |
Table of Contents
2021—5-Year PSU Award-Unadjusted,
subject to forfeiture and cancellation provisions
Name |
|
Number of PSUs at 200%
(Maximum) Vesting |
Henry A. Fernandez |
|
34,840 |
Andrew C. Wiechmann |
|
2,438 |
C.D. Baer Pettit |
|
18,580 |
Scott A. Crum |
|
3,250 |
Robert J. Gutowski |
|
2,438 |
Option Exercises and Stock
Vested
The following table contains information
with regard to stock options exercised by our NEOs and vesting and conversion of restricted stock held by the NEOs during fiscal
2021.
|
|
Option Awards |
|
Stock Awards |
Name |
|
Number of
Shares
Acquired on
Vesting
(#) |
|
Value Realized
on Vesting
($)(1) |
|
Number of
Shares
Acquired on
Vesting
(#) |
|
Value Realized
on Vesting
($)(1) |
Henry A. Fernandez |
|
— |
|
— |
|
— |
|
— |
Andrew C. Wiechmann |
|
— |
|
— |
|
5,173 |
|
2,223,407 |
C.D. Baer Pettit |
|
— |
|
— |
|
2,391 |
|
999,366 |
Scott A. Crum |
|
— |
|
— |
|
2,193 |
|
942,573 |
Robert J. Gutowski |
|
— |
|
— |
|
4,751 |
|
2,042,027 |
(1) |
The value realized for stock awards is based on
the closing price of MSCI common stock on the stock vesting date. |
Potential Payments Upon Termination
or Change in Control
Change in Control
Severance Plan
In the event of a change in control
of the Company, Executive Committee members, including all of our NEOs, would be entitled to benefits under the MSCI Inc. Change
in Control Severance Plan (the “CIC Plan”), which was adopted by the Board of Directors in May 2015. The CIC Plan
covers participants identified on a schedule attached to the CIC Plan (subject to any additions to or removals from the participant
list by the Compensation Committee), including the Company’s CEO, CFO and the Company’s other NEOs. In the event of
a “Qualifying Termination” (for certain terminations related to changes in control, as defined in the CIC Plan), participants
will receive the severance payments and benefits specified in the CIC Plan. Severance payments and benefits under the CIC Plan
are subject to a “double-trigger” as both a change in control and a termination of the participant’s employment
by the Company without “cause” or by the participant for “good reason” (as such terms are defined in the
CIC Plan) are required in order for the participant to qualify for payments and benefits. The CIC Plan does not include any golden
parachute excise tax gross-up provisions. Any severance payments and benefits under the CIC Plan are subject to execution of an
agreement by the CIC Plan participant releasing claims against the Company. Participants are also obligated to comply with confidentiality,
non-solicitation and non-disparagement covenants under their release agreement.
Annual Incentive
Plan
In the event of a change in control
(as defined in the AIP), unless otherwise determined by the Compensation Committee, the performance period applicable to any outstanding
AIP cash bonus award will cease as of the date immediately prior to the change in control. The portion of any such award based
on performance metrics (other than KPIs) will be payable based on the higher of (i) the Company’s actual achievement of
the performance metrics (other than KPIs) for the prorated period ending immediately prior to the change in control and (ii) 100%.
The portion of any such award based on KPIs will be payable at 100% of the target KPIs. All awards will be payable by the Company
(or the successor or survivor entity) within 60 days of the date of the change in control, prorated for the portion of the applicable
performance period that elapsed prior to the change in control.
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92 |
MSCI | COMPENSATION MATTERS |
If the Company’s successor
will not be implementing a comparable annual incentive plan for the remaining portion of the year in which the change in control
occurs, the Compensation Committee may, in its discretion, elect not to prorate the awards. If any AIP participant is eligible
to receive a prorated annual bonus for the year in which the change in control occurs pursuant to any other change in control
severance plan, including the CIC Plan, the individual’s prorated annual bonus payable under such other plan will be reduced
by the amount of the bonus paid under the AIP.
Offer Letters
For information regarding certain
amounts payable to each of Messrs. Wiechmann and Pettit in connection with an involuntary termination of employment other than
for cause pursuant to the terms of their offer letter or employment letter, respectively, please see “Employment Agreements”
on page 82 of this Proxy Statement.
Equity Acceleration
The descriptions of equity acceleration
provisions below apply to the applicable outstanding equity awards as of December 31, 2021.
TERMINATIONS OTHER THAN DUE
TO DEATH, DISABILITY, INVOLUNTARY TERMINATION WITHOUT CAUSE, GOVERNMENTAL SERVICE OR RETIREMENT
Upon termination of an NEO’s
employment for any reason other than due to death, disability, involuntary termination without cause, certain governmental service
or retirement (as such terms are defined in the applicable award agreement), his or her unvested RSUs and PSUs will generally
be cancelled immediately. Equity awards granted to NEOs who are eligible for retirement treatment are cancelled following a termination
for cause.
DEATH OR DISABILITY
Upon termination of an NEO’s
employment due to death or “disability” (as defined in the applicable award agreement):
● |
RSUs. RSUs will vest and convert into shares
within 30 days of the termination date. |
● |
2019-2021 PSUs. PSUs will vest and convert into shares on
the adjustment date, subject to adjustment based on actual performance through the end of the performance period. |
INVOLUNTARY TERMINATION
If the Company terminates an NEO’s
employment without “cause” (as defined in the applicable award agreement) and he or she signs and does not revoke
an agreement and release of claims satisfactory to the Company within 60 days of the termination date:
● |
2019 RSUs. If the NEO is not eligible for retirement
treatment as of the termination date, RSUs will vest and convert into shares within 60 days of the termination date. If the NEO
is eligible for retirement treatment, RSUs will vest and convert into shares at any time, determined in the discretion of the
Compensation Committee, during the period commencing on January 1 of the year following the year of termination and ending on
the one-year anniversary of the termination date (or, 15 days following the expiration of any non-compete the NEO is subject to,
if earlier), but in no event before January 1 of the year following the year of termination. |
● |
2020-2021 RSUs. A prorated portion of the
RSUs will vest and convert to shares on the next regularly scheduled vesting date equal to the product of (i) one-third of
the total number of RSUs granted pursuant to the award multiplied by (ii) a fraction, (A) the numerator of which is the total
number of months the NEO was employed by the Company during the applicable 12-month vesting period (rounded up to the next
whole month) and (B) the denominator of which is 12 months. However, for NEOs who have achieved “62/10 Retirement Eligibility”
(as defined in the applicable award agreement), the RSUs will fully vest on the date of termination and will convert to shares
on the original payment schedule. |
● |
2019 PSUs. PSUs will service-vest and convert into shares
on the adjustment date, subject to adjustment based on actual performance through the end of the performance period. |
● |
2020-2021 3-Year PSUs. A prorated portion of the target number
of PSUs will vest and convert into shares on the adjustment |
Table of Contents
|
date equal to the product of (i) the target number
of PSUs multiplied by (ii) a fraction, (A) the numerator of which is the total number of months the NEO was employed by the
Company during the 3-year performance period (rounded up to the next whole month), and (B) the denominator of which is 36
months, subject to adjustment based on actual performance through the end of the performance period. However, for NEOs who
have achieved “62/10 Retirement Eligibility,” all of the target PSUs (i.e., not prorated) will vest and convert
into shares on the adjustment date, subject to adjustment based on actual performance through the end of the performance period. |
● |
2020-2021 5-Year PSUs. If the termination of employment occurs
prior to the second anniversary of the grant date, the PSUs will be forfeited in their entirety. Following the second anniversary
of the grant date, a prorated portion of the target number of PSUs will vest and convert into shares on the adjustment date
equal to the product of (i) the target number of PSUs multiplied by (ii) a fraction, (A) the numerator of which is the total
number of months the NEO was employed by the Company during the 5-year performance period (rounded up to the next whole month),
and (B) the denominator of which is 60 months, subject to adjustment based on actual performance through the end of the performance
period. However, for NEOs who have achieved “62/10 Retirement Eligibility,” all of the target PSUs (i.e., not
prorated) will vest and convert into shares on the adjustment date, subject to adjustment based on actual performance through
the end of the performance period. |
GOVERNMENTAL SERVICE
Upon termination of an NEO’s
employment as a result of commencing certain employment with a governmental employer (as defined in the applicable award agreement):
● |
2019 RSUs. The RSUs will vest and convert into shares
on the termination date or within 60 days thereafter. |
● |
2019 PSUs. If such termination occurs prior to the adjustment
date, the PSUs will be adjusted within a range based on the expected (or actual, if such termination occurs after the end
of the performance period) achievement of the performance metrics for the performance period (which will be determined by
extrapolating the performance metrics that have been achieved as of the end of the most recent fiscal quarter prior to the
date on which the NEO’s employment terminates) and such adjusted PSUs will vest and convert into shares within 60 days
following the termination date. If such termination occurs following the adjustment date, the PSUs will fully vest and convert
into shares within 60 days of termination. |
RETIREMENT
Upon termination of an NEO’s
employment in circumstances that makes him or her eligible for retirement treatment (based on the applicable award agreement):
● |
2019 RSUs. RSUs will vest and convert into
shares at any time, determined in the discretion of the Compensation Committee, during the period commencing on January 1
of the year following the year of termination and ending on the one-year anniversary of the termination date (or, 15 days
following the expiration of any non-compete the NEO is subject to, if earlier), but in no event before January 1 of the year
following the year of termination. |
● |
2020-2021 RSUs. For NEOs who have achieved “Legacy Retirement
Eligibility” or “55/10 Retirement Eligibility” (as such terms are defined in the applicable award agreement)
but who have not achieved “62/10 Retirement Eligibility,” a prorated portion of the RSUs will vest and convert
to shares on the next regularly scheduled vesting date equal to the product of (i) one-third of the total number of RSUs granted
pursuant to the award multiplied by (ii) a fraction, (A) the numerator of which is the total number of months the NEO was
employed by the Company during the applicable 12-month vesting period (rounded up to the next whole month) and (B) the denominator
of which is 12 months. For NEOs who have achieved “62/10 Retirement Eligibility,” the RSUs will fully vest on
the date of termination and will convert to shares on the original payment schedule. |
● |
2019 PSUs. If retirement eligibility occurs prior to or on
the vesting date, the PSUs will vest and convert into shares on the adjustment date, subject to adjustment based on actual
performance through the end of the performance period; except that, if on the adjustment date, the NEO is subject to a non-compete
restriction, the PSUs will convert, in the discretion of the Compensation Committee, during the period (x) commencing on the
adjustment date and (y) ending on December 31, 2022 or December 31, 2023, as applicable. If such termination occurs after
the vesting date (but prior to the adjustment date), the adjusted PSUs will convert into shares on December 31, 2022 or December
31, 2023, as applicable. |
● |
2020-2021 PSUs. For NEOs who have achieved “Legacy Retirement
Eligibility” or “55/10 Retirement Eligibility” but who have not achieved “62/10 Retirement Eligibility,”
a prorated portion of the target number of PSUs will vest and convert to shares on the adjustment date equal to the product
of (i) the target number of PSUs multiplied by (ii) a fraction, (A) the numerator |
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94 |
MSCI | COMPENSATION MATTERS |
|
of which is the total number of months the NEO
was employed by the Company during the 3- or 5-year performance period, as applicable (rounded up to the next whole month),
and (B) the denominator of which is 36 or 60 months, as applicable, subject to adjustment based on actual performance through
the end of the performance period. However, for NEOs who have achieved “62/10 Retirement Eligibility,” all of
the target PSUs (i.e., not prorated) will vest and convert into shares on the adjustment date, subject to adjustment based
on actual performance through the end of the performance period. |
CHANGE IN CONTROL
In the event an NEO’s employment is terminated
by MSCI without “cause” or by him or her for “good reason,” in each case, within 24 months following a
“change in control” (as such terms are defined in the applicable award agreement):
● |
RSUs. RSUs will vest and convert into shares
within 60 days of the date of termination of employment. |
● |
2019-2021 PSUs. PSUs will vest and convert to shares within
60 days of the date of termination of employment, and the performance metrics will be deemed to have been achieved at the
greater of (i) the actual achievement of the performance metrics for the period commencing on the first day of the performance
period and ending on the date immediately prior to the change in control and (ii) 100%. |
The following table represents the amounts to which
our NEOs or their estates or representatives, as applicable, would have been entitled to receive had their employment been terminated
on December 31, 2021 or had a change in control occurred on December 31, 2021.
Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
Change
in Control |
Name(1) |
|
Involuntary
Termination
Without Cause- Equity at Target Performance(1)(2) |
|
Termination
Due to Death, Disability- Equity at Target Performance(1)(3) |
|
Termination
Due to
Government Service - Equity at Target Performance(1)(4) |
|
Cash
Severance(5) |
|
Benefits and
Perquisites - Cobra / UK Medical Continuation Premiums(6) |
|
Termination
Without Cause or for Good Reason (Following a Change in Control)-
Equity at Target Performance(1)(7) |
Henry A. Fernandez |
|
$ |
87,745,786 |
|
$ |
87,745,786 |
|
$ |
87,745,786 |
|
$ |
5,301,752 |
|
$ |
72,354 |
|
$ |
87,745,786 |
Andrew C. Wiechmann |
|
$ |
3,258,898 |
|
$ |
6,047,863 |
|
$ |
6,047,863 |
|
$ |
2,238,100 |
|
$ |
— |
|
$ |
6,047,863 |
C.D. Baer Pettit |
|
$ |
16,594,096 |
|
$ |
38,957,894 |
|
$ |
38,957,894 |
|
$ |
4,320,918 |
|
$ |
17,367 |
|
$ |
38,957,894 |
Scott A. Crum |
|
$ |
5,130,666 |
|
$ |
10,781,506 |
|
$ |
10,781,506 |
|
$ |
2,750,880 |
|
$ |
84,391 |
|
$ |
10,781,506 |
Robert
J. Gutowski |
|
$ |
1,629,755 |
|
$ |
4,098,283 |
|
$ |
4,098,283 |
|
$ |
2,078,900 |
|
$ |
72,354 |
|
$ |
4,098,283 |
(1) |
All values are based on a closing stock price
of $612.69 per share as of December 31, 2021. The amounts included in this table also represent values associated with the
acceleration of the 2019 PSUs for the NEOs, which vested on February 7, 2022. As such, as of the date of this proxy statement,
the value attributable to the 2019 PSUs reflected in the table above for Messrs. Fernandez ($49,129,773), Wiechmann ($1,850,936),
Pettit ($22,674,432), Crum ($6,650,137) and Gutowski ($1,850,936) are no longer currently applicable in the event of any future
termination of employment or change in control. |
(2) |
These amounts represent the values associated with the acceleration
of unvested RSUs and payout of PSUs at the target performance level upon a termination of the NEO’s employment due to
an involuntary termination without cause (not following a change in control), in each case, pursuant to the terms of the applicable
award agreement. The value associated with the acceleration of unvested RSUs and PSUs (assuming payout at the maximum performance
level) is $205,017,715 for Mr. Fernandez, $5,633,072 for Mr. Wiechmann, $44,318,931 for Mr. Pettit, $12,393,493 for Mr. Crum
and $3,874,039 for Mr. Gutowski. |
(3) |
These amounts represent the values associated with the acceleration
of unvested RSUs and payout of PSUs at the target performance level upon a termination of the NEO’s employment due to
death or disability, in each case, pursuant to the terms of the applicable award agreement. The value associated with the
acceleration of unvested RSUs and PSUs (assuming payout at the maximum performance level) is $205,017,715 for Mr. Fernandez,
$11,237,960 for Mr. Wiechmann, $92,937,108 for Mr. Pettit, $23,668,215 for Mr. Crum and $8,915,252 for Mr. Gutowski. |
(4) |
These amounts represent the values associated with the acceleration
of unvested RSUs and payout of PSUs at the target performance level upon a termination of the NEO’s employment due to
a termination for government service pursuant to the terms of the applicable award agreement. The value associated with the
acceleration of unvested RSUs and PSUs (assuming payout at the maximum performance level) is $205,017,715 for Mr. Fernandez,
$11,237,960 for Mr. Wiechmann, $92,937,108 for Mr. Pettit, $23,668,215 for Mr. Crum and $8,915,252 for Mr. Gutowski. |
(5) |
A lump sum cash payment under our CIC Plan equal
to the sum of (1) two times the participant’s base salary and (2) two times the participant’s average annual cash
bonus (three-year average annual cash bonus). For more information on our CIC Plan and qualifying terminations of employment
thereunder, see “Compensation Discussion and Analysis—Potential Payments Upon Termination or Change in Control—Change
in Control Severance Plan” above. |
Table of Contents
(6) |
A lump sum cash payment under our CIC Plan equal
to 135% of the approximate amount of COBRA continuation premiums for the participant and his or her eligible dependents for
24 months for the coverage option and level of medical, dental and/or vision coverage in effect for the participant immediately
prior to the date of termination (or, in the case of an international participant, equivalent local private medical benefits);
provided, however, that such continued participation shall only be provided to an international participant to the extent
permitted under the terms of any applicable group health plan and applicable law. For more information on our CIC Plan and
qualifying terminations of employment thereunder, see “Compensation Discussion and Analysis—Potential Payments
Upon Termination or Change in Control—Change in Control Severance Plan” above. |
(7) |
These amounts represent the values associated with the acceleration
of unvested RSUs and payout of PSUs at the target performance level upon a termination of the NEO’s employment by the
Company without cause or by the NEO for good reason, in each case, within 24 months following a change in control, pursuant
to the terms of the applicable award agreement. The value associated with the acceleration of unvested RSUs and PSUs (assuming
payout at the maximum performance level) is $205,017,715 for Mr. Fernandez, $11,237,960 for Mr. Wiechmann, $92,937,108 for
Mr. Pettit, $23,668,215 for Mr. Crum and $8,915,252 for Mr. Gutowski. |
2021 Pay Ratio
In accordance with the requirements
of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio
Rule”), we are providing the following estimated information for 2021:
● |
the median of the annual total compensation of
all our employees (except our Chief Executive Officer) was $58,415; |
● |
the annual total compensation of our Chief Executive Officer was
$10,338,312; and |
● |
the ratio of these two amounts was 177 to 1. We believe that this
ratio is a reasonable estimate calculated in a manner consistent with the requirements of the Pay Ratio Rule. |
SEC rules for identifying the
median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and,
as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
Methodology
for Identifying our “Median Employee”
EMPLOYEE POPULATION
To identify the median of the
annual total compensation of all our employees (other than our Chief Executive Officer), we first identified our total employee
population from which we determined our “median employee.” We determined that, as of December 31, 2021, our employee
population consisted of 4,303 individuals (of which 47.4% of MSCI employees were located in the Asia Pacific region, 23.3% in
Europe, Middle East and Africa, 20.6% in the U.S. and Canada, and 8.7% in Mexico and Brazil). Our employee population consisted
of our global workforce of full-time, part-time, seasonal and temporary employees, as described in more detail below.
DETERMINING OUR MEDIAN EMPLOYEE
To identify our “median
employee” from our total employee population, we compared the amount of base salary plus actual cash bonus paid for 2021.
In making this determination, we annualized the compensation of our full-time employees who were hired in 2021 but did not work
for us for the entire fiscal year and permanent part-time employees. We identified our “median employee” using this
compensation measure, which was consistently applied to all our employees included in the calculation.
OUR MEDIAN EMPLOYEE
Using the methodologies described
above, we determined that our “median employee” was a full-time, salaried employee located in Mumbai, India, with
base salary for the 12-month period ending December 31, 2021 in the amount of $41,580.
Determination
of Annual Total Compensation of our “Median Employee” and our CEO
Once we identified our “median
employee,” we then calculated such employee’s annual total compensation for 2021 using the same methodology we used
for purposes of determining the annual total compensation of our NEOs for 2021 (as set forth in the Summary Compensation Table
for 2021 on page 87 of this Proxy Statement).
Table of Contents
Audit
Matters
Independent
Auditor’s Fees
The following table summarizes the aggregate fees (including
related expenses) billed and/or accrued in 2021 and 2020 for professional services provided by PwC. On March 15, 2021, the Audit
and Risk Committee approved the engagement of PwC as the Company’s independent auditor for 2021. These fees were approved
pursuant to the pre-approval policies and procedures described below.
$
IN THOUSANDS |
2021 |
|
2020 |
Audit fees(1) |
3,396 |
|
3,120 |
Audit-related fees(2) |
698 |
|
15 |
Tax fees(3) |
1,329 |
|
1,607 |
All other fees(4) |
16 |
|
6 |
Total |
5,439 |
|
4,748 |
(1) |
Audit fees consisted of fees billed and/or accrued
for (i) audits of our consolidated financial statements included in our Annual Reports on Form 10-K and related services,
(ii) reviews of the interim condensed consolidated financial statements included in our quarterly financial statements, (iii)
audits of various entities for statutory and other reporting requirements, (iv) comfort letters, consents and other services
related to SEC and other regulatory filings and (v) audits of our internal control over financial reporting (as required by
Section 404 of the Sarbanes-Oxley Act of 2002). |
(2) |
In 2021 and 2020, Audit-related fees consisted of fees billed and/or
accrued for the annual benefit plan audit as well as other assurance and related services. |
(3) |
Tax fees related to tax compliance assistance in 2021 and 2020 were
$1,043,596 and $1,409,000, respectively. Tax consulting fees related to international and domestic tax matters, including
international tax planning, in 2021 and 2020 were approximately $285,431 and $198,000, respectively. |
(4) |
In 2021 and 2020, all other fees primarily consisted of fees related
to accounting research software subscriptions. |
Pre-Approval
Policy of the Audit and Risk Committee of Services Performed by Independent Auditors
The Audit and Risk Committee has implemented pre-approval
policies and procedures related to the provision of audit and non-audit services by the independent auditor to ensure the services
do not impair their independence. Under these procedures, the Audit and Risk Committee pre-approves both the type of services
to be provided by the independent auditors and the estimated fees related to those services. During the pre -approval process,
the Audit and Risk Committee considers the impact of the types of services and the related fees on the independence of the auditor.
Even if a service has received general pre-approval, if it involves a fee in excess of $750,000 or relates to tax planning and
advice, it requires a separate pre-approval of the full Audit and Risk Committee. The Audit and Risk Committee has delegated authority
to the Chair of the Audit and Risk Committee to pre-approve certain engagements not requiring approval by the full Audit and Risk
Committee. The Chair must report, for informational purposes, any pre-approval decisions to the Audit and Risk Committee at its
next scheduled meeting. The services and fees must be deemed compatible with the maintenance of the auditor’s independence,
including compliance with SEC rules and regulations. Management reports the actual fees versus pre-approved amounts periodically
throughout the year by category of service.
Table of Contents
Audit and Risk Committee Report
The Audit and
Risk Committee operates under a written charter adopted by the Board, which is accessible through the “Corporate Governance”
link under the “Investor Resources” tab found on our website’s Investor Relations homepage (https://ir.msci.com).
The Audit and Risk Committee is responsible for the oversight of the integrity of the Company’s consolidated financial statements,
the Company’s system of internal control over financial reporting, the Company’s risk management, the qualifications
and independence of the Company’s independent auditor, the performance of the Company’s internal and independent auditors
and the Company’s compliance with legal and regulatory requirements. The Audit and Risk Committee has the sole authority
and responsibility to appoint, compensate, evaluate and, when appropriate, replace the Company’s independent auditor. The
Board has determined that all of the Audit and Risk Committee’s members are independent under the applicable independence
standards of the NYSE and the Exchange Act.
The Audit and Risk Committee serves in an oversight
capacity and is not part of the Company’s managerial or operational decision-making process. Management is responsible for
the financial reporting process, including the system of internal controls, for the preparation of consolidated financial statements
in accordance with accounting principles generally accepted in the United States and for the report on the Company’s internal
control over financial reporting. The Company’s independent auditor for the year ended December 31, 2021, PwC, was responsible
for auditing the consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K, expressing
an opinion as to their conformity with accounting principles generally accepted in the United States of America and expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting, as well as reviewing the Company’s
interim condensed consolidated financial statements included in its Quarterly Reports on Form 10-Q. The Audit and Risk Committee’s
responsibility is to oversee the financial reporting process and to review and discuss management’s report on the Company’s
internal control over financial reporting. The Audit and Risk Committee relies, without independent verification, on the information
provided to us and on the representations made by management, the internal auditor and the independent auditor.
The Audit and Risk Committee held ten meetings during
the year ended December 31, 2021, and among other things:
● |
reviewed and discussed the Company’s quarterly
and annual earnings releases; |
● |
reviewed and discussed the (i) quarterly unaudited consolidated financial
statements and related notes and (ii) audited consolidated financial statements and related notes to the consolidated financial
statements for the year ended December 31, 2021 with management and PwC; |
● |
reviewed and discussed the annual plan and scope of work of the independent
auditor; |
● |
reviewed and discussed the annual plan and scope of work of the internal
auditor and summaries of significant reports to management by the internal auditor; |
● |
met with PwC, the internal auditor and Company management in executive
sessions to discuss the results of their examinations and evaluations of the Company’s internal controls, and the overall
quality of the Company’s financial reporting and compliance programs; |
● |
reviewed and discussed the critical accounting policies set forth
in the Company’s Annual Report on Form 10-K and reviewed critical audit matters reported by PwC; |
● |
reviewed business and financial market conditions, including periodic
assessments of risks posed to MSCI’s operations and financial condition (including those related to technology and cybersecurity);
and |
● |
evaluated the performance of PwC and approved their engagement as
the Company’s independent auditor. |
PwC also provided to the Audit and Risk Committee the
written disclosures and the letters required by the applicable PCAOB requirements regarding PwC’s communications with the
Audit and Risk Committee concerning independence, and represented that it is independent from the Company. We discussed with PwC
their independence from the Company, and considered whether the services they provided to the Company beyond those rendered in
connection with their integrated audit of the Company’s consolidated financial statements and internal control over financial
reporting, and the reviews of the Company’s interim condensed consolidated financial statements included in its Quarterly
Reports on Form 10-Q, were compatible with maintaining their independence.
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During the year ended December 31, 2021, the Audit and
Risk Committee also received regular updates on the amount of fees and scope of audit, audit-related and tax services provided.
Pursuant to the pre-approval policies and procedures related to the provision of audit and non-audit services by the independent
auditors as described above within “—Pre-Approval Policy of the Audit and Risk Committee of Services Performed by
Independent Auditors,” the Audit and Risk Committee approved, among other things, fees related to the integrated audits,
statutory audits, consultations and certain non-audit services. The Audit and Risk Committee also approved certain tax fees consisting
of compliance and advisory services related to (i) tax consulting fees related to international and domestic tax matters, including
international corporate restructurings, and (ii) tax compliance assistance.
Based on our review and these meetings, discussions
and reports described above, and subject to the limitations on our role and responsibilities referred to above and in the Audit
and Risk Committee’s charter, we recommended to the Board that the Company’s audited consolidated financial statements
be included in the Company’s 2021 Annual Report on Form 10-K.
Respectfully submitted,
Wayne Edmunds (Chair)
Robert G. Ashe
Sandy C. Rattray
Linda H. Riefler
Rajat Taneja
Table of Contents
Proposal No. 3
Ratification of the Appointment of MSCI Independent
Auditor
|
|
|
|
The Audit and Risk Committee appointed PricewaterhouseCoopers
LLP (“PwC”) as independent auditors for 2022 and presents this selection
to the shareholders for ratification. PwC will audit our consolidated financial statements
for the year ended December 31, 2022 and perform other permissible pre-approved services.
A PwC representative will attend the 2022 Annual Meeting to respond to your questions and will have the opportunity
to make a statement if he or she desires to do so. If shareholders do not ratify the appointment, the Audit and Risk Committee
will reconsider it. Even if shareholders ratify the selection of PwC, the Audit and Risk Committee, in its discretion, may select
a new independent auditor at any time during the year if it believes that the change would be in the best interest of the Company.
The Audit and Risk Committee periodically reviews the engagement of the independent auditor to assess, among
other things, the skills, experience, service levels and costs associated with conducting the annual audit of the Company’s
financial statements. PwC has served as our independent auditor since March 2014.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast at our 2022 Annual Meeting, at which a quorum is present,
is required to approve Proposal No. 3. Abstentions shall not be treated as votes cast.
|
|
|
|
|
|
|
|
Our
Board of Directors Recommends that you vote “FOR”
the ratification of the appointment of PricewaterhouseCoopers LLP
as our independent auditor. |
|
|
|
Proxies
solicited by our Board will be voted “FOR”
this ratification unless otherwise instructed. |
|
|
|
|
|
Table of Contents
Beneficial
Ownership of Common Stock
Stock Ownership of Executive Officers
and Directors
We require members of our Executive Committee (which
includes all of our executive officers) and our directors to comply with our stock ownership guidelines to further align their
interests with the interests of our shareholders. As of the date of this Proxy Statement, all of the members of our Executive
Committee and our directors are in compliance with the applicable stock ownership guidelines. See “Compensation Matters—Compensation
Discussion and Analysis—Stock Ownership Guidelines” on page 83 of this Proxy Statement and “Director Compensation
and Stock Ownership Guidelines—Non-Employee Director Stock Ownership Guidelines” on page 53 of this Proxy Statement
for additional information regarding our ownership guidelines for the members of our Executive Committee and our directors, respectively.
The following table sets forth the beneficial ownership
of our common stock by each of our NEOs and directors, and by all of our directors and executive officers as of March 1, 2022,
as a group. The address for each of our executive officers and directors is 7 World Trade Center, 250 Greenwich Street, 49th Floor,
New York, New York 10007. Percentage of share ownership amounts are based on 81,267,909 shares of our common stock outstanding
as of March 1, 2022.
Named Executive Officers |
|
Shares(1) |
|
Right to
Acquire(2) |
|
Beneficial
Ownership
Total(3) |
|
Percent of
Class(4) |
Henry A. Fernandez(5) |
|
2,052,401 |
|
— |
|
2,052,401 |
|
2.53% |
Andrew C. Wiechmann |
|
14,505 |
|
2,671 |
|
17,176 |
|
—% |
C.D. Baer Pettit |
|
259,087 |
|
— |
|
259,087 |
|
—% |
Scott A. Crum |
|
30,087 |
|
— |
|
30,087 |
|
—% |
Robert J. Gutowski |
|
15,122 |
|
— |
|
15,122 |
|
—% |
Directors |
|
|
|
|
|
|
|
|
Robert G. Ashe |
|
15,825 |
|
442 |
|
16,267 |
|
—% |
Wayne Edmunds |
|
8,095 |
|
339 |
|
8,434 |
|
—% |
Catherine R. Kinney(6) |
|
26,491 |
|
339 |
|
26,830 |
|
—% |
Jacques P. Perold |
|
3,888 |
|
339 |
|
4,227 |
|
—% |
Sandy C. Rattray |
|
569 |
|
339 |
|
908 |
|
—% |
Linda H. Riefler |
|
18,545 |
|
339 |
|
18,884 |
|
—% |
Marcus L. Smith |
|
2,867 |
|
339 |
|
3,206 |
|
—% |
Rajat Taneja(7) |
|
178 |
|
322 |
|
500 |
|
—% |
Paula Volent |
|
980 |
|
339 |
|
1,319 |
|
—% |
All
Current Executive Officers and Directors as of March 1, 2022 as a Group (14
Persons) |
|
2,448,640 |
|
5,808 |
|
2,454,448 |
|
3.02% |
(1) |
Excludes shares of our common stock that may be
acquired through the vesting of RSUs and PSUs. Includes 20,478 shares of our common stock for which Ms. Kinney has elected to defer receipt of such shares until the 60th day after her separation from service as a director and 178 shares of our common stock for which Mr. Taneja has elected to defer receipt of such shares until the earlier of (i) June 1, 2025 and (ii) the 60th day after his separation from service as a director. |
(2) |
Includes shares of our common stock that can be acquired through
vesting of RSUs within 60 days of the date of this table (i.e., through May 1, 2022). See the “Outstanding Equity Awards
at Fiscal Year-End” Table included herein for additional information regarding RSUs held by each NEO as of December
31, 2021. As of December 31, 2021, each of our non-employee directors had the following outstanding stock awards, all of which
are in the form of RSUs: Messrs. Edmunds, Perold, Rattray and Smith and Mmes. Kinney, Riefler and Volent each had 339 RSUs
outstanding, Mr. Ashe had 442 RSUs outstanding and Mr. Taneja had 322 RSUs outstanding. Such RSUs are scheduled to vest on
May 1, 2022. Ms. Riefler elected to defer receipt of such RSUs until the 60th day after her "separation from service" as a director. Mr. Taneja elected to defer receipt of such RSUs until the earlier of (i) June 1, 2025 and (ii) the 60th day after his separation from service as a director. |
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(3) |
Except as indicated in the footnotes to this table,
to our knowledge each executive officer and director, as of March 1, 2022, had sole voting and investment power with respect
to his or her shares of our common stock. Beneficial Ownership Totals may differ from those set forth in Statements of Changes
in Beneficial Ownership reported on Form 4 filed with the SEC due to the exclusion herein of RSUs granted by the Company,
as described in footnote (1) to this table. |
(4) |
All executive officers and directors (other than Mr. Fernandez) each
beneficially owned less than 1.0% of the shares of our outstanding common stock. Percentages for each beneficial owner are
calculated in accordance with Rule 13d-3(d)(1) under the Exchange Act. Percentages for each named executive officer, executive
officer and director as of March 1, 2022 and collectively as a group are based on the number of our shares outstanding as
of March 1, 2022, which excludes shares of our common stock that can be acquired through vesting of RSUs within 60 days of
the date of this table (i.e., through May 1, 2022). |
(5) |
Includes 314,479 shares of our common stock held by the Fernandez
2007 Children’s Trust of which the spouse of Mr. Fernandez is the trustee, 503,109 shares of our common stock held by
The Henry Fernandez 2022 MSCI Annuity Trust of which Mr. Fernandez is the trustee, 7,900 shares of our common stock held by
one of his children under the Uniform Transfer to Minors Act and 15,800 shares of our common stock directly held by two of
Mr. Fernandez’s children. |
(6) |
Includes 4,020 shares of our common stock held by the Catherine R.
Kinney 2020 GRAT of which Ms. Kinney is the trustee and 10,558 shares of our common stock held by the Catherine R. Kinney
2021 GRAT No. 2 of which Ms. Kinney is the trustee. |
(7) |
Mr. Taneja was appointed to the Board, effective June 1, 2021. |
Stock
Ownership of Principal Shareholders
The following table contains information regarding the
only persons we know of that beneficially own more than 5% of our common stock. Percentage of class amounts are based on 81,267,909
shares of our common stock outstanding as of March 1, 2022.
|
Shares
of Common Stock
Beneficially Owned |
Name
and Address |
Number
of
Shares |
|
Percentage
of Class(1) |
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 |
8,548,608(2) |
|
10.52% |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 |
6,730,522(3) |
|
8.28% |
(1) |
Because percentage of class ownership is based on the total number of shares of our
common stock outstanding as of a date that differs from the date used by the principal shareholders to calculate the percentages
for purposes of filing the applicable Schedule 13G or 13G/A, percentages of class ownership presented herein may differ from
amounts reported in the applicable Schedule 13G or 13G/A filed with the SEC by the relevant principal shareholder. |
(2) |
Based on information in a Schedule 13G/A (Amendment No. 9) filed with the SEC on February 10,
2022. The Schedule 13G/A discloses that The Vanguard Group had sole voting power as to 0 shares of our common stock, shared
voting power as to 136,149 shares of our common stock, sole dispositive power as to 8,212,212 shares of our common stock and
shared dispositive power as to 336,396 shares of our common stock. In addition, the Schedule 13G/A discloses that the person
filing the report is an investment adviser in accordance with §240.13d-1(b)(1)(ii)(E) and the identification and classification
of the subsidiaries which acquired the securities being reported on therein are set forth on Appendix A thereto. |
(3) |
Based on information in a Schedule 13G/A (Amendment No. 10) filed with the SEC on February 3,
2022. The Schedule 13G/A discloses that BlackRock, Inc. had sole voting power as to 6,023,969 shares of our common stock and
sole dispositive power as to 6,730,522 shares of our common stock. In addition, the Schedule 13G/A discloses that the person
filing the report is a parent holding company or control person in accordance with §240.13d-1(b)(1)(ii)(G) and the identification
and classification of the subsidiaries which acquired the securities being reported on therein are set forth on Exhibit A
thereto. |
Table of Contents
Other
Matters
Corporate
Governance Documents
MSCI has a corporate governance webpage that can be
found under the “Corporate Governance” link under the “Investor Resources” tab on our website’s
Investor Relations homepage (https://ir.msci.com).
Our Corporate Governance Policies (including our Director
Independence Standards), Code of Ethics and Business Conduct and committee charters are available electronically, without charge,
on or through our website. To access these documents, click on the “Corporate Governance” link under the “Investor
Resources” tab found on our website’s Investor Relations homepage (https://ir.msci. com).
These documents are also available, without charge, to any shareholder who requests them by writing to us at c/o Corporate Secretary,
MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007 or via email at investor.relations@msci.com.
Our Code of Ethics and Business Conduct applies to our
directors, executive officers and employees. If we make any substantive amendment to, or grant a waiver to, a provision of the
Code of Ethics and Business Conduct for our CEO, CFO, Principal Accounting Officer and Global Controller or persons performing
similar functions, we will satisfy the applicable SEC disclosure requirement by promptly disclosing the nature of the amendment
or waiver on our website’s Investor Relations homepage (https://ir.msci.com).
Certain Transactions
Transactions
with Shareholders
From time to time, shareholders that own more than 5%
of our common stock subscribe to, license or otherwise purchase, in the normal course of business, certain of our products and
services. These transactions are negotiated on an arm’s-length basis and are subject to review under our Related Person
Transactions Policy described below.
During 2021, BlackRock, Inc. and The Vanguard Group
and/or their respective affiliates subscribed to, licensed or otherwise purchased in the normal course of business, certain of
our products and services. For purposes of full disclosure, revenues recognized by us from subscriptions, licenses and other fees
related to our products and services in 2021 from each of these shareholders and/or their respective affiliates are set forth
in the table below.
Name |
|
2021 Revenues |
BlackRock, Inc. |
|
$259.7 million |
The Vanguard Group |
|
$ 17.7 million |
Transactions
with Directors
Sandy C. Rattray served as the Chief Investment Officer
of Man Group plc from 2017 to September 30, 2021. In 2021, Man Group plc and its subsidiaries subscribed to, licensed or otherwise
purchased in the normal course of business, certain of the Company’s products and services. Revenues recognized from subscriptions,
licenses and other fees related to such products and services in 2021 were approximately $3.7 million.
Table of Contents
Related Person Transactions Policy
The Company maintains a written Related Person Transactions
Policy (the “Policy”), which governs the approval of related person transactions. The Governance Committee administers
the Policy. It is the responsibility of each director, director nominee and executive officer to promptly notify the legal department
of transactions in which he or she may be involved. The legal department also conducts diligence and maintains controls and procedures
to identify and submit for review and approval any such transactions.
Under the Policy, the legal department determines whether
a proposed transaction constitutes a related person transaction requiring review under the Policy and/or disclosure. If the legal
department determines that (i) the proposed transaction constitutes a related person transaction or (ii) it would be beneficial
to further review the transaction under the Policy, then the legal department may review and approve certain transactions pursuant
to delegation from the Governance Committee or refer the transactions to the Governance Committee.
When evaluating a proposed Related Person Transaction,
the legal department will consider all relevant facts and circumstances, including: (1) the dollar amount of the transaction,
the commercial reasonableness of the terms and the purpose of the transaction, as well as the benefit to the Company; (2) whether
negotiations were at arm’s length; (3) the terms and conditions of comparable or similar transactions; (4) whether the transaction
is provided on terms that may be more favorable than those available to others; (5) the materiality and character of the related
person’s interest in the transaction and whether there may be any conflicts of interest; (6) whether the transaction would
be considered unusual for one or both of the parties and (7) whether the transaction may impact director independence if applicable.
Other Business
We do not know of any matters that may be presented
for action at the meeting other than those described in this Proxy Statement. If any other matter is properly brought before the
meeting, the proxy holders will vote on such matter in their discretion.
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be
held on April 26, 2022. Our Proxy Statement and our Annual Report on Form 10-K for the
fiscal year ended December 31, 2021 are available free of charge at www.proxyvote.com.
Information contained on such website is not incorporated by reference into this Proxy
Statement or any other report we file with the SEC. |
Table of Contents
Annex A: Frequently Asked Questions
How do we refer to MSCI Inc. in this Proxy Statement?
We refer to MSCI Inc. as the “Company,” “MSCI,”
“we,” “our” or “us” and the Board of Directors of MSCI Inc. as the “Board.” MSCI
is incorporated in Delaware and its shares are listed on The New York Stock Exchange under the symbol MSCI. References to “Shares,”
“shares” or “shares of our common stock” in this Proxy Statement refer to shares of our common stock,
par value $0.01 per share.
What are the date, time and place of the 2022 Annual Meeting?
We will hold the 2022 Annual Meeting on April 26, 2022 at 2:30 P.M. Eastern
Time, via the internet at www.virtualshareholdermeeting.com/MSCI2022.
In order to access the virtual annual meeting, you will be asked to provide
your 16-digit control number. Instructions on how to attend and participate via the internet, including how to demonstrate proof
of share ownership, are posted at www.virtualshareholdermeeting.com/MSCI2022. Information
contained on this website is not incorporated by reference into this Proxy Statement or any other report we file with the SEC.
Will the 2022 Annual Meeting be webcast?
Yes. You may attend the annual meeting virtually at www.virtualshareholdermeeting.com/MSCI2022,
where you will be able to vote electronically and submit questions during the meeting. A webcast replay of the 2022 Annual Meeting
will also be archived on our Investor Relations website, https://ir.msci.com/events.cfm, until
April 26, 2023.
How do I submit a question at the 2022 Annual Meeting?
To submit questions before the 2022 Annual Meeting, please email your
question(s) to the Corporate Secretary at corporatesecretary@msci.com by no later than April 25, 2022. Please include “Annual
Meeting Questions” in the subject line and provide your name, 16-digit control number and, if applicable, indicate the proposal
to which your question relates in the body of the email.
You may submit a question during the meeting via our virtual shareholder
meeting website, www.virtualshareholdermeeting. com/MSCI2022. If your question is properly
submitted during the relevant portion of the meeting agenda, our Chairman intends to respond to your question during the live
webcast. Questions on similar topics may be combined and answered together. A webcast replay of the 2022 Annual Meeting, including
the Q&A session, will also be archived on our Investor Relations website, https://ir.msci.com/events.cfm,
until April 26, 2023.
What if the Company encounters technical difficulties during the 2022
Annual Meeting?
If we experience technical difficulties during the meeting (e.g., a temporary
or prolonged power outage), our Chairman will determine whether the meeting can be promptly reconvened (if the technical difficulty
is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged).
In any situation, we will promptly notify shareholders of the decision via www.virutalshareholdermeeting.com/MSCI2022.
If you encounter technical difficulties accessing our meeting or asking
questions during the meeting, a support line will be available on the login page of the virtual meeting website.
Who may attend the 2022 Annual Meeting?
All stockholders as of March 1, 2022, or their duly appointed proxies,
may attend the 2022 Annual Meeting. In order to attend the 2022 Annual Meeting, a stockholder must own MSCI common stock at the
close of business on March 1, 2022. If your shares are held in the name of a broker, bank, custodian, nominee or other record
holder (“street name”), you must obtain a proxy, executed in your favor, from the holder of record (that is, your
broker, bank, custodian, or nominee) to be able to vote at the 2022 Annual Meeting.
Table of Contents
Who may vote at the 2022 Annual Meeting?
You can vote your shares of MSCI common stock at our 2022 Annual Meeting
if you were a shareholder at the close of business on March 1, 2022 (the “record date”). As of March 1, 2022, there
were 81,267,909 shares of MSCI common stock outstanding. Each share of MSCI common stock entitles you to one vote on each matter
voted on at the annual meeting of shareholders.
A majority of the shares of MSCI common stock outstanding at the close
of business on the record date must be present in order to hold the meeting and conduct business. This is called a “quorum.”
Your shares are counted as present at the 2022 Annual Meeting if you vote through the internet at the virtual annual meeting of
shareholders or properly submit your proxy prior to the 2022 Annual Meeting.
Why did I receive a one-page notice in the mail regarding the internet
availability of proxy materials instead of a full set of printed proxy materials?
Pursuant to the “notice and access” rules adopted by the SEC,
we are making this Proxy Statement and our 2021 Annual Report on Form 10-K (including any amendments thereto) available to our
shareholders over the internet. As a result, unless you have previously requested electronic access to our proxy materials or
the receipt of paper proxy materials, you will receive a Notice of Internet Availability of Proxy Materials containing instructions
on how to access this Proxy Statement and our 2021 Annual Report on Form 10-K (including any amendments thereto) over the internet,
how to request a free paper copy of these materials and how to vote via the internet. We will mail the Notice of Internet Availability
of Proxy Materials on or about March 16, 2022. The Notice of Internet Availability of Proxy Materials is not a proxy card and
cannot be used to vote your shares.
In addition, if you are voting online, you will be prompted to consent
to receiving proxy materials electronically in future years. Choosing to receive your future proxy materials electronically will
save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings of shareholders on
the environment. If you choose to receive future proxy materials electronically, you will receive an email next year with instructions
containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials electronically
will remain in effect until you terminate it. See “How do I sign up for electronic delivery of proxy materials?” below
for further information on electing to receive proxy materials electronically.
What is the difference between holding shares as a “record holder”
and as a beneficial owner of shares held in “street name”?
Record Holder. If your shares are registered directly in your name
with MSCI’s transfer agent, Broadridge Corporate Issuer Solutions, Inc. (including its affiliates, “Broadridge”),
you are considered a “record holder” with respect to those shares, and the Notice of Internet Availability of Proxy
Materials will be sent directly to you.
Beneficial Owner of Shares Held in Street Name. If your shares
are held in an account with a brokerage firm, bank, broker dealer, or other intermediary, then you are considered a beneficial
owner of shares held in “street name,” and the Notice of Internet Availability of Proxy Materials and other proxy
materials will be forwarded to you by that intermediary. As a beneficial owner of shares held in “street name,” you
have the right to direct that intermediary on how to vote the shares held in your account by following their instructions for
voting and using their forms. If you do not provide your brokerage firm, bank, broker dealer or other intermediary with instructions
on how to vote your shares, such intermediary or intermediary nominee will be able to vote your shares only with respect to the
proposal related to the ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditor for 2022.
Table of Contents
106 |
MSCI | ANNEX A: FREQUENTLY ASKED QUESTIONS |
How do I vote my shares?
You may direct your vote by internet, telephone or mail. Your vote must
be received by the deadline specified on the proxy card or voting instruction form, as applicable.
|
|
If You are a Shareholder
of Record |
|
If You are a Beneficial
Holder of
Shares Held in “Street Name” |
By Internet Prior to the 2022 Annual Meeting*
(24 hours a day): |
|
www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern
Time on April 25, 2022. Have your proxy card in hand when you access the website and follow the instructions to obtain your
records and to create an electronic voting instruction form. |
|
www.proxyvote.com |
By Internet During the 2022 Annual Meeting*
(24 hours a day): |
|
www.virtualshareholdermeeting.com/MSCI2022
You may attend the meeting via the internet and vote during the meeting. Have your proxy card in hand when you access the
website and follow the instructions. |
|
www.virtualshareholdermeeting.
com/MSCI2022 |
By Telephone*
(24 hours a day): |
|
1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on April 25, 2022. Have your proxy card in hand when you call and then follow
the instructions. |
|
Follow the voting instructions you receive from your brokerage firm,
bank, broker dealer or other intermediary. |
By Mail: |
|
You can vote by mail by requesting a paper copy of the materials,
which will include a proxy card. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided
or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717 |
|
Follow the voting instructions you receive from your brokerage firm,
bank, broker dealer or other intermediary. |
|
|
* |
While MSCI and Broadridge do not charge any fees
for voting by internet or telephone, there may be related costs from other parties, such as usage charges from internet access
providers and telephone companies, for which you are responsible. |
How does the Board recommend that I vote and what vote is required
for adoption or approval of each matter to be voted on?
Proposal
No. |
|
Proposal |
|
Vote Required |
|
Directors’
Recommendation |
1 |
|
Election of Directors |
|
Number of votes cast “FOR”
exceeds number of votes cast “AGAINST” for each director |
|
FOR all nominees |
2 |
|
Advisory Vote to Approve Executive Compensation (Say-on-Pay) |
|
Majority of the total votes cast by holders of shares present through the
virtual meeting or represented by proxy |
|
FOR the approval of the Executive Compensation of our NEOs |
3 |
|
Ratification
of the Appointment of MSCI’s Independent Auditor |
|
Majority
of the total votes cast by holders of shares present through the virtual meeting or represented by proxy |
|
FOR
the ratification of the appointment of PricewaterhouseCoopers LLP |
How will my shares be voted if I do not give specific voting instructions
and what are broker non-votes?
Record Holders. If you indicate that you wish to vote as recommended
by our Board or if you sign, date and return a proxy card but do not give specific voting instructions, then the proxy holders
will vote your shares in the manner recommended by our Board on all matters presented in this Proxy Statement (e.g., “FOR”
for Proposal No. 1, No. 2 and No. 3) and in their discretion regarding any other matters properly presented for a vote at our
2022 Annual Meeting. As of the date of this Proxy Statement, we did not know of any proposals or matters to be raised at the 2022
Annual Meeting other than those presented in this Proxy Statement.
Table of Contents
Beneficial Owners of Shares Held in “Street Name.” Broker
non-votes occurs when your brokerage firm, bank, broker dealer or other intermediary has not received specific voting instructions
from you with respect to shares held in “street name” and the broker does not have discretionary voting authority
with respect to a proposal. If you are the beneficial owner of shares held in “street name” and you do not give instructions
as to how to vote, your broker may have authority to vote your shares only on discretionary items but not on non-discretionary
items, as determined by the NYSE.
● |
Non-discretionary items. The following proposals are considered “non-discretionary” items: Proposal No. 1—election of directors and Proposal No. 2—approve, by non-binding vote, our executive compensation. |
● |
Discretionary item. Proposal No. 3—the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent auditor for 2022 is a “discretionary” item. NYSE member brokers that do not receive voting instructions from beneficial owners of shares held in “street name” may vote on this proposal in their discretion, subject to any voting policies adopted by the broker holding your shares. |
Broker non-votes are counted as present for purposes of determining the
presence or absence of a quorum for the transaction of business. However, broker non-votes are not counted for purposes of Proposal
Nos. 1 and 2 and will therefore have no effect on the outcome of these proposals. Therefore, if you hold your shares in an account
with a brokerage firm, bank, a broker dealer or other intermediary, it is critically important that you submit your voting instructions
if you want your shares to count for the non-discretionary items listed above.
How are abstentions treated?
Abstentions are also counted as present for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions have no effect on the determination of whether a
nominee or any of the proposals have received the vote of a majority of the shares of common stock present or represented by proxy
and voting at the 2022 Annual Meeting. However, abstentions could prevent the approval of a proposal where the number of affirmative
votes, though a majority of the votes represented and cast, does not constitute a majority of the required quorum.
What are my choices for casting my vote on each matter to be voted
on?
Proposal No. |
|
Proposal |
|
Voting Options |
|
Effect of Abstentions |
1 |
|
Election of Directors |
|
FOR, AGAINST or ABSTAIN
(for each director nominee) |
|
No effect—not counted as a “vote cast” |
2 |
|
Advisory Vote to Approve Executive Compensation (Say-on-Pay) |
|
FOR, AGAINST or ABSTAIN |
|
No effect—not counted as a “vote cast” |
3 |
|
Ratification of the Appointment of MSCI’s Independent Auditor |
|
FOR, AGAINST or ABSTAIN |
|
No effect—not counted as a “vote cast” |
How many votes are required to elect directors and adopt proposals?
The election of each director and ratification of the appointment of PwC
as MSCI’s independent auditor requires the affirmative vote of a majority of the shares of common stock represented or by
proxy at the meeting and entitled to vote. The approval of a resolution regarding the compensation of our NEOs as disclosed in
this Proxy Statement is a non-binding advisory vote; however, we value the opinions of our stockholders and will take into account
the outcome of this vote in considering future compensation arrangements. A majority of the shares entitled to vote on a matter,
whether present virtually or by proxy, will constitute a quorum at the meeting.
What happens if a director does not receive a majority of the votes
required for his or her re-election?
Under the laws of Delaware (our state of incorporation), if the director
is not elected at the annual meeting, the director will continue to serve on the Board as a “holdover director.” However,
our Bylaws provide that, in order for an incumbent director to become a nominee of the Board, the director must submit an irrevocable
resignation as director that becomes effective if (i) he or she does not receive a majority of the votes cast in an uncontested
election and (ii) the Board accepts the resignation. If a director does not receive a majority of the votes cast in an uncontested
election, the Governance Committee will consider the director’s resignation and recommend to the Board whether to accept
or reject the resignation. The Board will decide whether to accept or reject the resignation and publicly disclose its decision
within 90 days after the election results are certified.
Table of Contents
108 |
MSCI | ANNEX A: FREQUENTLY ASKED QUESTIONS |
How do I revoke or change my proxy?
If you are a “record holder,” you can revoke or change your
proxy at any time before your shares are voted, subject to the voting deadlines that are described on the proxy card or voting
instruction form, as applicable, by:
● |
Voting again by internet or by telephone (only your last internet or telephone proxy submitted prior to the meeting will be counted); |
● |
Signing and returning a new proxy card with a later date; or |
● |
Voting by internet while attending the virtual annual meeting (attending the annual meeting by internet does not revoke your proxy unless you vote by internet during the virtual annual meeting). |
If you are a “record holder,” you may also revoke your proxy
by giving written notice of revocation to c/o Corporate Secretary, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th
Floor, New York, New York 10007, which must be received no later than 5:00 P.M. Eastern Time, on April 25, 2022.
If you are a beneficial owner of shares held in “street name,”
you may revoke your proxy by following the instructions your brokerage firm, bank, broker dealer or other intermediary provides.
Will my vote be confidential?
Our Bylaws provide that your individual vote is confidential and will
not be disclosed to any officer, director or employee of MSCI, except as required by law and in certain limited circumstances
such as when you request or consent to disclosure, or make a request or comment on the proxy card.
Who counts the votes cast at the 2022 Annual Meeting?
Representatives of Broadridge will tabulate the votes cast at the 2022
Annual Meeting, and American Election Services, LLC will act as the independent inspector of elections.
Where can I find the voting results of the 2022 Annual Meeting?
We expect to announce the preliminary voting results at the 2022 Annual
Meeting. The final voting results will be tallied by representatives of Broadridge, our inspector of elections, and will be subsequently
published by us by the filing of a Current Report on Form 8-K with the SEC within four business days after the 2022 Annual Meeting.
Who will pay for the cost of the proxy solicitation?
We pay the expenses of the preparation of proxy materials and the solicitation
of proxies for our 2022 Annual Meeting. Proxies may be solicited on our behalf by directors, officers, employees or agents in
person or by telephone, electronic transmission and facsimile transmission. Our directors, officers and employees will receive
no additional compensation for any such solicitation.
We have also hired Saratoga Proxy Consulting LLC (“Saratoga”),
520 8th Avenue, New York, NY 10018, to assist in the distribution and solicitation of proxies. We will pay Saratoga a fee of $10,000,
plus reasonable expenses, for these services. We will reimburse brokers and other similar institutions for costs incurred by them
in mailing proxy materials to beneficial owners.
How do I sign up for electronic delivery of proxy materials?
Shareholders can access this Proxy Statement and our 2021 Annual Report
on Form 10-K via the internet at www.proxyvote.com by following the instructions outlined
on the secure website. For future annual meetings of shareholders, shareholders can consent to accessing our proxy materials,
including the Notice of Internet Availability of Proxy Materials, our 2021 Annual Report on Form 10-K and the Proxy Statement,
electronically in lieu of receiving hard copies by mail. To receive our proxy materials electronically, you will need access to
a computer and an email account. If you vote through the internet at www.proxyvote.com, you
will be prompted to consent to receiving proxy materials electronically in future years. To consent to electronic delivery, when
prompted, you must indicate that you agree to receive such materials electronically in future years.
Table of Contents
Shareholders that wish to revoke their request for electronic delivery
may do so at any time without charge, by contacting us in writing at c/o Corporate Secretary, MSCI Inc., 7 World Trade Center,
250 Greenwich Street, 49th Floor, New York, New York 10007 or by telephone at (212) 981-7465.
If you hold your shares through a brokerage firm, bank, broker dealer
or other intermediary and you have not already done so, you can choose electronic delivery of our proxy materials by contacting
such intermediary. You may also update your email address by contacting such intermediary.
What is householding?
Consistent with notices sent to shareholders of record sharing a single
address, we will send only one copy of each of the Notice of Internet Availability of Proxy Materials, our 2021 Annual Report
on Form 10-K and this Proxy Statement to that address unless we have received contrary instructions from any shareholder at that
address. This “householding” practice reduces our printing and postage costs. Shareholders may request or discontinue
householding, or may request a separate copy of each of the Notice of Internet Availability of Proxy Materials, our 2021 Annual
Report on Form 10-K or this Proxy Statement as follows:
● |
Shareholders wishing to discontinue or begin householding, should contact us in writing at c/o Corporate Secretary at MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007 or by telephone at (212) 981-7465. |
● |
Shareholders owning their shares through a bank, broker or other holder of record who wish to either discontinue or begin householding should contact their record holder. |
● |
Any householded shareholder may request prompt delivery of a copy of each of the Notice of Internet Availability of Proxy Materials, our 2021 Annual Report on Form 10-K or the Proxy Statement, as applicable, by contacting us at (212) 981-7465 or by writing to us at Investor Relations, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007 or via email at investor.relations@msci.com. Instructions for requesting such materials are also included in the Notice of Internet Availability of Proxy Materials. |
How can I submit a recommendation for a director candidate?
The Governance Committee oversees searches for and identifies qualified
individuals for membership on MSCI’s Board. Please see page 30 of this Proxy Statement for additional information on director
qualifications.
Shareholders may make recommendations for consideration by the Governance
Committee at any time. To recommend a director candidate for consideration by the Governance Committee, a shareholder must submit
a written notice which demonstrates that it is being submitted by a shareholder of MSCI and include information about each proposed
director candidate, including name, age, business address, principal occupation, principal qualifications and other relevant biographical
information. In addition, the shareholder must confirm his or her candidate’s consent to serve as a director. There is no
difference in the manner in which the Governance Committee evaluates nominees proposed by shareholders and those identified by
the Governance Committee. Shareholders must send recommendations to the Governance Committee, c/o Corporate Secretary, MSCI Inc.,
7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007.
How can I submit nominees (such as through proxy access) or a shareholder
proposal at the 2023 annual meeting of shareholders?
Shareholders who wish to submit a “proxy access” nomination
for inclusion in our proxy statement in connection with our 2023 annual meeting of shareholders may do so by submitting a nomination
notice, in compliance with the procedures and along with the other information required by our Bylaws, in writing at c/o Corporate
Secretary, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007 or by email to corporatesecretary@msci.com,
no earlier than October 17, 2022 and no later than November 16, 2022.
Shareholders intending to present a proposal at the 2023 annual meeting
of shareholders under SEC Rule 14a-8 to request that the proposal be included in next year’s Proxy Statement must submit
the proposal to us in writing at c/o Corporate Secretary, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New
York, New York 10007 or by email to corporatesecretary@msci.com. We must receive the proposal by no later than November 16, 2022.
If we hold our 2023 annual meeting of shareholders more than 30 days before or after April 26, 2023 (the one-year anniversary
date of the 2022 Annual Meeting), we will disclose the new deadline by which shareholder proposals must be received under Item
5 of Part II of our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably determined
Table of Contents
110 |
MSCI | ANNEX A: FREQUENTLY ASKED QUESTIONS |
to inform shareholders. In addition, shareholder proposals must otherwise
comply with the requirements of Rule 14a-8 under the Exchange Act and with the SEC regulations under Rule 14a-8 regarding the
inclusion of shareholder proposals in company-sponsored proxy materials.
Shareholders intending to present a proposal at the 2023 annual meeting
of shareholders, but not for inclusion of the proposal in our Proxy Statement, or to nominate a person for election as a director,
must comply with the requirements set forth in our Bylaws. Our Bylaws require, among other things, that our Corporate Secretary
receive written notice from the shareholder of record of intent to present such proposal or nomination no more than 120 days and
no less than 90 days prior to the anniversary of the preceding year’s annual meeting of shareholders.
Therefore, the Company must receive notice of such a proposal or nomination
for the 2023 Annual meeting of shareholders no earlier than December 27, 2022 and no later than January 26, 2023. The notice must
contain the information required by our Bylaws, a copy of which is available upon request to us in writing at c/o Corporate Secretary,
MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007.
How do I communicate with individual directors or the Board as a group?
Shareholders and other interested parties may contact any member (or all
members) of the Board by mail. To communicate with the Board, any individual director or any group or committee of directors,
correspondence should be addressed to the Board or any such individual director or group or committee of directors by either name
or title. All such correspondence should be sent to the Board at c/o Corporate Secretary, MSCI Inc., 7 World Trade Center, 250
Greenwich Street, 49th Floor, New York, New York 10007. Correspondence that is unrelated to the duties and responsibilities of
the Board such as spam, junk mail and mass mailings, product complaints, personal employee complaints, product inquiries, new
product suggestions, resumes and other forms of job inquiries, surveys, business solicitations or advertisements will not be forwarded
to the Board.
How do I report issues regarding accounting, internal controls and
other auditing matters?
Any interested parties may report potential issues regarding accounting,
internal controls and other auditing matters. The communication should be marked “Personal and Confidential” and sent
to MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007, Attention: Chair of the Audit
Committee of MSCI Inc., in care of the General Counsel. Our Procedures for Submission of Ethical or Accounting Related Complaints
are available on our website. To access this document, click on the “Corporate Governance” link under the “Investor
Resources” tab found on our website’s Investor Relations homepage (https://ir.msci.com).
Table of Contents
Annex B: Supplemental Financial Information
Non-GAAP Financial Measures
Full-Year 2021 Reconciliation of Operating Revenue Growth to Organic
Operating Revenue Growth (unaudited)
|
|
Comparison
of The Years Ended December 31, 2021 and 2020 |
Index |
|
Total
Change Percentage |
|
Recurring
Subscription Change Percentage |
|
Asset-
Based Fees Change Percentage |
|
Non-Recurring
Revenues Change Percentage |
Operating revenue growth |
|
23.1% |
|
|
12.1% |
|
|
38.6% |
|
|
29.8% |
|
Impact of acquisitions and divestitures |
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
Impact of foreign currency exchange rate fluctuations |
|
0.1% |
|
|
0.1% |
|
|
(0.1% |
) |
|
—% |
|
Organic operating revenue growth |
|
23.2% |
|
|
12.2% |
|
|
38.5% |
|
|
29.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analytics |
|
Total
Change
Percentage |
|
|
Recurring
Subscription
Change
Percentage |
|
|
Asset-
Based Fees
Change
Percentage |
|
|
Non-Recurring
Revenues
Change
Percentage |
|
Operating revenue growth |
|
5.9% |
|
|
5.3% |
|
|
—% |
|
|
48.1% |
|
Impact of acquisitions and divestitures |
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
Impact of foreign currency exchange rate fluctuations |
|
0.2% |
|
|
0.2% |
|
|
—% |
|
|
(0.1% |
) |
Organic operating revenue growth |
|
6.1% |
|
|
5.5% |
|
|
—% |
|
|
48.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESG
and Climate |
|
Total
Change
Percentage |
|
|
Recurring
Subscription
Change
Percentage |
|
|
Asset-
Based Fees
Change
Percentage |
|
|
Non-Recurring
Revenues
Change
Percentage |
|
Operating revenue growth |
|
49.2% |
|
|
47.9% |
|
|
—% |
|
|
152.5% |
|
Impact of acquisitions and divestitures |
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
Impact of foreign currency exchange rate fluctuations |
|
(5.8% |
) |
|
(5.9% |
) |
|
—% |
|
|
(1.9% |
) |
Organic operating revenue growth |
|
43.4% |
|
|
42.0% |
|
|
—% |
|
|
150.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other – Private Assets |
|
Total
Change
Percentage |
|
|
Recurring
Subscription
Change
Percentage |
|
|
Asset-
Based Fees
Change
Percentage |
|
|
Non-Recurring
Revenues
Change
Percentage |
|
Operating revenue growth |
|
51.3% |
|
|
54.5% |
|
|
—% |
|
|
(23.9% |
) |
Impact of acquisitions and divestitures |
|
(41.3% |
) |
|
(43.1% |
) |
|
—% |
|
|
—% |
|
Impact of foreign currency exchange rate fluctuations |
|
(6.0% |
) |
|
(6.0% |
) |
|
—% |
|
|
(3.6% |
) |
Organic operating revenue growth |
|
4.0% |
|
|
5.4% |
|
|
—% |
|
|
(27.5% |
) |
Table of Contents
112 |
MSCI
| ANNEX B: SUPPLEMENTAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
Total Change Percentage |
|
Recurring Subscription Change Percentage |
|
Asset- Based Fees Change Percentage |
|
Non-Recurring Revenues Change Percentage |
Operating revenue growth |
|
20.5% |
|
|
14.3% |
|
|
38.6% |
|
|
33.9% |
|
Impact of acquisitions and divestitures |
|
(1.3% |
) |
|
(1.8% |
) |
|
—% |
|
|
—% |
|
Impact of foreign currency exchange rate fluctuations |
|
(0.5% |
) |
|
(0.7% |
) |
|
(0.1% |
) |
|
(0.3% |
) |
Organic operating revenue growth |
|
18.7% |
|
|
11.8% |
|
|
38.5% |
|
|
33.6% |
|
Reconciliation of Adjusted EBITDA to Net Income (unaudited)
|
|
Years Ended |
In Thousands (Except Percentages) |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
Dec. 31, 2019 |
Index Adjusted EBITDA |
|
$ |
951,312 |
|
|
$ |
766,493 |
|
|
$ |
670,188 |
|
Analytics Adjusted EBITDA |
|
|
198,799 |
|
|
|
172,924 |
|
|
|
152,113 |
|
ESG and Climate Adjusted EBITDA |
|
|
29,748 |
|
|
|
22,851 |
|
|
|
21,813 |
|
All Other – Private Assets Adjusted EBITDA |
|
|
16,931 |
|
|
|
9,242 |
|
|
|
6,385 |
|
Consolidated Adjusted EBITDA |
|
|
1,196,790 |
|
|
|
971,510 |
|
|
|
850,499 |
|
Amortization of intangible assets |
|
|
80,592 |
|
|
|
56,941 |
|
|
|
49,410 |
|
Depreciation and amortization of property, equipment and leasehold
improvements |
|
|
28,901 |
|
|
|
29,805 |
|
|
|
29,999 |
|
Impairment related to sublease of leased property |
|
|
7,702 |
|
|
|
— |
|
|
|
— |
|
Acquisition-related integration and transaction costs(1) |
|
|
6,870 |
|
|
|
— |
|
|
|
— |
|
Multi-Year PSU payroll tax expense |
|
|
— |
|
|
|
— |
|
|
|
15,389 |
|
Operating Income |
|
|
1,072,725 |
|
|
|
884,764 |
|
|
|
755,701 |
|
Other expense (income), net |
|
|
214,589 |
|
|
|
198,539 |
|
|
|
152,383 |
|
Provision for income taxes |
|
|
132,153 |
|
|
|
84,403 |
|
|
|
39,670 |
|
Net Income |
|
$ |
725,983 |
|
|
$ |
601,822 |
|
|
$ |
563,648 |
|
Adjusted EBITDA Margin (%) |
|
|
58.6 |
% |
|
|
57.3 |
% |
|
|
54.6 |
% |
Net Income Margin (%) |
|
|
35.5 |
% |
|
|
35.5 |
% |
|
|
36.2 |
% |
(1) |
Incremental and non-recurring costs attributable
to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred
no later than 12 months after the close of the transaction. |
Reconciliation of Net Income and Diluted EPS to Adjusted Net Income
and Adjusted EPS (unaudited)
|
|
Years Ended |
In Thousands, Except Per Share Data |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
Dec. 31, 2019 |
Net Income |
|
$ |
725,983 |
|
|
$ |
601,822 |
|
|
$ |
563,648 |
|
Plus: Amortization of acquired intangible assets and equity method
investment basis difference |
|
|
47,001 |
|
|
|
37,413 |
|
|
|
34,773 |
|
Plus: Multi-Year PSU payroll tax expense |
|
|
— |
|
|
|
— |
|
|
|
15,389 |
|
Less: Discrete excess tax benefit related to Multi-Year PSU vesting |
|
|
— |
|
|
|
— |
|
|
|
(66,581 |
) |
Plus: Debt extinguishment costs associated with the 2024, 2025,
2026 and 2027 Senior Notes Redemptions |
|
|
59,104 |
|
|
|
44,930 |
|
|
|
16,794 |
|
Plus: Write-off of internally developed capitalized software |
|
|
16,013 |
|
|
|
— |
|
|
|
— |
|
Plus: Impairment related to sublease of leased property(1) |
|
|
8,702 |
|
|
|
— |
|
|
|
— |
|
Plus: Acquisition-related integration and transaction costs(2)(3) |
|
|
7,041 |
|
|
|
— |
|
|
|
— |
|
Less: Gain from changes in ownership interest of equity method
investee |
|
|
(6,972 |
) |
|
|
— |
|
|
|
— |
|
Less: Tax Reform adjustments |
|
|
— |
|
|
|
(6,256 |
) |
|
|
— |
|
Less: Income tax effect |
|
|
(26,462 |
) |
|
|
(16,490 |
) |
|
|
(13,226 |
) |
Adjusted net income |
|
$ |
830,410 |
|
|
$ |
661,419 |
|
|
$ |
550,797 |
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended |
In Thousands, Except Per Share Data |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
Dec. 31, 2019 |
Diluted EPS |
|
$ |
8.70 |
|
|
$ |
7.12 |
|
|
$ |
6.59 |
|
Plus: Amortization of acquired intangible assets and equity method
investment basis difference |
|
|
0.56 |
|
|
|
0.44 |
|
|
|
0.41 |
|
Plus: Multi-Year PSU payroll tax expense |
|
|
— |
|
|
|
— |
|
|
|
0.18 |
|
Less: Discrete excess tax benefit related to Multi-Year PSU vesting |
|
|
— |
|
|
|
— |
|
|
|
(0.78 |
) |
Plus: Debt extinguishment costs associated with the 2024, 2025,
2026 and 2027 Senior Notes Redemptions |
|
|
0.71 |
|
|
|
0.53 |
|
|
|
0.20 |
|
Plus: Write-off of internally developed capitalized software |
|
|
0.19 |
|
|
|
— |
|
|
|
— |
|
Plus: Impairment related to sublease of leased property(1) |
|
|
0.10 |
|
|
|
— |
|
|
|
— |
|
Plus: Acquisition-related integration and transaction costs(2)(3) |
|
|
0.08 |
|
|
|
— |
|
|
|
— |
|
Less: Gain from changes in ownership interest of equity method
investee |
|
|
(0.08 |
) |
|
|
— |
|
|
|
— |
|
Plus: Tax Reform adjustments |
|
|
— |
|
|
|
(0.07 |
) |
|
|
— |
|
Less: Income tax effect |
|
|
(0.31 |
) |
|
|
(0.19 |
) |
|
|
(0.16 |
) |
Adjusted EPS |
|
$ |
9.95 |
|
|
$ |
7.83 |
|
|
$ |
6.44 |
|
(1) |
Right-of-use impairment of $7.7 million related
to sublease of leased property is presented within “General and administrative” expenses and the write-off of
leasehold improvements of $1.0 million is presented within “Depreciation and amortization of property, equipment and
leasehold improvements” expenses. |
(2) |
Acquisition-related integration and transaction costs of $1.4 million
are presented within “General and administrative” expenses and $0.2 million are presented within “Depreciation
and amortization of property, equipment and leasehold improvements” expenses. |
(3) |
Incremental and non-recurring costs attributable to acquisitions
directly related to the execution of the transaction and integration of the acquired business that have occurred no later
than 12 months after the close of the transaction. |
Reconciliation of Adjusted EBITDA Expenses to Operating Expenses (unaudited)
|
|
Years Ended |
In Thousands |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
Index adjusted EBITDA expenses |
|
$ |
300,452 |
|
$ |
250,002 |
|
Analytics adjusted EBITDA expenses |
|
|
345,500 |
|
|
340,884 |
|
ESG and Climate adjusted EBITDA expenses |
|
|
136,444 |
|
|
88,513 |
|
All Other – Private Assets adjusted EBITDA expenses |
|
|
64,358 |
|
|
44,481 |
|
Consolidated adjusted EBITDA expenses |
|
|
846,754 |
|
|
723,880 |
|
Amortization of intangible assets |
|
|
80,592 |
|
|
56,941 |
|
Depreciation and amortization of property, equipment
and leasehold improvements |
|
|
28,901 |
|
|
29,805 |
|
Impairment related to sublease of leased property |
|
|
7,702 |
|
|
— |
|
Acquisition-related integration
and transaction costs(1) |
|
|
6,870 |
|
|
— |
|
Total Operating Expenses |
|
$ |
970,819 |
|
$ |
810,626 |
|
(1) |
Incremental and non-recurring costs attributable
to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred
no later than 12 months after the close of the transaction. |
Reconciliation of Net Cash Provided by Operating Activities to Free
Cash Flow (unaudited)
|
|
Years Ended |
In Thousands |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
Dec. 31, 2019 |
Net cash provided by operating activities |
|
$ |
936,069 |
|
|
$ |
811,109 |
|
|
$ |
709,523 |
|
Capital expenditures |
|
|
(13,509 |
) |
|
|
(21,826 |
) |
|
|
(29,116 |
) |
Capitalized software development costs |
|
|
(39,285 |
) |
|
|
(29,149 |
) |
|
|
(24,654 |
) |
Capex |
|
|
(52,794 |
) |
|
|
(50,975 |
) |
|
|
(53,770 |
) |
Free cash flow |
|
$ |
883,275 |
|
|
$ |
760,134 |
|
|
$ |
655,753 |
|
Table of Contents
114 |
MSCI
| ANNEX B: SUPPLEMENTAL
FINANCIAL INFORMATION |
Notes Regarding the Use of Non-GAAP Financial
Measures
MSCI has presented supplemental non-GAAP financial measures as part
of this Proxy Statement. A reconciliation is provided that reconciles each non-GAAP financial measure with the most comparable
GAAP measure. The non-GAAP financial measures presented in this Proxy Statement should not be considered as alternative measures
for the most directly comparable GAAP financial measures. The non-GAAP financial measures presented in this Proxy Statement are
used by management to monitor the financial performance of the business, inform business decision making and forecast future results.
“Adjusted EBITDA” is defined as net income before (1) provision
for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements,
(4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including impairment related
to sublease of leased property and certain non-recurring acquisition-related integration and transaction costs.
“Adjusted EBITDA expenses” is defined as operating expenses
less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and,
at times, certain other transactions or adjustments, including impairment related to sublease of leased property and certain non-recurring
acquisition-related integration and transaction costs.
“Adjusted net income” and “adjusted EPS” are
defined as net income and diluted EPS, respectively, before the after-tax impact of: the amortization of acquired intangible assets,
including the amortization of the basis difference between the cost of the equity method investment and MSCI’s share of
the net assets of the investee at historical carrying value, the impact related to costs associated with debt extinguishment,
the impact related to certain non-recurring acquisition-related integration and transaction costs, the impact from impairment
related to sublease of leased property, the impact related to gain from changes in ownership interest of equity method investee,
and, at times, certain other transactions or adjustments. We also exclude the tax impact of adjustments for the Tax Cuts and Jobs
Act that was enacted on December 22, 2017 (“Tax Reform”), except for certain amounts associated with active tax
planning implemented as a result of Tax Reform.
“Capex” is defined as capital expenditures plus capitalized
software development costs.
“Free cash flow” is defined as net cash provided by operating
activities, less Capex.
“Organic operating revenue growth” is defined as operating
revenue growth compared to the prior year period excluding the impact of acquired businesses, divested businesses and foreign
currency exchange rate fluctuations.
Asset-based fees adjusted for the impact of foreign currency exchange
rate fluctuations does not adjust for the impact from foreign currency exchange rate fluctuations on the underlying assets under
management.
We believe adjusted EBITDA and adjusted EBITDA expenses are meaningful
measures of the operating performance of MSCI because they adjust for significant one-time, unusual or non-recurring items as
well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management
considers to be our ongoing operating performance in the period.
We believe adjusted net income and adjusted EPS are meaningful measures
of the performance of MSCI because they adjust for the after-tax impact of significant one-time, unusual or non-recurring items
as well as eliminate the impact of any transactions that do not directly affect what management considers to be our ongoing operating
performance in the period. We also exclude the after-tax impact of the amortization of acquired intangible assets and amortization
of the basis difference between the cost of the equity method investment and MSCI’s share of the net assets of the investee
at historical carrying value, as these non-cash amounts are significantly impacted by the timing and size of each acquisition
and therefore not meaningful to the ongoing operating performance in the period.
We believe that free cash flow is useful to investors because it relates
the operating cash flow of MSCI to the capital that is spent to continue and improve business operations, such as investment in
MSCI’s existing products. Further, free cash flow indicates our ability to strengthen MSCI’s balance sheet, repay
our debt obligations, pay cash dividends and repurchase shares of our common stock.
Table of Contents
We believe organic operating revenue growth is a meaningful measure
of the operating performance of MSCI because it adjusts for the impact of foreign currency exchange rate fluctuations and excludes
the impact of operating revenues attributable to acquired and divested businesses for the comparable prior year period, providing
insight into our ongoing operating performance for the period(s) presented.
We believe that the non-GAAP financial measures presented in this Proxy
Statement facilitate meaningful period-to-period comparisons and provide a baseline for the evaluation of future results.
Adjusted EBITDA expenses, adjusted EBITDA, adjusted net income, adjusted
EPS, Capex, free cash flow and organic operating revenue growth are not defined in the same manner by all companies and may not
be comparable to similarly-titled non-GAAP financial measures of other companies. These measures can differ significantly from
company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions
in which companies operate and capital investments. Accordingly, the Company’s computation of these measures may not be
comparable to similarly titled measures computed by other companies.
Supplemental Information Regarding Retention
Rate and Run Rate
Retention Rate
Retention Rate is an important metric because subscription cancellations
decrease our Run Rate and ultimately our future operating revenues over time. The annual Retention Rate represents the retained
subscription Run Rate (subscription Run Rate at the beginning of the fiscal year less actual cancels during the year) as a percentage
of the subscription Run Rate at the beginning of the fiscal year.
The Retention Rate for a non-annual period is calculated by annualizing
the cancellations for which we have received a notice of termination or for which we believe there is an intention not to renew
or discontinue the subscription during the non-annual period, and we believe that such notice or intention evidences the client’s
final decision to terminate or not renew the applicable agreement, even though such notice is not effective until a later date.
This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the fiscal year to calculate
a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the period.
Retention Rate is computed by operating segment on a product/service-by-product/service
basis. In general, if a client reduces the number of products or services to which it subscribes within a segment, or switches
between products or services within a segment, we treat it as a cancellation for purposes of calculating our Retention Rate except
in the case of a product or service switch that management considers to be a replacement product or service. In those replacement
cases, only the net change to the client subscription, if a decrease, is reported as a cancel. In the Analytics and the ESG and
Climate operating segments, substantially all product or service switches are treated as replacement products or services and
netted in this manner, while in our Index and Real Estate operating segments, product or service switches that are treated as
replacement products or services and receive netting treatment occur only in certain limited instances. In addition, we treat
any reduction in fees resulting from a down-sell of the same product or service as a cancellation to the extent of the reduction.
We do not calculate Retention Rate for that portion of our Run Rate attributable to assets in index-linked investment products
or futures and options contracts, in each case, linked to our indexes.
Run Rate
Run Rate is a key operating metric and is important because an increase
or decrease in our Run Rate ultimately impacts our future operating revenues over time. At the end of any period, we generally
have subscription and investment product license agreements in place for a large portion of total revenues for the following 12
months. We measure the fees related to these agreements and refer to this as “Run Rate.”
Table of Contents
116 |
MSCI
| ANNEX B: SUPPLEMENTAL
FINANCIAL INFORMATION |
Run Rate estimates at a particular point in time the annualized value
of the recurring revenues under our client license agreements (“Client Contracts”) for the next 12 months, assuming
all Client Contracts that come up for renewal, or reach the end of the committed subscription period, are renewed and assuming
then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where
fees are linked to an investment product’s assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the
market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or reported
exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated
with “one-time” and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of
recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date,
and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value
associated with products or services under any Client Contract with respect to which we have received a notice of termination,
non-renewal or an indication the client does not intend to continue their subscription during the period and have determined that
such notice evidences the client’s final decision to terminate or not renew the applicable products or services, even though
such notice is not effective until a later date.
Changes in our recurring revenues typically lag changes in Run Rate.
The actual amount of recurring revenues we will realize over the following 12 months will differ from Run Rate for numerous reasons,
including:
● |
fluctuations in revenues associated with new
recurring sales; |
● |
modifications, cancellations and non-renewals of existing Client
Contracts, subject to specified notice requirements; |
● |
differences between the recurring license start date and the date
the Client Contract is executed due to, for example, contracts with onboarding periods or fee waiver periods; |
● |
fluctuations in asset-based fees, which may result from changes
in certain investment products’ total expense ratios, market movements, including foreign currency exchange rates, or
from investment inflows into and outflows from investment products linked to our indexes; |
● |
fluctuations in fees based on trading volumes of futures and options
contracts linked to our indexes; |
● |
fluctuations in the number of hedge funds for which we provide
investment information and risk analysis to hedge fund investors; |
● |
price changes or discounts; |
● |
revenue recognition differences under U.S. GAAP, including those
related to the timing of implementation and report deliveries for certain of our products and services; |
● |
fluctuations in foreign currency exchange rates; and |
● |
the impact of acquisitions and divestitures. |
Table of Contents
Our
Principles of Sustainable Investing
At MSCI,
we believe ESG & climate factors will significantly impact financial assets and the risk and return of investments, which
will lead to a large-scale re-allocation of capital over the coming years.
Given the
significant and increasing impact that we expect ESG to exert on assets and the allocation of capital, MSCI urges all investors
to integrate ESG considerations throughout their investment processes: to identify new investment opportunities, manage emerging
risks and achieve long-term, sustainable investment performance.
The MSCI
Principles of Sustainable Investing set forth our views on the core principles and best practices for ESG integration.
To learn
more visit msci.com/esg-investing
Information
and reports on our website will not be deemed a part of, or otherwise incorporated by reference in, this Proxy Statement or any
other report we file with the SEC.
Explore MSCI
Table of Contents
Table of Contents
MSCI INC.
C/O BROADRIDGE
P.O. BOX 1342
BRENTWOOD, NY 11717
|
|
VOTE BY INTERNET
Before The Meeting - Go
to www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern
Time on April 25, 2022. Have your proxy card in hand when you access the website and follow the instructions to obtain your
records and to create an electronic voting instruction form.
During The Meeting
- Go to www.virtualshareholdermeeting.com/MSCI2022
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked
by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on April 25, 2022. Have
your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
D66835-P67779 |
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DETACH AND RETURN THIS PORTION ONLY |
MSCI
INC. |
|
|
|
|
|
|
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|
The Board of Directors recommends you vote FOR the following: |
|
|
|
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|
|
|
|
1. |
Election of Directors |
|
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Nominees: |
|
For |
Against |
Abstain |
|
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|
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1a. Henry A. Fernandez |
|
o |
o |
o |
|
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1b. Robert G. Ashe |
|
o |
o |
o |
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1c. Wayne Edmunds |
|
o |
o |
o |
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1d. Catherine R. Kinney |
|
o |
o |
o |
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1e. Jacques P. Perold |
|
o |
o |
o |
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1f. Sandy C. Rattray |
|
o |
o |
o |
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1g. Linda H. Riefler |
|
o |
o |
o |
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1h. Marcus L. Smith |
|
o |
o |
o |
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1i. Rajat Taneja |
|
o |
o |
o |
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1j. Paula Volent |
|
o |
o |
o |
|
The Board of Directors recommends you vote FOR the following proposal: |
|
For |
Against |
Abstain |
|
|
|
|
|
|
|
|
2. |
To approve, by non-binding vote, our executive compensation, as described in these proxy materials. |
|
o |
o |
o |
|
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|
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|
The Board of Directors recommends you vote FOR the following proposal: |
|
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3. |
To ratify the appointment of PricewaterhouseCoopers LLP as independent auditor. |
|
o |
o |
o |
|
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. |
|
|
|
|
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name by authorized officer.
|
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
|
Signature (Joint Owners) |
Date |
|
Table of Contents
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
D66836-P67779
MSCI INC.
Annual Meeting of Shareholders April 26, 2022 2:30 P.M. Eastern Time
This proxy is solicited by the Board
of Directors of MSCI Inc. The undersigned hereby appoints each of Cecilia Aza and Robert J. Gutowski as proxies of the undersigned,
each with full power of substitution, to represent the undersigned and to vote as designated on the reverse side of this proxy
card all of the shares of common stock of MSCI Inc. that the undersigned is entitled to vote at the Annual Meeting of Shareholders
of MSCI Inc. to be held live via the Internet on April 26, 2022, at 2:30 P.M. Eastern Time, and at any adjournments or postponements
thereof, upon all matters that may properly come before the meeting. You can virtually attend the meeting online by visiting www.virtualshareholdermeeting.com/MSCI2022.
If no such direction is made, the proxy will be voted in accordance with the Board of Directors’ recommendations.
Continued and to be signed on reverse side