def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[Amendment
No. ]
Filed by the Registrant o
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement |
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
þ Definitive Proxy
Statement |
o Definitive
Additional Materials |
o Soliciting
Material under § 240.14a-12 |
MOODYS CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and
0-11. |
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1) |
Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined): |
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4) |
Proposed maximum aggregate value of transaction: |
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Fee paid previously with written preliminary materials. |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form Schedule or Registration Statement No.: |
Dear Stockholder:
You are cordially invited to attend the 2006 Annual Meeting of
Stockholders of Moodys Corporation to be held on Tuesday,
April 25, 2006, at 9:30 a.m. at the Companys
offices at 99 Church Street, New York, New York.
The Notice of Annual Meeting and Proxy Statement accompanying
this letter describe the business to be acted upon at the
meeting. The Annual Report for the year ended December 31,
2005 is also enclosed.
Your vote is important. Please vote your shares whether or not
you plan to attend the meeting. In addition to voting in person
or by mail, stockholders of record have the option of voting by
telephone or via the Internet. If your shares are held in the
name of a bank, broker or other holder of record, please check
your proxy card or other voting instructions to see which of
these options are available to you.
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Sincerely, |
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Raymond W.
McDaniel, Jr.
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Chairman and Chief Executive Officer |
MOODYS CORPORATION
99 Church Street
New York, New York 10007
NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
The 2006 Annual Meeting of Stockholders of Moodys
Corporation will be held on Tuesday, April 25, 2006, at
9:30 a.m. at the Companys offices at 99 Church
Street, New York, New York, for the following purposes, all as
more fully described in the accompanying Proxy Statement:
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To elect three Class II directors of the Company to each
serve a three-year term; |
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To ratify the appointment of PricewaterhouseCoopers LLP as the
independent registered public accounting firm of the Company for
the year 2006; |
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To vote on one stockholder proposal, if properly presented at
the meeting; and |
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To transact such other business as may properly come before the
meeting. |
The Board of Directors of the Company has fixed the close of
business on March 1, 2006 as the record date for the
determination of stockholders entitled to notice of, and to vote
at, the meeting.
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By Order of the Board of Directors, |
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Jane B. Clark
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Corporate Secretary |
March 22, 2006
Whether or not you plan to attend the meeting in person, it
is important that you complete, sign, date and promptly return
the enclosed form of proxy or that you give your proxy by
telephone or the Internet. A self-addressed envelope is enclosed
for your convenience. No postage is required if mailed in the
United States. If you attend the meeting, you may vote in
person, even if you have previously returned your proxy card or
voted by telephone or the Internet.
TABLE OF CONTENTS
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i
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF MOODYS CORPORATION
General
This Proxy Statement and the accompanying proxy card are being
furnished to the holders of the common stock, par value
$.01 per share (the Common Stock), of
Moodys Corporation (Moodys or the
Company) in connection with the solicitation of
proxies by the Board of Directors of the Company (the
Board of Directors or the Board) for use
in voting at the Annual Meeting of Stockholders or any
adjournment or postponement thereof (the Annual
Meeting). The Annual Meeting will be held on Tuesday,
April 25, 2006, at 9:30 a.m. at the Companys
principal executive offices located at 99 Church Street, New
York, New York 10007. This Proxy Statement and the accompanying
proxy card are first being mailed to stockholders on or about
March 22, 2006. Moodys telephone number is
(212) 553-0300.
Annual Meeting Admission
Stockholders will need an admission ticket to enter the Annual
Meeting. For stockholders of record, an admission ticket is
attached to the proxy card sent to you. If you plan to attend
the Annual Meeting in person, please retain the admission ticket.
If your shares are held in the name of a bank, broker or other
holder of record and you plan to attend the Annual Meeting in
person, you may obtain an admission ticket in advance by sending
a written request, along with proof of share ownership such as a
bank or brokerage account statement, to the Corporate Secretary
of the Company at 99 Church Street, New York, New York 10007.
Stockholders who do not have admission tickets will be admitted
following verification of ownership at the door.
Record Date
The Board of Directors has fixed the close of business on
March 1, 2006 as the record date (the Record
Date) for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting. As of the close
of business on the Record Date, there were
291,173,591 shares of Common Stock outstanding. Each holder
of Common Stock entitled to vote at the Annual Meeting will be
entitled to one vote per share.
How to Vote
In addition to voting in person at the Annual Meeting,
stockholders of record can vote by proxy by calling a toll-free
telephone number, by using the Internet or by mailing their
signed proxy cards. The telephone and Internet voting procedures
are designed to authenticate stockholders identities, to
allow stockholders to give their voting instructions and to
confirm that stockholders instructions have been recorded
properly. Specific instructions for stockholders of record who
wish to use the telephone or Internet voting procedures are set
forth on the enclosed proxy card.
If your shares are held in the name of a bank, broker or other
holder of record, you will receive instructions from the holder
of record that you must follow in order for your shares to be
voted. Certain of these institutions offer telephone and
Internet voting.
Special Voting Procedures for Certain Current and Former
Employees
Many current and former employees of the Company have share
balances in the Moodys Common Stock Fund of the
Moodys Corporation Profit Participation Plan (the
Profit Participation Plan). The voting procedures
described above do not apply to these share balances. Instead,
any proxy given by such an employee or former employee will
serve as a voting instruction for the trustee of the Profit
Participation Plan, as well as a proxy for any shares registered
in that persons own name (including shares acquired under
the Moodys Corporation Employee Stock Purchase Plan and/or
pursuant to restricted stock awards). To allow
sufficient time for voting by the trustee, Profit Participation
Plan voting instructions must be received by April 20,
2006. If voting instructions have not been received by that
date, the trustee will vote those Profit Participation Plan
shares in the same proportion as the Profit Participation Plan
shares for which it has received instructions, except as
otherwise required by law.
Quorum and Voting Requirements
The holders of a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting, whether present in
person or represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. If a quorum is
not present at the Annual Meeting, the stockholders present may
adjourn the Annual Meeting from time to time, without notice,
other than by announcement at the meeting, until a quorum is
present or represented. At any such adjourned meeting at which a
quorum is present or represented, any business may be transacted
that might have been transacted at the original meeting.
Abstentions and broker non-votes will be counted for purposes of
determining whether a quorum is present at the Annual Meeting. A
broker non-vote occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for
that particular matter and has not received instructions from
the beneficial owner.
A plurality of the voting power present in person or represented
by proxy and entitled to vote at the Annual Meeting is required
for the election of directors. Only shares that are voted in
favor of a particular nominee will be counted towards such
nominees achievement of a plurality. Thus, shares present
at the Annual Meeting that are not voted for a particular
nominee, shares present in person or represented by proxy where
the stockholder properly withholds authority to vote for such
nominee, and broker non-votes, if any, will not be counted
towards such nominees achievement of a plurality.
The affirmative vote of the majority of the votes present in
person or represented by proxy and entitled to vote at the
Annual Meeting is required to ratify the appointment of
PricewaterhouseCoopers LLP as the independent registered public
accounting firm of the Company for the year ending
December 31, 2006. If a stockholder abstains from voting or
directs the stockholders proxy to abstain from voting on
the matter, the shares are considered present at the meeting for
such matter, but since they are not affirmative votes for the
matter, they will have the same effect as votes against the
matter. On the other hand, shares resulting in broker non-votes,
if any, while present at the meeting are not entitled to vote
for such matter and will have no effect on the outcome of the
vote.
The affirmative vote of the majority of the votes present in
person or represented by proxy and entitled to vote at the
Annual Meeting is required to adopt the stockholder proposal set
forth in this Proxy Statement. Please bear in mind that the
adoption of the stockholder proposal included in this Proxy
Statement at the Annual Meeting would serve only as a
recommendation to the Board of Directors to take the action
requested by the proponent. The affirmative vote of the holders
of at least 80% in voting power of the outstanding shares of
Common Stock at a future stockholders meeting would be
required in order to declassify the Board of Directors, as
requested by the stockholder proposal. If a stockholder abstains
from voting or directs the stockholders proxy to abstain
from voting on the matter, the shares are considered present at
the meeting for such matter, but since they are not affirmative
votes for the matter, they will have the same effect as votes
against the matter. On the other hand, shares resulting in
broker non-votes, if any, while present at the meeting are not
entitled to vote for such matter and will have no effect on the
outcome of the vote.
Proxies
The enclosed proxy provides that you may specify that your
shares of Common Stock be voted For the director
nominees or to Withhold Authority for the nominees
and For, Against or Abstain
from voting with respect to the other proposals. The Board of
Directors recommends that you vote For each of the
three director nominees named in this Proxy Statement,
For the ratification of the selection of the
independent registered public accounting firm, and
Against the stockholder proposal. All shares of
Common Stock represented by properly executed proxies received
prior to or at the Annual Meeting and not revoked will be voted
in accordance with the instructions indicated in such proxies.
Properly executed proxies that do
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not contain voting instructions will be voted in accordance with
the recommendations of the Board of Directors.
It is not expected that any matter other than those referred to
herein will be brought before the Annual Meeting. If, however,
other matters are properly presented, the persons named as
proxies will vote in accordance with their best judgment with
respect to such matters.
Any stockholder of record who votes by telephone or the Internet
or who executes and returns a proxy may revoke such proxy or
change such vote at any time before it is voted at the Annual
Meeting by (i) filing with the Corporate Secretary of the
Company at 99 Church Street, New York, New York 10007, written
notice of such revocation, (ii) casting a new vote by
telephone or the Internet or by submitting another proxy that is
properly signed and bears a later date or (iii) attending
the Annual Meeting and voting in person. A stockholder whose
shares are owned beneficially through a bank, broker or other
nominee should contact that entity to change or revoke a
previously given proxy.
Proxies are being solicited hereby on behalf of the Board of
Directors. The cost of the proxy solicitation will be borne by
the Company, although stockholders who vote by telephone or the
Internet may incur telephone or Internet access charges. In
addition to solicitation by mail, directors, officers and
employees of the Company may solicit proxies personally or by
telephone, telecopy, email or otherwise. Such directors,
officers and employees will not be specifically compensated for
such services. The Company has retained Georgeson Shareholder
Communications Inc. to assist with the solicitation of proxies
for a fee not to exceed $10,000, plus reimbursement for
out-of-pocket expenses.
Arrangements may also be made with custodians, nominees and
fiduciaries to forward proxy solicitation materials to the
beneficial owners of shares of Common Stock held of record by
such custodians, nominees and fiduciaries, and the Company may
reimburse such custodians, nominees and fiduciaries for their
reasonable
out-of-pocket expenses
incurred in connection therewith.
Delivery of Documents to Stockholders Sharing an Address
If you are the beneficial owner, but not the record holder, of
the Companys shares, your broker, bank or other nominee
may seek to reduce duplicate mailings by delivering only one
copy of the Companys Proxy Statement and Annual Report to
multiple stockholders who share an address unless that nominee
has received contrary instructions from one or more of the
stockholders. The Company will deliver promptly, upon written or
oral request, a separate copy of the Proxy Statement and Annual
Report to a stockholder at a shared address to which a single
copy of the documents was delivered. A stockholder who wishes to
receive a separate copy of the Proxy Statement and Annual
Report, now or in the future, should submit their request to the
Company by telephone at (212) 553-3638 or by submitting a
written request to the Companys Investor Relations
Department, at 99 Church Street, New York, New York 10007.
Beneficial owners sharing an address who are receiving multiple
copies of proxy materials and annual reports and wish to receive
a single copy of such materials in the future should contact
their broker, bank or other nominee to request that only a
single copy of each document be mailed to all stockholders at
the shared address in the future.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), requires the
Companys directors and executive officers and persons who
beneficially own more than 10% of a registered class of the
Companys equity securities to file with the Securities and
Exchange Commission (the SEC) and the New York Stock
Exchange (the NYSE) reports on Forms 3, 4 and 5
concerning their ownership of and transactions in the Common
Stock and other equity securities of the Company. As a practical
matter, the Company seeks to assist its directors and executives
by monitoring transactions and completing and filing reports on
their behalf.
Based solely on the Companys review of copies of such
reports furnished to the Company and written representations
that no other reports are required, the Company believes that
all of its officers and directors
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and those greater-than-10% stockholders that filed any reports
filed all of such reports on a timely basis during the year
ended December 31, 2005, except as described below:
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On February 9, 2005, shares of Common Stock beneficially
owned by Mr. McDaniel, the Companys Chairman and
Chief Executive Officer (the CEO), Mr. Goggins,
the Companys Senior Vice President and General Counsel,
Ms. Dering, the Companys Executive Vice
President Global Regulatory Affairs &
Compliance, and Ms. Derings spouse, a former employee
of Moodys Investors Service, were sold in order to make
certain tax payments in connection with the vesting of
restricted stock. The amounts sold were 1,575, 346, 668 and
236 shares, respectively. Ms. Dering reported the
sales of shares owned by her and her spouse in a Form 4
filed on May 4, 2005. Each of Mr. Goggins and
Mr. McDaniel reported the sales of shares owned by him in a
Form 4 filed on May 16, 2005. On October 1, 2005,
114 shares of Common Stock beneficially owned by
Mr. McCabe, the Companys Senior Vice
President Corporate Controller, were sold in order
to make certain tax payments in connection with the vesting of
restricted stock. Mr. McCabe reported the sale in a
Form 4 filed on February 10, 2006. |
CORPORATE GOVERNANCE
In order to address evolving best practices and new regulatory
requirements, the Board of Directors annually reviews its
corporate governance practices and the charters for its standing
committees. As a result of this review, during 2005 the Board
amended the Companys Corporate Governance Principles and
the charters of its Audit Committee and its Governance and
Compensation Committee. A copy of the amended Corporate
Governance Principles is available on the Companys website
at www.moodys.com under the headings Shareholder
Relations Corporate Governance Corporate
Governance Principles. A copy of the amended charter of
the Audit Committee is attached to this Proxy Statement as
Appendix A, and copies of both it and the amended charter
of the Governance and Compensation Committee are available on
the Companys website at www.moodys.com under the headings
Shareholder Relations Corporate
Governance Committee Charters. Copies may also
be obtained upon request, addressed to the Corporate Secretary
of the Company at 99 Church Street, New York, New York 10007.
The Audit Committee and the Governance and Compensation
Committee assist the Board in fulfilling its responsibilities,
as described below.
Board Meetings and Committees
During 2005, the Board of Directors met six times and had two
standing committees, an Audit Committee and a Governance and
Compensation Committee, which also performs the functions of a
nominating committee. All directors attended at least 75% of the
total number of meetings of the Board and of all committees of
the Board on which they served (held during the periods in which
they served) in 2005.
Directors are encouraged to attend the Annual Meeting. All of
the Companys directors were in attendance at the 2005
Annual Meeting.
The Audit Committee
The Audit Committee represents and assists the Board of
Directors in its oversight responsibilities relating to: the
integrity of the Companys financial statements and the
financial information provided to the Companys
stockholders and others; the Companys compliance with
legal and regulatory requirements; the Companys internal
controls; and the audit process, including the qualifications
and independence of the Companys principal external
auditors (the Independent Auditors) and the
performance of the Independent Auditors, and of the
Companys internal audit function. The Audit Committee is
responsible for the appointment, compensation and oversight of
the Independent Auditors and, as such, the Independent Auditors
report directly to the Audit Committee.
The Audit Committee has established a policy setting forth the
requirements for the pre-approval of audit and permissible
non-audit services to be provided by the Companys
Independent Auditors. Under the policy, the Audit Committee
pre-approves the annual audit engagement terms and fees, as well
as any other audit services and specified categories of
non-audit services, subject to certain pre-approved fee levels.
In addition, pursuant to the policy, the Audit Committee has
authorized its chair to pre-approve other audit and permissible
non-audit services up to $50,000 per engagement and a
maximum of $250,000 per year. The policy
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requires that the Audit Committee chair report any pre-approval
decisions to the full Audit Committee at its next scheduled
meeting.
The members of the Audit Committee are Mr. Wulff
(Chairman), Mr. Anderson, Mr. Glauber, Mr. Kist,
Senator Mack, Dr. McKinnell and Ms. Newcomb, each of
whom is independent under NYSE and SEC rules and under the
Companys Corporate Governance Principles. The Board of
Directors has determined that each of Mr. Anderson,
Mr. Glauber, Mr. Kist, Dr. McKinnell,
Ms. Newcomb and Mr. Wulff is an audit committee
financial expert under the SECs rules.
Mr. Anderson currently serves on the audit committees of
three other public companies. Under the NYSE rules, a member of
the Audit Committee may not simultaneously serve on the audit
committees of more than two other public companies unless the
Board of Directors determines that such simultaneous service
does not impair the ability of the member to effectively serve
on the Audit Committee. The Board of Directors has determined
that Mr. Andersons simultaneous service on the three
other audit committees does not impair his ability to
effectively serve on the Companys Audit Committee.
The Audit Committee held eight meetings during 2005.
The Governance and Compensation Committee
The functions of the Governance and Compensation Committee
include identifying and evaluating possible candidates to serve
on the Board and recommending director nominees for approval by
the Board and the Companys stockholders. The Governance
and Compensation Committee also considers and makes
recommendations to the Board of Directors concerning the size,
structure, composition and functioning of the Board and its
committees, oversees the evaluation of the Board, and develops
and reviews the Companys Corporate Governance Principles.
The Governance and Compensation Committee oversees the
Companys overall compensation structure, policies and
programs, and assesses whether the Companys compensation
structure establishes appropriate incentives for management and
employees. The Committee also oversees the evaluation of senior
management (including by reviewing and approving performance
goals for the Companys executive officers, including the
CEO, and by evaluating their performance) and oversees, and
makes recommendations to the Board regarding, compensation
arrangements for the CEO and for certain other executive
officers. The Committee also administers and makes
recommendations to the Board with respect to the Companys
incentive compensation and equity-based compensation plans that
are subject to Board approval, including the Companys key
employees stock incentive plans.
The Governance and Compensation Committee will consider director
candidates recommended by stockholders of the Company. In
considering a candidate for Board membership, whether proposed
by stockholders or otherwise, the Governance and Compensation
Committee examines the candidates business experience and
skills, independence, judgment and integrity, his or her ability
to commit sufficient time and attention to Board activities, and
any potential conflicts with the Companys business and
interests. The Governance and Compensation Committee also seeks
to achieve a diversity of occupational and personal backgrounds
on the Board. To have a candidate considered by the Governance
and Compensation Committee, a stockholder must submit the
recommendation in writing and must include the following
information:
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The name of the stockholder and evidence of the persons
ownership of Company stock, including the number of shares owned
and the length of time of ownership; and |
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The name of the candidate, the candidates resume or a
listing of his or her qualifications to be a director of the
Company, and the persons consent to be named as a director
if selected by the Governance and Compensation Committee and
nominated by the Board. |
The stockholder recommendation and information described above
must be sent to the Corporate Secretary of the Company at 99
Church Street, New York, New York 10007, and must be received by
the Corporate Secretary not less than 120 days prior to the
anniversary date of the Companys most recent annual
meeting of stockholders. For the Companys 2007 annual
meeting, this deadline is December 26, 2006.
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The Governance and Compensation Committee identifies potential
nominees by asking current directors and executive officers to
notify the Committee if they become aware of persons, meeting
the criteria described above, who might be available to serve on
the Board. As described above, the Committee will also consider
candidates recommended by stockholders on the same basis as
those recommended by current directors and executives. The
Governance and Compensation Committee also, from time to time,
may engage firms that specialize in identifying director
candidates for the Committees consideration.
Once a person has been identified by or for the Governance and
Compensation Committee as a potential candidate, the Committee
may collect and review publicly available information regarding
the person to assess whether the person should be considered
further. If the Governance and Compensation Committee determines
that the candidate warrants further consideration, the chairman
or another member of the Committee contacts the person.
Generally, if the person expresses a willingness to be
considered and to serve on the Board, the Governance and
Compensation Committee requests information from the candidate,
reviews the persons accomplishments and qualifications,
including in light of any other candidates that the Committee
might be considering, and conducts one or more interviews with
the candidate. In certain instances, Committee members may
contact one or more references provided by the candidate or may
contact other members of the business community or other persons
that may have greater first-hand knowledge of the
candidates accomplishments.
The members of the Governance and Compensation Committee are
Dr. McKinnell (Chairman), Mr. Anderson,
Mr. Glauber, Mr. Kist, Senator Mack, Ms. Newcomb
and Mr. Wulff, each of whom is independent under NYSE rules
and under the Companys Corporate Governance Principles.
The Governance and Compensation Committee met seven times during
2005.
Codes of Business Conduct and Ethics
The Company has adopted a code of ethics that applies to its
CEO, Chief Financial Officer and Controller, or persons
performing similar functions. The Company has also adopted a
code of business conduct and ethics that applies to the
Companys directors, officers and employees. A current copy
of each of these codes is available on the Companys
website at www.moodys.com under the headings Shareholder
Relations Corporate Governance Codes of
Business Conduct and Ethics. A copy of each is also
available in print to stockholders upon request, addressed to
the Corporate Secretary of the Company at 99 Church Street, New
York, New York 10007.
The Company intends to satisfy any disclosure requirements
regarding amendments to, or waivers from, the code of ethics by
posting such information on the Companys website at
www.moodys.com under the headings Shareholder
Relations Corporate Governance Codes of
Business Conduct and Ethics.
Director Independence
To assist it in making determinations of a directors
independence, the Board has adopted independence standards,
which are set forth below and are also included in the
Companys Corporate Governance Principles. The Board has
determined that Mr. Anderson, Mr. Glauber,
Mr. Kist, Senator Mack, Dr. McKinnell,
Ms. Newcomb and Mr. Wulff, and thus a majority of the
directors on the Board, are independent under these standards.
The standards adopted by the Board incorporate the director
independence criteria included in the NYSE listing standards, as
well as additional criteria established by the Board. Each of
the Audit Committee and the Governance and Compensation
Committee is composed entirely of independent directors. In
accordance with NYSE requirements and the independence standards
adopted by the Board, all members of the Audit Committee meet
additional independence standards applicable to audit committee
members.
An independent director is a director whom the Board
has determined has no material relationship with the Company or
any of its consolidated subsidiaries (for purposes of this
section, collectively referred to as the Company),
either directly, or as a partner, stockholder or officer of an
organization that has a
6
relationship with the Company. For purposes of this definition,
the Board has determined that a director is not independent if:
|
|
|
1. the director is, or in the past three years has been, an
employee of the Company, or an immediate family member of the
director is, or in the past three years has been, an executive
officer of the Company; |
|
|
2. (a) the director, or an immediate family member of
the director, is a current partner of the Companys outside
auditor; (b) the director is a current employee of the
Companys outside auditor; (c) a member of the
directors immediate family is a current employee of the
Companys outside auditor participating in the firms
audit, assurance or tax compliance (but not tax planning)
practice; or (d) the director or an immediate family member
of the director was in the past three years (but is no longer) a
partner or employee of the Companys outside auditor and
personally worked on the Companys audit within that time; |
|
|
3. the director, or a member of the directors
immediate family, is or in the past three years has been, an
executive officer of another company where any of the
Companys present executive officers serves or served on
the compensation committee at the same time; |
|
|
4. the director, or a member of the directors
immediate family, has received, during any
12-month period in the
past three years, any direct compensation from the Company in
excess of $100,000, other than compensation for Board service,
compensation received by the directors immediate family
member for service as an employee (other than an executive
officer) of the Company, and pension or other forms of deferred
compensation for prior service with the Company; |
|
|
5. the director is a current executive officer or employee,
or a member of the directors immediate family is a current
executive officer, of another company that makes payments to or
receives payments from the Company, or during any of the last
three fiscal years, has made payments to or received payments
from the Company, for property or services in an amount that, in
any single fiscal year, exceeded the greater of $1 million
or 2% of the other companys consolidated gross
revenues; or |
|
|
6. the director, or the directors spouse, is an
executive officer of a non-profit organization to which the
Company or the Company foundation makes, or in the past three
years has made, contributions that, in any single fiscal year,
exceeded the greater of $1 million or 2% of the non-profit
organizations consolidated gross revenues. (Amounts that
the Company contributes under matching gifts programs are not
included in the contributions calculated for purposes of this
standard.) |
An immediate family member includes a
directors spouse, parents, children, siblings, mother and
father-in-law, sons and
daughters-in-law,
brothers and
sisters-in-law, and
anyone (other than a domestic employee) who shares the
directors home.
The Companys independent directors routinely meet in
executive session, without the presence of management directors
or other members of management. Those sessions are presided over
by the chairman of the Audit Committee or of the Governance and
Compensation Committee, depending upon the primary topic to be
discussed at the session.
Communications with Directors
The Board of Directors has established a process to receive
communications from stockholders and other interested parties.
Stockholders and other interested parties may communicate with
the Board of Directors or with all non-management directors as a
group, with the directors who preside over executive sessions of
the Board, or with a specific director or directors, by writing
to them c/o the Corporate Secretary of the Company at 99
Church Street, New York, New York 10007.
All communications received as set forth in the preceding
paragraph will be opened by the Corporate Secretary in the
office of the Companys General Counsel for the sole
purpose of determining whether the contents represent a message
to the Companys directors. Any contents that are not in
the nature of advertising, promotions of a product or service,
or patently offensive material will be forwarded promptly to the
addressee.
7
Compensation of Directors
Non-employee directors receive a combination of cash and equity
compensation for serving on the Board of Directors.
In 2005, non-employee directors received an annual retainer of
$75,000, in quarterly installments. The chairman of each of the
Audit Committee and the Governance and Compensation Committee
received an additional annual fee of $10,000, in quarterly
installments. There were no separate meeting fees in 2005.
In February 2005, each non-employee director at that time
received a grant of $100,000 worth of restricted stock under the
1998 Moodys Corporation Non-Employee Directors Stock
Incentive Plan (the 1998 Directors Plan). After
becoming a director in February 2005, Ms. Newcomb received
a grant of $91,667 worth of restricted stock. The restricted
stock vests in three equal annual installments.
A non-employee director may elect to defer receipt of all or a
portion of his or her retainer until after termination of Board
of Directors service. Deferred amounts are credited to an
account and receive the rate of return earned by one or more
investment options in the employee Profit Participation Plan as
selected by the director. Upon the occurrence of a
change-in-control of
the Company, a lump sum payment shall be made to each director
of the amount credited to the directors deferred account
on the date of the
change-in-control, and
the total amount credited to each directors deferred
account from the date of the
change-in-control until
the date such director ceases to be a director shall be paid in
a lump sum at that time. In addition, any notice by a director
to change or terminate an election to defer retainers given on
or before the date of the
change-in-control shall
be effective as of the date of the
change-in-control
rather than the end of the calendar year.
Directors also are reimbursed for travel, meals and hotel
expenses incurred in connection with attendance at meetings of
the Board of Directors or its committees, which are generally
held at the Companys executive office. The Board of
Directors typically has a meeting once a year outside the United
States in a country where the Company has operations. For those
meetings, the Company pays for travel for the directors and one
guest of each director, as well as for their accommodations,
meals, Company-arranged activities and other incidental expenses.
Effective April 26, 2005, Mary Evans retired as a director
of the Board. In recognition of Mrs. Evanss nearly
15 years of service as a director, the Company amended
Mrs. Evanss restricted stock award agreements to
release, effective as of April 30, 2005, all restrictions
on the restricted shares granted to her in February 2003 and
February 2004 and, effective as of February 23, 2006, all
restrictions on the restricted shares granted to her in February
2005.
In January 2006, Mrs. Evans received a payment of
5,786 shares of Common Stock and 1,413 shares of
Dun & Bradstreet Common Stock, representing the
deferred performance share balance as of December 31, 2005
under the 1998 Moodys Corporation Replacement Plan for
Certain Non-Employee Directors Holding Dun & Bradstreet
Corporation Equity-Based Awards (the Directors
Replacement Plan). In February 2006, Mrs. Evans
received a payment of approximately $1,658,518 pursuant to the
Directors Replacement Plan with respect to her phantom
stock unit share-equivalent balance as of December 31, 2005
and $18,183 as the first of five installment payments pursuant
to the 1998 Non-Employee Directors Deferred Compensation Plan,
with respect to her deferred compensation account balance as of
December 31, 2005. In April 2005, Ms. Evans received a
retirement gift valued at $1,405 and a tax
gross-up for the gift.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors has nominated Ewald Kist, Henry A.
McKinnell, Jr. and John K. Wulff for re-election as
Class II directors, each for a three-year term expiring in
2009. If elected, each nominee will hold office until his or her
term expires and until his or her successor is elected and
qualified. Each of Mr. Kist, Dr. McKinnell and
Mr. Wulff is currently a member of the Board of Directors.
The Company expects each nominee for election as a director to
be able to serve if elected. If any nominee is unable to serve,
proxies will
8
be voted for the election of such other person for director as
management may recommend in the place of such nominee.
The Board of Directors recommends a vote FOR the
election as directors of each of the Class II nominees
listed below.
The principal occupation and certain other information
(including age as of the date of this Proxy Statement) about the
nominees and other directors of the Company whose terms of
office continue after the Annual Meeting are set forth below.
NOMINEES FOR DIRECTORS
Class II Directors Whose Terms Expire in 2009
Ewald Kist
Director since July 2004
Ewald Kist, age 62, is a member of the Audit and Governance
and Compensation Committees of the Board of Directors.
Mr. Kist was Chairman of ING Groep NV (ING
Group) from 2000 to his retirement in June 2004. Before
serving as chairman of ING Group, Mr. Kist was vice
chairman from 1999 to 2000 and served as a member of the
Executive Board from 1993 to 1999. Prior to the merger of
Nationale Nederlanden and NMB Postbank Group to form ING
Group in 1992, Mr. Kist served in a variety of capacities
at Nationale Nederlanden beginning in 1969, including Chairman
from 1991 to 1992, General Management the
Netherlands from 1989 to 1991 and president Nationale
Nederlanden US Corporation from 1986-1989. Mr. Kist is
also a director of The DSM Corporation, Royal Philips
Electronics and the Dutch National Bank.
Henry A. McKinnell, Jr., Ph.D.
Director since October 1997
Henry A. McKinnell, Jr., age 63, is chairman of the
Governance and Compensation Committee and is a member of the
Audit Committee of the Board of Directors. Dr. McKinnell is
chairman and chief executive officer of Pfizer Inc, a
research-based global health care company. He has served as
Pfizer Incs chairman since May 2001 and as its chief
executive officer since January 2001. He served as president of
Pfizer Inc from May 1999 to May 2001, and as president of Pfizer
Pharmaceuticals Group from January 1997 to April 2001.
Dr. McKinnell served as chief operating officer of Pfizer
Inc from May 1999 to December 2000, and executive vice president
from 1992 to 1999. In addition to serving on the board of Pfizer
Inc, Dr. McKinnell is a director of ExxonMobil Corporation.
John K. Wulff
Director since April 2004
John K. Wulff, age 57, is chairman of the Audit Committee
and is a member of the Governance and Compensation Committee of
the Board of Directors. Mr. Wulff has served as
non-executive chairman of the board of Hercules Incorporated, a
manufacturer and supplier of specialty chemical products, since
December 2003. Mr. Wulff was first elected as a director of
Hercules in July 2003, and served as interim chairman from
October 2003 to December 2003. Mr. Wulff served as a member
of the Financial Accounting Standards Board from July 2001 until
June 2003. From January 1996 until March 2001, Mr. Wulff
was chief financial officer of Union Carbide Corporation. During
his 14 years with Union Carbide, Mr. Wulff also served
as vice president and principal accounting officer from January
1989 to December 1995, and controller from July 1987 to January
1989. From April 1977 until June 1987, Mr. Wulff was a
partner with KPMG and predecessor firms (accounting and
consulting firms). In addition to serving on the board of
Hercules, Mr. Wulff is a director of Sunoco, Inc. and
Fannie Mae.
9
CONTINUING DIRECTORS
Class III Directors Whose Terms Expire in 2007
Basil L. Anderson
Director since April 2004
Basil L. Anderson, age 60, is a member of the Audit and
Governance and Compensation Committees of the Board of
Directors. Mr. Anderson served as vice chairman of Staples,
Inc. from September 2001 until his retirement in March 2006.
Prior to joining Staples, Mr. Anderson served as executive
vice president and chief financial officer of Campbell Soup
Company from April 1996 to February 2001. Prior to joining
Campbell Soup, Mr. Anderson was with Scott Paper Company
where he served in a variety of capacities beginning in 1975,
including vice president and chief financial officer from
December 1993 to December 1995. Mr. Anderson is also a
director of Staples, Inc., Becton Dickenson, CRA International
Inc. and Hasbro, Inc.
Raymond W. McDaniel, Jr.
Director since April 2003
Raymond W. McDaniel, Jr., age 48, is the Chairman and
CEO of the Company. Mr. McDaniel served as the
Companys President from October 2004 until April 2005 and
the Companys Chief Operating Officer from January 2004
until April 2005. He also has served as President of
Moodys Investors Service since November 2001.
Mr. McDaniel served as the Companys Executive Vice
President, Global Ratings and Research, from April 2003 to
January 2004, and as Senior Vice President, Global Ratings and
Research, from November 2000 to April 2003. Mr. McDaniel
served as Senior Managing Director, Global Ratings and Research,
of Moodys Investors Service from November 2000 to November
2001, and as Managing Director, International, from 1996 to
November 2000. Mr. McDaniel is also a director of John
Wiley & Sons, Inc.
Class I Directors Whose Terms Expire in 2008
Robert R. Glauber
Director since June 1998
Robert R. Glauber, age 67, is a member of the Audit and
Governance and Compensation Committees of the Board of
Directors. Mr. Glauber has served as chairman and chief
executive officer of NASD since September 2001. From November
2000 to September 2001, Mr. Glauber served as president and
chief executive officer of NASD. From 1992 to October 2000,
Mr. Glauber was an adjunct lecturer at the Center for
Business and Government at the John F. Kennedy School of
Government at Harvard University. From 1989 to 1992
Mr. Glauber served as Under Secretary of the Treasury for
Finance.
Connie Mack
Director since December 2001
Connie Mack, age 65, is a member of the Audit and
Governance and Compensation Committees of the Board of
Directors. Senator Mack has served as a senior policy advisor at
King & Spalding LLP since February 2005 and served as a
senior policy advisor at Shaw Pittman, LLP from February 2001 to
February 2005. He was a United States Senator (R-FL) from 1989
to January 2001. While in the Senate, Senator Mack was the
Republican Conference chairman from 1997 to 2001, chairman of
the Joint Economic Committee from 1995 to 1997 and 1999 to 2001,
and a member of the Senate Finance and Senate Banking, Housing
and Urban Affairs committees. Senator Mack was chairman of the
Presidents Advisory Panel on Federal Tax Reform and is
also a director of Darden Restaurants, EXACT Sciences
Corporation, Genzyme Corporation, Mutual of America Life
Insurance Company, the H. Lee Moffitt Cancer Center and Spirit
Aerosystems.
Nancy S. Newcomb
Director since February 2005
Nancy S. Newcomb, age 60, is a member of the Audit and
Governance and Compensation Committees of the Board of
Directors. Ms. Newcomb served as senior corporate officer,
risk management, of Citigroup
10
from May 1998 until her retirement in 2004. She served as a
customer group executive of Citicorp (the predecessor
corporation) from December 1995 to April 1998, and as a division
executive, Latin America from September 1993 to December 1995.
From January 1988 to August 1993 she was the principal financial
officer, responsible for liquidity, funding and capital
management. Ms. Newcomb is also a director of The DIRECTV
Group, Inc. and SYSCO Corporation.
ITEM 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS
The Audit Committee, in its capacity as a committee of the Board
of Directors, has appointed PricewaterhouseCoopers LLP to serve
as the independent registered public accounting firm to audit
the consolidated financial statements of the Company for the
year ending December 31, 2006. As a matter of good
corporate governance, the Audit Committee has requested the
Board of Directors to submit that selection to stockholders for
ratification. PricewaterhouseCoopers LLP acted as the
independent registered public accounting firm for the year ended
December 31, 2005. Services provided to the Company by
PricewaterhouseCoopers LLP in 2005 included the audit of the
consolidated financial statements, audits of managements
assessment of the effectiveness of internal control over
financial reporting and the effectiveness of internal control
over financial reporting, limited reviews of quarterly financial
statements, employee benefit plan audits, consultations on
various accounting matters, acquisition due diligence review and
statutory audits of
non-U.S. subsidiaries.
If the appointment of PricewaterhouseCoopers LLP is not ratified
by stockholders, the Audit Committee will re-evaluate its
selection and will determine whether to maintain
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm or to appoint another
independent registered public accounting firm. If prior to the
2007 Annual Meeting of Stockholders PricewaterhouseCoopers LLP
ceases to act as the Companys independent registered
public accounting firm or if the Audit Committee removes
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm, then the Audit Committee will
appoint another independent registered public accounting firm. A
representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting. Such representative will have the
opportunity to make a statement if he or she so desires and is
expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of
the appointment of PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for
2006.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees for professional services rendered for the
integrated audit of the Companys annual financial
statements for the years ended December 31, 2005 and 2004,
for the review of the financial statements included in the
Companys reports on
Forms 10-Q
and 8-K, and for
statutory audits of
non-U.S. subsidiaries
were approximately $2.0 million (including
$0.4 million not billed) in 2005 and $2.3 million
(including $0.4 million not billed) in 2004. All such fees
were attributable to PricewaterhouseCoopers LLP.
Audit-Related Fees
The aggregate fees billed for audit-related services rendered to
the Company by PricewaterhouseCoopers LLP for the years ended
December 31, 2005 and 2004 were approximately
$0.1 million and $0.7 million (including
$0.1 million not billed), respectively. Such services
included acquisition due diligence reviews, employee benefit
plan audits, internal control reviews, and consultations
concerning financial accounting and reporting standards.
11
Tax Fees
The aggregate fees billed for tax services rendered to the
Company by PricewaterhouseCoopers LLP for the years ended
December 31, 2005 and 2004 were approximately $3,000 and
$15,000, respectively. Tax services rendered by
PricewaterhouseCoopers LLP principally related to expatriate tax
services and tax consulting and compliance.
All Other Fees
The aggregate fees billed for all other services rendered to the
Company by PricewaterhouseCoopers LLP for the years ended
December 31, 2005 and 2004 were approximately $9,000
(including $4,000 not billed) and $5,000, respectively. Other
fees principally relate to accounting research software.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed with management
the audited financial statements of the Company for the year
ended December 31, 2005 (the Audited Financial
Statements), managements assessment of the
effectiveness of the Companys internal control over
financial reporting, and the independent auditors
evaluation of the Companys system of internal control over
financial reporting. In addition, the Audit Committee has
discussed with PricewaterhouseCoopers LLP, who reports directly
to the Audit Committee, the matters required by Statement on
Auditing Standards Nos. 61 and 90 (Communication with Audit
Committees).
The Audit Committee also has discussed with
PricewaterhouseCoopers LLP its independence from the Company,
including the matters contained in the written disclosures and
letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit
Committees). The Audit Committee also has discussed with
management of the Company and PricewaterhouseCoopers LLP such
other matters and received such assurances from them as it
deemed appropriate. The Audit Committee considered whether the
rendering of non-audit services by PricewaterhouseCoopers LLP to
the Company is compatible with maintaining the independence of
PricewaterhouseCoopers LLP from the Company.
Following the foregoing review and discussions, the Audit
Committee recommended to the Board of Directors that the Audited
Financial Statements be included in the Companys Annual
Report on
Form 10-K for the
year ended December 31, 2005 for filing with the SEC.
The Audit Committee
John K. Wulff, Chairman
Basil L. Anderson
Robert R. Glauber
Ewald Kist
Connie Mack
Henry A. McKinnell, Jr.
Nancy S. Newcomb
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below sets forth the number of shares of Common Stock
beneficially owned as of December 31, 2005 by (i) each
person who is known to the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock (the
Companys 5% Owners), (ii) each director
and nominee for director of the Company, (iii) each named
executive officer listed in the Summary Compensation Table
below, and (iv) all directors and executive officers of the
Company as a group. Stock ownership information is based on
(a) the number of shares of Common Stock held by directors
and executive officers as of December 31, 2005 (in
accordance with information supplied to the Company by them),
and (b) the number of shares of Common Stock held by the
Companys 5% Owners, based on information filed with the
SEC by the Companys 5% Owners. Unless otherwise indicated
and except for the interests of individuals spouses, the
stockholders listed below have sole voting and investment power
with respect to the shares indicated as owned by them.
Percentages are based upon the number of shares of Common Stock
outstanding on December 31, 2005, and, where applicable,
the number of shares of Common Stock that the indicated person
or group had a right to acquire within 60 days of such
date. The table also sets forth ownership information concerning
Stock Units, the value of which is measured by the
price of the Common Stock. Stock Units do not confer voting
rights and are not considered beneficially owned
shares under SEC rules.
|
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|
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|
|
|
|
Aggregate Number of |
|
|
|
Percent of |
|
|
Shares Beneficially |
|
|
|
Shares |
Name |
|
Owned(1) |
|
Stock Units(2) |
|
Outstanding |
|
|
|
|
|
|
|
Basil L. Anderson
|
|
|
4,440 |
|
|
|
1,495 |
|
|
|
* |
|
Jeanne M. Dering
|
|
|
391,120 |
(3) |
|
|
0 |
|
|
|
* |
|
Jennifer Elliott
|
|
|
40,929 |
|
|
|
0 |
|
|
|
* |
|
Robert R. Glauber
|
|
|
64,603 |
|
|
|
1,561 |
|
|
|
* |
|
John J. Goggins
|
|
|
214,331 |
|
|
|
0 |
|
|
|
* |
|
Linda S. Huber
|
|
|
9,885 |
|
|
|
0 |
|
|
|
* |
|
Ewald Kist
|
|
|
3,764 |
|
|
|
0 |
|
|
|
* |
|
Connie Mack
|
|
|
27,458 |
|
|
|
0 |
|
|
|
* |
|
Raymond W. McDaniel, Jr.
|
|
|
1,116,885 |
(3) |
|
|
0 |
|
|
|
* |
|
Henry A. McKinnell, Jr.
|
|
|
79,055 |
|
|
|
13,997 |
|
|
|
* |
|
Nancy S. Newcomb
|
|
|
2,198 |
|
|
|
0 |
|
|
|
* |
|
John Rutherfurd, Jr.
|
|
|
660,506 |
|
|
|
0 |
|
|
|
|
|
John K. Wulff
|
|
|
6,440 |
|
|
|
2,939 |
|
|
|
* |
|
All current directors and executive officers as a group
(13 persons)
|
|
|
1,971,294 |
|
|
|
19,992 |
|
|
|
0.68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Number of |
|
|
|
Percent of |
|
|
Shares Beneficially |
|
|
|
Shares |
Name |
|
Owned |
|
Stock Units |
|
Outstanding |
|
|
|
|
|
|
|
Berkshire Hathaway Inc.,
|
|
|
48,000,000(4 |
)(5) |
|
|
0 |
|
|
|
16.54 |
% |
|
Warren E. Buffett, OBH, Inc., GEICO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation, Government Employees
|
|
|
|
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|
|
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|
|
|
|
|
|
Insurance Company and National Indemnity
|
|
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|
Company
|
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|
1440 Kiewit Plaza
|
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Omaha, Nebraska 68131
|
|
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|
|
|
|
|
|
|
|
Davis Selected Advisers, L.P.,
|
|
|
18,971,712 |
(6) |
|
|
0 |
|
|
|
6.54 |
% |
|
2949 East Elvira Road, Suite 101
|
|
|
|
|
|
|
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|
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Tucson, Arizona 85706
|
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|
13
|
|
* |
Represents less than 1% of the outstanding Common Stock. |
|
|
(1) |
Includes the maximum number of shares of Common Stock that may
be acquired within 60 days of December 31, 2005, upon
the exercise of vested stock options as follows:
Mr. Anderson 0; Ms. Dering
349,250; Ms. Elliott 36,185;
Mr. Glauber 52,000;
Mr. Goggins 193,637; Ms. Huber
0; Mr. Kist 0; Senator Mack 18,000;
Mr. McDaniel 1,029,653;
Dr. McKinnell 58,360;
Ms. Newcomb 0; Mr. Rutherfurd
590,075; and Mr. Wulff 0; and all current
directors and executive officers as a group
1,743,440. Also includes the following shares of restricted
stock over which the named executive officers and directors had
voting (but not dispositive) power as of December 31, 2005:
Mr. Anderson 3,744;
Ms. Dering 14,686; Ms. Elliott
4,226; Mr. Glauber 5,676;
Mr. Goggins 9,402; Ms. Huber
0; Mr. Kist 3,308; Senator Mack
5,676; Mr. McDaniel 35,272;
Dr. McKinnell 5,676;
Ms. Newcomb 0; Mr. Rutherfurd
0; and Mr. Wulff 3,744; and all current
directors and executive officers as a group 94,501. |
|
(2) |
Consists of stock units (payable to non-employee directors after
retirement), the value of which is measured by the price of the
Common Stock, received under various non-employee director
compensation arrangements of the Company and its predecessor.
These units do not confer voting rights and are not considered
beneficially owned shares of Common Stock under SEC
rules. Additional stock units accrue over time to reflect the
deemed reinvestment of dividends. |
|
(3) |
Includes 7,860 shares beneficially owned by
Ms. Derings spouse, a former employee of Moodys
Investors Service, and 2,000 shares beneficially owned by
Mr. McDaniels spouse. |
|
(4) |
As set forth in the most recent amended Schedule 13G
jointly filed with the SEC by Warren E. Buffett, Berkshire
Hathaway Inc., OBH, Inc., GEICO Corporation, Government
Employees Insurance Company and National Indemnity Company,
(a) each of Mr. Buffett, Berkshire Hathaway Inc., OBH,
Inc. and National Indemnity Company had shared voting power and
shared dispositive power with respect to all of the
24,000,000 shares reported in such Schedule 13G and
(b) each of GEICO Corporation and Government Employees
Insurance Company had shared voting power and shared dispositive
power with respect to 7,859,700 of such 24,000,000 shares.
The number of shares beneficially owned as set forth in the
table above has been adjusted for the May 18, 2005 stock
split. |
|
(5) |
This address is listed in the most recent amended
Schedule 13G as the address of each of Mr. Buffett,
Berkshire Hathaway Inc. and OBH, Inc. The address of National
Indemnity Company is listed as 3024 Harney Street, Omaha,
Nebraska 68131, and the address of each of GEICO Corporation and
Government Employees Insurance Company is listed as 1 GEICO
Plaza, Washington, D.C. 20076. |
|
(6) |
A Schedule 13G/ A filed by Davis Selected Advisers, L.P.
(Davis) with the SEC on February 14, 2006
reported that Davis, a registered investment adviser, had sole
voting and dispositive power over 18,971,712 shares. |
Stock Ownership Guidelines
In July 2004, the Board of Directors established stock ownership
guidelines for non-employee directors and executives of the
Company and its subsidiaries, Moodys Investors Service and
Moodys KMV Company. Each non-employee director and
executive has five years to comply with those guidelines. The
ownership requirements for the Company are five times base
salary for the CEO, four times base salary for the Chief
Operating Officer, two times base salary for the remaining
executives, and five times the annual cash retainer for
non-employee directors. Restricted shares and shares owned by
immediate family members or through qualified Company savings
and retirement plans may be used to satisfy the ownership
requirements.
14
EXECUTIVE COMPENSATION
The table below sets forth, for the three years ended
December 31, 2005, 2004 and 2003, the compensation of the
CEO, the retired CEO and each of the four other most highly
compensated executive officers of the Company (the named Company
executives).
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation Awards |
|
|
|
|
|
|
|
|
Annual Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual |
|
Stock |
|
Underlying |
|
Long-Term |
|
All Other |
|
|
|
|
|
|
|
|
Compensation |
|
Award(s) |
|
Options |
|
Incentive |
|
Compensation |
Name and Principal Position |
|
Year |
|
Salary($) |
|
Bonus ($) (1) |
|
($) (2) |
|
($) (3) |
|
(#) (4) |
|
Payouts($) |
|
($) (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Rutherfurd, Jr.
|
|
|
2005 |
|
|
$ |
273,000 |
|
|
$ |
552,871 |
|
|
$ |
0 |
|
|
$ |
404,202 |
|
|
|
65,660 |
|
|
$ |
0 |
|
|
$ |
195,458 |
|
|
Retired Chairman and Chief |
|
|
2004 |
|
|
|
900,000 |
|
|
|
1,739,780 |
|
|
|
0 |
|
|
|
741,253 |
|
|
|
225,000 |
|
|
|
0 |
|
|
|
203,206 |
|
|
Executive Officer |
|
|
2003 |
|
|
|
840,000 |
|
|
|
1,953,000 |
|
|
|
0 |
|
|
|
n/a |
|
|
|
318,000 |
|
|
|
0 |
|
|
|
196,854 |
|
Raymond W. McDaniel
|
|
|
2005 |
|
|
|
675,000 |
|
|
|
1,600,000 |
|
|
|
0 |
|
|
|
1,031,094 |
|
|
|
167,500 |
|
|
|
0 |
|
|
|
112,359 |
|
|
Chairman and Chief |
|
|
2004 |
|
|
|
564,485 |
|
|
|
965,825 |
|
|
|
0 |
|
|
|
543,581 |
|
|
|
165,000 |
|
|
|
0 |
|
|
|
135,594 |
|
|
Executive Officer |
|
|
2003 |
|
|
|
532,533 |
|
|
|
1,340,000 |
|
|
|
0 |
|
|
|
n/a |
|
|
|
212,000 |
|
|
|
0 |
|
|
|
136,184 |
|
Linda S. Huber(6)
|
|
|
2005 |
|
|
|
281,250 |
|
|
|
706,941 |
|
|
|
0 |
|
|
|
447,692 |
|
|
|
66,667 |
|
|
|
0 |
|
|
|
0 |
|
|
Executive Vice President and |
|
|
2004 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
Chief Financial Officer |
|
|
2003 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Jeanne M. Dering(7)
|
|
|
2005 |
|
|
|
462,500 |
|
|
|
551,941 |
|
|
|
0 |
|
|
|
412,388 |
|
|
|
67,000 |
|
|
|
0 |
|
|
|
64,237 |
|
|
Executive Vice President |
|
|
2004 |
|
|
|
430,501 |
|
|
|
477,868 |
|
|
|
0 |
|
|
|
247,106 |
|
|
|
75,000 |
|
|
|
0 |
|
|
|
65,429 |
|
|
Global Regulatory Affairs & |
|
|
2003 |
|
|
|
378,800 |
|
|
|
489,645 |
|
|
|
0 |
|
|
|
n/a |
|
|
|
92,000 |
|
|
|
0 |
|
|
|
86,958 |
|
|
Compliance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Goggins
|
|
|
2005 |
|
|
|
337,459 |
|
|
|
329,967 |
|
|
|
0 |
|
|
|
268,048 |
|
|
|
43,550 |
|
|
|
0 |
|
|
|
42,126 |
|
|
Senior Vice President and |
|
|
2004 |
|
|
|
324,480 |
|
|
|
278,857 |
|
|
|
0 |
|
|
|
153,181 |
|
|
|
46,500 |
|
|
|
0 |
|
|
|
45,423 |
|
|
General Counsel |
|
|
2003 |
|
|
|
312,000 |
|
|
|
315,000 |
|
|
|
0 |
|
|
|
n/a |
|
|
|
64,000 |
|
|
|
0 |
|
|
|
60,678 |
|
Jennifer Elliott(8)
|
|
|
2005 |
|
|
|
298,221 |
|
|
|
354,046 |
|
|
|
206,866 |
|
|
|
140,247 |
|
|
|
22,780 |
|
|
|
0 |
|
|
|
41,771 |
|
|
Vice President and |
|
|
2004 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
Chief Human Resources
|
|
|
2003 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The bonus amounts shown in this column were earned with respect
to each year indicated and generally were paid in the following
year. Ms. Hubers bonus amount also includes a
$100,000 sign-on bonus. |
|
(2) |
The amounts shown in this column for Ms. Elliott are
comprised primarily of amounts provided by the Company with
respect to her overseas assignment, including a $60,400 foreign
premium. |
|
(3) |
The amounts shown in this column represent the dollar value of
the Common Stock based on the closing price of the Common Stock
on the respective dates of grant: $32.10 on February 9,
2004, $41.765 on February 22, 2005 and $45.29 on
July 1, 2005. All grants of restricted stock were made
under the Companys 2001 Key Employees Stock
Incentive Plan (as amended and restated on April 27, 2004,
the 2001 Stock Incentive Plan). |
|
|
|
|
|
On February 22, 2005, the following grants of restricted
shares of Common Stock were received:
Mr. Rutherfurd 9,678 shares;
Mr. McDaniel 24,688 shares;
Ms. Dering 9,874 shares;
Mr. Goggins 6,418 shares; and
Ms. Elliott 3,358 shares. On July 1,
2005, Ms. Huber received a grant of 9,885 restricted shares
of Common Stock. The number and value of the aggregate
restricted stock holdings of each named executive officer as of
December 31, 2005 were as follows:
Mr. Rutherfurd no restricted shares;
Mr. McDaniel 35,272 restricted shares, valued
at $1,975,947; Ms. Huber 9,885 restricted
shares, valued at $607,137; Ms. Dering 14,686
restricted shares, valued at $815,422;
Mr. Goggins 9,402 restricted shares, valued at
$523,774; and Ms. Elliott 4,226 restricted
shares, valued at $243,941. |
|
|
|
All restricted shares granted in 2004 and in February 2005, and
their closing prices on the respective dates of grant, have been
adjusted for the May 18, 2005 stock split. |
|
|
|
Subject to continued employment through each vesting date,
vesting of these restricted stock grants in any one year
generally depends on the financial performance of the Company.
Twenty-five percent of the grant represents the Target
Shares for each vesting year. If the Companys annual
operating income growth in any one year is (i) less than
10%, then 50% of the Target Shares will vest; (ii) between
10% and 15%, then 100% of the Target Shares will vest; and
(iii) greater than 15%, then 150% of the Target |
15
|
|
|
|
|
Shares will vest. No more than 100% of the initial grant will
vest, and all shares will vest in full, if not previously
vested, five years from the grant date, subject to continued
employment through such date, regardless of whether performance
goals have been achieved. The 2001 Stock Incentive Plan provides
that a grant outstanding for at least one year vests in full
upon the grantees retirement. Consequently, upon
Mr. Rutherfurds retirement on April 26, 2005,
14,434 restricted shares awarded to him on February 9,
2004, vested in full. In recognition of
Mr. Rutherfurds service, the Company also caused the
9,678 restricted shares awarded to him on February 22,
2005, to vest in full. |
|
|
|
Dividends will be accumulated and paid, without interest, when
the underlying shares vest. |
|
|
(4) |
The amounts shown in this column represent the number of
non-qualified options granted in each year indicated. The
numbers shown for options granted prior to May 18, 2005
have been adjusted for the stock split on that date. |
|
(5) |
The amounts shown in this column for Messrs. Rutherfurd,
McDaniel and Goggins and Ms. Dering represent aggregate
annual Company contributions for their accounts under the Profit
Participation Plan, which is open to substantially all employees
of the Company and certain of its subsidiaries, and the Profit
Participation Benefit Equalization Plan (PPBEP). The
Profit Participation Plan is a tax-qualified defined
contribution plan, and the PPBEP is a non-qualified plan that
provides benefits to participants in the Profit Participation
Plan equal to the amounts of Company contributions that would
have been made to the participants Profit Participation
Plan accounts but for certain Federal tax laws. In 2005,
Ms. Huber was not a participant in the Profit Participation
and PPBEP Plans. The amount described with respect to
Ms. Elliott was contributed by the Companys
subsidiary to the Australian Superannuation Fund pursuant to
Australias Superannuation Guarantee Law. |
|
(6) |
Ms. Huber joined the Company as Executive Vice President
and Chief Financial Officer on May 16, 2005. |
|
(7) |
Ms. Dering served as Executive Vice President and Chief
Financial Officer of the Company until May 2005, at which time
she became Executive Vice President Global
Regulatory Affairs & Compliance. |
|
(8) |
Prior to becoming an executive officer of the Company on
January 10, 2005, Ms. Elliott was a Managing Director
of Moodys Investors Service in Australia. Her compensation
appears in the table in U.S. dollars but certain elements
of her compensation were paid in Australian dollars. An exchange
rate of 0.733552 from The Federal Reserve Bank of New York as of
December 30, 2005 was used to calculate the
U.S. dollars. |
The table below sets forth information concerning grants of
stock options to purchase Common Stock during the year ended
December 31, 2005 to the named Company executives.
Option Grants in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
of |
|
% of Total |
|
|
|
|
|
|
|
|
Securities |
|
Options |
|
|
|
|
|
|
|
|
Underlying |
|
Granted to |
|
Exercise |
|
|
|
|
|
|
Options |
|
Employees in |
|
or Base |
|
|
|
Grant Date |
|
|
Granted |
|
Fiscal Year |
|
Price |
|
Expiration |
|
Present Value |
Name |
|
(#) (1) |
|
(%) |
|
($/Share) |
|
Date |
|
($) (2) |
|
|
|
|
|
|
|
|
|
|
|
John Rutherfurd, Jr.
|
|
|
65,660 |
|
|
|
1.56 |
% |
|
$ |
41.688 |
|
|
|
02/22/15 |
|
|
|
819,076 |
|
Raymond W. McDaniel
|
|
|
167,500 |
|
|
|
3.98 |
% |
|
$ |
41.688 |
|
|
|
02/22/15 |
|
|
|
2,089,479 |
|
Linda S. Huber
|
|
|
66,667 |
|
|
|
1.58 |
% |
|
$ |
44.985 |
|
|
|
07/01/15 |
|
|
|
889,338 |
|
Jeanne Dering
|
|
|
67,000 |
|
|
|
1.59 |
% |
|
$ |
41.688 |
|
|
|
02/22/15 |
|
|
|
835,792 |
|
John Goggins
|
|
|
43,550 |
|
|
|
1.03 |
% |
|
$ |
41.688 |
|
|
|
02/22/15 |
|
|
|
543,264 |
|
Jennifer Elliott
|
|
|
22,780 |
|
|
|
0.54 |
% |
|
$ |
41.688 |
|
|
|
02/22/15 |
|
|
|
284,169 |
|
|
|
(1) |
The numbers of shares underlying options granted prior to
May 18, 2005, and the exercise prices of those options,
have been adjusted for the stock split on that date. All options
are generally exercisable in four annual installments, the first
of which was February 22, 2006, and expire on
February 22, 2015. In recognition of
Mr. Rutherfurds service, upon his retirement on
April 26, 2005, the Company caused the |
16
|
|
|
options on 65,660 shares of Common Stock awarded to him on
February 22, 2005, which would otherwise have expired upon
such retirement, to continue to vest in accordance with their
normal vesting schedule. |
|
(2) |
The February 22, 2005 grant date present value is based on
the Black-Scholes option valuation model, applying the following
assumptions: an expected stock-price volatility factor of 23%; a
risk-free rate of return of 4.065%; a dividend yield of 0.528%;
and an expected time to exercise of 6 years from the date
of grant. The July 1 grant date present value is based on
the Black-Scholes option valuation model, applying the following
assumptions: an expected stock-price volatility of 23%; a
risk-free rate of return of 3.891%; a dividend yield of 0.489%,
and an expected time to exercise of 6 years from the date
of grant. The Black-Scholes model is premised on the immediate
exercisability and transferability of the options, neither of
which applies to the options set out in the table above. The
actual amounts realized, if any, will depend on the extent to
which the stock price exceeds the option exercise price at the
time the option is exercised. |
The table below sets forth information concerning options
exercised by each of the named Company executives during the
year ended December 31, 2005, and the number and value of
exercisable and unexercisable options held as of
December 31, 2005.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
Value of Unexercised In-the- |
|
|
Shares |
|
|
|
Options at Fiscal Year-End |
|
Money Options at Fiscal Year |
|
|
Acquired |
|
|
|
(#) |
|
End ($) (1) |
|
|
on Exercise |
|
Value |
|
|
|
|
Name |
|
(#) |
|
Realized($) |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
John Rutherfurd, Jr.
|
|
|
759,750 |
|
|
$ |
30,326,013 |
|
|
|
685,750 |
|
|
|
479,910 |
|
|
$ |
28,760,367 |
|
|
$ |
16,159,654 |
|
Raymond W. McDaniel
|
|
|
15,386 |
|
|
|
803,258 |
|
|
|
836,028 |
|
|
|
454,750 |
|
|
|
37,843,578 |
|
|
|
15,700,431 |
|
Linda S. Huber
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
66,667 |
|
|
|
0 |
|
|
|
1,702,809 |
|
Jeanne Dering
|
|
|
90,044 |
|
|
|
3,915,773 |
|
|
|
265,750 |
|
|
|
194,250 |
|
|
|
11,465,482 |
|
|
|
6,738,872 |
|
John Goggins
|
|
|
0 |
|
|
|
0 |
|
|
|
137,625 |
|
|
|
127,925 |
|
|
|
5,785,856 |
|
|
|
4,458,581 |
|
Jennifer Elliott
|
|
|
0 |
|
|
|
0 |
|
|
|
16,115 |
|
|
|
48,905 |
|
|
|
635,020 |
|
|
|
1,652,939 |
|
|
|
(1) |
The numbers in the above table have been adjusted for the stock
split on May 18, 2005. Value is calculated as the
difference between the closing price of the Common Stock of
$61.42 on December 30, 2005 and the option exercise price. |
Retirement Benefits
The tables below set forth the estimated aggregate annual
benefits payable under the Moodys Corporation Retirement
Account (the Retirement Account), Pension Benefit
Equalization Plan (PBEP) and Supplemental Executive
Benefit Plan (SEBP) to persons in specified average
final compensation and credited service classifications upon
retirement at age 65.
The Governance and Compensation Committee approved the inclusion
of Mr. McDaniel and Ms. Dering as participants in an
amended SEBP effective as of October 22, 2001, and approved
the inclusion of Mr. Goggins as a participant in that
amended SEBP effective October 1, 2004.
17
Table I sets forth estimates of the aggregate annual retirement
benefits for Mr. Rutherfurd based on various assumptions
regarding average final compensation and years of credited
service. Table II sets forth such estimates for
Messrs. McDaniel and Goggins and Ms. Dering. For
Mr. Rutherfurd, the aggregate annual retirement benefits do
not increase as a result of additional credited service after
20 years. For Messrs. McDaniel and Goggins and
Ms. Dering, the aggregate annual retirement benefits do not
increase as a result of additional credited service after
30 years. Ms. Huber will become a participant in the
Retirement Account and the PBEP on June 1, 2006.
Ms. Elliott does not participate in the
U.S. retirement plans. The contribution of the
Companys subsidiary to the Australian Superannuation Fund
on behalf of Ms. Elliott is set forth in the Summary
Compensation Table.
Table I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Aggregate Annual Retirement |
|
|
Benefits Assuming Credited Service of: |
|
|
|
Average Final Compensation |
|
5 Years |
|
10 Years |
|
15 Years |
|
20 Years |
|
|
|
|
|
|
|
|
|
$ 400,000
|
|
$ |
80,000 |
|
|
$ |
160,000 |
|
|
$ |
200,000 |
|
|
$ |
240,000 |
|
450,000
|
|
|
90,000 |
|
|
|
180,000 |
|
|
|
225,000 |
|
|
|
270,000 |
|
550,000
|
|
|
110,000 |
|
|
|
220,000 |
|
|
|
275,000 |
|
|
|
330,000 |
|
700,000
|
|
|
140,000 |
|
|
|
280,000 |
|
|
|
350,000 |
|
|
|
420,000 |
|
850,000
|
|
|
170,000 |
|
|
|
340,000 |
|
|
|
425,000 |
|
|
|
510,000 |
|
1,000,000
|
|
|
200,000 |
|
|
|
400,000 |
|
|
|
500,000 |
|
|
|
600,000 |
|
1,300,000
|
|
|
260,000 |
|
|
|
520,000 |
|
|
|
650,000 |
|
|
|
780,000 |
|
1,600,000
|
|
|
320,000 |
|
|
|
640,000 |
|
|
|
800,000 |
|
|
|
960,000 |
|
1,900,000
|
|
|
380,000 |
|
|
|
760,000 |
|
|
|
950,000 |
|
|
|
1,140,000 |
|
Table II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Aggregate Annual Retirement Benefits |
|
|
Assuming Credited Service of: |
|
|
|
Average Final Compensation |
|
5 Years |
|
10 Years |
|
15 Years |
|
20 Years |
|
30 Years |
|
|
|
|
|
|
|
|
|
|
|
$ 400,000
|
|
$ |
40,000 |
|
|
$ |
80,000 |
|
|
$ |
120,000 |
|
|
$ |
160,000 |
|
|
$ |
240,000 |
|
450,000
|
|
|
45,000 |
|
|
|
90,000 |
|
|
|
135,000 |
|
|
|
180,000 |
|
|
|
270,000 |
|
550,000
|
|
|
55,000 |
|
|
|
110,000 |
|
|
|
165,000 |
|
|
|
220,000 |
|
|
|
330,000 |
|
700,000
|
|
|
70,000 |
|
|
|
140,000 |
|
|
|
210,000 |
|
|
|
280,000 |
|
|
|
420,000 |
|
850,000
|
|
|
85,000 |
|
|
|
170,000 |
|
|
|
255,000 |
|
|
|
340,000 |
|
|
|
510,000 |
|
1,000,000
|
|
|
100,000 |
|
|
|
200,000 |
|
|
|
300,000 |
|
|
|
400,000 |
|
|
|
600,000 |
|
1,300,000
|
|
|
130,000 |
|
|
|
260,000 |
|
|
|
390,000 |
|
|
|
520,000 |
|
|
|
780,000 |
|
1,600,000
|
|
|
160,000 |
|
|
|
320,000 |
|
|
|
480,000 |
|
|
|
640,000 |
|
|
|
960,000 |
|
1,900,000
|
|
|
190,000 |
|
|
|
380,000 |
|
|
|
570,000 |
|
|
|
760,000 |
|
|
|
1,140,000 |
|
Average final compensation under the SEBP is defined as the
highest average annual compensation during five consecutive
12-month periods in the
last 10 consecutive
12-month periods of the
participants credited service. Participants vest in their
accrued retirement benefit upon completion of five years of
service. The benefits shown in the table above are calculated on
a straight-life annuity basis. Amounts shown in the table above
include benefits payable under the Retirement Account, the PBEP,
and U.S. Social Security.
The Retirement Account, together with the PBEP, provides
retirement income based on a percentage of annual compensation.
The percentage of compensation allocated annually ranges from 3%
to 12.5%, based on age and credited service. Amounts allocated
also receive interest credits based on
30-year Treasury
interest rate equivalent with a minimum compounded annual
interest credit rate of 3%.
18
The approximate numbers of years of credited service under the
plans as of December 31, 2005 are as follows:
Mr. Rutherfurd 18;
Mr. McDaniel 19; Ms. Dering
20; and Mr. Goggins 7.
For the purpose of determining retirement benefits, compensation
for a given year consists of the aggregate of salary, wages,
regular cash bonuses, commissions and overtime pay that are paid
to the applicable employee in such year. Severance pay,
contingent payments and other forms of special remuneration are
excluded. Since the Summary Compensation Table above includes
for each year bonuses that are earned in such year but not paid
until the following year, compensation for purposes of
determining retirement benefits varies from that shown in the
Summary Compensation Table.
For the reasons discussed above, compensation for determining
retirement benefits for the named executive officers differed by
more than 10% from the amounts shown in the Summary Compensation
Table. The 2005 compensation for purposes of determining
retirement benefits was as follows:
Mr. Rutherfurd $2,162,180;
Mr. McDaniel $1,640,824;
Ms. Dering $940,368; and
Mr. Goggins $616,316.
Certain Transactions
In May 2005, Ms. Derings spouse, a former employee of
Moodys Investors Service, exercised options to purchase
shares of Common Stock for an aggregate price of $2,786,397,
resulting in a pre-tax gain of $4,273,931. The shares were sold
on the same day the options were exercised, and the transaction
was filed with the SEC on a Form 4. In February 2005,
restrictions lapsed on 1,154 restricted shares of Common Stock
held by Ms. Derings spouse and having an aggregate value
of $49,172. Ms. Derings spouse earned salary and
bonus payments during 2005 totaling $414,113, and participated
in other employee benefit arrangements on terms consistent with
other employees at his level. In connection with the termination
of his employment in May 2005, Ms. Derings spouse
received salary continuation payments totaling approximately
$164,769.
Career Transition Plan
All of the Companys executive officers named in the
Summary Compensation Table above currently participate in the
Companys Career Transition Plan (CTP). The CTP
generally provides for the payment of benefits if an eligible
executives employment terminates by reason of a reduction
in force, job elimination, unsatisfactory job performance (not
constituting cause) or a mutually agreed upon resignation. In
the event of an eligible termination, an executive officer will
be paid 52 weeks of salary continuation (26 weeks if
the executive is terminated by the Company for unsatisfactory
performance), payable at the times the executives salary
would have been paid if employment had not terminated. For this
purpose, salary consists of the executives annual base
salary at the time of termination. In addition, the executive
will receive continued medical, dental and life insurance
benefits during the applicable salary continuation period and
will be entitled to such outplacement services during the salary
continuation period as are being provided by the Company. Except
in the case of a termination by the Company for unsatisfactory
performance, the executive also will receive: (i) a
prorated portion of the actual bonus for the year of termination
that would have been payable to the executive under the annual
bonus plan in which the executive was participating at the time
of termination, provided that the executive was employed for at
least six full months during the calendar year of termination;
(ii) cash payments equal in value to a prorated portion of
any performance-based awards under the
Companys stock incentive plan, provided that the executive
was employed for at least half of the applicable performance
period; and (iii) financial planning/counseling services
during the salary continuation period to the same extent
afforded immediately prior to termination of employment. The CTP
gives the Companys Chairman and CEO the discretion to
reduce or increase the benefits otherwise payable to, or
otherwise modify the terms and conditions applicable to, an
eligible executive under the CTP.
REPORT OF THE GOVERNANCE AND COMPENSATION COMMITTEE
Overview of Executive Compensation Philosophy and Program
The Governance and Compensation Committee establishes the
performance objectives and the compensation of the
Companys key executives, including the Chairman and CEO.
The Committee consists entirely
19
of independent non-employee directors and is chaired by
Dr. McKinnell. The Companys executive compensation
program is designed to:
|
|
|
|
|
provide a competitive total compensation package that will
retain key executives and motivate them to achieve outstanding
performance for the Company; |
|
|
|
link a substantial part of each key executives
compensation to the achievement of the Companys financial
and strategic objectives and to the individuals
performance; and |
|
|
|
align key executives rewards with increases in shareholder
value. |
In establishing compensation of executive officers, the
Committee considers pay levels in a compensation peer group (the
Peer Group) consisting of financial services
companies with market capitalization comparable to the Company,
as well as other factors noted below. The Companys
executive compensation program consists of the following three
components:
|
|
|
|
|
Base Salaries. In setting base salaries, the Committee
evaluates a variety of factors, including competitive pay
levels, scope of responsibilities, individual performance and
prior experience. |
|
|
|
Annual Cash Incentives. Through the annual cash incentive
program, a significant portion of total cash compensation is
at risk and is paid based on both Company and
individual performance against quantitative and qualitative
measures. |
|
|
|
Longer-Term Incentives. Long-term compensation consists
of stock options and restricted stock and is intended to align
executive pay with shareholder value creation. |
Evaluation of Key Executive Performance
Each year, the Governance and Compensation Committee sets
financial and non-financial objectives for the Company and key
executives in discussion with the Chairman and CEO and after a
review by the Board of Directors of the Companys
preliminary annual operating budget. In evaluating the
performance of the Chairman and CEO and other key executives,
the Committee considers the financial performance of the Company
and the performance of the key executives in relation to those
objectives, and also considers other relevant criteria such as
accomplishments of individual executives and of the management
team as a whole. The Committee determines aggregate funding of
the Companys cash incentive program based on the financial
performance of the Company, including the Companys growth
in operating income and earnings per share compared with its
intermediate-term growth targets, and uses discretion in
determining individual cash incentive pay-outs, with the goal of
promoting and rewarding outstanding performance.
The Companys financial performance during 2005 topped our
previous record performance in 2004, with revenue increasing by
20% and operating income by 19% year over year. Diluted earnings
per share for the full year 2005 were 31% higher than the same
period of 2004. These results were above the Companys
current normative targets of low teens percent growth in revenue
and operating income and mid teens growth in earnings per share.
The Company continued to broaden its geographic reach, including
opening Moodys Eastern Europe in Russia together with an
office in India, and increasing to 40% its investment in Midroog
Limited, an Israeli rating agency. The Company also acquired
Economy.com, renamed Moodys Economy.com, a leading
independent provider of economic, financial, country and
industry research, and continued to grow revenues from its new
Market Implied Ratings product. These factors demonstrate
managements success in executing its operating strategy
with regard to new products, geographical expansion and brand
extension by capitalizing on the growth of worldwide capital
markets, including both developed and developing domestic and
cross-border market activity. The Company also successfully
executed its financial strategy to return excess capital to
shareholders while retaining appropriate financial flexibility.
In particular, management implemented an effective share
repurchase strategy and tax strategy, successfully refinanced
its maturing debt, and delivered excellent value to shareholders
during 2005.
Based on these results, and other achievements relevant to
individual performance, the Governance and Compensation
Committee approved the 2005 compensation awards shown in the
Summary Compensation Table.
20
Compensation of the Chief Executive Officer
2005 was a transition year for the Chief Executive Officer
position at the Company, as Mr. Rutherfurd retired in April
and Mr. McDaniel assumed the office.
In determining Messrs. Rutherfurds and
McDaniels 2005 compensation, the Committee considered the
performance of the Company, Messrs. Rutherfurds and
McDaniels individual job performance and Peer Group
compensation data provided by an outside consultant, as well as
the factors noted above under Evaluation of Key Executive
Performance.
Based on Mr. Rutherfurds planned retirement date, the
Committee increased his base salary from $900,000 to
$936,000 per annum effective as of January 3, 2005
through April 30, 2005. Based on the Companys solid
financial results, and Mr. Rutherfurds strong
performance in managing the business and successfully effecting
the transition to the new Chief Executive Officer, the Committee
awarded him a pro-rated cash bonus for 2005 of $552,871.
Based on Mr. McDaniels transition to and formal
assumption of the Chief Executive Officer title on
April 30, 2005, the Committee increased his base salary
from $564,485 to $675,000 per annum effective as of
January 3, 2005. Based on the Companys solid
financial results and Mr. McDaniels strong
performance in managing the business and continuing to implement
its strategy, the Committee awarded him a cash bonus for 2005 of
$1,600,000.
Tax Deductibility
Section 162(m) of the Internal Revenue Code limits income
tax deductibility of compensation in excess of $1 million
paid to the CEO and the four other most highly compensated
individuals serving as executive officers of the Company at the
end of the fiscal year to compensation that is
performance-based as defined under the regulations.
Stock options awarded under the Companys stockholder
approved stock incentive plans are performance-based, and any
amounts required to be included in an executives income
upon the exercise of options do not count toward the
$1 million limitation. For other compensation to be
performance-based under the regulation, it must be contingent on
the attainment of performance goals approved by stockholders,
and the attainment of these goals must be certified by a
committee of the Board which consists entirely of independent
directors.
While the Governance and Compensation Committee generally seeks
to maximize the deductibility of compensation paid to executive
officers, and annual awards under the 2005 Moodys
Corporation Covered Employee Cash Incentive Plan generally
constitute deductible, performance-based compensation, the
Committee intends to retain the flexibility necessary to provide
cash and equity compensation in line with competitive practice,
the Companys compensation philosophy and the
Companys best interests.
The Governance and Compensation Committee
Henry A. McKinnell, Jr., Chairman
Basil L. Anderson
Robert R. Glauber
Ewald Kist
Connie Mack
Nancy S. Newcomb
John K. Wulff
21
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder
return of the Company to the performance of Standard &
Poors Stock 500 Index (the S&P 500) and an
index of performance peer group companies (the Performance
Peer Group).
The Company does not believe there are any publicly traded
companies that represent strict peers. However, each of the
companies in the Performance Peer Group offers business
information products in one or more segments of its business.
The Performance Peer Group consists of Dow Jones &
Company, Inc., The McGraw-Hill Companies, Pearson PLC, Reuters
Group PLC, Thomson Corporation, and Wolters Kluwer nv.
The comparison assumes that $100.00 was invested in Common Stock
and in each of the foregoing indices on December 29, 2000.
The comparison also assumes the reinvestment of dividends, if
any. The total return for the Common Stock was 389% during the
performance period as compared with a total return during the
same period of 3% for the S&P 500, and -22% for the
Performance Peer Group.
COMPARISON OF CUMULATIVE TOTAL RETURN
SINCE DECEMBER 29, 2000
MOODYS CORPORATION, S&P COMPOSITE INDEX AND PEER
GROUP INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/29/00 |
|
12/31/01 |
|
12/31/02 |
|
12/31/03 |
|
12/31/04 |
|
12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Moodys Corporation
|
|
|
100.00 |
|
|
|
156.04 |
|
|
|
162.30 |
|
|
|
238.86 |
|
|
|
344.10 |
|
|
|
489.40 |
|
Peer Group Index
|
|
|
100.00 |
|
|
|
77.57 |
|
|
|
47.94 |
|
|
|
63.27 |
|
|
|
74.61 |
|
|
|
78.32 |
|
S&P Composite Index
|
|
|
100.00 |
|
|
|
88.12 |
|
|
|
68.64 |
|
|
|
88.33 |
|
|
|
97.94 |
|
|
|
102.75 |
|
The comparisons in the graph above are provided in response to
disclosure requirements of the SEC and are not intended to
forecast or be indicative of future performance of the Common
Stock.
22
ITEM 3
STOCKHOLDER PROPOSAL
Mr. Nick Rossi, P.O. Box 249, Boonville, California
95415, the beneficial owner of 1,200 shares of Common Stock
as custodian for Katrina Wubbolding, has given notice of his
intention, through his designee, Mr. John Chevedden, 2215
Nelson Avenue, No. 205, Redondo Beach, California 90278,
and/or Mr. Cheveddens designee, to make the following
proposal at the Annual Meeting.
3 Elect Each Director Annually
RESOLVED: Shareholders request that our Directors take
the necessary steps, in the most expeditious manner possible, to
adopt and implement annual election of each director. This would
include that our director elections completely transition from
the current staggered system to 100% annual election of each
director in one election cycle if practicable. Also to
transition solely through direct action of our board if this is
practicable.
The Safeway 2004 definitive proxy is one example of converting
from a 100% staggered system to a 100% annual election of each
director system in one election cycle. Southwest Airlines began
transition to annual election of each director solely through
direct action by the Southwest Airlines board in 2005.
Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted
this proposal.
66% Yes-Vote
Thirty-three (33) shareholder proposals on this topic
achieved an impressive 66% average yes vote in 2005 through late
September. The Council of Institutional Investors www.cii.org,
whose members have $3 trillion invested, recommends adoption of
this proposal topic.
Progress Begins with One Step
The reason to take the above RESOLVED step is reinforced by
viewing our overall corporate governance vulnerability. For
instance in 2005 it was reported (and corresponding concerns are
noted):
|
|
|
|
|
We had no Independent Chairman or Lead Director
Independent oversight concern. |
|
|
|
Shareholders were only allowed to vote on individual directors
once in
3-years
Accountability concern. |
|
|
|
An awesome 80% shareholder vote was required to make certain key
changes Entrenchment concern. |
|
|
|
Cumulative voting was not permitted. |
|
|
|
Our directors were protected by a poison pill
Accountability concern. |
Additionally:
|
|
|
|
|
Our full Board met only 5-times in a full year
Commitment concern. |
|
|
|
37% of our directors were allowed to hold from 4 to
5 director seats each Over-extension concern. |
|
|
|
Our CEOs personal shareholdings declined over the past
year. |
|
|
|
Our compensation committee had two active CEOs,
Mr. McKinnell from Pfizer, and Mr. Glauber from the
NASD. |
|
|
|
Our company had not reported a formal business ethics code. |
This list of deficiencies reinforces the reason to adopt the
initial RESOLVED statement of this proposal.
23
Our directors should be comfortable with this proposal because
our unopposed directors typically need only one vote for
election out of tens of millions of shares.
Best for the Investor
Arthur Levitt, Chairman of the Securities and Exchange
Commission, 1993-2001 said:
In my view its best for the investor if the entire board
is elected once a year. Without annual election of each director
shareholders have far less control over who represents them.
Take on the Street by Arthur Levitt
Elect Each Director Annually
Yes on 3
Statement of the Board of Directors in Opposition to the
Stockholder Proposal
The Board of Directors unanimously recommends that stockholders
vote AGAINST this proposal.
Under our Certificate of Incorporation, the Board is divided
into three classes with directors elected to staggered
three-year terms. Approximately one-third of the directors stand
for election each year, and a majority of the Board can be
replaced in the course of two annual meetings occurring
approximately one year apart. The Board recognizes that at some
companies a classified board structure may be viewed as reducing
accountability of the Board to stockholders. However, the Board
believes that the Company has demonstrated its ability to
maintain accountability and to enhance stockholder value under
the Companys existing governance structure. In addition,
due to the nature of the Companys business, the Company
benefits from the classified board structure through enhanced
stability and the ability to pursue long-term strategies in a
unique and dynamic economic and regulatory environment.
Increased Stability. Moodys primary business of
assessing and issuing credit ratings depends in part upon
maintaining the confidence of the marketplace and of regulators
that the Companys ratings processes are stable, methodical
and free from improper influence. The Board believes that its
business reputation benefits from stability at the corporate
level and that the classified board structure promotes that
stability by buffering the Company from potential hostile
acquirors or arbitragers that may have only a short-term focus.
The classified board structure does not insulate the Company
from potential acquisitions or changes in the composition of the
Board, and it does not alter the fiduciary responsibility of
directors in responding to any such efforts. Instead, it serves
to ensure that any person seeking to effect a change in control
proceeds at a reasonable pace and either negotiates with the
Board or takes its views to stockholders over a period of at
least two annual meetings.
Improved Long-Term Planning. The nature of the
Companys business and the economic and regulatory
environment in which it operates are unique and constantly
evolving. The Board believes that the continuity made possible
by the classified board structure is essential to the proper
oversight of a company operating in this environment. As a
result of the existing structure, at any given time a majority
of the Companys directors have prior experience as a
Company director and thus solid knowledge of the Companys
complex business and long-term strategy. The Board believes that
experienced directors who are knowledgeable about the
Companys business environment are a valuable resource and
are better positioned to make decisions that are in the best
interests of the Company and its stockholders.
Enhanced Ability to Resist Unfair and Abusive Takeover
Tactics. A classified board structure augments a
boards ability to negotiate the best results for
shareholders in a potential takeover situation. The Board
believes that, when vested with directors such as
the existing Board members who are strongly
committed to enhancing shareholder value, the classified board
structure gives the incumbent directors additional opportunity
to evaluate the adequacy and fairness of any takeover proposal,
negotiate on behalf of all shareholders and weigh alternative
methods of maximizing shareholder value. The Board also believes
that a board whose majority includes members with a historical
perspective of the company is in a better position
24
to recognize and realize appropriate opportunities to enhance
shareholder value. Moreover, although a classified board is
intended to cause a person seeking to obtain control of the
Company to negotiate with the Board, the existence of a
classified board will not prevent a person from accomplishing a
hostile acquisition.
Board Accountability. The Board believes that the
benefits of the current classified board structure do not
compromise the directors accountability to stockholders.
Directors elected to three-year terms are equally accountable to
stockholders as directors elected annually, since all directors
are required to uphold their fiduciary duties to the Company and
its stockholders, regardless of the length of their term of
office. The Board also believes that through the operation of
its existing procedures, including the existence of a director
retirement policy and the addition of several new directors in
recent years, it is able to assure stockholders that its Board
composition is appropriate.
Based on the foregoing, the Board has concluded that the
Companys classified board structure continues to promote
the best interests of the stockholders. The Board of
Directors therefore recommends a vote AGAINST this
stockholder proposal.
OTHER BUSINESS
The Board of Directors knows of no business other than the
matters set forth herein which will be presented at the Annual
Meeting. Inasmuch as matters not known at this time may come
before the Annual Meeting, the enclosed proxy confers
discretionary authority with respect to such matters as may
properly come before the Annual Meeting, and it is the intention
of the persons named in the proxy to vote in accordance with
their best judgment on such matters.
STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
Stockholder proposals which are being submitted for inclusion in
the Companys proxy statement and form of proxy for the
2007 annual meeting of stockholders must be received by the
Company at its principal executive offices no later than
November 22, 2006. Such proposals when submitted must be in
full compliance with applicable laws, including
Rule 14a-8 of the
Exchange Act.
Under the Companys By-Laws, stockholder proposals which
are being submitted other than for inclusion in the
Companys proxy statement and form of proxy for the 2007
annual meeting of stockholders must be received by the Corporate
Secretary of the Company at its principal executive offices no
earlier than January 25, 2007 and no later than
February 14, 2007. Such proposals when submitted must be in
full compliance with applicable law and the Companys
By-Laws. In order for a stockholder proposal submitted outside
of Rule 14a-8 to
be considered timely within the meaning of
Rule 14a-4(c),
such proposal must be received by the Company on or prior to
February 14, 2007.
March 22, 2006
25
Appendix A
MOODYS CORPORATION
AMENDED AUDIT COMMITTEE CHARTER
Purpose
The Audit Committees primary purpose is to represent and
assist the Board of Directors in fulfilling its oversight
responsibilities relating to: (a) the integrity of the
Companys financial statements and the financial
information provided to the Companys shareholders and
others; (b) the Companys compliance with legal and
regulatory requirements; (c) the Companys internal
controls; and (d) the audit process, including the
qualifications and independence of the Companys principal
external auditors (the Independent Auditors) and the
performance of the Companys internal audit function and
the Independent Auditors. The Committee also oversees the
preparation of the report required by the SECs rules to be
included in the Companys annual proxy statement.
Membership and Meetings
The Committee shall be comprised of at least three directors, as
appointed by the Board upon the recommendation of the Governance
and Compensation Committee, including one chairman. Each member
of the Committee shall meet the independence requirements of the
NYSE for directors and audit committee members, and shall be
financially literate, both as determined by the Board. At least
one member of the Committee shall be an audit committee
financial expert, as determined by the Board in accordance
with the rules and regulations of the SEC.
Meetings shall be held at least four times per year and
additional meetings shall be held as needed. The Committee shall
report to the Board on its activities on a regular basis. The
Committee shall meet privately, periodically, with
representatives of the Independent Auditors and the Head of
Internal Audit, and with the Chief Financial Officer, the
Controller, and the Chief Legal Counsel.
To fulfill its duties and responsibilities, the Committee shall
undertake the following:
Financial Reporting
1. The Committee shall review with the Independent Auditors
and internal auditors, the adequacy of the Companys
financial reporting processes, both internal and external.
2. The Committee shall review: (a) the planned scope
and results of audit examinations by the Independent Auditors,
including any difficulties the Independent Auditors encountered
in the course of their audit work, and managements
response; and (b) the scope and results of the internal
audit program.
3. The Committee shall review significant changes in
accounting principles, any significant disagreements between
management and the Independent Auditors and other significant
matters in connection with the preparation of the Companys
financial statements, and shall receive required reports from
the Independent Auditors.
4. The Committee shall: (a) meet to review with
management and the Independent Auditors the Companys
audited financial statements, including reviewing the
Companys specific disclosures under
Managements Discussion and Analysis of Financial
Condition and Results of Operations; (b) discuss with
the Independent Auditors the matters required to be discussed by
Statement of Auditing Standards (SAS) Nos. 61 and
90; and (c) determine whether to recommend to the Board
that the Companys audited financial statements be included
in the Companys Annual Reports on
Form 10-K.
5. The Committee shall meet to review with management and
the Independent Auditors the Companys Quarterly Reports on
Form 10-Q,
including reviewing the Companys specific disclosures
under Managements Discussion and Analysis of
Financial Condition and Results of Operations, and discuss
with the Independent Auditors the matters required to be
discussed by SAS No. 100.
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6. The Committee shall review and discuss earnings press
releases, other press releases related to financial information,
and earnings guidance as appropriate.
Independent Auditors
7. The Committee shall be directly responsible, in its
capacity as a committee of the Board, for the appointment,
compensation, retention and oversight of the work of the
Independent Auditors. In this regard, the Committee shall select
and retain (subject to shareholder ratification), evaluate,
determine funding for, and where appropriate, replace the
Independent Auditors.
8. The Committee shall receive and review, at least
annually, a report by the Independent Auditors describing:
(a) the Independent Auditors internal quality-control
procedures; and (b) any material issues raised by the most
recent internal quality-control review, or peer review, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the Independent Auditors,
and any steps taken to deal with any such issues.
9. The Committee shall oversee the qualifications,
performance and independence of the Independent Auditors by:
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receiving from the Independent Auditors, on a periodic basis, a
formal written statement delineating all relationships between
the Independent Auditors and the Company and containing such
other information as may be required by Independence Standards
Board Standard No. 1; |
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reviewing, and discussing with the Independent Auditors, on a
periodic basis, any disclosed relationships or services (whether
between the Independent Auditors and the Company or otherwise),
including a summary of permissible non-audit services performed
by the Independent Auditors, that may impact the objectivity or
independence of the Independent Auditors and considering, at
least annually, the independence of the Independent
Auditors; and |
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approving in advance all audit and permissible non-audit
services to be provided by the Independent Auditors and
establishing policies and procedures for the pre-approval of
audit and permissible non-audit services to be provided by the
Independent Auditors. |
10. The Committee shall establish policies for the hiring
of employees and former employees of the Independent Auditors.
Evaluation and Charter
11. The Committee shall evaluate its performance annually
and review and reassess the adequacy of this Charter annually.
Compliance
12. The Committee shall receive reports regarding, and
review with the Independent Auditors, internal auditors and
management, the adequacy and effectiveness of: (a) the
Companys internal controls, including any significant
deficiencies in internal controls and significant changes in
internal controls reported to the Committee by the Independent
Auditors or management; and (b) the Companys
disclosure controls and procedures.
13. The Committee shall oversee the Companys
compliance program by reviewing: (a) legal and regulatory
compliance matters; and (b) the Companys policies and
procedures designed to promote compliance with laws,
regulations, and internal policies and procedures, including the
Companys code of conduct. This will be facilitated through
the receipt of reports from management, legal counsel and third
parties.
14. The Committee shall review: (a) the Companys
policies with respect to risk assessment and risk management,
and contingent liabilities and risks that may be material to the
Company; and (b) major
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legislative and regulatory developments which could materially
impact the Company. This will be facilitated through the receipt
of reports from management, legal counsel and third parties.
15. The Committee shall establish and oversee procedures
for the receipt, retention and treatment of complaints received
by the Company regarding accounting, internal accounting
controls and auditing matters, including procedures for
confidential, anonymous submission of concerns by employees
regarding accounting and auditing matters.
16. On an annual basis, the Committee shall review and
discuss with management: (a) the Companys policies
and procedures regarding officers expenses and
perquisites; and (b) a summary of officers expenses
and use of corporate assets.
Outside Advisors
The Committee shall have the power to conduct or authorize
investigations into any matters within the Committees
scope of responsibilities. The Committee shall be empowered to
retain such independent counsel, accountants, or other advisors
as it determines appropriate to assist it in the performance of
its functions, and shall receive appropriate funding from the
Company, as determined by the Committee, for payment of
compensation to any such advisors.
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NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK EASY IMMEDIATE AVAILABLE 24 HOURS A DAY 7 DAYS A WEEK
Dear Stockholder:
Moodys Corporation encourages you to take advantage of convenient ways by which you can vote
your shares. You can vote your shares electronically through the Internet or the telephone. This
eliminates the need to return the proxy card.
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TO VOTE OVER THE INTERNET |
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Log on to the Internet and go to the web site https://www.proxyvotenow.com/mco |
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TO VOTE OVER THE TELEPHONE |
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On a touch-tone telephone, call 1-888-216-1319, 24 hours a day, 7 days a week. |
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Your electronic vote authorizes the named proxies in the same manner as if you marked, signed,
dated and returned the proxy card. If you choose to vote your shares electronically, there is
no need for you to mail back your proxy card. |
THANK YOU FOR VOTING!
1-888-216-1319
CALL TOLL-FREE TO VOTE
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6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6
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Please sign and date below,
detach and return in enclosed
envelope or vote by telephone or
Internet.
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x
Votes must be indicated
(x) in black or blue ink. |
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE NOMINEES, FOR PROPOSAL II AND AGAINST PROPOSAL III.
The Board of Directors recommends a vote FOR its nominees and FOR Proposal II.
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Election of three Class II Directors: |
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FOR
ALL
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WITHHOLD
FOR ALL
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*EXCEPTIONS
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Nominees
for Class II: 01 Ewald Kist, 02 Henry A.
McKinnell, Jr.,
03 John K. Wulff
*(Instructions: To withhold authority to vote for any individual nominee, mark the
Exceptions box and write that nominees name on the following blank line.)
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FOR |
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AGAINST |
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ABSTAIN |
II.
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Ratification of the appointment of independent
registered public accounting firm for 2006.
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The Board of Directors recommends a vote AGAINST Proposal III |
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III. Stockholder proposal to elect each director annually. |
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And, in their discretion, in the transaction of such
other business as may properly come before the Annual
Meeting. |
Please sign exactly as the name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
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Date
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Share Owner sign here
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Co-Owner sign here |
Moodys Corporation
Annual Meeting of Stockholders
April 25, 2006
9:30 a.m.
99 Church Street
New York, New York 10007
MOODYS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD TUESDAY, APRIL 25, 2006
The undersigned hereby appoints Raymond W. McDaniel, Jr., Linda S. Huber and John J. Goggins,
and each of them, as proxies, each with full power of substitution, to represent the undersigned
and vote all the shares of common stock of Moodys Corporation which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on April 25, 2006 at 9:30 a.m., local time,
at the Companys offices at 99 Church Street, New York, New York 10007, and any adjournment or
postponement thereof. The undersigned directs the named proxies to vote as directed on the reverse
side of this card on the specified proposals and in their discretion on any other business which
may properly come before the meeting.
This card also constitutes voting instructions to the Trustee of the Moodys Corporation
Profit Participation Plan to vote, in person or by proxy, the proportionate interest of the
undersigned in the shares of common stock of Moodys Corporation held by the Trustee under the
plan, as described in the Proxy Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE REVERSE
SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS RECOMMENDATIONS. THE NAMED PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN
THIS CARD OR FOLLOW THE APPLICABLE INTERNET OR TELEPHONE VOTING PROCEDURES.
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Mark this box if you plan to attend
the Annual Meeting.
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To change your address, please mark
this box and indicate below.
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MOODYS CORPORATION
P.O. BOX 11067
NEW YORK, N.Y. 10203-0067
To vote by telephone or
Internet, please see the
reverse side of this card.
To vote by mail, please sign
and date this proxy card on
the reverse, tear off at the
perforation and mail
promptly in the enclosed
postage-paid envelope.