MSCI Inc. Corporate Governance Policies
Adopted November 12, 2007
As Amended November 1, 2011 and April 30, 2013
The Board seeks members who combine a broad spectrum of experience and expertise with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility, be leaders or senior managers in the companies or institutions with which they are or were affiliated and be selected based upon contributions they can make to the Board and management and their ability to represent the interests of shareholders. The Board will also take into account diversity of a candidate's perspectives, background, and other demographics.
The Nominating and Corporate Governance Committee has, as one of its responsibilities, the recommendation of director candidates to the full Board after receiving input from all directors, including the Chairman.
The Board should establish subjective and objective performance criteria at the beginning of each year for use in formal evaluations of the Chairman. The Compensation Committee conducts the evaluation of the Chairman in the context of its review of the Company's performance in meeting its priorities for purposes of awarding compensation. The Compensation Committee chair reports to the Board on the evaluation in a Non-Employee Director Session.
The Nominating and Corporate Governance Committee will lead the Board in a self-evaluation to determine whether it and its committees are functioning effectively. The performance of the Board and the Nominating and Corporate Governance, Audit and Compensation Committees shall also be evaluated each year. Comments regarding individual directors that arise during these evaluations will be directed for their consideration to the Chairman and to the Chairman of the Nominating and Governance Committee.
The Board should have a significant majority of independent directors meeting the independence requirements of the New York Stock Exchange.
The Board believes that directors should not stand for election following their seventy-second birthday.
The Board expects a director who changes his or her present job responsibility to so advise, and to offer to tender his or her resignation to, the Chairman. The Chairman should refer the matter to the Nominating and Corporate Governance Committee for review with the Chairman's recommendation. The Committee should evaluate the facts and circumstances and recommend to the Board whether to seek and accept the director's resignation. The Board expects directors to consult with the Chairman (or the Nominating and Corporate Governance Committee) on special circumstances.
Executive Sessions are those sessions that only include directors. Non-Employee Director Sessions are those sessions that include only non-employee directors. Independent Director Sessions are sessions that include only independent directors.
Non-employee directors may meet in Non-Employee Director or Committee Sessions at the discretion of the non-employee directors. Such sessions are not required except on the occasion of the annual evaluation of the Chairman. If any non-employee directors are not independent, then the independent directors shall schedule an Independent Director Session at least once per year. The Lead Director has the authority to call, and shall lead, Non-Employee Director and Independent Director Sessions; provided that so long as the Lead Director is not an independent director, the independent directors shall appoint an independent director to call and lead the Independent Director Sessions. The Lead Director, and so long as the Lead Director is not an independent director, the independent directors, may retain independent legal, accounting or other advisors in connection with these sessions, and the Company shall provide appropriate funding.
The Board expects the Chairman to offer to resign upon retirement. There may be circumstances where the Board's policy to accept the resignation would not apply, including to accommodate the transition for the new Chairman or where the current Chairman cedes the title of Chief Executive Officer to another individual.
The Board believes that officers other than the Chairman who are also directors should resign immediately from the Board when they retire from or leave active Company employment or change positions. In any event, they should resign from the Board at age 65.
The Company's Bylaws state that the Chairman of the Board, may, but need not be, a person other than the Chief Executive Officer of MSCI.
The Board maintains Audit, Compensation, Nominating and Governance Committees. The Audit, Compensation and Nominating and Corporate Governance Committees shall consist solely of independent directors. The Board also may maintain additional committees to facilitate discharging its responsibilities. Before establishing any additional committee, the Board shall consider whether the membership of the committee should be limited solely to independent directors.
The Board generally favors the periodic rotation of Committee assignments and Committee chair positions, but also recognizes that at times it may not be in the best interest of the Company to change a Committee assignment or chair position, such as when a director has special knowledge or experience. It is expected that Committee chairs will serve approximately 4-6 years on average in order to facilitate rotation of Committee chairs while preserving experienced leadership.
The Chairman should regularly consult with Committee chairs to obtain their insights and to optimize Committee performance. The Committee chairs, in consultation with the Chairman, Chief Financial Officer and General Counsel, should establish the frequency and length of Committee meetings.
The Committee chairs, working with the Chairman, should establish Committee agendas for the year. All standing Committees should meet regularly during the year and receive reports from Company personnel on developments affecting the Committees' work.
The Chairman, in consultation with members of the Board, should establish the agendas and schedules for Board meetings. The Lead Director shall advise the Chairman regarding Board meeting agendas and as to the appropriate schedule of Board meetings and may request inclusion of additional agenda items.
The Board believes it is critical for members to have materials on topics to be discussed sufficiently in advance of meeting dates and for Board members to be kept abreast of developments between Board meetings. The Company regularly informs Board members of Company and competitive developments and distributes, in advance, written materials for use at Board meetings. The Lead Director shall advise the Chairman of the Board's informational needs.
The Board believes that attendance of key executive officers augments the meeting process. The Company's Chief Financial Officer and General Counsel regularly attend all scheduled Board meetings. The Chairman encourages these persons to respond to questions posed by Board members relating to their areas of expertise. Such persons do not attend Executive Sessions, Non-Employee Director Sessions or Independent Director Sessions, either of the Board or any Committee thereof, unless requested.
The Board also believes that heads of the Company's business units and other officers can assist the Board with its deliberations and provide critical insights and analysis, particularly when the Board hears presentations on the business plan for the upcoming year. Attendance of such persons allows the most knowledgeable and accountable persons to communicate directly with the Board. It also provides the Board direct access to individuals critical to the Company's succession planning.
Board members have complete and open access to senior members of management. The Company's practice is to have the heads of business units present their annual plan to the Board for review and approval. The Chairman invites key employees to attend Board sessions at which the Chairman believes they can meaningfully contribute to Board discussion.
The Compensation Committee recommends director compensation and benefits to the full Board. In discharging this duty, the Committee shall be guided by three goals: compensation should fairly pay directors for work required in a company of MSCI s size and scope; compensation should align directors interests with the long-term interests of shareholders; and the structure of the compensation should be easy for shareholders to understand. The Board believes that total compensation should include a significant equity component because it believes that this more closely aligns the long-term interests of directors with those of shareholders and provides a continuing incentive for directors to foster the Company's success.
The Board's optimum size is 3 to 15.
The Board believes that it will be in the best interest of the Company for the independent directors to appoint a Lead Director. The Lead Director shall be appointed annually.
The Lead Director shall preside at all meetings of the Board at which the Chairman is not present, and shall have the authority to call, and will lead, Non-Employee Director Sessions and, when the Lead Director is an independent director, Independent Director Sessions. The Lead Director shall help facilitate communication between the Chairman and the Non-Employee and Independent Directors. The Lead Director shall advise the Chairman of the Board's informational needs, shall advise the Chairman regarding Board meeting agendas and as to the appropriate schedule of Board meetings and may request inclusion of additional agenda items. The Lead Director will be available, if requested by major shareholders, for consultation and direct communication.
The Board has established these guidelines to assist it in determining whether or not directors qualify as independent pursuant to the guidelines and requirements set forth in the New York Stock Exchange's Corporate Governance Rules. No director will qualify as independent unless the Board affirmatively determines that the director has no material relationship with MSCI (either directly or as a partner, shareholder or officer of an organization that has a relationship with MSCI). In each case, the Board will broadly consider all relevant facts and circumstances and shall apply the following standards (in accordance with the guidance, and subject to the exceptions, provided by the New York Stock Exchange in its Commentary to its Corporate Governance Rules and, with respect to the guidelines in Section 1 below, subject to the applicable Transition Rule set forth in such Rules):
Employment and commercial relationships affecting independence.
- Current Relationships. A director will not be independent if: (i) the director is a current partner or current employee of MSCI's internal or external auditor; (ii) an immediate family member of the director is a current partner of MSCI's internal or external auditor; (iii) an immediate family member of the director is a current employee of MSCI s internal or external auditor and Personally works on MSCI's audit or assurance or tax compliance matters; (iv) the director is a current employee, or an immediate family member of the director is a current executive officer, of an entity that has made payments to, or received payments from, MSCI for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues; v) the director is an employee of MSCI or an immediate family member of the director is an executive officer of MSCI; or (vi) an MSCI executive officer is on the compensation committee of the board of directors of a company that employs the MSCI director or an immediate family member of the director as an executive officer.
- Relationships within Preceding Three Years. A director will not be independent if, within the preceding three years: (i) the director or an immediate family member was an executive officer of MSCI; (ii) the director or an immediate family member of the director was a (a) partner or employee of MSCI's internal or external auditor and (b) personally worked on MSCI s audit within that time; (iii) the director or an immediate family member of the director received more than $120,000 in direct compensation in any twelve-month period from MSCI, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); or (iv) an MSCI executive officer was on the compensation committee of the board of directors of a company that concurrently employed the MSCI director or an immediate family member of the director as an executive officer.
Compensation Committee Members. In addition to the provisions of Section 1. A and B above, in determining the independence of any director who will serve on MSCI’s Compensation Committee, the Board will consider all factors specifically relevant to determining whether such director has a relationship with MSCI which is material to that director’s ability to be independent from management in connection with the duties of a Compensation Committee member, including, but not limited to: (i) the source of the compensation of such director, including any consulting, advisory or other compensatory fee paid by MSCI and (ii) whether such director is affiliated with MSCI or any of its subsidiaries or affiliates.
Relationships not deemed material for purposes of director independence.
In addition to the provisions of Section 1 above, each of which must be fully satisfied with respect to each independent director, the Board must affirmatively determine that the director has no material relationship with MSCI. To assist the Board in this determination, and as permitted by the New York Stock Exchange's Corporate Governance Rules, the Board has adopted the following categorical standards of relationships that are not considered material for purposes of determining a director's independence. Any determination of independence for a director that does not meet these categorical standards will be based upon all relevant facts and circumstances and the Board shall disclose the basis for such determination in the Company's proxy statement.
Equity Ownership. A relationship arising solely from a Director's ownership of an equity or limited partnership interest in a party that engages in a transaction with MSCI, so long as such director's ownership interest does not exceed 5% of the total equity or partnership interests in that other party.
- Other Directorships. A relationship arising solely from a director's position as (i) director or advisory director (or similar position) of another company or for-profit corporation or organization that engages in a transaction with MSCI or (ii) director or trustee (or similar position) of a tax exempt organization that engages in a transaction with MSCI (other than a charitable contribution to that organization by MSCI).
- Ordinary Course Business. A relationship arising solely from transactions (including, but not limited to, providing data or other products or services to MSCI or licensing products or services from MSCI), between MSCI and a director or company of which a director is an executive officer, employee or owner of 5% or more of the equity of that company, if such transactions are made in the ordinary course of business and on terms and conditions and under circumstances that are substantially similar to those prevailing at the time for comparable transactions, products or services for or with unaffiliated third parties.
- Indebtedness. A relationship arising solely from a director's status as an executive officer, employee or owner of 5% or more of the equity of a company to which MSCI is indebted at the end of MSCI's preceding fiscal year, so long as the aggregate amount of the indebtedness of MSCI to such company is not in excess of 2% of MSCI's total consolidated assets at the end of MSCI s preceding fiscal year.
- Charitable Contributions. A relationship arising solely from a director's status as an officer, employee, director or trustee of a tax exempt organization, and the discretionary charitable contributions by MSCI (directly or through any foundation or similar organization established by MSCI) to the organization are less than the greater of 1 million or 2% of the organization s consolidated gross revenues (as such term is construed by the automaticNew York Stock Exchange for purposes of Section 303A.02(b)(v) of the Corporate Governance Standards). Automatic matching of employee charitable contributions are not included in MSCI's contributions for this purpose.)
- Professional, Social and Religious Organizations and Educational Institutions. A relationship arising solely from a Director's membership in the same professional, social, fraternal or religious association or organization, or attendance at the same educational institution, as an executive officer.
- Family Members. Any relationship or transaction between an immediate family member of a director and MSCI shall not be deemed a material relationship or transaction that would cause the director not to be independent if the standards in this Section 2 would permit the relationship or transaction to occur between the director and MSCI.
The Chairman of the Board or the Chairman of the Nominating and Governance Committee should extend the invitation.
The Board does not favor term limits for directors, but believes that it is important to monitor individual director performance.
The Compensation Committee oversees plans for management development and succession.
Senior Company executives serving on the Executive Committee should evaluate, nominate and compile a succession plan for their areas of responsibility that should be reviewed with the Chairman. Each plan should include policies regarding succession in the event of an emergency. The Chairman should provide input on each succession plan and discuss the plans with the Compensation Committee. The Chairman reviews with the Compensation Committee succession planning for his successor at least annually. The Compensation Committee periodically reviews with the Board succession plans for the Chairman and the areas of responsibility for senior executives serving on the Executive Committee. Succession planning should include policies and principles for Chairman and CEO selection and performance review, as well as policies regarding succession in the event of an emergency or the retirement of the Chairman or CEO.
The Board believes that under ordinary circumstances, management speaks for the Company and the Chairman speaks for the Board. Individual Board members may, from time to time, meet with or communicate with various constituencies that are involved with the Company. It is expected that Board members would do this with the knowledge of management and, in most instances, at the request of management. The Lead Director should be available, if requested by major shareholders, for consultation and direct communication.
The Board strongly supports the one share/one vote concept and opposes cumulative voting. It opposes the ability of a single investor or group of investors to band together to achieve a goal, such as the election of a director, which is not supported by a majority of the Company's shareholders.
For purposes of this paragraph, non-employee directors are directors of the Company who are not employees of the Company or any of its affiliates. Non-employee directors are able to elect to receive all or a portion of their cash retainers in the form of stock of the Company. In addition, when non-employee directors are first elected to the Board, and at each subsequent annual meeting, they are entitled to receive an annual grant of $90,000 ($115,000 for the Lead Director) in stock units which are subject to vesting as described below. Grants will be made immediately following each regularly scheduled annual shareholder meeting. If a director joins the Board of Directors at any time other than the annual shareholder meeting, the equity grant will be prorated and made at the time of such director joining the Board of Directors. Stock units granted in connection with annual meetings would become fully vested and convert on the first anniversary of the grant date. These opportunities and incentives help align non-employee directors' interests with shareholders' interests.
Non-employee directors are required to maintain an annual target level of ownership of the number of shares equal to the sum of the stock units granted to such non-employee director on the date of each of the three prior annual shareholders' meetings. Shares counted toward these guidelines include any shares held by the director directly or indirectly and stock units. These guidelines become effective on the date of the 2013 annual shareholders' meeting.
The Board opposes repricing of incentive based options by a reduction in the option s exercise price. The Board favors equitable adjustment of an option's exercise price in connection with a reclassification of the Company's stock; a change in the Company's capitalization; a stock split; a restructuring, merger, or combination of the Company; or other similar events in connection with which it is customary to adjust the exercise price of an option and/or the number and kind of shares subject thereto. The Board opposes the future grant of a stock option reload feature pursuant to which, upon tendering of shares of common stock to pay the exercise price of an underlying option, or having shares of common stock withheld to pay taxes due upon the exercise of an option, the optionee receives a new option to acquire the number of shares of common stock tendered or withheld.
The Board believes that the Company should not enter into paid consulting arrangements with non-employee directors.
Directors shall not serve on the board of more than six (6) public companies, including MSCI.
The General Counsel and Chief Financial Officer shall be responsible for providing an orientation program for new directors. Orientation shall include personal briefing by senior management on the Company's strategic plans, its financial statements and its key policies and practices. The General Counsel and Chief Financial Officer shall make available to continuing directors the opportunity to attend educational sessions on subjects that would assist them in discharging their duties. The Company will reimburse directors for reasonable costs incurred attending these sessions.
The Board and its Committees shall have the right at any time to retain independent outside financial, legal or other advisors.
Directors are expected to exercise their business judgment to act in good faith, on an informed basis and in what they reasonably believe to be the best interest of the Company and its shareholders. Directors are expected to attend the meetings of the Board and the committees on which they serve and to review in advance materials distributed before the meeting.
The Board believes that director attendance at shareholder meetings is appropriate and can assist directors in carrying out their duties. When directors attend shareholder meetings, they are able to hear directly shareholder concerns regarding the Company. The Board expects that directors will attend annual shareholder meetings.
The Board expects that an incumbent director who fails to receive a majority of the votes cast in an election that is not a Contested Election (as defined in the Company's Bylaws) and who tenders his or her resignation pursuant to the Company's Bylaws shall not participate in any proceedings by the Board or any committee thereof regarding whether to accept or reject such director's resignation or whether to take other action with respect to such director.
The Board may amend these Policies from time to time.
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