UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Securities Exchange Act of 1934 (Amendment No. )
| ☑ | Filed by the Registrant | ☐ | Filed by a party other than the Registrant | ||||||||
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☐ | Preliminary Proxy Statement | ||||
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
☑ | Definitive Proxy Statement | ||||
☐ | Definitive Additional Materials | ||||
☐ | Soliciting Material under §240.14a-12 | ||||
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY): | |||||
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☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | ||||
| 2023 PROXY STATEMENT | 3 | ||||||||||
 | Letter from our Chairman and CEO | |||||||
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 Our 2022 performance reflects the trust our clients place in us to help them navigate an increasingly complex investment landscape. During periods of global turmoil, investors become even more reliant on high-quality data, models, analytics and research to help them understand market changes. | ||||||||
Dear fellow shareholders,
First and foremost, thank you for your continued support of MSCI Inc. (“MSCI” or the “Company”). Our 2022 results highlight the dedication of our employees and the ongoing confidence our clients have in our ability to support them.
Delivering Results
Despite elevated levels of market volatility and a global bear market, we had another highly successful year and delivered strong performance. While the external environment created headwinds, our businesses performed well through difficult operating conditions. We achieved recurring subscription revenue growth of 16% and adjusted EPS1 growth of 15%, each compared against the prior year. We also delivered a record full-year retention rate of 95.2%.
Our 2022 performance reflects the trust our clients place in us to help them navigate an increasingly complex investment landscape. During periods of global turmoil, investors become even more reliant on high-quality data, models, analytics and research to help them understand market changes. In 2022, we provided tools our clients needed to navigate a series of economic and financial disruptions following Russia’s invasion of Ukraine, historically high inflation, rising interest rates and other geopolitical and economic developments.
Amid external challenges, MSCI remains focused on maintaining investments to support our long-term ambitions. In 2022, we took proactive and meaningful efficiency actions to preserve resources for
key growth areas. We believe these actions will help us emerge stronger and continue thriving against challenging backdrops, supported by the strength of our all-weather franchise.
Expanding ESG and Climate Solutions
Even as the political debate over ESG gets louder, ESG integration remains a key business priority across industries. The reality is that ESG-related risks are financial risks, and our ESG and Climate solutions help our clients integrate ESG-related risks into their investment processes to make better informed decisions. These conclusions are reinforced by client demand for our ESG solutions, which stayed strong in 2022.
As for climate risks in particular, they have become increasingly visible around the world, as countries suffer from significant climate events. MSCI continues to take a leading position with our climate-related investment tools, and climate was our fastest-growing area in 2022. Our climate tools can help market participants assess the carbon impact of different investments, set better baselines for emissions targets and improve climate reporting.
Last year we launched a number of exciting new climate solutions, including MSCI Climate Action Indexes and a tool for banks to measure and report on ESG and climate-related risks pursuant to the European Banking Authority’s ESG Pillar 3 prudential framework. We also introduced Total Portfolio Footprinting, which helps financial institutions better understand the extent and impact of greenhouse-gas
emissions at companies they are financing.
Enhancing our Data and Technology
Data and technology are key enablers of MSCI’s growth strategy, and our ongoing tech-driven data transformation is helping us enhance both our solutions and the broader client experience. In 2022, we expanded our strategic partnership with Microsoft to support our new MSCI ONE technology platform, which is built on Microsoft Azure. More recently, we announced a strategic partnership with Google Cloud to build a financial data acquisition and development platform. This new platform will make it easier for MSCI and our clients to process data at scale and turn data into actionable insights.
We Ask for Your Support
Your vote is very important to us. We strongly encourage you to read both our Proxy Statement and our 2022 Annual Report on Form 10-K in their entirety, and we ask that you support our recommendations. We sincerely appreciate your continued support of MSCI, and we look forward to the 2023 Annual Meeting.
Sincerely,
HENRY A. FERNANDEZ
Chairman, Chief Executive Officer
and Shareholder
March 15, 2023
and Shareholder
March 15, 2023
1Adjusted EPS is a non-GAAP financial measure. See Annex B for definitions and reconciliations of all non-GAAP financial measures referenced herein.
4 | MSCI | |||||||||||||||||||
| Letter from our Independent Lead Director | |||||||
 | ||||||||
The Board’s role is critical in overseeing MSCI’s strategy, and we continue to work closely with management on matters regarding the business, its performance and its long-term outlook. | ||||||||
Dear fellow shareholders,
The independent directors of MSCI and I join Henry in inviting you to attend our Company’s 2023 Annual Meeting. It is a privilege to continue to serve as your independent Lead Director. As our 2023 Annual Meeting approaches, I am pleased to have this opportunity to update you on the Board’s priorities and work during the past year.
Board Culture
One of the hallmarks of the MSCI Board is a culture of open dialogue, rigorous debate and sustained engagement with management. We communicate with each other and with MSCI’s senior leaders with candor in order to fulfill our responsibility to exercise prudent, independent judgement and provide effective oversight. We invite a significant number of our senior leaders into the Board room, we regularly request and receive deep-dive sessions on matters of importance, and we thoroughly assess ourselves and our performance as a Board. We also regularly invite our shareholders and our clients into the Board room to ensure that we are hearing feedback from some of our most important stakeholders. We believe this level of depth is necessary to operate on your behalf to position MSCI to create long-term value.
Refreshment
Our Board takes an active role in Board succession planning, is committed to regular Board refreshment and works to ensure a Board with a diversity of experiences, perspectives and skills. This year, we are pleased to announce the nominations of Robin Matlock and Baer Pettit for election to the Board at our 2023 Annual Meeting. Robin was most recently the Chief Marketing Officer of VMware and is a seasoned marketing and technology executive with over three decades of experience in digital business transformation and go-to-market execution. She has brought to the Board a keen focus on how we communicate our value proposition to our clients and our broader stakeholder community.
As MSCI’s President and Chief Operating Officer, Baer brings to the Board tremendous expertise and operational insights. The Board has interacted extensively with Baer over his long tenure at MSCI, and we believe his contributions will strengthen the Board’s effectiveness in its oversight of MSCI’s business and long-term strategy. These appointments in 2022 and 2023 were informed by the Board’s continued focus on refreshment and its commitment to maintain a
composition that aligns with MSCI’s strategic priorities.
Shareholder Engagement
The Board values the perspectives of MSCI’s shareholders, who have placed their trust in MSCI and its Board. In particular, the Board believes that candid and specific feedback from its shareholders enhance MSCI’s corporate responsibility practices. In 2022, members of the Board had the opportunity to engage with top shareholders representing approximately 40% of our shares outstanding and were pleased to receive positive feedback on MSCI’s corporate responsibility efforts. During these engagements, we discussed MSCI’s strategy and addressed a wide range of corporate responsibility topics, such as climate commitments, corporate governance, and a range of human capital management issues, including diversity, equity and inclusion, employee engagement and senior talent progression. Shareholder feedback continues to directly inform the Board’s oversight on a variety of important matters, and this Proxy Statement includes discussion of updates we have made in response to our ongoing dialogue with our shareholders.
| 2023 PROXY STATEMENT | 5 | ||||||||||
Executive Compensation
Another key topic of discussion with shareholders was our executive compensation and the Compensation, Talent and Culture Committee’s incorporation of a new equity vehicle within our long-term equity incentive program: performance stock options that are earned and vest based on the achievement of revenue and adjusted EPS, each measured over a cumulative three-year performance period. We believe the inclusion of performance stock options reinforces MSCI’s strategic and operational priorities and the cumulative revenue and adjusted EPS metrics complement the total-shareholder-return metrics in other parts of the long-term equity incentive program. We also shared with shareholders other enhancements we made in 2022, including updating the Company’s share ownership and retention guidelines for senior management to provide for even more rigorous requirements. These changes reflect our ongoing efforts to ensure long-term alignment with shareholders and to instill an owner-operator mindset in our senior leaders.
Environmental Sustainability
This year, we announced new and updated climate targets to demonstrate our commitment to
reducing our emissions. Specifically, MSCI reaffirmed its commitment to reach net-zero emissions across the value chain before 2040 and enhanced its science-based near-term, long-term and net-zero emissions reduction targets, each of which have been approved by the Science Based Targets initiative (SBTi). MSCI is proud to be in the first group of companies to receive approval for its carbon-reduction targets from SBTi, a global body enabling businesses to set emissions reduction targets in line with the latest climate science. While our trajectory for emissions reduction will not be fully linear and will evolve over time to align with the latest science, technology and data, the Board will work with management to provide transparent reporting of our progress, including against the enhanced targets we set in 2022. In this area and others, we remain committed to providing transparency on our efforts.
Strategy and Risk
The Board’s role is critical in overseeing MSCI’s strategy, and we continue to work closely with management on matters regarding the business, its performance and its long-term outlook. This was of particular importance in 2022, as MSCI and the world addressed new macroeconomic and geopolitical
developments that led to a more complex investment and operating landscape. In particular, the Board, through its Audit and Risk Committee, receives quarterly updates on enterprise risk and information technology risk developments, and in 2022 the full Board received specific updates, among others, on technology and cybersecurity infrastructure, technology and data partnerships, research and product development, and regulatory developments relevant to our business and industry.
On behalf of my fellow independent directors and the entire Board, thank you for your continued support. We appreciate the opportunity to serve MSCI on your behalf in 2023 and beyond. We look forward to hearing your views at the 2023 Annual Meeting and through our ongoing engagement.
Sincerely,
ROBERT G. ASHE
Independent Lead Director
and Shareholder
March 15, 2023
Independent Lead Director
and Shareholder
March 15, 2023
6 | MSCI | |||||||||||||||||||
| Notice of Annual Meeting of Shareholders | ||||
Annual Meeting Proposals and Voting Recommendations | |||||||||||||||||
 DATE AND TIME APRIL 25, 2023 (Tuesday) 2:30 P.M., EASTERN TIME  LOCATION Attend the virtual meeting, including to vote and/or submit questions via the internet through a virtual web conference at: www.virtualshareholder meeting.com/MSCI2023  RECORD DATE MARCH 1, 2023 | |||||||||||||||||
| 1 | Election of Directors | “FOR” each nominee  SEE PAGE 18 | |||||||||||||||
| 2 | Advisory Vote to Approve Executive Compensation (Say-on-Pay) | “FOR” SEE PAGE 56 | |||||||||||||||
| 3 | Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation | “1 YEAR” SEE PAGE 95 | |||||||||||||||
| 4 | Ratification of the Appointment of MSCI’s Independent Auditor | “FOR” SEE PAGE 99 | |||||||||||||||
The 2023 annual meeting of shareholders (the “2023 Annual Meeting”) will commence at 2:30 P.M., Eastern Time. Online check-in will be available beginning at 1:30 P.M., Eastern Time. Please allow ample time for the online check-in process. To participate in the 2023 Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card or on any additional voting instructions that accompanied your proxy materials. A webcast replay of the 2023 Annual Meeting will also be made available on our Investor Relations website (https://ir.msci.com). If you are a beneficial shareholder, your broker will not be able to vote your shares with respect to any of the matters presented at the meeting, other than the ratification of the selection of our independent registered public accounting firm, unless you give your broker specific voting instructions. We will mail the Notice of Internet Availability of Proxy Materials on or about March 15, 2023. The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be used to vote your shares. | How to Vote Whether or not you plan to attend our 2023 Annual Meeting, it is important that you vote as soon as possible to ensure that your shares are represented.  INTERNET www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 24, 2023. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.  TELEPHONE 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 24, 2023. Have your proxy card in hand when you call and then follow the instructions.  MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the 2023 Annual Meeting to be held on April 25, 2023. This Proxy Statement and our 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are available without charge at www.proxyvote.com. Information contained on such website is not incorporated by reference into this Proxy Statement or any other report we file with the Securities and Exchange Commission (the “SEC”). | |||||||||||||||||
| 2023 PROXY STATEMENT | 7 | ||||||||||
| Table of Contents | ||||
NOTE ON FORWARD-LOOKING STATEMENTS This Proxy Statement and statements and reports that are referenced in this Proxy Statement contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to future events and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond MSCI’s control and that could materially affect our actual results, levels of activity, performance or achievements. Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in the MSCI 2022 Annual Report on Form 10-K filed with the SEC on February 10, 2023 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Statements and reports on our website or other websites that we refer to in this Proxy Statement will not be deemed a part of, or otherwise incorporated by reference in, this Proxy Statement or any other report we file with the SEC. Some of the statements and reports contain cautionary statements regarding forward-looking information that should be carefully considered. Our statements and reports about our objectives may include statistics or metrics that are estimates, make assumptions based on developing standards that may change, and provide aspirational goals that are not intended to be promises or guarantees. Inclusion of metrics or other information in such reports is not intended to imply that such information is material to MSCI. Any forward-looking statement in this Proxy Statement and statements and reports that are referenced in this Proxy Statement reflect MSCI’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to MSCI’s operations, results of operations, growth strategy and liquidity. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law. | ||
8 | MSCI | |||||||||||||||||||
| Proxy Summary | ||||
This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
MSCI at a Glance MSCI Inc. trades under the symbol “MSCI” on the New York Stock Exchange (“NYSE”) and as of March 1, 2023 had a market capitalization of $41.3 billion. | We are a leading provider of critical decision support tools and solutions for the global investment community. Strategic Pillars of Growth | |||||||||||||||||||||||||
As of December 31, 2022, we employed 4,759 people and served over 6,600 clients in more than 95 countries. | Extend leadership in research-enhanced content across asset classes | Expand solutions that empower client customization | ||||||||||||||||||||||||
Lead the enablement of ESG and climate investment integration | Strengthen client relationships and grow into strategic partnerships with clients | |||||||||||||||||||||||||
Enhance distribution and content-enabling technology | Execute strategic relationships and acquisitions with complementary content and technology companies | |||||||||||||||||||||||||
Our mission-critical offerings help investors address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our knowledge of the global investment process and our expertise in research, data and technology, we enable our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more effective portfolios. | ||||||||||||||||||||||||||
| Addressing all Participants in the Investment Process | ||||||||||||||||||||||||||
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Providers of Capital Enabling asset owners and managers to make better investment decisions and build better portfolios | Users of Capital Enabling corporates and others to understand ESG and climate risks, benchmark against peers and inform engagement with shareholders | Financial Intermediaries Enabling banks, broker dealers, exchanges, custodians and others to improve the investment process with more transparency | ||||||||||||||||||||||||
| 2023 PROXY STATEMENT | 9 | ||||||||||
Strong Financial Performance
In 2022, we continued to execute a focused strategy to accelerate growth, improve efficiency and attract the best talent. Our strong results reflect our commitment to building long-term shareholder value.
Financial highlights for the year ended December 31, 2022 include the following:
2022 Financial Highlights
OPERATING REVENUES (in millions except percentages) | OPERATING EXPENSES / ADJUSTED EBITDA EXPENSES* (in millions except percentages) | |||||||||||||||||||
 | ||||||||||||||||||||
 | ||||||||||||||||||||
DILUTED EPS / ADJUSTED EPS* (unaudited) | CASH FROM OPERATING ACTIVITIES / FREE CASH FLOW* (in millions except percentages) | |||||||||||||
 |  | |||||||||||||
* MSCI has presented supplemental non-GAAP financial measures as part of this Proxy Statement. Definitions of each non-GAAP measure and a reconciliation of each non-GAAP financial measure with the most comparable GAAP measure are set forth in Annex B. The non-GAAP financial measures presented in this Proxy Statement should not be considered as alternative measures for the most directly comparable GAAP financial measures. The non-GAAP financial measures presented in this Proxy Statement are used by management to monitor the financial performance of the business, inform business decision making and forecast future results.
10 | MSCI | Proxy Summary | |||||||||||||||||||
Our Capital Allocation Program
~$4.5 billion Capital returned in the last five years (as of December 31, 2022) (includes dividends) | ~12.5 million Shares repurchased in the last five years (as of December 31, 2022) | ~20.2 percent 2022 increase in quarterly per-share dividend from $1.04 quarterly to $1.25 quarterly | ||||||
Capital Optimization Activities in 2022
•Increased regular quarterly cash dividend by approximately 20.2% to $1.25 per share, representing $5.00 per share on an annualized basis (subsequently increased to $1.38 in 2023).
•Repurchased approximately 2.7 million shares of our common stock at an average price of $470.68 per share for a total value of $1.28 billion.
•Extended the term of our existing Revolving Credit Facility to February 2027.
•Entered into an aggregate of $350.0 million of term loans under a new Term Loan A Credit Facility, which matures in February 2027.
Total Shareholder Return
The following graph compares the cumulative total shareholders’ return (“TSR”) of our common stock, the Standard & Poor’s 500 Stock Index, the NYSE Composite Index and the MSCI USA Financials Index since December 31, 2012 assuming an investment of $100 at the closing price of each respective investment on December 31, 2012. In calculating annual TSR, we have assumed the reinvestment of dividends, if any. The indexes are included for comparative purposes only. They do not necessarily reflect management’s opinion that such indexes are an appropriate measure of the relative performance of our common stock. The MSCI USA Financials Index is an index operated by MSCI.
COMPARISON OF CUMULATIVE TEN YEAR TOTAL RETURN | ||
 | MSCI Inc. |  | S&P 500 Index |  | NYSE Composite Index |  | MSCI USA Financials Index | ||||||||||||||||
 | |||||||||||||||||||||||
The above graph is not “soliciting material,” is not to be deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Company Name/Index | 12/31/12 | 12/31/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | ||||||||||||||||||||||||
| MSCI Inc. | $ | 100.00 | $ | 141.08 | $ | 153.70 | $ | 236.72 | $ | 261.86 | $ | 425.86 | $ | 502.30 | $ | 890.04 | $ | 1,552.10 | $ | 2,144.05 | $ | 1,643.72 | |||||||||||||
| S&P 500 Index | $ | 100.00 | $ | 132.39 | $ | 150.51 | $ | 152.59 | $ | 170.84 | $ | 208.14 | $ | 199.01 | $ | 261.68 | $ | 309.82 | $ | 398.76 | $ | 326.54 | |||||||||||||
| NYSE Composite Index | $ | 100.00 | $ | 126.28 | $ | 134.81 | $ | 129.29 | $ | 144.73 | $ | 171.83 | $ | 156.46 | $ | 196.36 | $ | 210.09 | $ | 253.52 | $ | 229.81 | |||||||||||||
| MSCI USA Financials Index | $ | 100.00 | $ | 134.01 | $ | 153.53 | $ | 152.42 | $ | 187.00 | $ | 228.23 | $ | 197.27 | $ | 262.22 | $ | 256.94 | $ | 348.83 | $ | 306.42 | |||||||||||||
| 2023 PROXY STATEMENT | 11 | ||||||||||
Corporate Responsibility
We believe, and our research shows, that sound ESG and climate practices are commonly linked to better business results. As a leader in providing ESG and climate solutions to investors, consultants and corporates, we also aim to demonstrate leading corporate responsibility practices. A number of our recent accomplishments include the following:
 | Enabling Sustainable Investing Offer solutions and content for investors globally to manage their ESG and climate risks and opportunities |  | Social Practices Serve our people through areas of focus including DE&I, talent practices, benefits and outreach programs | |||||||||||
•Solutions •Launched Total Portfolio Footprinting, a tool to help financial institutions better understand the extent and impact of greenhouse gas (“GHG”) emissions at companies they are financing •Launched tools to help investors identify portfolio risk exposure to biodiversity loss and deforestation with the MSCI Biodiversity-Sensitive Areas Screening Metrics and the MSCI Deforestation Screening Metrics •Launched a solution for banks to measure and report on ESG and climate-related risks pursuant to the European Banking Authority’s ESG Pillar 3 prudential framework •Launched the MSCI Climate Action Indexes, a suite of equity indexes that are designed to support investors with a strategy focused on companies that are leaders in their sectors with respect to climate transition activities •Trends and Research •Published our 11th annual ESG and Climate Trends to Watch report, which analyzes more than 30 emerging ESG trends set to shape ESG investing in 2023 and beyond | •Diversity Equity & Inclusion (“DE&I”) •Hosted 5th Annual Global DE&I Summit, an annual event designed to cultivate leaders from diverse backgrounds and to further promote our commitment to workplace inclusion and belonging •Published our 2021, 2020 and 2019 U.S. Consolidated EEO-1 Report data •Disclosed diversity data aligned to Sustainability Accounting Standards Board (“SASB”) categories •Pay equity assessment identified no meaningful differences in pay based on gender globally or based on race or ethnicity in the U.S. •Employee Engagement •In December 2022 employee engagement survey, achieved a 78% response rate, and the percentage of respondents characterized as fully engaged was 74%, the highest since we implemented the survey •Future of Work •Launched “Future of Work” in January 2022, which introduced flexibility of when and where employees work via a hybrid-work model | |||||||||||||
 | Environmental Sustainability Manage carbon emissions and climate risks and opportunities, and implement sustainable operational practices |  | Robust Governance Implement policies and practices that reflect MSCI’s commitment to strong governance | |||||||||||
•Enhanced Commitments •Set 2025 milestones to achieve 100% renewable electricity and reduce GHG emissions; accelerated the timeline for reducing absolute Scope 1, 2 and 3 GHG emissions from 2035 to 2030 •Enhanced near-term (i.e., 2030) targets to reduce absolute Scope 1 and 2 GHG emissions 80% and to reduce absolute Scope 3 GHG emissions 50%, compared to prior targets of 50% and 20%, respectively •Published Climate Transition Plan to demonstrate progress towards our near-term targets •Supply Chain Engagement •Supplier Sustainability and Diversity Team engaged with key suppliers to set, and report progress on meeting, science-based carbon reduction targets •Reporting and Verification •Received approval for science-based near-term, long-term and net-zero GHG emissions reduction targets by the Science Based Targets initiative (SBTi) •Filed 4th annual CDP Questionnaire and received score of A- •Published second TCFD report •Disclosed 2021 emissions metrics across Scopes 1, 2 and 3, reflecting reductions since our 2019 baseline year | •Board Developments •Appointed Robin Matlock, a new director with a deep background in go-to-market and marketing strategy, client insight and technological innovation •Appointed Baer Pettit, our President and COO, who brings expertise and deep knowledge of MSCI, its people, clients, operations and value proposition •Approved Committee rotations for 2023 Board term, including all Committee Chairs •Board Education Sessions •Conducted board education sessions to strengthen the Board’s expertise on ESG and climate and cybersecurity •Disclosures and Policies •Enhanced Board diversity and skills disclosure, including by disclosing on an individual-director level and fully updating core competency/skills categories •Further enhanced Board Committee Charters and Corporate Governance Policies to reflect leading practices and shareholder feedback | |||||||||||||
For additional information about our Corporate Responsibility Program, please see page 47 of this Proxy Statement.
12 | MSCI | Proxy Summary | |||||||||||||||||||
Governance Highlights
Our Board of Directors Nominees
Each of our current directors is standing for election to hold office until the next annual meeting of shareholders or until the director’s earlier retirement, resignation, death or removal. The table below provides information on each of our director nominees, including which of our four standing committees the director nominee sits on. Our four standing committees are the Audit and Risk Committee (the “Audit Committee”), the Compensation, Talent and Culture Committee (the “Compensation Committee”), the Governance and Corporate Responsibility Committee (the “Governance Committee”) and the Strategy and Finance Committee (the “Strategy Committee”).
| COMMITTEES: | A | Audit | C | Compensation | G | Governance | S | Strategy | Chair | ||||||||||||||||||||||||||||||||
| COLLECTIVE SKILLSET |  | |||||||||||||
| Executive Leadership | ||||||||||||||
 | 11/12 | |||||||||||||
| Investment Industry Experience | ||||||||||||||
 | 9/12 | |||||||||||||
| Global Perspective | ||||||||||||||
 | 10/12 | |||||||||||||
| Regulatory, Government and Public Policy | ||||||||||||||
 | 3/12 | |||||||||||||
| Corporate Development | ||||||||||||||
 | 8/12 | |||||||||||||
| Financial Reporting and Capital Allocation | ||||||||||||||
 | 7/12 | |||||||||||||
| Corporate/Enterprise Risk Management | ||||||||||||||
| 10/12 | |||||||||||||
| Client Relations, Marketing and Brand Development | ||||||||||||||
| 7/12 | |||||||||||||
| Digital, Data and Cybersecurity Expertise | ||||||||||||||
 | 5/12 | |||||||||||||
| ESG and Climate Practices | ||||||||||||||
| 5/12 | |||||||||||||
| Human Capital Management | ||||||||||||||
| 9/12 | |||||||||||||
| Geographic Diversity | ||||||||||||||
 | ||||||||||||||
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| 2023 PROXY STATEMENT | 13 | |||||||||||||||||||
Proposal 1 Election of Directors | |||||
The Board recommends a vote FOR each director nominee. | See Page 18 | ||||
 | 4 Independent Directors appointed in the past 5 years. Active Board Refreshment •In 2022, we appointed Robin Matlock, a new director with a deep background in go-to-market and marketing strategy. •In 2023, we appointed Baer Pettit, our President and Chief Operating Officer. •In 2023, we approved the rotation of Committee Chairs and members. •Mandatory director retirement age of 72. Since 2019, two directors have retired pursuant to the retirement policy. | |||||||||||||||||||||||||||||||||||||||||||
DIVERSITY IS AN IMPORTANT FACTOR IN OUR BOARD COMPOSITION DECISIONS Our Board is committed to diversity within its membership. Our Governance Committee considers a number of factors including diversity, age, skills, background and experience, in seeking to develop a diverse and well-rounded board. The Governance Committee also instructs any search firm it retains to identify a diverse slate of candidates. | ||||||||||||||||||||||||||||||||||||||||||||
14 | MSCI | Proxy Summary | |||||||||||||||||||
Engaging with our Shareholders
We believe that engaging with our shareholders, prospective shareholders and sell-side analysts is the best way to address the issues that matter most to them. During 2022, we held over 265 meetings covering a wide range of matters. We aim to engage with our shareholders year-round through investor meetings, industry conferences and inviting shareholders to speak to the Board, and our key shareholder engagement activities for 2022 included our Corporate Responsibility Roadshow conducted in the fall of 2022.
| Deep Shareholder Outreach Team: | Senior Business Leaders | + | Finance and Investor Relations Team | + | Corporate Secretary Team | + | Human Resources Team, including Talent and Compensation | + | Corporate Responsibility Team and Global Corporate Services Team | + | Board Members | ||||||||||||||||||||||||
What We Discussed in 2022: | OUR BUSINESS Market Trends Competitive Environment Product Development Financial Performance Overall Outlook | OUR CORPORATE RESPONSIBILITY EFFORTS Human Capital Management, including DE&I Executive Compensation Program Board Refreshment and Corporate Governance | OVER 265 meetings with our shareholders, prospective shareholders and sell-side analysts, including Corporate Responsibility Roadshow ~60% of our shares outstanding represented across our shareholder engagement meetings in 2022 | ||||||||
Our Year-Round Shareholder Engagement Program
See “Shareholder Engagement” on page 41 for more information on our shareholder engagement activities.
| 2023 PROXY STATEMENT | 15 | |||||||||||||||||||
Proposal 2 Advisory Vote to Approve Executive Compensation (Say-on-Pay) | |||||
The Board recommends a vote FOR this proposal. | See Page 56 | ||||
Aligning Executive Compensation with Company Strategy, Culture and Performance
We believe our executive compensation program was integral to our successful financial performance in 2022. Our executive compensation program is designed not only to closely align the compensation and interests of our named executive officers (“NEOs”) with the interests of our shareholders, but also to reflect the economic realities of our operating environment.
MSCI’s executive compensation program emphasizes performance-based compensation in the form of cash incentive awards under our Annual Incentive Plan (“AIP”) and equity incentive awards under our Long-Term Incentive Plan (“LTIP”) that focus respectively on the achievement of short- and long-term goals. We believe in proactive, ongoing engagement with our shareholders regarding our executive compensation programs and practices to understand their viewpoints and to discuss and demonstrate the important connection between our compensation program and the interests of our shareholders.
SHORT-TERM (Annual Incentive Plan Cash Bonus) | LONG-TERM (Long-Term Incentive Plan Equity Grants) | |||||||||||||||||||
| (70%) | (20%) | (10%) | •Restricted Stock Units (cliff-vest after a 3-year service period) •Performance Stock Units (earned based on absolute TSR CAGR over a 3-year performance period) with a 1-year post-vesting mandatory holding period •Performance Stock Options (earned based on cumulative revenue and cumulative adjusted EPS over a 3-year performance period) | |||||||||||||||||
| Financial Performance | Key Performance Indicators | DE&I Goals | ||||||||||||||||||
 | ||||||||||||||||||||
Aligns NEOs’ interests with stakeholders’ interests by: •Rewarding performance for achievement of strategic goals, which are designed to position the Company competitively •Promoting strong financial results and shareholder value •Explicitly promoting DE&I progress | Further aligns NEOs’ interests with stakeholders’ interests by: •Promoting an “owner-operator” mentality among senior leaders •Linking a substantial portion of long-term compensation to the achievement of operational results (revenue and adjusted EPS) and shareholder value creation (TSR) | |||||||||||||||||||
2022 Pay Mix
| 2022 ANNUALIZED CEO | 2022 AVERAGE ANNUALIZED OTHER NEOS | |||||||
 |  | |||||||
In 2022, our CEO received over 90% of his compensation in the form of “at-risk” variable compensation under the AIP and LTIP (on average, over 85% in the case of our other NEOs).
16 | MSCI | Proxy Summary | |||||||||||||||||||
Annual Incentive Plan
The AIP closely aligns the interests of our NEOs with those of our shareholders by emphasizing a formulaic approach to determine annual cash incentive awards, which are based on the achievement of specified annual financial criteria aligned with our Board-approved Operating Plan (70% of the target annual cash bonus under the AIP), individual key performance indicators (“KPIs”) (20% of the target annual cash bonus under the AIP) and specific DE&I goals (“DE&I Goals”) (10% of the target annual cash bonus under the AIP) that serve to focus our senior management team on enhancing DE&I progress within the Company. The Compensation Committee regularly assesses the components and metrics used in the AIP and the weighting of those components and metrics, in addition to taking into account shareholder feedback.
For additional information about the AIP program, please see the discussion on page 71 of this Proxy Statement.
Long-Term Incentive Plan
The LTIP is designed to prioritize shareholder value creation and facilitate an “owner-operator” mindset among our senior executives. In 2022, we enhanced our LTIP by adopting a new award mix for our NEOs comprised of restricted stock units (“RSUs”), performance stock units (“PSUs”) and performance stock options (“PSOs”), the mix of which varies based on the executive’s position. Consistent with our practice, our CEO and our President and COO were not granted any RSUs in 2022, and instead all of their LTIP awards were granted in the form of PSUs and PSOs tied to performance metrics.
The LTIP comprises a mix of the following:
| RSUs | •Annual grant of RSUs to our NEOs (other than our CEO and our President and COO) that cliff-vest at the end of a three-year service period. | ||||
| PSUs | •Annual grant of PSUs which cover a cumulative three-year performance period. •The PSUs are eligible to vest between 0% and 300% based on the achievement of an absolute total shareholder return compound annual growth rate (“TSR CAGR”) performance metric. •The PSUs include a one-year post-vest mandatory holding period. | ||||
| PSOs | •Annual grant of PSOs which cover a cumulative three-year performance period. •The PSOs are eligible to vest between 0% and 200% based on the combined level of achievement of (i) a cumulative revenue performance goal and (ii) a cumulative adjusted EPS performance goal (each weighted at 50%). | ||||
For additional information about the LTIP, please see the discussion beginning on page 75 of this Proxy Statement.
Stock Ownership and Retention Requirements
Our stock ownership and retention guidelines require that all members of our Executive Committee (which includes senior leaders from across the firm who drive MSCI’s strategy and operations, including our NEOs) must hold shares equivalent, in the aggregate, to 25% of the “net shares” they receive (i.e., after payment of taxes, exercise price and related costs) from equity awards granted to them after January 1, 2022.
Our stock ownership and retention guidelines also feature stringent minimum stock ownership guidelines applicable to members of our Executive Committee, including our NEOs, that are among the highest in our peer group (including 12x base salary for our CEO and our President and COO). For additional information about our Stock Ownership and Retention Guidelines applicable to our NEOs, please see page 78 of this Proxy Statement.
| 2023 PROXY STATEMENT | 17 | |||||||||||||||||||
Response to Say-on-Pay Vote At our 2022 annual meeting of shareholders, shareholders again expressed overwhelming support for the compensation of our NEOs with approximately 98.0% of the votes cast approving our “Say on Pay” advisory proposal relating to our NEO compensation. This represents the fifth consecutive year of “Say on Pay” approval of 96% or higher. |  | ||||||||||
To read more about shareholder feedback relating to our Executive Compensation program, see the discussion on page 66 of this Proxy Statement.
Proposal 3 Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation | |||||
The Board recommends a vote every 1 YEAR for this proposal. | See Page 95 | ||||
The Board recommends continuing our current practice of holding an advisory vote to approve executive compensation every one year. We value the opinion of our shareholders. An annual say-on-pay vote will best reinforce our desire to communicate with our shareholders and allow them to regularly express a view on the Company’s compensation policies and practices.
Proposal 4 Ratification of the Appointment of MSCI’s Independent Auditor | |||||
The Board recommends a vote FOR this proposal. | See Page 99 | ||||
The Audit and Risk Committee periodically reviews the engagement of the independent auditor to assess, among other things, the skills, experience, service levels and costs associated with conducting the annual audit of the Company’s financial statements. PwC has served as our independent auditor since March 2014.
18 | MSCI | |||||||||||||||||||
 | Proposal No. 1 Election of Directors | ||||
Our Board currently has 12 directors. Each director stands for election at each annual meeting of shareholders and holds office until his or her successor has been duly elected and qualified or the director’s earlier retirement, resignation, death or removal. All of the nominees presented beginning on page 21 of this Proxy Statement are directors of MSCI as of March 15, 2023. All directors, other than Robin Matlock and Baer Pettit, were elected at the 2022 annual meeting of shareholders. The Board believes that each of the nominees brings strong skills and experience to the Board, giving the Board, as a group, the appropriate skills needed to exercise its oversight responsibilities and advise management with respect to the Company’s strategy, risks and opportunities.
Each nominee has indicated that he or she is willing and able to serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy vote will be cast for another person nominated by the Board, or the Board may elect to reduce its size.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast with respect to each director’s election at our 2023 Annual Meeting, at which a quorum is present, is required to approve Proposal No. 1. Abstentions and broker non-votes shall not be treated as votes cast. For additional information on the consequences for directors who do not receive a majority of votes cast, please refer to “What happens if a director does not receive a majority of the votes required for his or her re-election?” in Annex A.
 | Our Board recommends that you vote “FOR” the election of all twelve nominees named below. Proxies solicited by our Board will be voted “FOR” these nominees unless otherwise instructed. | ||||
| 2023 PROXY STATEMENT | 19 | |||||||||||||||||||
Director Core Competencies and Diversity
The following tables provide information regarding the director nominees, including the skills, experiences and attributes possessed by one or more of our director nominees that our Board believes are most relevant to the Board’s oversight of our strategy, risks and opportunities. We believe effective oversight comes from a Board that represents a diverse range of knowledge and perspectives that provides the collective skills, qualifications, backgrounds and experience necessary for sound governance and oversight. In 2023, we revised the below list of director competencies to focus on those that the Governance Committee believes are most relevant to the current needs of the Board.
Additional detail on each director nominee’s experiences and qualifications follows their biographies beginning on page 21 of this Proxy Statement.
EXECUTIVE LEADERSHIP Directors who have served as CEOs, COOs or other senior executives possess critical experience setting and executing strategic priorities across complex organizations, which are necessary skills to help support our growth and the creation of shareholder value. |  | ||||
INVESTMENT INDUSTRY EXPERIENCE Directors with expertise in the investment industry have a deep understanding of our key clients (e.g., asset owners, asset managers, financial intermediaries, wealth managers, private assets investment professionals and corporates) and the use-cases for our product offerings, which provides us with valuable market and client insights. |  | ||||
GLOBAL PERSPECTIVE As a company with significant global operations, with businesses tied to the global capital markets and with global client and employee bases, we value directors on the MSCI Board with a global perspective who have worked outside of the United States or who have other substantial management or operational experience with international teams or organizations. |  | ||||
REGULATORY, GOVERNMENT AND PUBLIC POLICY ENGAGEMENT Directors who have significantly interacted with, or who have served as, government officials, regulators or policymakers, provide important guidance and insight on managing complex regulatory and public policy issues affecting MSCI around the world. |  | ||||
CORPORATE DEVELOPMENT Directors with relevant experience identifying, assessing and executing corporate development opportunities provide insight to us as we define priorities to expand our business through mergers, partnerships and acquisitions. We believe expertise in these areas allows our Board to oversee our corporate opportunities and our efforts to grow our business and maximize return for our shareholders. |  | ||||
FINANCIAL REPORTING AND CAPITAL ALLOCATION We utilize a variety of financial targets and metrics, and an understanding of accounting, financial planning, financial reporting and financial controls structures is critical to how we measure our performance and report to our investors. Additionally, we value directors who have significant experience with corporate financing activities and equity and debt markets to support appropriate oversight of our capital structure. |  | ||||
CORPORATE/ENTERPRISE RISK MANAGEMENT In light of the Board’s role overseeing corporate/enterprise risk management and understanding the most significant risks facing MSCI, including strategic, market, operational, financial, legal, regulatory and reputational risks, we seek directors with experience in corporate/enterprise risk management and oversight. | | ||||
CLIENT RELATIONS, MARKETING AND BRAND DEVELOPMENT Client-centricity is essential for us to understand and support our clients’ needs. In addition, marketing and brand development are increasingly important to growing our client relationships and footprint. Experience in these areas contributes to the Board’s understanding of changing market conditions and trends and helps us better deploy our innovative tools and solutions to our clients. | | ||||
DIGITAL, DATA AND CYBERSECURITY EXPERTISE Directors with expertise in current relevant technology and data issues, including cybersecurity, digital transformation, data security and privacy, big data and analytics, enterprise software and emerging technologies, provide important insights and oversight with respect to the use of technology to optimize and secure our operations, drive efficiencies and product development, and deliver our solutions more effectively to our clients. |  | ||||
ESG AND CLIMATE PRACTICES Experience with ESG or climate practices, goals, tools and strategies used by investors helps us support the needs of our clients, as we enable their efforts to integrate ESG and climate considerations into their investment processes. Additionally, experience with corporate ESG or climate practices, including initiatives such as setting carbon reduction targets or DE&I strategies, contributes to the Board’s oversight of MSCI’s corporate practices in these areas. | | ||||
HUMAN CAPITAL MANAGEMENT MSCI is committed to maintaining a performance culture and a high level of employee engagement. Experience in talent management (attraction, development and retention), executive compensation, succession planning, DE&I and culture are important areas of Board oversight, including with respect to relevant regulatory or financial considerations or shareholder perspectives. | | ||||
20 | MSCI | Proposal 1: Election of Directors | |||||||||||||||||||
| DIRECTOR CORE COMPETENCIES |  |  |  |  |  |  |  |  |  |  |  |  | ||||||||||||||||||||||||||
| Executive Leadership | l | l | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||
| Investment Industry Expertise | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||
| Global Perspective | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
Regulatory, Government and Public Policy Engagement | l | l | l | |||||||||||||||||||||||||||||||||||
| Corporate Development | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||
Financial Reporting and Capital Allocation | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||||
| Corporate/Enterprise Risk Management | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
Client Relations, Marketing and Brand Development | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||||
| Digital, Data and Cybersecurity Expertise | l | l | l | l | l | |||||||||||||||||||||||||||||||||
| ESG and Climate Practices | l | l | l | l | l | |||||||||||||||||||||||||||||||||
| Human Capital Management | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||
| TENURE/AGE/GENDER/INDEPENDENCE | ||||||||||||||||||||||||||||||||||||||
| Tenure | 9 | 8 | 15 | 13 | <1 | 6 | <1 | 3 | 15 | 5 | 1 | 3 | ||||||||||||||||||||||||||
| Age | 63 | 67 | 64 | 71 | 57 | 64 | 58 | 53 | 62 | 56 | 58 | 66 | ||||||||||||||||||||||||||
| Gender | M | M | M | F | F | M | M | M | F | M | M | F | ||||||||||||||||||||||||||
| Independence | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
| DIVERSITY/BACKGROUND | ||||||||||||||||||||||||||||||||||||||
| African American/Black | l | |||||||||||||||||||||||||||||||||||||
| Alaskan Native/Native American | ||||||||||||||||||||||||||||||||||||||
| Asian/South Asian | l | |||||||||||||||||||||||||||||||||||||
| Caucasian/White | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||
| Hispanic/Latino | l | |||||||||||||||||||||||||||||||||||||
| Native Hawaiian or Pacific Islander | ||||||||||||||||||||||||||||||||||||||
| Two or More Races | ||||||||||||||||||||||||||||||||||||||
| LGBTQ+ | ||||||||||||||||||||||||||||||||||||||
| Born Outside of the U.S. | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||
| DIRECTOR DIVERSITY | DIRECTOR INDEPENDENCE | DIRECTOR TENURE | DIRECTOR AGE | |||||||||||||||||
 |  |  |  | |||||||||||||||||
| 2023 PROXY STATEMENT | 21 | |||||||||||||||||||
2023 Director Nominees
 Director since: 2013 Age: 63 years old Committees: Audit Committee (Member) Strategy Committee (Chair) | ROBERT G. ASHE | Independent Lead Director | ||||||
Mr. Ashe retired from IBM Corporation (“IBM”) in January 2012, where he had most recently served as General Manager of Business Analytics from 2010 to 2012 and before that as General Manager of Business Intelligence and Performance Management since 2008, following IBM’s acquisition of Cognos Inc. (“Cognos”), a Canadian provider of business intelligence and performance management software. Mr. Ashe worked for Cognos from 1984 to 2008, holding various executive positions, including most recently President and Chief Executive Officer from 2004 to 2008, President and Chief Operating Officer from 2002 to 2004 and Chief Corporate Officer from 2001 to 2002, during a portion of which time he also served as Chief Financial Officer. He also held various Senior Vice President positions in Worldwide Field Operations, Products and Application Development Tools from 1996 to 2001. Prior to that, he held various Vice President roles within Product Development and Corporate Finance. Mr. Ashe holds a Bachelor of Commerce from the University of Ottawa. Mr. Ashe is also a Certified Public Accountant in Canada. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: Shopify Inc. (December 2014 to present) PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS: ServiceSource International, Inc. (March 2013 to May 2020) and Halogen Software Inc. (February 2013 to April 2017) QUALIFICATIONS: We believe that Mr. Ashe’s over 30 years of experience in the technology sector, including his oversight of product marketing, software development, revenue growth initiatives and strategic transactions, render him qualified to serve as one of our directors. As a member of other public company boards and the former CEO of a public company, Mr. Ashe also brings to the Board insight with respect to the Board’s roles and responsibilities that are vital to his role as our Lead Director. | ||||||||
22 | MSCI | Proposal 1: Election of Directors | |||||||||||||||||||
 Director since: 2015 Age: 67 years old Committees: Audit Committee (Chair) Compensation Committee (Member) | WAYNE EDMUNDS | Independent Director | ||||||
Mr. Edmunds previously served as the Interim Group Chief Executive of BBA Aviation plc from July 2017 to March 2018. He previously served as Chief Executive Officer of Invensys plc at Invensys Systems, Inc. (“Invensys”) from 2011 until his retirement in 2014. Previously, Mr. Edmunds was Chief Financial Officer of Invensys. Prior to joining Invensys in 2008, Mr. Edmunds was Senior Vice President of Finance at Reuters America, Inc. from 2005 to 2008. Mr. Edmunds served as the Chief Financial Officer of Innovance Networks Inc. (“Innovance”) from 2000 to 2004, where he was responsible for financial planning and operations. Prior to joining Innovance, Mr. Edmunds held other senior management roles in the technology sector, including working 17 years at Lucent Technologies, Inc., where he served as Vice President of Finance for the Optical Networking Division and as Vice President of Marketing and Business Development and was responsible for Europe, Middle East and Africa operations. Mr. Edmunds began his career at Amerada Hess Oil as an analyst in Corporate Treasury. Mr. Edmunds holds a Bachelor of Arts in accounting from Rutgers University and an M.B.A. in finance from Pace University. PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS: Signature Aviation plc (August 2013 to June 2021), Dialight plc (January 2016 to August 2019) and Ashtead Group plc (February 2014 to September 2018) QUALIFICATIONS: We believe that Mr. Edmunds’ extensive insight into global companies in the technology sector and his memberships on the Boards of multiple international companies render him qualified to serve as one of our directors. | ||||||||
 Director since: 2007 Age: 64 years old | HENRY A. FERNANDEZ | Chairman and CEO | ||||||
Mr. Fernandez has served as Chairman of our Board since 2007 and as our CEO and a director since 1998. He served as head of the MSCI business from 1996 to 1998 and as President from 1998 to October 2017. MSCI was previously a business unit within Morgan Stanley prior to its IPO in 2007. Before leading MSCI, he was a Managing Director at Morgan Stanley, where he worked from 1983 to 1991 and from 1994 to 2007, in emerging markets business strategy, equity derivatives sales and trading, mergers and acquisitions, and corporate and mortgage finance. Mr. Fernandez holds a Bachelor of Arts in economics from Georgetown University, an M.B.A. from the Stanford University Graduate School of Business and pursued doctoral studies in economics at Princeton University. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: Royalty Pharma plc (August 2020 to present) QUALIFICATIONS: We believe that Mr. Fernandez’s extensive experience and leadership in the financial services industry as well as his unparalleled knowledge of MSCI and its business, including as our Chairman and Chief Executive Officer, render him qualified to serve as one of our directors. | ||||||||
| 2023 PROXY STATEMENT | 23 | |||||||||||||||||||
 Director since: 2009 Age: 71 years old Committees: Governance Committee (Member) | CATHERINE R. KINNEY | Independent Director | ||||||
Ms. Kinney retired from NYSE Euronext in March 2009, having served as a Co-President and Co-Chief Operating Officer from 2002 to 2008. From 2007 to 2009, she served in Paris overseeing global listings, marketing and branding, and served as part of the integration team following the merger of NYSE and Euronext in April 2007. Ms. Kinney joined NYSE in 1974 and rose through the ranks holding management positions with responsibility for several divisions, including: all client relationships from 1996 to 2007, trading floor operations and technology from 1987 to 1996 and regulation from 2002 to 2004. Ms. Kinney holds a Bachelor of Arts from Iona College and has completed the Advanced Management Program at Harvard Graduate School of Business. She has received honorary degrees from Georgetown University, Fordham University and Rosemont College. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: MetLife Inc. (April 2009 to present) and SolarWinds Corporation (October 2018 to present) PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS: QTS Realty Trust, Inc. (August 2013 to September 2021) and Netsuite Inc. (March 2009 to November 2016) QUALIFICATIONS: We believe that Ms. Kinney’s management experience, including her role in overseeing a multinational business, as well as her expertise in corporate governance, including her role in developing the NYSE corporate governance standards for listed companies, render her qualified to serve as one of our directors. | ||||||||
 Director since: 2022 Age: 57 years old Committees: Governance Committee (Member) | ROBIN L. MATLOCK | Independent Director | ||||||
Ms. Matlock previously served as the Senior Vice President and Chief Marketing Officer of VMware, Inc. (“VMware”), a position she held from 2013 to June 2020. Ms. Matlock previously served as Vice President, Corporate Marketing at VMware from 2009 to 2013. Before VMware, Ms. Matlock served as Executive Vice President and General Manager of Imperva Inc., a cybersecurity software and services company. Prior to that, she held executive positions in a number of technology companies, including McAfee, Entercept Security Technologies and Symantec Corporation. Ms. Matlock has been active as a director and advisor of private technology companies for a number of years. She earned her Bachelor of Arts degree in Economics and Music from Rice University. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: Iron Mountain Incorporated (July 2019 to present) QUALIFICATIONS: We believe that Ms. Matlock’s experience in the areas of go-to-market and marketing strategy, client insight and technological innovation render her qualified to serve as one of our directors. | ||||||||
24 | MSCI | Proposal 1: Election of Directors | |||||||||||||||||||
 Director since: 2017 Age: 64 years old Committees: Governance Committee (Chair) Strategy Committee (Member) | JACQUES P. PEROLD | Independent Director | ||||||
Mr. Perold was president of Fidelity Management & Research Company, the investment advisor for Fidelity’s family of mutual funds, until his retirement in 2014. From 2001 to 2009, Mr. Perold was president of Geode Capital Management, LLC, a sub-advisor to Fidelity. He is currently a trustee of New York Life Insurance Company’s MainStay mutual funds, a trustee of Partners in Health, and a co-founder and Chairman of CapShift, a company focused on enabling impact investments from donor-advised funds and foundations. Mr. Perold holds a Bachelor of Arts degree in economic history from the University of Cape Town and a post-graduate Bachelor of Arts Honours degree in sociology from the University of Cape Town. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: Allstate Corporation (December 2015 to present) QUALIFICATIONS: We believe that Mr. Perold’s over 30 years of experience and leadership in strategy and operations as well as experience as an investment professional at one of the world’s largest asset management firms render him qualified to serve as one of our directors. | ||||||||
 Director since: 2023 Age: 58 years old | C.D. BAER PETTIT | Director, President and Chief Operating Officer | ||||||
Mr. Pettit joined MSCI in 2000 and has served as MSCI’s President since October 2017 and Chief Operating Officer since January 2020, having previously served as Chief Operating Officer from 2015 to 2017. He is responsible for MSCI’s commercial and operational functions, including client coverage, marketing, product management, research and product development, technology and operations. He previously served as MSCI’s Head of Products, Head of Index Products, Head of Marketing and Head of Client Coverage. Mr. Pettit holds a Master of Arts degree in history from Cambridge University and a Master of Science degree from the School of Foreign Service at Georgetown University. QUALIFICATIONS: We believe that Mr. Pettit’s over 20 years of experience with MSCI, including his oversight of the Company’s business functions, render him qualified to serve as one of our directors. | ||||||||
| 2023 PROXY STATEMENT | 25 | |||||||||||||||||||
 Director since: 2020 Age: 53 years old Committees: Audit Committee (Member) Strategy Committee (Member) | SANDY C. RATTRAY | Independent Director | ||||||
Mr. Rattray retired from Man Group plc in September 2021, having served as Chief Investment Officer from 2017 to September 2021. He previously served as Chief Executive Officer of Man AHL from 2013 to 2017 and Chief Investment Officer of Man Systematic Strategies from 2010 to 2013. Prior to holding such positions, he held several other senior leadership positions at Man Group. Before joining GLG Partners, which was later acquired by Man Group in 2007, he spent 15 years at Goldman Sachs where he held various positions, including Managing Director and head of the Fundamental Strategy Group. Mr. Rattray also sits on the MSCI Advisory Council. He holds a Master’s Degree in Natural Sciences and Economics from the University of Cambridge and a Licence Spéciale from the Université Libre de Bruxelles. He is also a governor of the Southbank Centre in London. QUALIFICATIONS: We believe that Mr. Rattray’s over 25 years of experience in the global investment industry, including his focus on the technological innovation impacting the industry, render him qualified to serve as one of our directors. | ||||||||
 Director since: 2007 Age: 62 years old Committees: Audit Committee (Member) Compensation Committee (Chair) | LINDA H. RIEFLER | Independent Director | ||||||
Ms. Riefler retired from Morgan Stanley in February 2013, where she served as the Chair of Global Research from June 2011 to February 2013 and as the Global Head of Research from 2008. She was the Chief Talent Officer of Morgan Stanley from 2006 to 2008. In these roles she served on both the Management Committee and the Operating Committee of Morgan Stanley. Ms. Riefler joined Morgan Stanley in 1987 in the Capital Markets division and was appointed a Managing Director in 1998 while in the Research division. Ms. Riefler holds a Bachelor of Arts in economics from Princeton University and an M.B.A. from the Stanford University Graduate School of Business. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: CSX Corporation (March 2017 to present) QUALIFICATIONS: We believe that Ms. Riefler’s in-depth knowledge of talent management, risk management, company valuation and the global capital markets render her qualified to serve as one of our directors. | ||||||||
26 | MSCI | Proposal 1: Election of Directors | |||||||||||||||||||
 Director since: 2017 Age: 56 years old Committees: Compensation Committee (Member) Strategy Committee (Member) | MARCUS L. SMITH | Independent Director | ||||||
Mr. Smith was the Chief Investment Officer, Canada Equity, and a portfolio manager at MFS Investment Management (“MFS”) until his retirement in April 2017. As a portfolio manager, he was responsible for managing the MFS Institutional International Equity Portfolio and the International Concentrated Portfolio. He joined MFS in 1994 and held a variety of positions, including Chief Investment Officer (Asia) from 2010 to 2012, based in Boston, Director of Asian Research from 2005 to 2009, based in Singapore, and Equity Analyst from 1995 to 2000, based in London. Mr. Smith currently serves as a trustee for certain Eaton Vance funds. Mr. Smith holds a Bachelor of Science from the University of Mount Union and an M.B.A. from the Wharton School at the University of Pennsylvania. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: First Industrial Realty Trust, Inc. (February 2021 to present) PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS: DCT Industrial Trust, Inc. (October 2017 to August 2018) QUALIFICATIONS: We believe that Mr. Smith’s extensive experience in global financial markets and as an investment professional, including experience in Asia and Europe, render him qualified to serve as one of our directors. | ||||||||
 Director since: 2021 Age: 58 years old Committees: Audit Committee (Member) | RAJAT TANEJA | Independent Director | ||||||
Mr. Taneja is currently the President of Technology for Visa Inc. (“Visa”), a role he has held since September 2019. He joined Visa in November 2013 and served as Executive Vice President of Technology and Operations until August 2019. Prior to joining Visa, Mr. Taneja was Executive Vice President and Chief Technology Officer of Electronic Arts Inc. from October 2011 until November 2013. From August 1996 until October 2011, he served in various roles at Microsoft Corporation (“Microsoft”), including as the Corporate Vice President, Commerce Division. At Microsoft, Mr. Taneja led the development and deployment of commerce and transaction technologies across its connected services, the company’s online digital advertising platforms and its first business online service offering. Mr. Taneja holds a Bachelor of Engineering from Jadavpur University and a Master of Business Administration from Washington State University. PRIOR OTHER PUBLIC COMPANY DIRECTORSHIPS: Ellie Mae, Inc. (June 2015 to April 2019) QUALIFICATIONS: We believe that Mr. Taneja’s over 30 years of experience in global technology, innovation and research and development render him qualified to serve as one of our directors. | ||||||||
| 2023 PROXY STATEMENT | 27 | |||||||||||||||||||
 Director since: 2020 Age: 66 years old Committees: Governance Committee (Member) Strategy Committee (Member) | PAULA VOLENT | Independent Director | ||||||
Ms. Volent is currently Vice President and Chief Investment Officer at The Rockefeller University, a role she has held since August 2021. She previously served as Senior Vice President for Investments and Chief Investment Officer at Bowdoin College from 2006 to June 2021, Vice President for Investments at Bowdoin College from 2002 to 2006, and Associate Treasurer at Bowdoin College from 2000 to 2002. Prior to joining Bowdoin College in 2000, Ms. Volent served as a Senior Associate at the Yale Investments Office, and before focusing on endowment management, she worked as a paper conservator. She holds an M.B.A. from Yale School of Management, a Master of Arts from the Institute of Fine Arts, New York University and a Bachelor of Arts from the University of New Hampshire. CURRENT OTHER PUBLIC COMPANY DIRECTORSHIPS: 1stdibs.com, Inc. (June 2021 to present) QUALIFICATIONS: We believe that Ms. Volent’s experience as a Chief Investment Officer at a number of institutions and her engagement with the global investment community render her qualified to serve as one of our directors. | ||||||||
28 | MSCI | |||||||||||||||||||
| Corporate Governance | ||||
Corporate Governance Practices
MSCI’s Board of Directors adheres to governance principles designed to ensure the continued effectiveness of the Board and excellence in the execution of its duties. The Board has in place a set of Corporate Governance Policies reflecting these principles, including the Board’s policy of requiring a significant majority of the Board to be comprised of independent directors; the importance of reflecting a diversity of occupational and personal backgrounds and experience on the Board, including with respect to diversity, age and skills; and the practice of regularly scheduled executive sessions, including sessions of independent directors without members of management at each quarterly Board meeting.
MSCI also has a Code of Ethics and Business Conduct for directors, executive officers and employees, which is reviewed annually by the Board. Any amendment to, or waiver of, the Code of Ethics and Business Conduct that applies to one of our directors or executive officers may be made only by the Board or a Board committee.
Corporate Governance Highlights
•All director nominees except our CEO and our President and Chief Operating Officer (“COO”) are independent. •Strong, independent Lead Director and independent Board committees. •One share, one vote. •Annual election of directors. •Proxy access. •Majority vote for uncontested elections and plurality standard for contested elections. •No shareholder rights plan (i.e., a poison pill). •Risk oversight by full Board and Committees, including Board oversight of enterprise risk management, IT/cyber risk and other areas. •Demonstrated commitment to Board refreshment and director succession planning. •Annual Board, committee and director evaluations, with third-party evaluation firm engaged periodically. | •Executive session of independent directors held after each quarterly Board meeting. •Limits on multiple board service. •Robust director share ownership and retention guidelines. •Annual review of Code of Ethics and Business Conduct, committee charters and Corporate Governance Policies. •Annual off-season shareholder engagement focused on corporate responsibility topics, with director participation. •Full Board participation in succession and progression planning. •Targeted director education program, including leveraging in-house expertise to educate directors on climate, cybersecurity and other areas in 2022. | ||||
| 2023 PROXY STATEMENT | 29 | |||||||||||||||||||
Composition and Board Refreshment
Director Qualifications
The Governance Committee’s charter requires it to review candidates’ qualifications for membership on the Board or a committee of the Board, including making a specific determination as to the independence of each candidate based on criteria approved by the Board (and taking into account the enhanced independence, financial literacy and financial expertise standards that may be required under applicable law or NYSE rules for audit committee membership purposes, and heightened independence standards that may be required under applicable law or NYSE rules for compensation committee membership purposes). If the Governance Committee determines that adding a new director is advisable, it will recommend such individual to the Board for appointment as a member of the Board and any committees, as applicable.
Consistent with our Corporate Governance Policies, when appointing directors, the Board seeks members who combine sound business judgment, professionalism and a broad spectrum of experience and expertise with a reputation for the highest standards of ethics and integrity. Directors should have experience in positions with a high degree of responsibility, be leaders or senior managers in the companies or institutions with which they are or were affiliated and be selected based upon contributions they can make to the Board and management and their ability to represent and advance the interests of the Company and its shareholders.
The Board believes that its membership should reflect a diversity of occupational and personal backgrounds and experiences. In identifying nominees, the Board will consider a number of factors including diversity, age, skills, background and relevant experience. In the Board’s selection of director nominees, the Board also abides by MSCI’s commitment to managing our business in an environment free from discrimination, consistent with the MSCI Global Human Rights Policy. The composition of our current Board demonstrates the Board’s commitment to diversity in a number of areas. Women represent 33% of our current director nominees. Our directors also have differing backgrounds, educations, professional experiences, skills, ages, national origins and viewpoints.
Tenure and Board Refreshment
Our Board has shown an ongoing commitment to Board refreshment and to having highly qualified, independent perspectives in the boardroom. Five of the Company’s director nominees have been added to the Board since the beginning of 2018. The average tenure of the independent director nominees is currently 6.6 years. The average tenure is 6.8 years if Mr. Fernandez and Mr. Pettit are included. Also, under our Corporate Governance Policies, directors should not stand for re-election following their 72nd birthday. To date, the Board has not granted a waiver to this retirement policy. Since 2019, two directors have retired following their 72nd birthday and two directors decided not to stand for re-election. These retirements and decisions have provided us with opportunities for Board refreshment.
 | May 1, 2018 | | May 10, 2018 | | April 25, 2019 | | February 26, 2020 | | April 28, 2020 | | April 27, 2021 | | June 1, 2021 | | June 1, 2022 | | January 30, 2023 |  | ||||||||||||||||||||||||||||||||||||||
| Patrick Tierney retired | Rodolphe M. Vallee retired | Wendy E. Lane retired | Paula Volent and Sandy C. Rattray appointed to Board | Alice W. Handy and George W. Siguler retired | Benjamin DuPont retired | Rajat Taneja appointed to Board | Robin Matlock appointed to Board | Baer Pettit appointed to Board | ||||||||||||||||||||||||||||||||||||||||||||||||
We also periodically rotate committee assignments and committee chair positions. Committee chairs typically serve approximately 4 to 6 years on average in order to facilitate rotation of committee chairs while preserving experienced leadership. In 2023, there will be committee rotations in light of recent director appointments, as described below.
Director Re-Nomination
The Governance Committee also assesses the performance of current directors in its evaluation of current directors for re-nomination to the Board or re-appointment to any Board committees.
30 | MSCI | Corporate Governance | |||||||||||||||||||
New Director Search Process
Our newest directors, Robin Matlock and Baer Pettit, were appointed to the Board in 2022 and 2023, respectively. Ms. Matlock has extensive experience in go-to-market and marketing strategy, client insights and technological innovation. She was appointed to the Governance Committee. As our President and COO, Mr. Pettit brings extensive and unique experience and knowledge of the Company’s products, services, strategy and industry. The appointments of Ms. Matlock and Mr. Pettit were the result of the search process outlined below. Ms. Matlock was identified by an external search firm. Henry A. Fernandez, MSCI’s Chairman and CEO, and the members of the Governance Committee recommended Mr. Pettit as a nominee.
1 DIRECTOR RECRUITMENT PROCESS | The Governance Committee, with the feedback of the full Board, identifies key skills that would best serve the future needs of the Board and the Company, including by considering feedback from the Board’s annual self-evaluation process. Pursuant to the authority granted in its charter, the Governance Committee retains a professional search firm to assist in the process of identifying and evaluating potential director candidates. The Governance Committee instructs the search firm to focus on candidates with relevant experience and to seek a diverse slate of candidates. Using a search firm provides additional assurance to the Governance Committee that it is conducting a comprehensive search and evaluating a broad and diverse pool of potential candidates. Additionally, the Governance Committee solicits input from the Board. | ||||||||||||||||||||||
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2 IDENTIFICATION AND INTERVIEW OF CANDIDATES | From the candidates provided by the third-party search firm, where applicable, as well as input from directors, the Governance Committee identifies a short list of high-potential candidates, and the search firm then conducts an initial assessment of these candidates’ skills, experience, background and availability to commit to Board service. The Chair of the Governance Committee meets with a number of candidates. Certain candidates also meet with members of the Governance Committee, the Chairman and the Lead Director. | ||||||||||||||||||||||
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3 BOARD DECISION AND NOMINATION | The Governance Committee presents qualified candidates to the Board. In reviewing the potential candidates, the Board takes into account the qualifications discussed in “Director Qualifications” of this Proxy Statement and in MSCI’s Corporate Governance Policies. Upon completion of its assessment, the Governance Committee reports its recommendations for nominations to the full Board. Following discussion of a candidate’s qualifications and consideration of the independence of such candidate, where applicable, the Board formally appoints the candidate to the Board. | ||||||||||||||||||||||
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4 NEW DIRECTORS | •The Board appointed Robin Matlock to the Board, effective June 1, 2022 and Baer Pettit to the Board, effective January 30, 2023. •Ms. Matlock’s qualifications include over 25 years of experience in digital business transformation and go-to-market execution and her prior board experience, including service on the Compensation, Risk & Safety and Technology Committees of a U.S. public company. •As our President and COO, Mr. Pettit brings extensive and unique experience and knowledge of the Company’s products, services, strategy and industry. | ||||||||||||||||||||||
Proxy Access
In response to shareholder engagement, we amended our Bylaws in 2020 to permit a shareholder, or a group of up to 20 shareholders, owning at least three percent of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s annual meeting proxy materials director nominees constituting the greater of two directors or twenty percent of the total number of directors on the Board, provided that such shareholder(s) and nominee(s) satisfy the requirements specified in the Bylaws.
| 2023 PROXY STATEMENT | 31 | |||||||||||||||||||
Board Culture
The Board has established a boardroom dynamic that supports informed decision making and oversight. One of the hallmarks of the Board’s culture is meaningful and robust discussion, where views are thoroughly debated based on each director’s unique background, skills and opinions. Directors are expected to, and do, ask hard questions of management and of each other. Each member of the Board is also committed to maximizing shareholder value and promoting shareholder interests, and members of our Board regularly interact directly with our shareholders.
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ENGAGEMENT WITH MANAGEMENT: Directors regularly meet with senior management and continuously assess performance during meetings and other interactions. Our Corporate Governance Policies provide that each Board member has complete and open access to senior members of MSCI management. In 2022, we paired each independent Board member with members of our Executive Committee for sponsorship of inclusive leadership initiatives. REFRESHMENT: Our Board is committed to active refreshment – over 40% of our Board have tenures of less than five years. INDEPENDENCE: Having an independent Lead Director, all independent committee chairs, a significantly independent Board and a practice of independent director sessions following each Board meeting fosters a Board culture of open discussion and deliberation, with an unbiased evaluation of risks and opportunities. | DIVERSITY: Our Board is committed to diversity within its membership. Based on gender and ethnic diversity, our Board is currently over 50% diverse. The search process for any new director includes diverse talent, and any search firm is instructed to identify a diverse slate of candidates. SHAREHOLDER INTERESTS: The Board believes that candid and specific feedback from shareholders will enhance MSCI’s governance, social responsibility and compensation practices and the Board receives regular reports from management on meetings with shareholders and analysts. In 2022, our directors and senior leaders engaged with shareholders to discuss MSCI’s business, strategy and corporate responsibility efforts. We value direct shareholder feedback, and we regularly invite shareholders to speak directly with our Board at regular Board meetings. | OPEN DISCUSSION: Our Board emphasizes full and open discussion and debate. Mr. Ashe, our Lead Director, facilitates constructive discussion among independent directors and committee chairs and provides feedback to the Chairman to enhance Board leadership and culture. EVALUATION: Each year, our directors formally evaluate the effectiveness of the Board through a thorough and candid self-assessment. Among other topics, this self-assessment seeks feedback on the Board’s culture, leadership structure, committee effectiveness, continuing education, skills and expertise, and other areas. ORIENTATION AND DIRECTOR EDUCATION: The Board’s orientation and education processes foster a culture of continuing education. As part of the director orientation program, a new director meets with all members of the Management Committee and all MSCI business heads. | |||||||||||||||
32 | MSCI | Corporate Governance | |||||||||||||||||||
Structure of our Board
Substantially Independent Board
Under the MSCI Corporate Governance Policies, the full Board affirmatively determines the independence of directors and reviews the financial and other relationships between the independent directors and MSCI as part of its assessment of director independence. The Governance Committee also makes specific determinations as to the independence of each candidate when reviewing candidates’ qualifications for membership on the Board or a committee of the Board. Director independence is also monitored by the full Board on an ongoing basis. Our Corporate Governance Policies provide that the Board should have a significant majority of independent directors meeting the independence requirements of the NYSE. Currently, a significant majority of the |  | ||||
| All of our non-employee directors are independent | |||||
directors on our Board are independent. As of March 1, 2023, there are 12 directors on our Board, comprised of: (i) our Chairman and CEO; (ii) our President and COO; and (iii) 10 independent directors. Our Board has determined that each of Messrs. Ashe, Edmunds, Perold, Rattray, Smith, and Taneja and Mmes. Kinney, Matlock, Riefler and Volent is independent in accordance with the requirements of our Corporate Governance Policies, which follow NYSE rules and guidelines. In making such determinations, there were no material transactions, relationships or arrangements not disclosed in this Proxy Statement under “Other Matters—Certain Transactions” to be considered by the Board in determining whether each director was independent. Therefore, 10 of our 12 current directors are independent. Mr. Fernandez is not independent because of his position as CEO of MSCI, and Mr. Pettit is not independent because of his position as President and COO of MSCI. All members of the Audit Committee, Compensation Committee, Governance Committee and Strategy Committee satisfy the independence requirements of the NYSE. In addition, each member of the Audit Committee and Compensation Committee meets the heightened independence standards of the NYSE required for audit committee and compensation committee members, respectively. | |||||
Board Leadership
The Board seeks to achieve the best board leadership structure for the effective oversight of MSCI’s affairs. The Board believes that its leadership structure must be considered in the context of the individuals involved and the specific circumstances facing MSCI. The Governance Committee is responsible for the ongoing review of the governance structure of the Board and for recommending to the Board those structures and practices best suited to MSCI and its shareholders.
The Board regularly reviews its leadership structure and believes that it is in the best interests of MSCI and its shareholders to combine the roles of Chairman and CEO at this time, alongside a robust and independent Lead Director. The Board believes that the decision as to whether the positions of Chairman and CEO should be combined or separated, and whether an executive or an independent director should serve as Chairman if the roles are split, should be based upon the particular circumstances facing MSCI. Maintaining a flexible policy allows the Board to choose the leadership structure that best serves the interests of the Company and its shareholders at any particular time.
In determining the Board’s current leadership, among other factors, the Board considered and evaluated the importance of consistent, unified leadership to execute and oversee the Company’s strategy; the strength of Mr. Fernandez’s vision for the Company and the quality of his leadership; the strong and highly independent composition of the Board, including having fully independent committee leadership and membership; the views and feedback heard from our investors through our ongoing engagement programs expressing support for our Board leadership structure; and the meaningful and robust responsibilities of the independent Lead Director. As Chairman, Mr. Fernandez chairs Board meetings and the annual shareholder meeting, works with the Lead Director to set agendas for Board meetings (which the Lead Director approves), collaborates with the Board on the Company’s strategy and leads management in implementing that strategy.
A strong, independent Lead Director with clearly defined duties and responsibilities further enhances the contributions of MSCI’s independent directors, which have been, and continue to be, substantial. Our Corporate Governance Policies provide for the appointment of a Lead Director from among the Board’s independent directors whenever the Chairman is not independent. The Lead Director role supports the independent directors to provide effective, independent Board leadership and oversight of management.
| 2023 PROXY STATEMENT | 33 | |||||||||||||||||||
Robert G. Ashe has been our Lead Director since April 2018. As a member of other public company boards, the former CEO and CFO of a public company and an audit committee financial expert, Mr. Ashe also has significant experience with respect to the Board’s roles and responsibilities, including those related to risk oversight and the Board’s design and leadership structure. Further, our Chairman and Lead Director work closely to discuss strategic initiatives for the Company and to ensure the Board is effectively exercising its oversight responsibilities and its consideration of the Company’s significant risks and opportunities. The Board, in executive sessions of independent directors (which are presided over by the Lead Director), also considers and discusses risk-related matters. These sessions provide a forum for candid discussion of risk-related matters, without management or the Chairman and CEO present.
The Lead Director’s responsibilities include:
BOARD STRUCTURE | ||
•Advises and provides feedback to the Governance Committee and the Chairman on the structure of the Board and its leadership, including membership of Board committees and the selection of committee chairs •Has authority to retain independent legal, accounting or other advisors in connection with meetings of independent directors •Acts as a key advisor to the Chairman on a wide variety of Company matters, including with respect to strategic and risk oversight matters, as appropriate | ||
| BOARD CULTURE | ||
•Facilitates communication between the Chairman and independent directors •Facilitates teamwork and communication among the independent directors •Fosters an environment of open dialogue, effective information flow and constructive feedback •Ensures Board discussions effectively and appropriately engage management, including with respect to strategic and risk oversight matters, as appropriate | ||
| BOARD MEETINGS | ||
•Presides at all meetings of the Board at which the Chairman is not present •Has authority to call, and lead, independent director sessions •Approves all Board meeting agendas and schedules to ensure appropriate topics and sufficient time for discussion of all items •Approves other Board related materials (e.g., directors, acting through the Lead Director, may propose matters to be included on the agenda for a meeting) •Facilitates strong, independent oversight by leading executive sessions of independent directors at least after every quarterly Board meeting | ||
| PERFORMANCE, DEVELOPMENT AND SUCCESSION | ||
•Conducts individual director evaluations with independent directors, discussing topics including the Board’s culture, leadership structure, committee effectiveness, continuing education, skills and expertise, and other areas •In conjunction with the Governance Committee, reports to the Board on the Board’s annual self-assessment and provides recommendations for improvement, including relating to the Board’s oversight efforts and engagement with management •Collaborates with the Compensation Committee to oversee management succession and progression planning efforts •Meets directly with management of the Company | ||
| SHAREHOLDER ENGAGEMENT | ||
•Is available to, and consults and directly communicates with, shareholders and other key constituents, as appropriate •Participates in our annual off-season engagement efforts where we meet with many of our top shareholders to discuss our corporate responsibility practices, among other topics | ||
While we believe that combining the roles of Chairman and CEO is the most effective leadership structure for our Board and the Company at this time, our Bylaws and Corporate Governance Policies also permit a structure where the CEO would not serve contemporaneously as the Chairman of the Board should the separation of such roles be determined appropriate and in the best interests of MSCI and its shareholders in the future.
34 | MSCI | Corporate Governance | |||||||||||||||||||
Committees of the Board of Directors
Our Board has adopted a written charter for each of the Audit Committee, Compensation Committee, Governance Committee and Strategy Committee setting forth the roles and responsibilities of each committee. The Board and each committee may, from time-to-time, form and delegate authority to subcommittees when appropriate. Each committee annually reviews and assesses the adequacy of its charter and recommends any proposed changes to the Board for approval. You may access these charters through the “Corporate Governance” link under the “Investor Resources” tab found on our website’s Investor Relations homepage (https://ir.msci.com).
The table below provides detail on the composition of each of our designated standing committees for the following periods (i) April 26, 2022 to April 23, 2023 (“2022”) and (ii) effective April 24, 2023 (“2023”).
| Audit Committee | Compensation Committee | Governance Committee | Strategy Committee | |||||||||||||||||||||||
| 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | |||||||||||||||||||
Henry A. Fernandez(1) | ||||||||||||||||||||||||||
Robert G. Ashe | l | l | l | l | ||||||||||||||||||||||
Wayne Edmunds | l | l | l | l | ||||||||||||||||||||||
Catherine R. Kinney | l | l | ||||||||||||||||||||||||
Robin Matlock(2) | l | l | l | |||||||||||||||||||||||
Jacques P. Perold | l | l | l | l | ||||||||||||||||||||||
Baer Pettit(3) | ||||||||||||||||||||||||||
| Sandy C. Rattray | l | l | l | l | ||||||||||||||||||||||
| Linda H. Riefler | l | l | l | l | ||||||||||||||||||||||
| Marcus L. Smith | l | l | l | l | ||||||||||||||||||||||
| Rajat Taneja | l | l | ||||||||||||||||||||||||
| Paula Volent | l | l | l | l | ||||||||||||||||||||||
(1)Mr. Fernandez is not a formal member of any committee, but he attends most meetings for each committee.
(2)Ms. Matlock was appointed to the Board and to the Governance Committee on June 1, 2022.
(3)Mr. Pettit was appointed to the Board on January 30, 2023. Mr. Pettit is not a formal member of any committee, but he attends most meetings for each committee.
Chair
Member| 2023 PROXY STATEMENT | 35 | |||||||||||||||||||
AUDIT AND RISK COMMITTEE
MEMBERS: Wayne Edmunds (Chair) Robert G. Ashe Sandy C. Rattray Linda H. Riefler Rajat Taneja | MEETINGS HELD IN 2022: 9 •All members are independent within the meaning of the NYSE standards of independence for directors and audit committee members. •All members satisfy NYSE financial literacy requirements, each of Messrs. Ashe, Edmunds and Rattray and Ms. Riefler have accounting or other related financial management expertise, and Messrs. Ashe and Edmunds have been designated as “audit committee financial experts,” as defined by SEC rules. | ||||
PRIMARY RESPONSIBILITIES: •Oversees the integrity of the Company’s financial statements, internal controls over financial reporting, risk assessment and risk management (including major financial risk exposures and cybersecurity risks). •Oversees the Company’s internal controls over financial reporting, risk assessment and risk management. •Oversees the appointment, compensation, retention, termination and oversight of the work of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, including the independent auditor. •Evaluates the qualifications, independence and performance of the independent auditor, including obtaining a report of the independent auditor describing the items set forth in the Audit and Risk Committee’s charter, including those required by the Public Company Accounting Oversight Board. •Pre-approves audit and permitted non-audit services. •Reviews and evaluates the internal audit plan and the performance, responsibilities, budget and staffing of the Company’s internal audit function. •Reviews and discusses with management and the independent auditor the annual audited and quarterly unaudited financial statements included in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively. •Establishes procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters, and the review of any submissions received pursuant to such procedures. •Reviews reports from management relating to the status of compliance with legal and regulatory requirements. •Reviews with management (i) the Company’s key business risks, including the Company’s major strategic, operational, regulatory, litigation and financial risk exposures and technology and cybersecurity risks, (ii) policies and practices with respect to risk governance, risk assessment and risk management, and (iii) the steps that have been taken to assess, monitor and control such risks. •Reviews the Company’s enterprise risk management program, including its risk governance framework and risk management practices that facilitate the identification, assessment, mitigation and public reporting of risks that may affect the Company. KEY AREAS OF FOCUS IN 2022: •Risks associated with the evolving macro-economic environment, including inflation, the Great Resignation, geopolitical events and related global escalation of geopolitical tensions. •Cybersecurity and business continuity capabilities. •Data and technology governance, including process for internal audit action plans. •Risks associated with utilization of third-party data in our business. •Continued focus on the management and governance of data and research used in our ESG and Climate business. Further details on the role of the Audit and Risk Committee, as well as the Audit and Risk Committee Report, may be found in “Audit Matters—Audit and Risk Committee Report” on page 97 of this Proxy Statement. | |||||
Effective April 24, 2023, Robin Matlock and Marcus L. Smith will serve on the Audit Committee, and Mr. Smith will serve as the new Chair. Each of Ms. Matlock and Mr. Smith is independent within the meaning of the NYSE standards of independence for audit committee members and satisfies NYSE financial literacy requirements, and Mr. Smith has accounting or other relevant management expertise and has been designated as an “audit committee financial expert,” as defined by SEC rules. Effective April 24, 2023, Sandy C. Rattray and Linda H. Riefler will no longer serve on the Audit Committee.
36 | MSCI | Corporate Governance | |||||||||||||||||||
COMPENSATION, TALENT AND CULTURE COMMITTEE
MEMBERS: Linda H. Riefler (Chair) Wayne Edmunds Marcus L. Smith | MEETINGS HELD IN 2022: 6 •All members are independent within the meaning of the NYSE standards of independence for directors and compensation committee members. •All members qualify as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. | ||||
PRIMARY RESPONSIBILITIES: •Reviews the Company’s compensation strategy and reviews and approves the Company’s compensation and benefits programs, including reviewing and approving any incentive compensation and equity-based plans of the Company that are subject to Board approval and the Company’s stock ownership guidelines for the Executive Committee, which includes senior leaders from across the firm who drive MSCI’s strategy and operations. •Identifies, reviews and approves corporate goals and objectives relevant to the compensation of the Company’s executive officers and such other members of senior management as the Committee determines (the “Executives”), including pay-for-performance alignment; sets compensation for the Executives, and evaluates each Executive’s performance. •Reviews and approves the compensation of the Company’s CEO and each of the Company’s other Executives, including: base salary; annual incentive compensation; long-term incentive compensation; employment, severance, termination and change in control agreements; and any other compensation, ongoing perquisites or special benefit items. •Reviews non-employee director compensation every two years and recommends changes to the Board, when appropriate. •Periodically reviews, in consultation with the CEO, the Company’s management succession and progression planning and oversees the Company’s talent management, progression planning, career progression and retention strategies and programs, including the Company’s learning and leadership development and DE&I programs. •At least annually, reviews each Executive’s progress on DE&I initiatives, including key performance metrics. •Periodically reviews the Company’s initiatives and strategies relating to corporate culture, including considering the Company’s performance, engagement and pay-for-performance alignment when reviewing the workplace environment and culture and periodic reviews of the results of the Company’s employee engagement and external surveys. •Reviews and discusses with management the “Compensation Discussion and Analysis” section of the Company’s annual proxy statement, prepares the Compensation, Talent and Culture Committee Report required by SEC rules and recommends to the Board the inclusion of each in the Company’s annual proxy statement (included on pages 58 and 81 of this Proxy Statement, respectively). •Reviews and makes recommendations to the Board with respect to the frequency with which the Company will conduct “Say on Pay” votes and reviews and approves the proposals regarding the “Say on Pay” vote. •Considers the independence requirements of the NYSE prior to selecting a compensation consultant, legal counsel or other advisor and evaluates the performance of such advisors and approves all related fees. •At least annually, reviews and assesses the adequacy of the Company’s Global Human Rights Policy, including any related disclosures, and recommends any proposed changes to the Board, if required. KEY AREAS OF FOCUS IN 2022: •Oversight of executive compensation programs, including introduction of PSOs, creation and evaluation of performance scorecards and Executives’ compensation. •Senior leader succession and progression planning. •Our global DE&I strategy and executive accountability. •Continuing focus on the Company’s performance culture and monitoring of the Company’s hybrid working approach. Compensation Committee Interlocks and Insider Participation: No member of the Compensation Committee is now, or has been, an officer or employee of the Company, or had any relationship with the Company since January 1, 2022 requiring disclosure under applicable SEC rules on the disclosure of transactions with related persons. None of our NEOs currently serves or served during 2022 on the board of directors or compensation committee of another company at any time during which an executive officer of such company served on MSCI’s Board or Compensation Committee. | |||||
Effective April 24, 2023, Jacques P. Perold and Paula Volent will serve on the Compensation Committee, and Mr. Perold will serve as the new Chair. Mr. Perold and Ms. Volent qualify as “non-employee” directors for purposes of Rule 16b-3 under the Exchange Act. Mr. Perold and Ms. Volent also confirmed in connection with their appointments that there exists no Compensation Committee interlocks or insider participation. Effective April 24, 2023, Marcus L. Smith will no longer serve on the Compensation Committee.
| 2023 PROXY STATEMENT | 37 | |||||||||||||||||||
GOVERNANCE AND CORPORATE RESPONSIBILITY COMMITTEE
MEMBERS: Jacques P. Perold (Chair) Catherine R. Kinney Robin Matlock Paula Volent | MEETINGS HELD IN 2022: 5 •All members are independent within the meaning of the NYSE standards of independence for directors. | ||||
PRIMARY RESPONSIBILITIES: •Annually reviews the size and composition of the Board and its committees in light of the current needs of the Board, the Company and each committee and considers issues of judgment, diversity, age, skills, background and experience in doing so, including by considering succession planning for the Board and key leadership roles on the Board and its committees. •Oversees searches for candidates for election to the Board and recommends criteria and individuals for appointment to the Board and its committees. As part of the search process for each new director, instructs any search firm to identify a diverse slate of candidates. •Retains any search firm that assists the Governance Committee in identifying candidates and maintains sole authority to approve all such search firms’ fees and other retention terms. •Makes recommendations to the Board as to determinations of director independence. •Oversees and approves the process and guidelines for the annual evaluation of performance and effectiveness of the Lead Director, the Board and its committees, and individual directors. •Oversees the Company’s policies and initiatives related to corporate responsibility matters, including environmental stewardship (such as related to climate change) and other sustainability matters. Reviews with the Company’s management, including the Chief Responsibility and Diversity Officer, the Company’s performance against its corporate responsibility goals, metrics, policies, products and disclosure, and other corporate responsibility initiatives and priorities undertaken by the Company. •Evaluates the Company’s shareholder engagement practices on corporate responsibility matters and considers feedback received from shareholders. •At least annually, reviews and assesses the adequacy of the Company’s Corporate Governance Policies and Code of Ethics and Business Conduct and oversees compliance therewith. Reviews with the Company’s management, including the Head of Compliance, the Company’s Compliance program, priorities, initiatives, risks and mitigations. •At least annually, reviews and assesses the adequacy of the Company’s Related Person Transactions Policy and reviews related person transactions pursuant to the Related Person Transactions Policy. •At least annually, reviews and assesses the adequacy of the Company’s Corporate Political Activities Policy, including any related disclosures, and recommends any proposed changes to the Board, if required. KEY AREAS OF FOCUS IN 2022: •On an ongoing basis, Board composition and Board skills, with a focus on enhancing diversity in ongoing director searches. •Director search process resulting in the appointment of one new director in 2022. •Policies and initiatives related to the Company’s climate commitments, including updated carbon reduction targets. •Latest governance trends, including shareholder rights, shareholder proposal practice, the advent of the universal proxy cards and shareholder activism. | |||||
Effective June 1, 2022, Robin Matlock began serving on the Governance Committee. Effective April 24, 2023, Sandy C. Rattray and Linda H. Riefler will serve on the Governance Committee, and Ms. Riefler will serve as the new Chair. Effective April 24, 2023, Jacques P. Perold and Paula Volent will no longer serve on the Governance Committee.
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STRATEGY AND FINANCE COMMITTEE
MEMBERS: Robert G. Ashe (Chair) Jacques P. Perold Sandy C. Rattray Marcus L. Smith Paula Volent | MEETINGS HELD IN 2022: 7 •All members are independent within the meaning of the NYSE standards of independence for directors. | ||||
PRIMARY RESPONSIBILITIES: •Evaluates management’s recommendations with respect to the strategic direction of the Company and regularly consults with the Board on the objectives of the Company’s strategic plans and management’s implementation of such plans. •Reviews and makes recommendations with respect to the agenda for Board strategy meetings with management, taking into account issues important to the full Board. •Reviews and makes recommendations to the Board with respect to any mergers, combinations, acquisitions, divestitures, joint ventures, minority investments and other strategic transactions, and any financings for mergers, acquisitions and other significant financial transactions, in each case requiring the Board’s approval. •Reviews and oversees management’s plans and objectives for the capitalization of the Company, including target leverage levels and the structure and amount of debt and equity required to meet the Company’s financing needs, and make recommendations to the Board as appropriate. •Oversees the Company’s share repurchase programs, subject to Board-approved policies. •Reviews and recommends for approval by the Board changes to the Company’s dividend policy. KEY AREAS OF FOCUS IN 2022: •Advised management on its capital allocation program, including with respect to its approach to share repurchases, financing considerations and increasing the Company’s quarterly dividend. •Focused on the competitive landscape and advised management on merger, partnership and acquisition opportunities, with a focus on the ESG and Climate and Real Assets businesses. •Collaborated with management on the agenda for the Board’s two-day strategy session, to ensure alignment with internal investments and growth opportunities. | |||||
Effective April 24, 2023, Sandy C. Rattray will serve as the new Chair of the Strategy Committee, and Robert G. Ashe will no longer serve as the Chair.
| 2023 PROXY STATEMENT | 39 | |||||||||||||||||||
Engagement and Evaluation of our Board
Attendance at Board Meetings and Annual Meeting of Shareholders
EACH DIRECTOR ATTENDED AT LEAST | |||||||||||
8 BOARD MEETINGS | 8 EXECUTIVE SESSIONS, WHICH FOLLOWED THE BOARD MEETINGS | 3 OCCASIONS WHERE THE BOARD TOOK ACTION BY UNANIMOUS WRITTEN CONSENT | 75 percent OF THE TOTAL BOARD MEETINGS AND COMMITTEE MEETINGS ON WHICH THE DIRECTOR SERVED THAT WERE HELD WHILE THE DIRECTOR WAS A MEMBER | ||||||||
Our Board met eight times, held independent director executive sessions following all eight of those meetings and took action by unanimous written consent on three occasions during 2022. Each director attended at least 75% of the total meetings of the Board and committees on which the director served that were held while the director was a member.
Discussions between the Board and management on strategic direction, new business opportunities and the scope and mix of the Company’s products were held at each quarterly Board meeting. In addition to formal meetings, members of our Board informally interact with senior management on a periodic basis and participate in informal director education sessions.
Our Corporate Governance Policies state that directors are expected to attend the annual meetings of shareholders. In 2022, nine of our ten directors who were on the Board at the time attended our annual meeting of shareholders. Ms. Matlock and Mr. Pettit joined the Board in June 2022 and January 2023, respectively, and, therefore, did not attend the annual meeting of shareholders in 2022.
Independent Director Meetings
Our Corporate Governance Policies provide that our Lead Director will preside over non-employee director sessions. Mr. Ashe presided over independent director sessions following all Board meetings during 2022. The Board’s standing committees also have a practice of holding executive sessions after their quarterly meetings. Our Corporate Governance Policies further provide that if any non-employee directors are not independent, then the independent directors will meet at least once a year in an independent director session and the Lead Director will preside over each such independent director session. During 2022, all non-employee directors were independent.
Director Education and Orientation Program
Directors are encouraged and provided with opportunities to attend educational sessions on subjects that can assist them in performing their duties. Pursuant to the Director Education Policy, the Company will reimburse directors for reasonable costs incurred from attending these sessions. Directors also participate in an annual review of leading corporate governance practices by corporate governance experts, briefing sessions on topics that present special risks and opportunities and updates on accounting topics. The Company is also part of a peer-engaged program designed to enhance director performance, and we leverage virtual platforms to provide deep-dive sessions on certain aspects of MSCI’s business outside of quarterly meetings including on emerging topics such as ESG and climate, cybersecurity and technology partnerships.
All new directors participate in a director orientation program that includes briefings by senior management representing the heads of product lines and key functional areas on topics that include, among others, the Company’s strategic plans, capital structure, product overviews, historical financial performance and key policies and practices, including compliance and trading policies. We leverage MSCI’s hybrid work environment to hold orientation sessions virtually to provide for increased global participation by senior management. New directors are also encouraged to attend all committee meetings during their first year on the Board.
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Board and Individual Director Evaluations
The Board believes a rigorous self-evaluation process is important for its effectiveness. In addition to the ongoing assessment of the functioning of the Board, each year, our directors formally evaluate the effectiveness of the Board and its committees through a self-assessment administered by our directors and management. Directors respond to questions relating to the Board’s culture, leadership structure, committee effectiveness, continuing education, skills and expertise, and other areas. Director views are also discussed in one-on-one sessions between each director and our Lead Director. This collective feedback is discussed during executive session and, where appropriate, addressed with management.
| 1 | Members of the Governance Committee provide thoughts on the factors to be used in evaluating the Board, its committees and individual directors. The Corporate Secretary prepares a questionnaire based on these factors and solicits feedback from others, including the General Counsel and the Chief Responsibility and Diversity Officer. The Governance Committee also oversees and approves the process and guidelines for the annual evaluation of the performance and effectiveness of the Lead Director. | |||||||||||||||||||||||||
| INITIATION OF PROCESS | ||||||||||||||||||||||||||
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| 2 | Each director completes an anonymous self-assessment questionnaire covering a range of topics, including Board structure, Board culture, diversity, refreshment priorities, oversight of risk and the roles of the Board and its committees. On an annual basis, the Lead Director also conducts individual director evaluations through interviews with each director. | |||||||||||||||||||||||||
| EVALUATION | ||||||||||||||||||||||||||
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| 3 | The Corporate Secretary compiles the quantitative and qualitative data from this evaluation and consults with the Lead Director and the Chair of the Governance Committee on the results. The Lead Director and Chair of the Governance Committee review the results with the full Board in executive session. | |||||||||||||||||||||||||
| DISCUSSION | ||||||||||||||||||||||||||
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| 4 | The Lead Director and Chair of the Governance Committee discuss with the management the feedback provided by the Board and any enhancements in practices that may be warranted. Feedback for management is relayed to relevant teams to address the Board’s comments. | |||||||||||||||||||||||||
| FOLLOW-UP | ||||||||||||||||||||||||||
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| 5 | REVIEW OF STRATEGIC GOALS: •Board and committee agendas increasingly focus on strategic and forward-looking topics •Increasing use of scorecards to measure against strategic objectives and progress FOCUS ON CYBERSECURITY AND BUSINESS CONTINUITY: •Emphasis on cyber preparedness •Board education session on cybersecurity and business continuity planning, including scenario exercises DIRECTOR EDUCATION: •Leveraged virtual platforms to provide deep-dive sessions on certain aspects of MSCI’s business outside of quarterly meetings, including ESG and climate and cybersecurity | FOCUS ON ESG AND CLIMATE: •Governance Committee responsible for ESG and climate oversight •Chief Responsibility and Diversity Officer provides quarterly reports to the Governance Committee •For Management Committee members, climate commitment goals added to KPI goals tied to individual compensation SUCCESSION AND PROGRESSION PLANNING AND TALENT MANAGEMENT: •Potential successors to senior management invited to speak at Board and Committee meetings for additional exposure •Succession and progression planning at levels beyond the Executive Committee; accelerated development of current internal candidates | ||||||||||||||||||||||||
| FEEDBACK AND FOCUS AREAS | ||||||||||||||||||||||||||
| 2023 PROXY STATEMENT | 41 | |||||||||||||||||||
The Board may also periodically engage a third-party evaluation firm as part of this evaluation process. In 2019, a third-party evaluation firm met with certain members of senior management and members of the Board. The feedback from the third-party evaluation firm was considered by the Board and, where appropriate, the Board recommended enhancements to its practices based on such feedback.
Shareholder Engagement
We believe that engaging with our shareholders, prospective shareholders and sell-side analysts is the best way to address the issues that matter most to them. Dialogue with these constituencies helps us understand their perspectives on the Company’s goals and expectations for performance, and helps us identify issues that might affect our long-term strategy, corporate governance and compensation practices. As such, we offer several opportunities to provide feedback to our Board and senior management, including inviting certain shareholders to address the Board to present their views on the Company.
Our Investor Relations team leads year-round outreach efforts with our investors and the investment community. During these engagements, we typically discuss topics such as market trends affecting our industry, the competitive environment, our go-to-market strategy, our financial performance and our overall outlook for the Company.
2022 Shareholder Engagement
In 2022, we held over 265 meetings with our shareholders, prospective shareholders and sell-side analysts, during which we met with shareholders representing approximately 60% of our shares outstanding to gain valuable insights on the issues that matter most to our shareholders, with participation at certain meetings by our CEO, President and COO, CFO, Head of Investor Relations, Chief Responsibility and Diversity Officer and other members of senior management and the Board. In 2022, our team also attended 21 investor conferences and 6 non-deal roadshows and analyst-sponsored events to discuss topics including long-term growth opportunities, financial performance, capital allocation and corporate responsibility.
Our Year-Round Shareholder Engagement Program
42 | MSCI | Corporate Governance | |||||||||||||||||||
| Annual Corporate Responsibility Roadshow | |||||
We engage with shareholders before, during and after the proxy season, including by hosting an annual Corporate Responsibility Roadshow each fall, to review and receive feedback on our governance practices, corporate responsibility efforts, human capital management strategies and the design of our executive compensation program. The feedback we receive from these discussions, as well as from third-party rating agencies, is carefully considered by the Board, the Governance Committee and the Compensation Committee.
Our engagement team, which included members of our Legal, Investor Relations, Corporate Responsibility, DE&I, Executive Compensation and Talent teams, met with shareholders representing approximately 41.9% of our outstanding shares in 2022. Members of our Governance Committee, our Lead Director and Chair of the Strategy Committee and the Chair of the Compensation Committee participated in the Corporate Responsibility Roadshow as well, with a director present at meetings with shareholders representing approximately 39.9% of our outstanding shares.
| Key Topics Discussed at Corporate Responsibility Roadshow in 2022 | |||||||||||
HUMAN CAPITAL MANAGEMENT •Future of Work •Global Workforce •DE&I Progress •Pay Equity Assessment •Senior Talent Pipeline and Progression | EXECUTIVE COMPENSATION •Long-term Incentive Plan •ESG Metrics in Executive Compensation •Increased Stock Ownership and Retention Requirements | CORPORATE GOVERNANCE •Board Refreshment •Board Evaluation Practices •Board Culture •Shareholder Proposals | CLIMATE COMMITMENTS •Supply Chain Considerations •Carbon Reduction Targets •SBTi Certification | ||||||||
Investors provided valuable comments and perspectives during our Corporate Responsibility Roadshow on MSCI’s human capital management, executive compensation, board culture, corporate governance and business strategy, among other topics. In particular, shareholders focused on new disclosures and initiatives, including our Future of Work model, SBTi certification, executive compensation updates (including the introduction of PSOs) and various employee-related disclosures, including EEO-1 reporting and the results of our pay equity assessment. We also discussed our corporate responsibility efforts and disclosure and the structure, composition, evaluation and refreshment practices of our Board. We gained constructive feedback during these meetings, which was shared with our Board and management to drive continuing improvements in our corporate responsibility policies and practices.
| 2023 PROXY STATEMENT | 43 | |||||||||||||||||||
| RECENT ENHANCEMENTS IN RESPONSE TO SHAREHOLDER FEEDBACK | ||||||||||||||||||||
WHAT WE HEARD |  | WHAT WE DID |  | WHY | ||||||||||||||||
Request for additional detail on timelines and actions to reach net-zero | Set 2025 milestones to achieve 100% renewable electricity and reduce emissions Set enhanced 2030 near-term targets to reduce absolute scope 1 and 2 emissions by 80% and to reduce absolute scope 3 emissions by 50% Received SBTi approval for near-term, long-term and net-zero targets | As a public company that provides net-zero investment tools and has called on capital markets participants to support decarbonization, we strive to set appropriate emissions reductions targets and be transparent about our own emissions and impact | ||||||||||||||||||
Request for EEO-1 disclosure or greater disclosure on changes to gender and ethnicity composition | Published 2021, 2020 and 2019 Consolidated EEO-1 Reports Disclosed diversity data aligned to SASB categories for second year Pay equity assessment identified no meaningful differences in pay based on gender globally or based on race or ethnicity in the U.S. | We believe a diverse workforce and a culture of equity and inclusion can lead to improved innovation, employee engagement and other positive business outcomes | ||||||||||||||||||
Request to improve navigation of MSCI’s corporate responsibility disclosures | Re-designed the MSCI Corporate Responsibility website for easier navigation and organized all reports on one Sustainability Reports and Policies page | We believe it is important to convey transparent information around our corporate responsibility efforts | ||||||||||||||||||
| Request to emphasize skills and diversity of the Board | Enhanced Board diversity and skills disclosure, including by disclosing on individual level Fully updated core competency categories | We believe it is important to convey transparent information around our Board diversity, skills and composition | ||||||||||||||||||
Please see page 66 of this Proxy Statement for additional information on our engagement efforts specific to compensation matters.
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Oversight by our Board
Risk Oversight Responsibilities and Processes
Our Board is responsible for, and committed to, the oversight of MSCI’s long-term strategic plan and significant enterprise-wide risks. In carrying out this responsibility, the Board’s role in risk oversight is consistent with the Company’s leadership structure, with management having day-to-day responsibility for identifying, evaluating and managing the Company’s risk exposure and the Board having the ultimate responsibility for overseeing risk management governance, with a focus on the Company’s most significant risks. In this role, the Board is responsible for ensuring that the risk-management processes designed and implemented by management are functioning as intended and that necessary steps are taken to assess, monitor and control key business risks.
The risks described include those formally monitored at a Board or committee level, as part of the enterprise risk management (“ERM”) program or pursuant to committee charters. These risks do not represent a complete list of all risks that are considered and addressed from time to time by the Board, its committees or MSCI management. For more information on risks that affect our business, please see our most recent Annual Report on Form 10-K and other filings we make with the SEC.
Enterprise Risk Management Program
| ERM PROGRAM | ERM PROCESS | ||||
•Evaluates risk in numerous areas within MSCI, including technology; cybersecurity, privacy and data protection; clients; people, including talent management and DE&I; financial resilience; legal, regulatory and compliance; and corporate responsibility, including areas such as climate risk •Informed by our management-level Enterprise Risk Oversight Committee (“EROC”), chaired by our CFO •Provides the flexibility to make changes and to identify new risks on an on-going basis, and senior leaders engage with the CFO and Enterprise Risk Management Officer to escalate risks as appropriate | •A quarterly and ongoing process designed to identify, assess and manage MSCI’s risk exposures over the short-, intermediate and long-term, including by consideration of a variety of factors as part of a single risk-assessment framework that considers: •velocity, or potential speed of onset, of a risk, •impact of a risk, and •likelihood of a risk •On a quarterly basis, the Audit Committee is updated on MSCI’s ERM program by our Enterprise Risk Management Officer, including an overview of risks and trends •Quarterly presentations to the Audit Committee include more detailed discussions of emerging risk topics and trends; the Chair of the Audit Committee informs the Board of any key updates during reports to the Board | ||||
Role of the Board, Committees and Management
In order to maintain effective Board oversight, the Board delegates to individual committees certain elements of its oversight function, as described below. The Board then receives regular updates from its committees on individual categories of risk, including strategy, reputation, operations, climate change, corporate responsibility, people, technology, data, legal and regulatory. Our Board’s focus on overseeing risk management also enhances our directors’ ability to provide insight and feedback to senior management, who regularly interact with, and report to, the Board and its committees on risk matters.
| 2023 PROXY STATEMENT | 45 | |||||||||||||||||||
Board of Directors | ||||||||||||||
The full Board reviews the risks associated with MSCI’s strategic plan and discusses the appropriate levels of risk in light of MSCI’s business objectives. This review is done through an annual strategy review process and from time-to-time throughout the year as part of the Board’s ongoing review of corporate strategy. On an ongoing basis, the Board receives quarterly written reports on enterprise-level risks and receives regular reports from each of its committees on their areas of risk oversight. | ||||||||||||||
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| Committees | ||||||||||||||
| Committees are responsible for monitoring and reporting to the full Board on risks associated with their respective areas of oversight. In connection with its oversight responsibilities, each Committee meets with the members of management who are primarily responsible for the management of risk in their respective areas, including, among others, MSCI’s CFO, Chief Human Resources Officer, General Counsel, Head of Compliance, Chief Technology Officer, Chief Information Security Officer, Global Controller and Principal Accounting Officer, Corporate Secretary, Head of Internal Audit and Enterprise Risk Management Officer. | ||||||||||||||
Compensation Committee •Oversees risks associated with MSCI’s compensation practices (including reviewing whether any risks arising from MSCI’s compensation practices are reasonably likely to have a material adverse effect on MSCI) in consultation with external compensation consultants •Oversees risks associated with MSCI’s human capital management strategies, including related to MSCI’s DE&I programs and practices | Governance Committee •Oversees risks related to our overall corporate governance (including the effectiveness, structure and succession of the Board), related person transactions and political activities practices and disclosure •Monitors evolving risks related to ESG and climate matters, including corporate responsibility strategy, programs and reporting •Receives annual reports from our Head of Compliance and the Chief Compliance Officer of MSCI ESG Research LLC, an SEC-registered investment advisor •Receives annual update on governance trends and benchmarking of peers and best practices | Strategy Committee •Oversees risks related to certain financial matters, including capital allocation, financial planning, credit and liquidity and related policies •Monitors and provides guidance on strategic objectives, including on mergers, partnerships and acquisition opportunities, execution and integration | ||||||||||||
Audit Committee •Oversees MSCI’s ERM activities, including receiving quarterly reports from the Enterprise Risk Management Officer •Oversees MSCI’s accounting and financial reporting processes and the integrity of MSCI’s financial statements and internal controls, including receiving quarterly reports from MSCI’s independent auditor •Oversees MSCI’s technology and cybersecurity risks, with quarterly reports from the Chief Information Security Officer, informed by discussions with, and assessments from, external information security advisors •Oversees MSCI’s internal audit function, with quarterly reports from the Head of Internal Audit •Receives regular reports from MSCI’s Disclosure Committee, which meets at least quarterly to review the adequacy of the Company’s disclosure controls and procedures | ||||||||||||||
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| Management | ||||||||||||||
Our management team has day-to-day responsibility for identifying, assessing and managing risks and opportunities. In assessing these risks and opportunities, management regularly interacts with outside advisors, including external information security advisors, compensation consultants, counsel, financial advisors and others. The Company’s EROC oversees the Company’s key risk management activities to ensure that the Company is identifying, evaluating and managing risks that may have an impact on the Company’s ability to achieve its operational and strategic objectives. Other management-level teams and committees with risk oversight responsibilities including the following: | ||||||||||||||
46 | MSCI | Corporate Governance | |||||||||||||||||||
Business Resiliency | Corporate Responsibility | Cybersecurity | ||||||
Develops and executes strategies and processes to assess the severity, probability and scale of business interruption events and supports business continuity plans, with regular reporting to the Audit Committee | Assesses ESG and climate-related risks and leads initiatives of the Company’s corporate responsibility program with regular reporting to the Audit Committee (via the ERM framework) and the Governance Committee | Assesses and mitigates the risks posed by cybersecurity incidents and cyber-attacks impacting the Company’s data and information systems, with regular reporting to the Audit Committee | ||||||
Compliance | Disclosure Committee | Internal Audit | ||||||
Oversees risk associated with the Company’s ethics and compliance programs, led by our Head of Compliance, who reports directly to our General Counsel and provides updates to our Governance Committee on an annual basis, with consideration of relevant policies and practices throughout the year | Assesses and mitigates risk associated with the Company’s disclosure controls and procedures and considers disclosure regarding various specific risks, including regulatory, litigation, cybersecurity and key client risks, with regular reporting to the Audit Committee and regular review by the Enterprise Risk Management Officer of key disclosures | Responsible for acting as an independent assurance function and closely coordinates with the risk management program to ensure the annual audit plan is informed by the Company’s key risks, with regular reporting to the Audit Committee, including quarterly executive sessions during which management is not present | ||||||
Cybersecurity and Information Security Awareness
Our Board recognizes that the security of our technology is integral to our products, our business processes and our infrastructure. The mission of our management-level Information and Technology Risk Oversight Committee (“ITROC”), led by our Chief Information Security Officer (“CISO”) and including senior leaders such as our President and COO, CFO and General Counsel, among others, is to provide oversight relating to cybersecurity and technology-related risks that may present significant impacts to our operations, clients, reputation and financial position. Our IT risk program also includes an incident response plan that provides controls and procedures for timely and accurate reporting of any material cybersecurity incident, on-going internal and external assessments of our IT controls and security awareness training for employees.
On a quarterly basis, our CISO updates the Audit Committee on the Company’s IT risk program, including an overview of risks and trends, that is also made available to the full Board. In addition, the Audit Committee receives updates about the results of assessments conducted by outside advisors who provide independent assessments of our IT risk program and our response preparedness. The Chair of the Audit Committee informs the Board of any key updates during quarterly reports to the Board.
Privacy Awareness
Integrated with our IT security program and our enterprise risk program is our global privacy program. Our privacy program is led by our Chief Privacy Officer and the members of the MSCI Privacy Office, and it reports to our CISO. Our Privacy Steering Committee meets on a quarterly basis to review key risks and trends, progress on key initiatives, focus topics and regulatory developments. The Privacy Steering Committee is an essential component of our efforts to safeguard the processing of personal, sensitive and confidential data at MSCI and provides cross-functional oversight of our privacy program.
| 2023 PROXY STATEMENT | 47 | |||||||||||||||||||
Corporate Responsibility
As a leader in providing ESG and climate solutions to investors, we also aim to demonstrate leading corporate responsibility practices and policies that are meaningful to our various stakeholders, including our shareholders, clients, employees and local communities. This commitment includes our response to climate change and how we promote DE&I in our workforce.
Our commitment to corporate responsibility is embodied in four pillars:
| Our Approach to Corporate Responsibility | |||||||||||||||||||||||
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| 1 | ENABLING SUSTAINABLE INVESTING Offer tools and content for investors globally to manage their ESG and climate risks and opportunities | 2 | ENVIRONMENTAL SUSTAINABILITY Manage carbon emissions and climate risks and opportunities, and implement sustainable operational practices | ||||||||||||||||||||
| 3 | SOCIAL PRACTICES Serve our people through areas of focus including DE&I initiatives, talent practices, benefits and outreach programs | 4 | GOVERNANCE PRACTICES Implement policies and practices that reflect MSCI’s commitment to strong governance | ||||||||||||||||||||
Focus on Climate: Key Highlights
We take our commitment to climate seriously. As a leader in ESG and climate research and applications, MSCI is also committed to do its part to address climate change. We are focused on reducing our carbon footprint and ensuring our approach is well-aligned with our tools and solutions. Some recent areas of progress on our Company’s climate considerations include the following.
 | NEW COMMITMENTS & POLICIES |  | NEW ACTIONS |  | TRANSPARENCY THROUGH REPORTING | ||||||||||||
•Set 2025 milestones to achieve 100% renewable electricity and reduce GHG emissions •Accelerated timeline for reducing absolute Scope 1, 2 and 3 GHG emissions from 2035 to 2030 •Enhanced science-based near-term (i.e., 2030) targets to reduce absolute Scope 1 and 2 GHG emissions by 80% and to reduce absolute Scope 3 GHG emissions by 50%, compared to prior targets of 50% and 20%, respectively | •Supplier Sustainability and Diversity Team engaged with key suppliers to set, and report progress on meeting, science-based carbon reduction targets •Conducted Board education sessions on ESG and climate •Disclosed 2021 emissions metrics across Scopes 1, 2 and 3 reflecting reductions since our 2019 baseline year | •Enhanced our webpage dedicated to Sustainability Reports and Policies, including disclosing: •Fourth CDP Report, which received a score of A- •TCFD Report •Climate Transition Report •Water Usage Report •Received approval for science-based near-term, long-term and net-zero GHG emissions reduction targets by the Science Based Targets initiative (SBTi) | |||||||||||||||
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Corporate Responsibility Governance
We ensure the robustness of oversight over our corporate responsibility efforts through our governance process. Through a well-established framework and cross-functional committee structure, with leaders from across the organization, MSCI incorporates corporate responsibility into its core strategy—reflecting our belief that sustainable practices are essential to long-term growth. In line with this focus, the Governance Committee oversees the Company’s significant corporate responsibility matters, including corporate responsibility priorities and disclosure, with management having day-to-day responsibility over these efforts.
At the Board level, our Chief Responsibility and Diversity Officer provides written updates to the Governance Committee in advance of each quarterly meeting on MSCI’s corporate responsibility efforts. In addition, at least twice per year, she presents to the Governance Committee on key topics and management’s performance against our corporate responsibility initiatives. Key developments are shared with the full Board during the Governance Committee’s quarterly report to the Board.
The Board’s Oversight of Corporate Responsibility
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| Governance Committee | Compensation Committee | Audit Committee | Strategy Committee | ||||||||||||||||||||||||||
•Chief Responsibility and Diversity Officer provides quarterly updates •Corporate Secretary oversees annual review of charters and Board policies •Head of Compliance provides annual update •External Counsel leads annual review of governance trends and benchmarking of peers and best practices •Governance Committee oversees shareholder engagement on corporate responsibility matters, including participation by Board members in the annual Corporate Responsibility Roadshow | •Chief Human Resources Officer oversees quarterly meetings and senior leader succession and progression planning reviews •Chief Responsibility and Diversity Officer provides updates on DE&I initiatives and strategic enhancements •Head of Compensation and Benefits incorporates the Compensation Committee’s recommendations into executive compensation program •Compensation Consultant advises Compensation Committee on risk assessment and peer and best practices | •CFO and Global Controller oversee quarterly meetings •Independent Auditor oversees integrity in financial reporting •Internal Auditor reports to Audit Committee and provides quarterly updates on audit activities, findings and assurance •Enterprise Risk Management Officer and Chief Information Security Officer provide quarterly updates •General Counsel provides quarterly updates on legal and regulatory matters | •CFO oversees quarterly meetings •CFO partners with Strategy Committee to develop agenda for annual strategy meeting •Heads of Product Lines present strategy at annual strategy meeting | ||||||||||||||||||||||||||
Risk Oversight of Corporate Responsibility
MSCI’s EROC is also integrated into our corporate responsibility governance. The EROC oversees MSCI’s risk-management activities to ensure that MSCI has an effective process designed to identify, evaluate and manage risks that may have an adverse impact on MSCI’s ability to achieve its operational and strategic objectives. Climate-related risks, including transition and physical climate risks, are integrated into MSCI’s ERM reporting. The Audit Committee receives a quarterly update from the Enterprise Risk Management Officer on the work of the EROC, which includes reporting on climate-related risks.
Additional information on our corporate responsibility efforts, including our published sustainability reports and carbon-emissions reporting, can be found on our Corporate Responsibility website (https://www.msci.com/who-we-are/corporate-responsibility).
| 2023 PROXY STATEMENT | 49 | |||||||||||||||||||
Human Capital Management
MSCI is committed to creating a performance and growth culture with a high degree of employee engagement. Our talent and leadership development programs are designed to ensure we have the right people with the necessary skills to deliver on MSCI’s strategy, including a workplace that values and promotes diversity, equity and inclusion.
The Compensation Committee has oversight over talent management matters, including efforts relating to succession and progression planning, career progression and retention strategies, and learning and leadership development programs. In addition, this Committee oversees our efforts relating to our corporate culture, such as our DE&I strategy and our employee engagement. Our Chief Human Resources Officer, our Chief Responsibility and Diversity Officer and our Head of Talent report to our Board regularly on DE&I initiatives, our work towards enhancing corporate culture and our senior talent pipeline and talent management strategies. We also engage with our shareholders around these aspects of our human capital management strategies. Additional information on our human capital management priorities can be found on the “Corporate Responsibility” section of our website (https://www.msci.com/who-we-are/corporate-responsibility/social-practices).
50 | MSCI | Corporate Governance | |||||||||||||||||||
Human Capital Priorities
 | LEARNING AND DEVELOPMENT | 2022 NOTABLE DEVELOPMENTS •Formally launched “Future of Work,” which introduced flexibility of when and where employees work, while providing evolving technology to enable employees to be productive, whether working inside an MSCI office or remotely •In December 2022 employee engagement survey, achieved a 78% response rate, and the percentage of respondents characterized as fully engaged was 74%, the highest since we implemented the survey in 2011 •Published 2021, 2020, and 2019 Consolidated EEO-1 Reports •Pay equity assessment identified no meaningful differences in pay based on gender globally or race or ethnicity in the U.S. •Disclosed diversity data aligned to SASB categories for second year •Launched Executive Committee-sponsored Global Orientation Program for all new hires | |||||||||
We want our employees to actively participate in taking responsibility for their professional growth, and we provide the tools, programs and training to enable them to do so. We help our employees understand how their work and potential aligns with our overall strategy, while providing regular feedback and coaching to help develop their careers. MSCI offers on demand learning tools covering a wide range of topics with numerous options for employees to pursue self-paced career development opportunities. We also sponsor and reimburse employees for certain certifications and membership dues, ongoing education and relevant industry conferences and seminars. | |||||||||||
 | DIVERSITY, EQUITY AND INCLUSION | ||||||||||
We are designing a unified, company-wide approach to DE&I: establishing a shared focus, organizing legacy activity through a new lens and charting a clear path forward. We have operationalized our DE&I efforts across three strategic pillars relating to talent, senior leader engagement and accountability, and stakeholder engagement. We link 10% of target annual cash incentive for all Managing Directors under our AIP program to DE&I Goals, and we created an Executive Accountability Framework to establish the philosophy and process for assessment of these DE&I Goals and overall DE&I performance. | |||||||||||
| EMPLOYEE WELL-BEING | TOTAL EMPLOYEES: GENDER(1)(2) | |||||||||
We have a long-standing commitment to the health, safety and well-being of our employees. We have increased communications about employee assistance programs that provide mental health and emotional well-being support as well as resources to help manage stress and care for individuals and their families. We are also committed to supporting our employees as they operate in a hybrid work environment through a comprehensive ergonomics program. Our Global Human Rights Policy reflects our commitment to a safe, inclusive and diverse workplace, and is annually reviewed by the Compensation Committee. We are also proud to provide highly competitive benefits to our employees and their family members. We work to ensure our benefits program remains aligned with — and in many cases exceeds — current practices in the market. |  Male  Female | ||||||||||
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U.S. EMPLOYEES: RACE/ETHNICITY(1)(3) | |||||||||||
| Asian | Black or African American  Hispanic or Latino | ||||||||||
 White |  American Indian or Alaska Native, Native Hawaiian or Other Pacific Islander or Two or More Races | ||||||||||
 | COMMUNITY AND PHILANTHROPY |  | |||||||||
We encourage and support community involvement through global and local initiatives. We empower teams at all our office locations to identify and support organizations that have positively impacted their communities. Local and regional employee resource groups and office leadership teams determine where they want to have an impact. | |||||||||||
(1) Data as of December 31, 2022.
(2) 4% of global employees have not identified gender and are not included in the data calculations.
(3) 14% of U.S. employees have not identified race/ethnicity and are not included in the data calculations.
| 2023 PROXY STATEMENT | 51 | |||||||||||||||||||
Management Succession Planning
One of the Board’s principal responsibilities is to ensure appropriate succession and progression plans are in place for our senior management, including reviewing our executive talent and our potential leadership bench. The Compensation Committee oversees the process for succession and progression planning for senior management positions and reports on its activities to the full Board. Our CEO and our President and COO also meet regularly with our functions to review talent plans with an aim to identify top talent, including diverse talent, who have the most potential to progress to senior roles at MSCI.
To align the management succession and progression process with MSCI’s strategic objectives, the Compensation Committee consults with the CEO to periodically review the Company’s plans, including for the CEO and other executives. This process covers selection, succession in the event of incapacity, retirement or removal of an executive, and evaluations of, and development plans for, any potential successors to each of the executives. Our Board generally conducts an in-depth review of senior leader development and succession and progression planning at least once a year. Led by the CEO, the Chief Human Resources Officer and the Global Head of Talent, this review addresses MSCI’s management development initiatives, assesses senior management resources and identifies individuals who should be considered as potential future senior leaders at MSCI, as well as opportunities to hire strategically from the market. The Compensation Committee also annually reviews contingency planning for our Chief Executive Officer and members of our Management Committee.
The Company’s Management Committee, consisting of the Company’s senior-most leaders, engages in discussions focused on succession and progression plans with an emphasis on DE&I and growth opportunities for potential future senior leaders. High-potential leaders are challenged regularly with additional responsibilities, new positions or promotions to expose them to our new aspects of our operations. These individuals are often positioned to interact more frequently with the Board, through Board and Committee presentations and discussions, as well as informal events and interactions throughout the year.
Our integrated talent management strategy also includes efforts to hire, retain and fairly compensate a diverse and representative workforce. In line with this strategy, our Compensation Committee at least annually receives updates on the Company’s progress on DE&I initiatives, including key performance metrics related thereto. Our goal is to develop well-rounded, experienced and diverse senior leaders.
In 2022, as part of these efforts and following an extensive organizational design assessment, we announced a number of organizational and senior leadership changes, and we expanded our Executive Committee to reflect MSCI’s ambition to serve as an indispensable partner to clients and the investment community. This expansion brings together and elevates more of the senior leaders who drive MSCI’s strategy and operations into MSCI’s primary leadership committee. The new members of the Executive Committee increase the representation from operating functions, in particular, Research, Technology and Data, and Real Assets.
Additional information on our Executive Committee can be found on the “Our Leadership” section of our website
(https://www.msci.com/who-we-are/our-leadership).
(https://www.msci.com/who-we-are/our-leadership).
| Developing Our Next Generation of Leaders | |||||||||||||||||||||||
High-potential leaders are given exposure to our directors through formal presentations at Board or committee meetings, informal virtual education sessions, one-on-one meetings with individual directors and participation in other Board activities. The Board also holds ongoing reviews of our leadership bench. | |||||||||||||||||||||||
| ONGOING EXPOSURE AND REVIEW | |||||||||||||||||||||||
The Compensation Committee holds an annual formal succession and progression planning and talent review session, which all directors are invited to attend. This session includes identifying successors, and reviewing succession and progression plans and opportunities to hire from the market, for all senior management positions, including the CEO and President positions. This session also may include participation by external talent consultants we have engaged to assist in identifying and evaluating candidates and to ensure that we are considering a large, diverse pool of candidates. The Compensation Committee annually reviews succession and contingency planning for our CEO and members of our Management Committee. | |||||||||||||||||||||||
FORMAL SUCCESSION AND PROGRESSION PLANNING | |||||||||||||||||||||||
52 | MSCI | Corporate Governance | |||||||||||||||||||
Over the last year, the Company made the following senior management appointments from its succession and progression pools:
JANUARY 2022
•Former Head of ESG and Climate promoted to Chief Product Officer and Head of Index
•Former Head of ESG Products promoted to Head of ESG and Climate
•Former Head of Americas Index Client Coverage promoted to Head of Client Coverage – Americas
JUNE 2022
•Former Strategy and Corporate Development Managing Director promoted to Head of Investor Relations and Treasurer
NOVEMBER 2022
•Chief Diversity Officer promoted to Chief Responsibility and Diversity Officer
Compensation, Talent and Culture Governance
The Compensation Committee operates under a written charter adopted by the Board and is responsible for reviewing and approving annually all compensation awarded to the Company’s Executives, including the CEO and our other NEOs. The Compensation Committee also regularly engages with our CEO, President and COO, Chief Human Resources Officer, Chief Responsibility and Diversity Officer and other members of senior leadership on a broad range of human capital management topics. The Board regularly receives reports from the Compensation Committee on human capital management topics throughout the year. The Compensation Committee annually reviews the Company’s talent management strategies and programs with respect to senior levels in the organization, including the Company’s DE&I strategies and programs and key performance metrics, and periodically reviews open senior management roles, future talent needs, the Company’s corporate culture and learning and development programs, as well as the results of the Company’s employee engagement survey. See page 36 of this Proxy Statement for additional information on the Compensation Committee’s responsibilities.
The principal compensation plans and arrangements applicable to our NEOs are described in the “Compensation Matters” section of this Proxy Statement and the executive compensation tables included therein. The Compensation Committee may delegate the administration of these plans and arrangements, as appropriate, including to one or more officers of the Company, subcommittees or to the Chair of the Compensation Committee, in each case, when it deems doing so to be appropriate, in the best interests of the Company and consistent with applicable law and NYSE requirements.
The Compensation Committee has the authority to retain and terminate any compensation consultant assisting the Compensation Committee in the evaluation of CEO or other executive officer compensation. As further described in the “Compensation Discussion and Analysis” section included herein, during 2022, the Compensation Committee continued to retain Semler Brossy Consulting Group, LLC (“Semler Brossy”) as its own independent compensation consultant to review CEO and other executive officer compensation. All of the services provided by Semler Brossy to the Compensation Committee during 2022 were to provide advice or recommendations on the amount or form of executive officer and director compensation, and Semler Brossy did not provide any additional services to the Company during 2022. The Compensation Committee has considered, among other things, the factors delineated in Rule 10C-1 under the Exchange Act (“Rule 10C-1”), including the NYSE listing rules implementing Rule 10C-1 and Semler Brossy’s conflict of interest policies, and determined that the engagement of Semler Brossy does not raise any conflict of interest or other factors that compromise the independence of its relationship with the Compensation Committee. In developing its views on compensation matters and determining the compensation awarded to our CEO and other executive officers, the human resources department provides data and analyses to aid the Compensation Committee in its decisions. The CEO also makes recommendations on compensation for executive officers other than himself and the Compensation Committee takes these recommendations into account in reaching its compensation decisions. From time to time, the Compensation Committee may obtain input from external legal counsel, including Davis Polk & Wardwell LLP (“Davis Polk”), on compensation award documentation and other compensation-related practices, which in 2022 was communicated to the Compensation Committee via management, the legal department or the human resources department. In light of this relationship, the Compensation Committee has considered, among other things, the factors delineated in Rule 10C-1, including the NYSE listing rules implementing Rule 10C-1 and Davis Polk’s Principles and Guidelines for Advice to Compensation Committees.
| 2023 PROXY STATEMENT | 53 | |||||||||||||||||||
| Director Compensation and Stock Ownership Guidelines | ||||
Director Compensation
Director Compensation Best Practices
Robust Director Stock Ownership Guidelines | Each non-employee director is required to own a target number of shares of stock of the Company equal to the sum of the “net shares” resulting from the vesting of the RSUs granted to such director for each of the last five years. | ||||
Anti-Hedging and Anti-Pledging Policy | We prohibit all directors and employees, including all NEOs, from hedging or pledging the Company’s common stock or engaging in short sales, purchases or sales of options, puts or calls, as well as derivatives such as swaps, forwards or futures and trading on a short-term basis in the Company’s common stock. | ||||
Emphasis on Equity Compensation | The most significant portion of non-employee director compensation is the annual RSU equity award for service on the Board. | ||||
Director Compensation Program
The Compensation Committee reviews non-employee director compensation typically every two years and recommends changes, when appropriate, to the Board. The Compensation Committee is aided in its review by its external independent compensation consultant, Semler Brossy. The Compensation Committee takes into account peer benchmarking and broader general industry practices to establish non-employee director compensation.
| DIRECTOR FEES | COMMITTEE MEMBERSHIP FEES | |||||||
 |  | |||||||
* Based on the closing price of our common stock as reported by the NYSE on the trading day prior to grant.
Directors may elect under the terms of the MSCI Inc. 2016 Non-Employee Directors Compensation Plan (the “Directors Plan”) to receive their cash retainer in the form of shares of our common stock. Under the Directors Plan, non-employee directors are subject to annual limits on their cash and equity compensation, which were approved by our shareholders at our 2016 annual meeting of shareholders, as follows: non-employee directors may not receive in any calendar year (i) options, restricted stock, RSUs and other stock-based awards with a grant date fair value of more than $1,000,000 (as determined in accordance with applicable accounting standards) and (ii) retainers and other cash-based awards in excess of $1,000,000. These caps cannot be increased without the approval of our shareholders.
RSUs granted to non-employee directors are granted on May 1st of each year and vest on the first anniversary of the grant date. Cash retainers and RSU awards are prorated when a director joins the Board and/or a committee at any time other than May 1st. RSUs granted on or after May 1st vest on the next May 1st to occur following the grant date. For example, if a director joins the Board on February 1, 2023, his or her prorated RSUs will vest on May 1, 2023. If a director joins the Board on May 31, 2023, his or her prorated RSUs will vest on May 1, 2024.
54 | MSCI | Director Compensation and Stock Ownership Guidelines | |||||||||||||||||||
RSUs are recognized as an expense in the Company’s financial statements for financial reporting purposes with respect to 2022 in accordance with FASB ASC Subtopic 718-10.
Holders of these RSUs are entitled to participate in dividend equivalent payments, and such payments may be settled in cash, shares of our common stock, or a combination thereof, to be decided by the Company in its sole discretion. Prior to the conversion to shares, RSU holders do not have any rights as an MSCI shareholder with respect to such RSUs, including the right to vote the underlying shares. The RSUs are generally non-transferable; however, our Board may, in its discretion, specify circumstances under which an award may become immediately transferable and non-forfeitable or under which the award will be forfeited. The RSUs vest and convert to shares immediately upon termination of service for reasons of death, disability or a change in control. If service as a director terminates for any other reason, all unvested RSUs will be cancelled and forfeited unless determined otherwise by the Board or the Compensation Committee.
Non-employee directors are reimbursed for expenses incurred in connection with attending Board meetings and educational sessions.
Director Deferral Plan
Under the MSCI Inc. Non-Employee Directors Deferral Plan (the “Deferral Plan”), our directors are permitted to defer receipt of shares of our common stock payable in lieu of cash retainers and/or upon conversion of RSUs granted to the director following the year for which an election has been submitted; provided that an election made by a director within 30 days after the director becomes eligible to receive a cash retainer or RSUs shall apply to any common stock payable in lieu of such a cash retainer and/or upon conversion of such RSUs granted to the director following the date on which the director makes the election. Receipt of shares of our common stock may be deferred until a future date specified by the director, a termination of service from the Board, or the earlier of the two. While the Deferral Plan allows for it, the Board has not yet implemented a process for the deferral of cash payments.
2022 Non-Employee Director Compensation
| Name | Fees Earned or Paid in Cash(1)(2) ($) | Stock Awards(3)(4) ($) | All Other Compensation(5) ($) | Total ($) | ||||||||||
| Robert G. Ashe | 114,580 | 234,636 | 2,431 | 351,647 | ||||||||||
| Wayne Edmunds | 120,000 | 184,929 | 1,907 | 306,836 | ||||||||||
Catherine R. Kinney | 89,726 | 184,929 | 95,841 | 370,496 | ||||||||||
Robin Matlock(6) | 82,356 | 168,978 | 956 | 252,290 | ||||||||||
Jacques P. Perold | 115,000 | 184,929 | 1,907 | 301,836 | ||||||||||
| Sandy C. Rattray | 100,000 | 184,929 | 1,907 | 286,836 | ||||||||||
| Linda H. Riefler | 115,000 | 184,929 | 3,110 | 303,039 | ||||||||||
| Marcus L. Smith | 100,000 | 184,929 | 1,907 | 286,836 | ||||||||||
| Rajat Taneja | 89,726 | 184,929 | 4,606 | 279,261 | ||||||||||
| Paula Volent | 99,836 | 184,929 | 1,907 | 286,672 | ||||||||||
(1)Pursuant to MSCI’s Third Amended and Restated Articles of Incorporation, directors hold office for a term expiring at the next annual meeting of shareholders. The Board term beginning in April 2022 and ending in April 2023 (the “2022 Board Term”) and the Board term beginning in April 2021 and ending in April 2022 do not coincide with MSCI’s calendar-year fiscal year. Amounts included in the table above represent cash earned or paid, or stock awards granted, as applicable, during the year ended December 31, 2022. Because directors are paid for service from May 1 to April 30, any prorated amounts are calculated from the applicable date to May 1st of the relevant Board term.
(2)Cash amounts in this column include the annual retainers and committee fees paid during the year ended December 31, 2022. Four of our directors elected to receive all or a portion of their annual cash retainers in stock as set forth below. The number of shares issued was determined by dividing the aggregate value of the elected portion of the cash retainer by the closing price of our common stock on the trading day prior to the grant date ($421.25 for Messrs. Ashe and Taneja and Mmes. Kinney and Volent) and rounding down to the next whole number. Mr. Taneja elected to defer receipt of such shares until the earlier of (i) June 1, 2025 and (ii) the 60th day after his “separation from service” as a director under the Deferral Plan.
| Name | Cash | Stock | ||||||
| Mr. Ashe | — | $ 114,580.00 (272 shares) | ||||||
| Ms. Kinney | — | $ 89,726.25 (213 shares) | ||||||
| Mr. Taneja | — | $ 89,726.25 (213 shares) | ||||||
| Ms. Volent | — | $ 99,836.25 (237 shares) | ||||||
| 2023 PROXY STATEMENT | 55 | |||||||||||||||||||
(3)Represents the aggregate grant date fair value of RSUs granted in 2022 in accordance with FASB ASC Subtopic 718-10. The fair value is calculated by multiplying the closing price of our common stock on the date prior to the grant date by the number of units awarded. For assumptions regarding these calculations, please see notes 1 and 11 to the consolidated financial statements included in our 2022 Annual Report on Form 10-K filed with the SEC on February 10, 2023. However, the values in this column may not correspond to the actual value that will be realized by the non-employee directors at the time the RSUs vest. The number of RSUs awarded is determined by dividing the aggregate value of the RSU award by the closing price of our common stock on the trading day prior to the grant date ($421.25 for Messrs. Ashe, Edmunds, Perold, Rattray, Taneja and Smith and Mmes. Kinney, Riefler and Volent and $442.35 for Ms. Matlock) and rounding down to the next whole number. For the 2022 Board term, each of Messrs. Edmunds, Perold, Rattray, Taneja and Smith and Mmes. Kinney, Riefler and Volent received 439 RSUs, Ms. Matlock received 382 RSUs, and Mr. Ashe received 557 RSUs. These RSUs will vest on May 1, 2023. Ms. Riefler elected to defer receipt of such shares issuable upon vesting until the 60th day after her “separation from service” as a director under the Deferral Plan. Ms. Matlock elected to defer receipt of such shares issuable upon vesting until the earlier of (i) June 1, 2033 and (ii) the 60th day after her “separation from service” as a director under the Deferral Plan. Mr. Taneja elected to defer receipt of such shares issuable upon vesting until the earlier of (i) June 1, 2025 and (ii) the 60th day after his “separation from service” as a director under the Deferral Plan.
(4)As of December 31, 2022, each of our non-employee directors had the following outstanding stock awards in the form of RSUs: Messrs. Edmunds, Perold, Rattray, Taneja and Smith and Mmes. Kinney, Riefler and Volent each had 439 RSUs outstanding, Ms. Matlock had 382 RSUs outstanding and Mr. Ashe had 557 RSUs outstanding.
(5)Cash amounts in this column include dividend equivalents paid during the year ended December 31, 2022 in connection with the Company’s payment of its quarterly cash dividend. Each of Mr. Taneja and Mmes. Kinney, Matlock and Riefler received shares of our common stock and a cash payment for fractional shares received as a dividend equivalent payment for outstanding RSUs and in lieu of receiving a cash dividend payment for shares, in each case subject to his or her deferral election (in Ms. Kinney’s case, a prior deferral election that continues to apply with respect to awards previously deferred). The table below sets forth the amounts received by each.
| Name | Shares | Cash Received for Fractional Shares | |||||||||
| Ms. Kinney | $ 92,764.48 (196 shares) | $ | 1,169.62 | ||||||||
| Ms. Matlock | $ 453.04 (1 share) | $ | 503.21 | ||||||||
| Ms. Riefler | $ 1,387.53 (3 shares) | $ | 1,722.90 | ||||||||
| Mr. Taneja | $ 2,775.06 (6 shares) | $ | 1,830.52 | ||||||||
(6)Ms. Matlock was appointed to the Board, effective June 1, 2022.
Non-Employee Director Stock Ownership Guidelines
Under the Company’s stock ownership guidelines for non-employee directors, commencing on April 28, 2016, each non-employee director has been required to own a target number of shares of stock of the Company equal to the sum of the “net shares” resulting from the vesting of the RSUs granted to such director for each of the last five years, with such aggregate share ownership to be achieved within five years of initially being elected or appointed to the Board and maintained thereafter. “Net Shares” means the number of shares that would remain if the shares underlying the equity awards are sold or withheld by the Company to (i) pay the exercise price of a stock option, (ii) satisfy any tax withholding obligations (assuming a tax rate of 50%) or (iii) satisfy any other applicable transaction costs.
Shares that count towards satisfaction of the target level of stock ownership under the stock ownership guidelines for non-employee directors consist of the following:
(1) Shares beneficially owned individually, either directly or indirectly (including any shares beneficially owned as a result of an election to receive a retainer (or any portion thereof) in shares);
(2) Shares beneficially owned jointly with, or separately by, immediate family members residing in the same household, either directly or indirectly;
(3) Shares underlying vested and unvested RSUs granted under the Directors Plan; and
(4) Shares for which receipt has been deferred (including any shares held through the Deferral Plan or any other deferred compensation plan maintained by the Company).
As of the date of this Proxy Statement, all of our non-employee directors are in compliance with the Company’s stock ownership guidelines.
56 | MSCI | |||||||||||||||||||
| Proposal No. 2 Advisory Vote to Approve Executive Compensation (Say-on-Pay) | ||||
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables MSCI’s shareholders to vote to approve, on an advisory or non-binding basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules.
For an overview of the compensation of our NEOs and our compensation strategy, see “Compensation Matters—Compensation Discussion and Analysis—Executive Summary” below.
We are asking for shareholder approval of the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules, which include the disclosures under “Compensation Matters—Compensation Discussion and Analysis,” the compensation tables included herein and the narrative following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and practices described in this Proxy Statement.
This vote is advisory and therefore not binding on MSCI, the Compensation Committee or the Board. The Board and the Compensation Committee value the opinions of MSCI’s shareholders. To the extent there is any significant vote against NEO compensation as disclosed in this Proxy Statement, we will consider those shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. MSCI currently conducts annual advisory votes on executive compensation and, following our 2023 Annual Meeting, we expect to conduct the next advisory vote at MSCI’s 2024 annual meeting of shareholders subject to our review of the results of voting on Proposal No. 3.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes cast at our 2023 Annual Meeting, at which a quorum is present, is required to approve Proposal No. 2. Abstentions and broker non-votes shall not be treated as votes cast.
 | Our Board of Directors recommends a vote “FOR” the approval of the compensation of MSCI’s Named Executive Officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC. Proxies solicited by the Board will be voted “FOR” this approval unless otherwise instructed. | ||||
| 2023 PROXY STATEMENT | 57 | |||||||||||||||||||
| Compensation Matters | ||||