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Moody~s
Corporation 1 December 2009
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Contents
~
Background and Objectives
m Market Observations
t~
Market Data Summary
m Appendices
----- A: Proxy Analysis by Position
- - - 8: Study Methodology
Background and Objectives
G
Moody's Corporation (Moody's) has asked Hewitt Associates (Hewitt) to conduct a
competitive review of the compensation levels for several senior executive roles
- CEO and direct reports (7 roles)
~
The objective of this study is to compare current compensation levels for the executives
at Moody's to compensation of similar executive positions in order to:
---- Ensure that Moody's compensation practices are competitive with the market
-
~
Provide a benchmark and framework for pay decisions for 201 0
For this competitive review, Hewitt used Moody's proxy peer group of 20 companies
("proxy peer group") 1
---- This was used for Moody's senior-most roles including the CEO and direct reports;
additional information is included in the Study Methodology section
~
Reference data: Hewitt Total Compensation Measurement™ (TCM™) Financial
Services Peers (financial services companies including banks, diversified financials, and
business services companies)
-
1
Providing market data from a broader sample is often helpful as reference
UnionBanCal Corporation, a wholly owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU),
was excluded due to lack of publicly available compensation information
rk t
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Market Observations-lnterpre tion of Data
~m
Pay levels were compared to market median and 75th percentile levels
- Pay is considered at market levels if it is within 15% of market for the relevant
peer group
m External competitiveness is one element of the decision-making process regarding
pay levels for individual incumbents
m Other elements of pay decisions may include:
----· Degree to which the incumbent's role is "matched" by the market job
---- Scope of the market roles relative to the scope of Moody's roles (in terms of
organizational size, level, and strategic impact)
---- Degree to which internal equity is important for certain roles
----· The level of experience of the incumbent in his/her current role
: ;,. Market data inherently reflects varying levels of experience and is viewed as
pay for "fully proficient" incumbents in aggregate
---- Individual performance assessments
Market ObservationsActua~
m~
Compensation Relative to Proxy Peer Group
Aggregate actual total compensation for Moody's senior executives for 2009 is below the proxy peer group
median
-
This summary excludes the Chief Risk Officer (CRO) position due to insufficient matches from the proxy
peer group among NEOs
~
Base salaries are within the market median competitive range
m~
However, actual total cash levels significantly trail the market due to below market actual bonuses paid in 2009
for 2008 performance
m 2009 long-term incentives are at the market median but trail the
75th
percentile
mMedian
Moody's
versus
Market
D 75th Percentile
Base Salary
Actual Bonus
Total Cash
Long-term Incentives
Total Direct
Market ObservationsTarget Compensation Relative to Proxy Peer Group
!!II
2009 target total compensation (base salary, plus target bonus, plus long-term incentive awards) for Moody's
senior executives is at market median and below the 75th percentile
~
Target bonus is slightly above the market median but trails the
market median but also trails the 75th percentile
!1.11
percentile and target total cash is at the
Please note that target bonus data is available only for those peers that disclose target bonus opportunities
---
!iii~
75th
Eight of the peer companies do not disclose target bonus opportunity levels
Please note that the Group CEO and CRO roles have been excluded from this target analysis due to
insufficient market target bonus information for matching roles
30%
20%
10%
0%
mMedian
m75th Percentile
Moody's
versus -10%
Market
-20%
-30%
-40%
-50%
Target Bonus
Target Total Cash
Target Total Direct
rk t
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u m
Market Data Summa -Summa
~m
Methodology 1
We analyzed data from two peer groups for purposes of this assessment
- Proxy Peers (group of 20 companies)
- Hewitt TCM Financial Services Peers (group of 33 companies)
~
Moody's long-term incentive values have been calculated to mirror how peer group
equity awards were valued (to provide an "apples-to-apples" comparison)
---- Stock option values were calculated assuming full-term assumptions
(as opposed to expected life under FAS 123R)
1See
the Appendix for a more detailed explanation of the study methodology
Market Data Summa -Summa
~m
Methodology
On an individual incumbent level:
- Total cash = Base salary plus bonus
- Total comp = Total cash plus long-term incentives
~
However, these definitions do not typically hold up for market median summary
statistics
---- For example, the median base salary and the median bonus need not come
from the same company; therefore, median total cash is not necessarily median
salary plus median bonus
t!l1
Peer group statistics are "raw" or unadjusted for both proxy and Hewitt TCM
analysis
---- The summary statistics for the analysis are calculated for each pay element
discretely; therefore, the medians do not add across
Market Data Summary-Actual Compensation
Median
Proxy Data
Financial Services Survey Data
CEO (McDaniel)
$790,000
$2,000,000
$3,000,000
$1,904,800
$4,860,800
$910,417
$0
$1,020,000
$2,299,176
$3,299,176
$936,000
$305,000
$1,241,000
$1,586,169
$2,827,169
CFO (Huber)
$408,400
$408,400
$817,890
$438,846
$1,551,790
$500,000
$81,230
$650,000
$611,808
$1,294,149
$510,000
$200,000
$710,000
$777,732
$1,487,732
Group CEO (Almeida)
$387,128
$429,710
$747,722
$539,716
$1,315,661
$467,500
$145,711
$627,089
$493,257
$1,142,736
$450,000
$200,000
$650,000
$573,067
$1,223,067
Group CEO (Madelain)
$387,128
$429,710
$747,722
$539,716
$1,315,661
$467,500
$145,711
$627,089
$493,257
$1,142,736
$425,600
$122,800
$548,400
$614,005
$1,162,405
11,305,241
$3,566,305
704,554
$ 4,449,938
5,578,455
$ 10,128,118
$ 3,411,600
$3,046,600
1,075,500
997,800
4,487,100
4,044,400
4,853,136
4,423,336
9,340,236
8,467,736
9.1%
-73.9%
-39.2%
3.5%
-25.1%
-4.3%
52.6%
0.8%
-13.0%
-7.8%
Total w/CRO
$ 2,792,824
Total w/o CRO
Moody's +/-Proxy (excludes CRO)
Moody's +/-Survey (includes CRO)
$
3,818,126
$
6,653,516
$
4,272,731
$
$
$
Reference Match
coo
$394,138
$610,111
$987,722
$606,540
$1,801,683
CRO
$584,752
$370,749
$232,500
$79,229
$848,895
$457,088
$1,056,637
$395,000
$2,003,332
$831,899
75th Percentile
Proxy Data
Financial Services Survey Data
Moody's Actual
$987,500
$495,594
$3,365,090
$931,152
$4,347,500
$1,321,685
$3,638,378
$728,278
$6,916,891
$2,272,885
$1,010,000
$458,800
$1,441,550
$5,613,742
$7,797,904
$2,827,169
$332,800
$801,067
$922,530
$1,791,889
$305,000
$200,000
$1,586,169
$560,000
$936,000
$510,000
$1,241,000
CFO (Huber)
$710,000
$777,732
$1,487,732
GC (Goggins)
$510,102
$453,069
$902,186
$570,533
$1,472,719
$452,342
$266,040
$705,524
$672,104
$1,346,616
$400,000
$120,000
$520,000
$460,504
$980,504
Group CEO (Almeida)
$624,599
$1,543,880
$2,299,994
$1,126,096
$3,149,425
$551,250
$310,204
$772,150
$1,124,080
$1,790,984
$450,000
$200,000
$650,000
$573,067
$1,223,067
Group CEO (Madelain)
$624,599
$1,543,880
$2,299,994
$1,126,096
$3,149,425
$551,250
$310,204
$772,150
$1,124,080
$1,790,984
$425,600
$122,800
$548,400
$614,005
$1,162,405
CEO (McDaniel)
Total w/CRO
$3,801,137
Total w/o CRO
Moody's +/-Proxy (excludes CRO)
Moody's +/-Survey (includes CRO)
$8,180,200
$11,936,435
$7,741,075
$18,280,165
$4,055,217
$1,961,104
$5,694,497
$11,310,733
$17,658,895
Reference Match
coo
CRO
Note:
Note:
Note:
Note:
Note:
$472,213
$745,330
$1,221,467
$1,057,950
$2,064,122
$677,500
$457,088
Totalsexcludereferencematch
Positioning against proxy peers excludes Chief Risk Officer due to insufficient matches, for positioning against survey data, total includes Chief Risk Officer
Financial services CEO median actual bonus is due to 20 out of 27 matching CEOs not receiving a bonus
Financial services Chief Risk Officer median actual bonus is due to 6 out of 9 matching Chief Risk Officers not receiving a bonus
Reference match provided for Chief Risk Officer from Total Compensation by Industry
$478,130
$233,623
$1,136,884
$554,600
$1,374,587
$851,000
$2,737,659
$1,346,885
$3,411,600
$3,046,600
$1,075,500
$997,800
$4,487,100
$4,044,400
$4,853,136
$4,423,336
$9,340,236
$8,467,736
-19.9%
-87.8%
-66.1%
-42.9%
-53.7%
-15.9%
-45.2%
-21.2%
-57.1%
-47.1%
Market Data Summary-Target Compensation
Median
Proxy Data
CEO (McDaniel)
CFO (Huber)
Group CEO (Almeida)
Financial Services Survey Data
Moody's Target
$910,417
$1,325,000
$2,025,000
$2,299,176
$4,350,063
$936,000
$1,465,200
$2,401,200
$1,586,169
$3,987,369
$425,000
$304,000
$864,000
$662,080
$611,808
$455,860
$1,518,534
$1,150,031
$500,000
$413,800
$1,189,931
$510,000
$400,000
$660,000
$385,000
$1,170,000
$785,000
$777,732
$460,504
$1,947,732
$1,245,504
$539,716
$1,215,668
$467,500
$425,000
$761,000
$493,257
$1,328,366
$450,000
$528,000
$978,000
$573,067
$1,551,067
$4,272,731
$3,193,299
$9,886,048
$7,454,712
$3,566,305
$3,515,061
$6,431,938
$5,578,455
$12,122,326
$3,411,600
$2,171,000
$4,065,000
$2,810,200
$7,476,600
$4,981,200
$4,853,136
$3,236,263
$12,329,736
$8,217,463
$790,000
$408,400
$1,358,750
$496,206
$2,665,000
$758,367
$1,904,800
$438,846
$3,673,300
$1,445,705
$391,349
$250,518
$626,565
$449,751
$387,128
$220,773
$588,728
$2,793,230
$2,351,684
$5,914,792
$4,737,336
I
Total w/ CRO and w/ GCEO
$2,792,824
Total w/o CRO and GCEO
$2,018,569
Moody's +/-Proxy (excludes CRO and GCEO)
Moody's +/-Survey (includes CRO and GCEO)
7.6%
19.5%
5.1%
1.3%
10.2%
-4.3%
15.6%
16.2%
-13.0%
1.7%
$8,082,062
$2,017,498
$936,000
$510,000
$1,465,200
$660,000
$2,401,200
$1,170,000
$1,586,169
$777,732
$3,987,369
$1,947,732
Reference Match
coo
$394,138
$390,915
$901,415
$606,540
$1,576,658
CRO
$584,752
$370,749
$605,000
$315,136
$1,157,504
$685,885
$1,056,637
$395,000
$2,209,681
$1,080,885
75th Percentile
Proxy Data
Financial Services Survey Data
~l~l~l~l~l~l~l~:~l~~~l~l~l~l~l~l~l~l~l~l~l~l~~~~~~~l~l~~~~~:~@~~~;j~~~~l~l~~~l~l~l~l~:~:~~~~~~~~~@~l~t@~;~~~l~l~l~l~l~l~l~l~l~l~l~l~ll~lll:~~ll~l~l~l~l~l~l~l~l~l~l~l~:ll~~~~~lt~~~;~:~l~@~l~l~l~l~l~l~
$1,010,000
$560,000
$1,766,876
$600,006
$2,643,250
$1,100,000
$5,613,742
$922,530
CFO (Huber)
$987,500
$495,594
$2,547,500
$1,022,021
$3,351,349
$1,781,603
$3,638,378
$728,278
$5,752,783
$2,335,039
Group CEO (Almeida)
$624,599
$683,178
$1,269,203
$1,126,096
$2,672,471
$551,250
$735,188
$1,227,875
$1,124,080
$2,440,940
$450,000
$528,000
$978,000
$573,067
$1,551,067
Group CEO (Madelain)
$624,599
$683,178
$1,269,203
$1,126,096
$2,672,471
$551,250
$735,188
$1,227,875
$1,124,080
$2,440,940
$425,600
$516,800
$942,400
$614,005
$1,556,405
$5,700,311
$4,333,956
$9,298,431
$6,760,026
$7,741,075
$5,488,883
$16,093,715
$10,748,774
$4,055,217
$5,104,081
$8,768,103
$11,310,733
$20,01 0,463
$3,411,600
$2,171,000
$4,065,000
$2,810,200
$7,476,600
$4,981,200
$4,853,136
$3,236,263
$12,329,736
$8,217,463
-14.9%
-35.2%
-23.5%
-20.4%
-26.3%
-14.7%
-41.0%
-15.9%
-57.1%
-38.4%
CEO (McDaniel)
Total w/ CRO and w/ GCEO
$3,801,137
Total w/o CRO and GCEO
$2,551,939
Moody's +/-Proxy (excludes CRO and GCEO)
Moody's +/-Survey (includes CRO and GCEO)
Reference Match
coo
CRO
$472,213
$704,490
$1,200,504
$1,057,950
$2,252,256
$677,500
$457,088
$692,500
$415,950
$1,272,500
$873,037
Note Totals
reference match
Note Pos1t1onmg aga1nst proxy peers
Gr CEO due to low reported target bonuses and Chief R1sk Off1cer due to msuff1c1ent matches, for pos1t1onmg aga1nst survey data, total1ncludes Gr CEOs and Chief R1sk Officer
Note Reference match provided for Chief R1sk Off1cer from Total Compensation by Industry Target amounts are formulated based on target bonus%
$1,374,587
$851,000
$2,872,509
$1,724,037
jl!
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CE
AllianceBernstein
BlackRock Inc.
CME Group Inc.
Corporate Executive Board Co.
Dun & Bradstreet Corp
Eaton Vance
Equifax Inc.
Factset Research Systems Inc.
Fair Isaac Corp
Federated Investors Inc.
Franklin Resources Inc.
Interactive Data Corp.
I nvesco Ltd.
McGraw-Hill Companies Inc.
NASDAQ OMX Group
NYSE EURONEXT
RiskMetrics Group Inc.
Thomson-Reuters
Verisk Analy1ics
Kraus, Peter S.
Fink, Laurence D.
Donohue, Craig S.
Monahan Ill, Thomas L.
Alesio, Steven W.
Faust, Thomas E.
Smith, Richard F.
Hadley, Philip A.
Greene, Mark N.
Donahue, J. Christopher
Johnson, Gregory E.
D'Arcy, Raymond L.
Flanagan, Martin L.
McGraw, Ill, Harold W
Greifield, Robert
Niederauer, Duncan, L.
Berman, Ethan
Glocer, Thomas H.
Coyne, Frank J.
CEO
Chairman & CEO
CEO
CEO
Chairman & CEO
Chairman, CEO & President
Chairman & CEO
Chairman & CEO
CEO & Directcor
President & CEO
President & CEO
CEO
President & CEO
Chairman, President & CEO
President & CEO
CEO & Director
CEO & Chairman of the Board
CEO
Chairman, President & CEO
$4,706,000,000
$11,707,000,000
$802,195,000
$275,000
$500,000
$850,000
$630,000
$975,000
$500,000
$1,450,000
$275,000
$625,000
$875,000
$780,132
$500,000
$790,000
$1,350,000
$1,000,000
$1,000,000
$350,000
$1,550,000
$898,654
$6,000,000
$17,150,000
$642,600
$315,000
$1,093,219
$3,750,000
$1,813,630
$640,000
$0
$2,240,000
$2,400,000
$286,238
$3,655,000
$0
$3,800,000
$2,000,000
$235,000
$3,075,180
$2,000,000
19
$948,997,500
$2,644,856,000
$3,282,263,579
$4,885,000,000
19
$500,000
$790,000
$798,620
$987,500
$936,000
$3,514,160,000
$5,064,000,000
$2,644,856,000
$558,352,000
$1,726,300,000
$1,095,800,000
$1,935,700,000
$575,519,000
$1,223,680,000
$6,032,390,000
$6,212,710,000
$750,541,000
$3,307,600,000
$6,355,055,000
$502,457,000
$3,648,693,000
Count
25th %ile
Median
Average
75th %ile
Moody's
McDaniel, Raymond W.
Chairman and CEO
Morningstar CEO excluded due to his request of $100,000 base salary and no cash or equity incentive grants
AllianceBernstein CEO bonus is guaranteed for the first year
Cash data for CEO Vvas not aged due to tax deduction limitations on salary
Total cash compensation is the sum of base salary and bonus
Total compensation is the sum of long-term incentives (LTI) plus cash
Target compensation was excluded \A/here target bonus was not disclosed
$350,000
$3,100,000
$2,700,000
$585,000
$4,625,180
$2,898,654
$700,000
$4,650,000
$3,598,654
$0
$3,081,041
$0
$15,529,977
$23,402,230
$2,999,384
$1,544,854
$5,680,322
$6,154,800
$7,169,130
$1,991,542
$1,425,137
$3,747,946
$5,197,321
$2,078,754
$8,206,216
$3,763,884
$4,860,800
$6,664,653
$585,000
$7,706,221
$2,898,654
19
$477,500
$2,000,000
$2,689,256
$3,365,090
14
$732,250
$1,358,750
$2,793,489
$2,547,500
19
$1,147,500
$3,000,000
$3,487,876
$4,347,500
14
$1,417,250
$2,665,000
$3,674,474
$3,351,349
19
$716,542
$1,904,800
$2,386,167
$3,638,378
19
$2,488,704
$4,860,800
$5,874,044
$6,916,891
14
$2,302,803
$3,673,300
$5,233,585
$5,752,783
$305,000
$1,465,200
$1,241,000
$2,401,200
$1,586,169
$2,827,169
$3,987,369
$850,000
$693,000
$1,267,500
$19,860,000
$1,450,000
$625,000
$2,240,000
$2,650,000
$243,346
$1,080,000
$2,000,000
$6,275,000
$17,650,000
$1,492,600
$945,000
$2,068,219
$4,250,000
$3,263,630
$915,000
$625,000
$3,115,000
$3,180,132
$786,238
$4,445,000
$1,350,000
$4,800,000
$3,000,000
$1,700,000
$1,323,000
$2,242,500
$20,360,000
$2,900,000
$1,250,000
$3,115,000
$3,430,132
$743,346
$2,430,000
$3,000,000
$9,254,977
$5,752,230
$1,506,784
$599,854
$3,612,103
$1,904,800
$3,905,500
$1,076,542
$800,137
$632,946
$2,017,189
$1,292,516
$3,761,216
$2,413,884
$60,800
$3,664,653
$3,206,784
$1,922,854
$5,854,603
$22,264,800
$6,805,500
$2,050,137
$3,747,946
$5,447,321
$2,035,862
$4,843,884
$3,060,800
$700,000
$7,731,041
$3,598,654
CFO
AllianceBernstein
BlackRock Inc.
CMEGroup Inc.
Corporate Executr.te Board Co.
Dun & Bradstreet Corp
Eaton Vance
Joseph Jr., Robert H.
Petach, Ann Marie
Parisi, Jarres E.
Liu, Joyce
Konidaris, Anastasios G.
Whelan, Robert J.
SVP&CFO
Managing Director & CFO
CFO
CFO
SVP&CFO
VP, Treasurer & CFO
Equifax Inc.
Factset Research
Federated Investors
Franklin Resources Inc.
Interactive Data Corp.
lnvesco Ltd.
McGraw -Hill Companies Inc.
Andrean, Lee
Walsh, Peter G.
Donahue, Thomas R
Lew is, Kenneth A.
Hajducky Ill, Andrew J.
Starr, Loren M
Bahash, Robert J.
Cooley, Scott
Warren, David P.
Geltzeiler, MichaelS.
Obstler, David
Daleo, Robert D
Anguillare, MarkV.
Corporate VP & CFO
EVP, CFO & Treasurer
CFO & R-esident, Fll Hldgs
SVP, CFO & Treasurer
CFO, EVP& Treasurer
CFO
EVP, CFO
CFO
CFO
CFO
CFO
EVP&CFO
SVP&CFO
Morningstar, Inc.
NA.SDAQ OMX Group
NY SE EURONEXT
RiskMetrics Group Inc.
Thomson-Reuters
Verisk A nalytics
Count
25th %ile
Median
Average
75th %ile
Moody's
Huber, Linda S.
EVP & CFO
Notes:
Cash data was aged to January 1, 2010 using an annualized rate of 2.1%.
Total cash compensation is the sum of base salary and bonus
Total compensation is the sum of long-term incentives (L Tl) plus cash
Target compensation was excluded where target
$3,514,160,000
$5,064,000,000
$2,644,856,000
$558,352,000
$1,726,300,000
$1,095,800,000
$199,095
$408,400
$459,450 $1,582,550
$382,875
$244,287
$293,187
$280,775
$140,388
$140,388
$408,400
$263,571
$306,300
$321,615
$918,900 $6,083,118
$607,495
$2,042,000
$627,162
$421,163
$671,971
$1,240,515
$1,935,700,000
$466,342
$351,549
$285,681
$575,519,000
$260,355
$490,080
$1,223,680,000
$816,800 $1,470,240 $1,470,240
$6,032,390,000
$508,373
$714,700
$767,792
$6,212,710,000
$369,602
$260,278
$246,413
$750,541,000
$459,450
$943,404
$3,307,600,000
$938,299
$0
$6,355,055,000
$229,725
$459,450
$502,457,000
$482,816 $1,205,801
$536,025
$3,648,693,000
$765,750
$382,875
$4,706,000,000
$280,775
$306,300
$11,707,000,000 $1,021,000 '''$1 ,249,975 $1,276,250
$802,195,000
$262,161
$306,300
$496,206
$817,890
$750,435
$2,287,040
$1,223,073
$629,880
$1,402,854
$938,299
$689,175
$1,688,617
$1,148,625
$587,075
$2,270,975
$568,461
19
$948,997,500
$2,644,856,000
$3,282,263,579
$4,885,000,000
19
$280,775
$408,400
$469,140
$495,594
19
11
$284,936
$289,434
$408,400
$496,206
$615,739 $1,081,964
$931,152 $1,022,021
$510,000
$200,000
$660,000
$0
$388,288
$552,712
$133,296
$650,734
$261,600
$607,495
$2,430,288
$1,179,873
$554,459
$1,322,705
$1,502,115
$2,297,250
$758,367
$733,900
$1,046,643
$722,656
$384,217
$99,703
$1,074,619
$614,087
$237,729
$426,865
$1,480,706
$136,500
$1,590,313
$438,846
$1,551,790
$1,797,078
$3,009,696
$1,607,290
$729,583
$2,477,473
$1,552,386
$926,904
$2,115,481
$2,629,331
$723,575
$3,861,288
$1,007,307
19
$628,521
$817,890
$1,084,879
$1,321,685
11
$695,381
$758,367
$1,565,669
$1,781,603
19
$249,664
$438,846
$577,548
$728,278
19
$967,105
$1,551,790
$1,662,427
$2,272,885
11
$1,212,993
$1,445,705
$2,110,654
$2,335,039
$710,000
$1,170,000
$777,732
$1,487,732
$1,947,732
$676,062
$421,163
$714,700
$6,404,733
$752,023
$2,287,040
$1,276,165
$616,015
$1,018,841
$1,228,773
$554,459
$1,365,434
$6,666,333
$1,485,923
$3,009,696
$1,660,382
$715,718
$1,445,705
$3,887,563
$1,197,213
Group CEO
BlackRock Inc.
Federated Investors
lnvesco Ltd.
lnvesco Ltd.
Morningstar
Morningstar
NASDAQ OMX group
NYSE Euronext
Ris kMetrics Group
RiskMetrics Group
Kapito, RobertS.
Fisher, John B.
Lo, Andrew TS.
Taylor, Philip A.
Boruff, Chris
Reinkenneyer, Patrick
Boeker, Magnus
Freedberg, Hugh
Mina, Jorge
Berman, Gregg
R-esident
VP, R-es & CEO, Fed Advisory Oos
Sr. Managing Dr & Head of Asia-Pacific
Sr. Mng Dir & Head of NA Retail
R-esident, Advisory Software
R-esident, Morningstar Associates
R-esident
EVP, Head of Global Derivatives
Oo-Head of Risk
Oo-Head of Risk
$5,064,000,000 $408,400 $13,344,878
$13,753,278
$6,032,390,000 :·· $704,490 $2,042,000 $2,042,000 $2,746,490
$3,307,600,000 $408,400 $1,225,200
$1,633,600
$2,859,292
$3,307,600,000 $613,092 $2,246,200
$6,355,055,000 $229,725
$561,550
$791,275
$6,355,055,000 $229,725 $1,021,000
$1,250,725
$502,457,000 $765,750 $1,523,332 $1,021,000 $2,289,082
$3,648,693,000 $727,207 $1,605,523
$2,332,730
$4,706,000,000 $193,990
$245,040
$439,030
$4,706,000,000 $204,200
$245,040
$449,240
$2,746,490
$1,786,750
$4,330,692
$1,070,342
$1,293,356
$1,624,875
$215,384
$301,538
$2,589,801
$587,853
$113,750
$113,750
$18,083,970
$3,816,832
$2,926,956
$4,484,167
$1,006,659
$1,552,263
$4,878,883
$2,920,583
$552,780
$562,990
$3,816,832
$4,376,551
Pres Global Risk, Analytics & Internet
Solutions
Leader GMC & Middle Market
President-NA Personal Solutions
President-USCIS
President-NA Oomnnercial Solutions
The Dun & Bradstreet Oorporation
The Dun & Bradstreet Oorporation
Equfax Inc.
Equfax Inc.
Equfax Inc.
McGraw -Hill Oompanies
R-esident
Oount
25th %ile
Median
Average
75th %ile
16
$717,075,500
$3,307,600,000
$3,066,315,750
$4,795,500,000
16
$276,833
$387,128
$427,363
$624,599
16
$172,539
$429,710
$1,562,356
$1,543,880
7
$187,203
$220,773
$592,829
$683,178
16
$481,632
$747,722
$1,989,719
$2,299,994
7
$500,663
$588,728
$1,044,822
$1,269,203
16
$280,000
$539,716
$944,281
$1,126,096
16
$887,638
$1,315,661
$2,934,000
$3,149,425
7
$870,779
$1,215,668
$1,907,067
$2,672,471
Moody's
Almeida, Mark E.
President of Moody's Analytics
$450,000
$200,000
$528,000
$650,000
$978,000
$573,067
$1,223,067
$1,551,067
Moody's
Made lain, Michel
COO of Moody's Investors Service
$425,600
$122,800
$516,800
$548,400
$942,400
$614,005
$1,162,405
$1,556,405
Notes:
Cash data was aged to January 1, 2010 using an annualized rate of 2.1 %.
Benchmark data from Hewitt's Total Oompensation Measurennent'M (TCM'M) Detabase is not publicly available, but is reflected in the totals
Total cash compensation is the sum of b
General Counsel
Equifax Inc.
Fair Isaac Corp
McGraw-Hill Companies Inc.
NYSE Euronext
Verisk Analytics
CME Group Inc.
The Dun & Bradstreet Corporation
Risk Metrics
Moody's
Mast, Kent E.
Scadina, Mark R.
Vittor, Kenneth M.
Halvey, John K.
Thompson, Kenneth E.
Goggins, John G.
Chief Legal Officer
General Counsel
EVP and General Counsel
General Counsel
SVP, GC, and Corporate Secretary
MD General Counsel & Corp Seer
Leader Legal
EVP, GC & Chief Regulatory Officer
$1,935,700,000
$1,223,680,000
$6,355,055,000
$3,648,693,000
$802,195,000
$2,644,855,957
$1,726,300,000
$502,457,000
$420,244
$331,825
$566,451
$765,750
$362,455
$291,352
$165,913
$0
$893,375
$306,300
Count
25th o/oile
Median
Average
75th o/oile
8
$1,118,308,750
$1,831,000,000
$2,354,866,995
$2,895,815,218
8
$331,845
$391,349
$445,113
$510,102
$400,000
SVP--General Counsel
Notes:
Cash data Vvas aged to January 1, 2010 using an annualized rate of 2.1%.
Benchmark data from Hewitt's Total Compensation MeasurementTM (TCM™) Database is not publicly available, but is reflected in the totals
Total cash compensation is the sum of base salary and bonus
Total compensation is the sum of long-term incentives (LTl) plus cash
Target compensation was excluded where target bonus Vvas not disclosed
$252,146
$165,913
$661,608
$711,595
$497,738
$566,451
$1,659,125
$668,755
8
$168,066
$253,010
$377,879
$453,069
6
$225,915
$250,518
$348,287
$470,218
$120,000
$385,000
$672,390
$497,738
$1,263,545
$655,112
$901,441
$3,602,523
$1,073,275
$1,224,340
$655,112
$1,024,063
$551,950
$157,374
$334,990
$1,943,398
$404,520
8
$534,325
$617,603
$822,992
$902,186
6
$527,134
$626,565
$719,737
$936,145
8
$314,915
$449,751
$596,023
$570,533
8
$854,701
$1,057,389
$1,419,015
$1,472,719
6
$841,897
$1,150,031
$1,134,704
$1,377,522
$520,000
$785,000
$460,504
$980,504
$1,245,504
$1,428,583
Human Resources
Corporate EXecutive Board
Equfax
Fair Isaac Corp
McGraw-Hill Companies Inc.
Thomson-Reuters
CMEGroup Inc.
The Dun & Bradstreet Corporation
Jones, Melody L.
Chief HR Officer
Rushing, Coretha M VP HR
Dlal, Richard
SVP & Chief HR Officer
Murphy, DL.
BIP, HR
Dlndo, Stephen G.
B/P & Chief HR Officer
MD & Chief HR Officer
Leader HR & Wnning CUlture
Count
25th %ile
Median
Average
75th %ile
$558,352,000 $459,450 $344,588 $229,725
$1,935,700,000 $428,820 $297,297 $262,695
$1,223,680,000 $292,948
$0 $148,045
$6,355,055,000 $658,035
$0
$11707000000$710080$543809$543744
:~:~~::~~~:~~~
7
$1,47 4,990,000
$1,935,700,000
$3,735,849,000
$4,499,955,500
$804,038
$726,117
$292,948
$658,035
$1253889
$689,175
$691,515
$440,993
$1253824
$399,902
$592,300
$376,487
$368,377
$511089
$1,203,940
$1,318,417
$669,435
$1,026,412
$1764978
$1,089,077
$1,283,815
$817,480
$1764913
11111111111111111111111!!1!!1!1!11!111!!!1!!!1!1!1!!11!!!111!11!111!!1!1!!!111!1!!!!11!1!111!1!1!111!!11!!!!1!!!!1111!!!11!1!11!1!!!1!!!11!11!!1111!!11!!!1!!111!1!1!11!!!1!!!111!!111!11!!!1!1!11!11!1!!!111!1!111!!1!111!!!1!!!1!!111!!1!!11!1!!111!1!1!111!1!1!!!!11!!1!!11111111111111111111111
7
7
6
$336,927 $77,101 $198,469
$428,820 $297,297 $246,210
$454,425 $240,224 $279,497
$558,7 42 $343, 130 $294,217
Notes:
Cash data was aged to January 1, 2010 using an annualized rate of 2.1 %.
Benchmark data from Hew itt's Total Compensation MeasurementTM (TCMTM) Dltabase is not publicly available, but is reflected in the totals
Total cash compensation is the sum of b
7
$531,484
$722,579
$694,649
$765,077
6
$502,153
$687,403
$699,987
$690,930
7
$372,432
$399,902
$438,527
$551,695
7
$847,924
$1,203,940
$1,133,176
$1,318,820
6
$885,380
$1,185,676
$1,150,206
$1,283,430
tu
t
I
Study Methodology-Components of Pay
m The following components of pay were reviewed in this analysis:
------------~
Base Salary
Target and Actual Bonus
Target and Actual Total Cash (salary plus bonus)
Long-Term Incentives (LTl)
Target and Actual Total Direct Compensation (total cash plus LTl)
Moody's compensation reflects:
---- Current compensation (base salary, target and actual bonus, and long-term
incentives)
---- Moody's LTl awards (stock options) have been valued in the following manner:
Stock options using the Hewitt Modified Black-Scholes option pricing model
---- Note: Valued using full-term assumptions (not expected life as is used for
FAS 123R purposes) for both Moody's and the external market
Study Methodology-Proxy Data
Proxy Company Data
m For base salary, annual bonus, and total cash, data was taken from the most
recent proxy
~
LTl grant information was also taken from the most recent proxy and Form 4
filings. Awards were valued as follows:
- Stock options: Hewitt Modified Black-Scholes methodology with adjustments for
program-specific features such as vesting schedule and treatment upon
termination
- Restricted stock: Face value at date of grant with adjustments for risk of
forfeiture, treatment upon termination, and dividend policy
- Performance plans: Target face value at date of grant with adjustments for risk
of forfeiture, treatment upon termination, and program leverage
---- One-time, special awards were annualized over a period of 5 years
m Cash compensation aged to 2010 at 2.1% annually, except for the CEO due to tax
deduction limitations on salary
Study Methodology-Hewitt TCM Data
Hewitt TCM Data
m Data derived from "Financial Services" companies: selected banking, diversified
financial, and business services companies
~
Analysis is based on both actual and "target" compensation: base salary, annual
actual and target bonus, and most recent actual LTl awards
~
LTl valuation methodology consistent with proxy analysis
m Data collected as of 4/1/2009
~
Cash compensation aged to 1/1/2010 at 2.1% annually, except for CEO
long-Term Incentives Valuation Assumptions for Moody's
Stock Option Valuation
Assurred Strike Price/Fair 1\/larket Value
Term
Risk-Free Interest Rate
Annual Dvidend
Dvidend Yield
Stock Price Volatility
Vesting
Exercise Period Upon Temination- Vested
Death
Disability
Retirerrent
QuiUFire
$25.37
10
3.53%
$0.40
1.87%
41.77%
4-year graded
60 months
60 months
60 months
0 months
Vesting Treatrrent Upon Temination- Unvested
Death
Disability
Retirerrent
QuiUFire
Modified HA Black-Scholes Value
Percent of Fair Market Value
1
lmrrediate
lmrrediate
Forfeit
Forfeit
1
$8.77
34.57%
Modified HA Black-Scholes value takes into account discounts based on plan provisions.
Study Methodology-Data Sources
Peer Groups and Data Sources
Element
Peer Group
Proxy Analysis
Proxy Peers:
~
Group of 20 competitors approved by
the Compensation Committee
Survey Analysis
Custom Extraction from Hewitt
Total Compensation Measurement™
(TCM TM) Database:
m Financial services (including banks),
diversified financials, and business
services companies
~
Public disclosures; Form 4s, proxy
statements
~
Some peer company non-NEO data
from Hewitt TCM Database, as
indicated
Job Matching
~
CEO, CEO's direct reports
Data Analysis/Method
of Presentation
m Tabular data, by individual, with
Data Source
percentiles
~
Raw statistics (peer group similar to
Moody's in terms of size on average)
~
Hewitt TCM database
IS.1
CEO, CEO's direct reports
m Aggregated tabular data with percentiles
Blackrock Inc.
CME Group Inc
The Corporate Executive Board Company
The Dun & Bradstreet Corporation
Eaton Vance Corp.
Equifax Inc.
Factset Research Systems Inc.
Fair Isaac Corporation
Federated Investors, Inc.
Franklin Resources, Inc.
Interactive Data Corporation
lnvesco Ltd.
The McGraw-Hill Companies, Inc.
Morningstar, Inc.
The NASDAQ OMX Group, Inc.
NYSE Euronext
Riskmetrics Group, Inc.
Thomson Reuters PLC
Verisk Analytics, Inc.
Asset Management & Custody Banks
Specialized Finance
Research & Consulting Services
Research & Consulting Services
Asset Management & Custody Banks
Research & Consulting Services
Application Software
Application Software
Asset Management & Custody Banks
Asset Management & Custody Banks
Publishing
Asset Management & Custody Banks
Publishing
Publishing
Specialized Finance
Specialized Finance
Asset Management & Custody Banks
Publishing
Specialized Finance
Low
Average
25th Percentile
50th Percentile
75th Percentile
High
Moody's Corporation +/-Average
Moody's Corporation+/- Median
Moody's Corporation +/-75th Percentile
2,480
1,381
8,809
2,400
5,325
21,649
2,375
2,507
3,757
1,103
53,700
3,445
1,061
7,182
2,388
3,445
5,333
53,700
$279
$5,064
$2,645
$558
$1,726
$1,096
$1,936
$622
$631
$1,224
$4,342
$751
$3,308
$6,355
$502
$3,649
$4,706
$296
$11,707
$894
$279
$2,614
$629
$1,475
$3,822
$11,707
$2,479
$11,799
$21,417
$775
$4,157
$3,429
$3,645
$3,427
$917
$2,760
$25,893
$2,479
$9,566
$9,992
$2,343
$4,074
$6,778
$901
$25,755
3,590
$775
$7,309
$2,479
$3,618
$9,672
$25,893
-46%
13%
-27%
-33%
19%
-54%
-33%
36%
-49%
Note (1 ): Union Ban Cal Corporation, a wholly owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc.
(NYSE: MTU), was excluded due to lack of publicly available compensation information
TCM Financial Services Peer
American Express Company
Ameriprise Financial
Grou~
$31,920,000,000
$126,074,000,000
$2,699,000,000
$7,149,000,000
$95,676,000,000
-$38,000,000
$5,059,729,492
$1,419,000,000
$32,537,203,125
The Bank of New York Mellon
$16,828,000,000
BB& T Corporation
$10,404,000,000
Capital One Financial Corporation
$17,650,070,313
$152,015,000,000
$21,515,996,094
$1,519,000,000
$15,171,292,969
-$45,998,001
$12,489,973,633
CME Group Inc.
$2,644,855,957
$48,158,652,344
$715,486,023
$13,939,416,016
Deloitte 1 '4
The Dun & Bradstreet Corporation
$1,726,300,049
$1,586,000,000
$310,600,006
$4,162,083,496
Equifax Inc.
$1,935,699,951
$3,260,300,049
$272,799,988
$3,349,688,232
$8,539,000,000
$119,764,000,000
-$2,113,000,000
$4,769,629,395
$4,739,000,000
$9,331,000,000
$569,000,000
$5,824,728,027
$10,018,000,000
$107,389,000,000
-$572,000,000
$1,225,769,165
$3,505,459,961
$54,352,859,375
-$113,806,000
$2,803,943, 115
$844,030,029
$1,436,180,054
$98,992,996
$1,750,339,355
Experian Services Corp.
Fifth Third Bancorp
1,2,3,4
Fiserv, Inc.
Genworth Financial, Inc.
Huntington Bancshares Incorporated
IHS Group
lNG Americas, Inc.
Ingram Micro Inc.
4
$34,362,152,344
$7,083,473,145
-$394,920,990
$2,207,287,842
Janus Capital Corporation
$1,037,900,024
$3,336,699,951
$136,899,994
$1,267,567,627
KeyCorp
$6,499,000,000
$104,531,000,000
-$1,468,000,000
$4,217,468,262
M & T Bank Corporation
$4,216,569,824
$65,815,757,813
$555,887,024
$6,335,308,105
Marshall & IIsley Corporation
$4,008,690,918
$62,336,417,969
-$2,043,462,036
$3,550,464,600
McGraw-Hill Companies
$6,355,055,176
$6,080,142,090
$799,491 ,028
$7,293,254,883
$5,315,000,000
$4,255,000,000
$228,000,000
$2,231,291,992
$5,677,899,902
$82,053,601,563
$794,799,988
$11,631,234,375
Merrill Corporation
NCR Corporation
14
·
The Northern Trust Company
Regions Financial Corporation
$9,636,621 ,094
$146,247,812,500
-$5,595,773,926
$5,507,969,727
State Street Corporation
$12,572,000,000
$173,631,000,000
$1,811,000,000
$16,988,710,938
Sun Trust Banks, Inc.
$12,565,666,016
$189,137,968,750
$795,773,987
$10,460,379,883
$1,938,608,032
$1,550,251,953
$250,100,006
$2,755,605,957
$19,138,000,000
$265,912,000,000
$2,946,000,000
$43,881,996,094
Total System Services (TSYS)
U.S. Bancorp
Union Bank N.A.
4
3
Wachovia Corporation
Wells Fargo & Company
$22,413,000,000
$51,652,000,000
$1,309,639,000,000
$2,655,000,000
$109,922,632,813
Median
$7,149,000,000
$67,968,573,907
$272,799,988
$5,507,969,727
Moody's Corporation
$1,755,400,024
$1,773,400,024
$457,600,006
$4,817,582,031
1
Privately Held
2
Foreign Owned
3
Subsidiary
4
Data Not Publicly Available
Study Methodology-Position
~m
Matches~
Proxy Analysis
The following matches provided the basis for the proxy analysis:
Executive
Title
Proxy Match
R. McDaniel
Chairman and Chief Executive Officer
CEO (Corporate)
L. Huber
Executive Vice President and Chief Financial Officer
CFO
M. Madelain
Chief Operating Officer, Moody's Investors Service
CEO (Group)
M. Almeida
President, Moody's Analytics
CEO (Group)
J. Goggins
Senior Vice President-General Counsel
General Counsel
m Data was also reviewed from the Hewitt TCM database for all of these Moody's
roles
~ The Hewitt TCM position matches for each Moody's executive can be found on
the next page
Study Methodology-Position Matches, TCM Analysis
Moody's Title
Chairman and CEO
EVP,CFO
COO, MIS
President, MA
SVP,GC
Incumbent
McDaniel
Huber
Madelain
AI media
Goggins
TCM Database Match
CEO (Corporate)
CFO
CEO (Group)/Sector Head
CEO (Group)/Sector Head
General Counsel
Number of Incumbents (n=)
Proxy Peer Group 1
TCM
19
21
12
12
8
28
27
48
48
27
L___________ _____________________________
L___________ __________________________ ~
1
All of these roles were also matched to proxy data. Some non-NEO proxy matches were pulled from the
Hewitt TCM Database submissions from the proxy peer group companies (i.e., HR and GC matches
that were not in the "Top 5")
)
l
Moody's
Management Team Target Compensation Analysis
Corporate Executives
$1,875,350
$3,302,600
$1,196,000
$3,214,333
$1,500,000
$898,250
$885,000
$1,056,250
$580,000
$1,163,333
$500,000
$700,000
$789,500
$705,000
$1,051,500
$535,000
$1,118,333
$500,000
$1,000,000
$1,150,000
$2,577,250
Business Head
$525,000
Dering, Jeanne
CFO
$443,000
Gog!jins, John 121
General Counsel
Rutherfurd, John
President
2
Kimball, Andrew ' 1
$3,250.$4,000K
$400,000
$880,500
$595,000
$875,500
$430,000
$838,333
$550,000
$850,000
$3,903,000
$7,112,250
$5,777,300
$8,986,550
$4,243,000
$10,344,666
$4,475,000
$9,100,000
$582,000
$999,000
$995,000
$1,412,000
$674,400
$1,181,900
$850,000
$1,250.000
Totals
$3,033,000
$4,353,501
$5,050,000
$6,370,501
$3,305,520
$5,840,020
$4,175,000
$6,100,000
Totals
$3,349,067
$4,470,617
$5,328,571
$6,450,321
$3,556,435
$5,434,185
$4,000,000
$5,775,000
$15,936,566
$1_EI,155,871
Totals (assuming CEO competHive mld·polnt)
Perry
SMD Corp Finance Americas & Pub. Fin.
---~
'Total Totals -~~---- __
$21,607,37~ _!1_1.~04,9~
$21,418,671
- -
_$12,650,000=-~ - $20,975,000J
(1) 2001 Data annualized with Proposed Payout estimated by assuming bonus payout equal to target bonus
(2) AC!ual 2001 Target & Payout data does not Include 2102 Performance Cash Values
1:1200t/Moodfs/Dec2001 BOO Mlg\Mgl Team Target Comp Analysis o-man 12·5-Dl.xls/Top (f•nal)/1215/01
1
JOHNSON ASSOCIATES, INC.
Moody~s
Total Cash Comparison
Management Team
$18,000,000
$16,000,000
$14,000,000
F:. .A99re9afe.f\1aila9em.ent: ::rea:ri:;. ·p·;:;r;c;s·e·cr2oo2 'Ta.r9et' . . . . . . .,
Illustrates aggregate Total Cash
for entire Management Team,
including Corporate Executives,
Senior fv1Ds, and Group MDs
jreflects 8% increase from 2001 Target and is approximately
i88°/o of Estimated Market 2002 Target
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Actual 2001 Target
Proposed 2001 Payout
2
Proposed 2002 Target
Estimated Market 2002
Target (Median)
.JOHNSON ASSOCIATES~ I.NC.
Moody's Total Compensation Comparison
Management Team
Illustrates aggregate Total
Compensation for entire
Managernent Tearn, including
Corporate Executives, Senior
MDs, and Group MOs.
$22,000,000
$20,000,000
$18,000,000
$16,000,000
$"14,000,000
$12,000,000
$10,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Actual2001 Target
Proposed 2001 Payout
Proposed 2002 Target*
* Most significant difference is the Corporate Development and Head fv'IRMS positions
......... ~
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JOHNSON ASSOCIATES~ INC.
Moody's Total Cash Comparison
Corporate Executive Group
$6,000,000 ......
Includes Ruthelfurd (CE~al
Research & R a t i n g s ) , Kimbaf/ (MRMS}, Dering (CFO),
and Goggins (General Counsel)
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$i,OOO,OOO
so
Proposed 2001 Payout
Actual 2001 Target
Proposed 2002 Target
Estimated Market 2002
Target (Median)
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Moody's Total Compensation Comparison
Corporate Executive Group
$11 ,000,000
· Includes Ru
Research &
Ratings),
Kimball
(MRMS), Dering (CFO)~ and Goggins (General Counsel).
$10,000,000
I
$9,000,000
$8,000,000
$7,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Actual 200·1 Target
Proposed 2001 Payout
Proposed 2002 Target*
" Most significant difference is the Corporate Development and Head MRMS positions
Estimated Market 2002
Target (Median)*
1"Aniir:e·gate··c-o·r·;;oi·ate fxcc.litive p;()pc;·;;8a .2.Cioi"Tar9at""retl.ects.4s·e,;;· increase. ti-ot'i1. 2oo1 "ra.r9eF.ari·;._n; a'ilP'r"oxi·i:iiat•iliy ·1·14~;,:·d . E.st'imatecdviarl<Ei 2oo2 ·-rar9ei . . . . . . . . 1
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INC.
Moody's Tota~ Cash Comparison
Senior Managing Directors
$6;000,000
•• """"'"'"' '"'''"''"''-"''"'"•"•••o...o•<"•••••• ••• "'"''""""'"''"''"''''"""'"''"'"'' ''"'''"'' '''''''"''"'"
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•• " '
--Aggregate Senior Managing Director Proposed 2002 Target reflects 9% increase from 2001 Target and is approximately
79'% of Estimated Market 2002 Target A number of Senior Managing Directors are new to positions and will likely approach
market casl1 rates as develop experience.
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Actual 2001 Target
Proposed 2001 Payout
6
Proposed 2002 Target
Estimated Market 2002
Target (Median}
JOHNSON ASSOCIATES, INC.
OODY'S
2005 Competitive Market Compensation Update and Projections
December
5~
2005
)
)
Introduction
Johnson Associates was asked by Moody's to prepare a brief summary report on 2005 year-end
competitive positioning. The objective is to provide the Compensation Committee with an indication of
where Moody's 2006 target total compensation for senior professionals will be positioned against the
competitive marketplace. In addition to assisting Moody's, Johnson Associates provides advice to a
number of direct comparators and other financial service firms across industry sectors.
The business environment in 2005 has once again impacted most major financial service firms in a positive
way. Continued strong fixed income and trading results have produced strong business results and
increased compensation across firms. Additionally, for the majority of financial service comparators, other
business units like those focused on corporate finance, equities, and private equity/venture capital, will
have also contributed positively to year-over-year results, funding company-wide bonus and equity pools at
a 5°/o-10°/o+ increase over 2004. Importantly, there is noticeable dispersion among firms with several
major investment banks having compensation increases well above the market norm. Moreover, for select
Wall Street comparators this is a year where more senior positions will be aggressively rewarded.
Firms are increasingly optimistic about 2006, and earnings momentum is expected to be sustained across
most sectors. Moody's will encounter increased market demand for its professionals, particularly in the
structured area.
2
JOHNSON ASSOCIATES, INC.
)
Table of Contents
• Overview of Moody's Market Positioning and Proposed 2006
• Black Scholes Model- Current Perspective
• Moody's Black Scholes as o/o of Grant Price
Page
4
6
7
8
• Summary and Potential Directions
• Senior Executive Market Compensation
• Cash vs. Long-Term Compensation Mix: GMDs & Above (excluding R. McDaniel)
• Total Cash Compensation: GMDs & Above (excluding R. McDaniel)
• Total Long-Term Compensation: GMDs & Above (excluding R. McDaniel)
• Total Compensation: GMDs & Above (excluding R. McDaniel)
• APPENDIX
- 2004 CEO Compensation
- 2004 Second Highest Paid Compensation
- 2004 Third Highest Paid Compensation
- 2004 Fourth Highest Paid Compensation
- 2004 Fifth Highest Paid Compensation
- 2004 CFO Compensation
- 2004 General Counsel Compensation
- 2004 Equity Award Grants
- 2004 Equity Award Grants (3X Restricted Share Weight)
- 2004 Equity Award Outstanding
- 2004 Equity Award Outstanding (3X Restricted Share Weight)
3
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
JOHNSON ASSOCIATES, INC.
Overview of Moody•s Market Positioning and Proposed 2006
• Similar to previous years• exercise, Johnson Associates benchmarked Moody's senior executives
(Group Managing Directors and above) to market comparators
- Comparator group emphasizes other rating agencies and financial guarantors, with additional
reference to broader financial services and to a much lesser degree investment/commercial banks
(more relevant for Team MD's and below)
• Analysis focused on target compensation for 2005 and 2006 relative to market. As a group, executive
2005 target compensation at about =:65th percentile of market
- Consistent with the past few years, actual incentive (EPIC) payouts expected to be down year-overyear
- Management does not believe retention of senior executives will be a major issue this year. Driving
factor continues to be significant embedded, unvested equity gains from previous equity awards
- Moody's rapidly rising stock price has helped to produce attractive actual compensation
- For 2006, moderate adjustments in compensation mix from equity to cash and moving to 50°/o/50°/o
blend by value for stock options and restricted stock. Net impact to increase retention across range
of scenarios
• Johnson Associates believes management's proposed =9°/o-1 0°/o aggregate increase in 2006 target
total compensation for Sr Managing Directors (SMD) and Group Managing Directors (GMD) consistent
with market. Proposal incorporates both market movements and promotions
- More aggressive increase proposed on average for EVPs and above must reflect relative
contributions. Due to their heavy weighting in pay of equity they are the group most impacted by
changes in projected value created by a rising stock price and the Black Scholes model value
4
JOHNSON ASSOCIATES, INC.
Overview of Moody's Market Positioning and Proposed 2006
• In total, Moody•s will be positioned at the median for equity utilization, which is a decline from the past
- Reflects reductions in the number of shares awarded to manage total compensation compared to
market, movement to greater utilization of restricted stock, and elimination of lowest participant levels
with foregone value moved into cash compensation
5
JOHNSON ASSOCIATES, INC.
Moody's Black Scholes Model- Current Perspective
• Since Moody's has been a public company stock option awards have been valued using the Black
Scholes model. Unlike in some other organizations, grants were never considered a "free good" without
a meaningful cost to shareholders
- A detailed analysis shows stock options at Moody's currently have a Black Scholes value in the 30°/o35% range using current assumptions
- This result runs counter to that found in many other organizations where larger absolute dividend
levels and more significant declines in price volatility have driven lower model values
• In utilizing both stock options and restri.cted shares at Moody's, a "rule of thumb" has been applied that
three stock options equals in value one restricted share. Said another way, stock options are assumed
to be worth :::33°/o of their face value, with restricted shares at grant at 100°/o of market
- This "rule of thumb" for Moody's continues to be very realistic. For current awards there appears no
obvious reason to change it. However, the value trade-off should be monitored to insure that the
planned amount of value is delivered regardless of the mix between stock options and restricted
stock
6
JOHNSON ASSOCIATES, INC.
Black Scholes as 0/o of Grant Price
45'%
40%
35%
30"'/o
25%
20'%
15%
10";;,
•. 0 Moody's Assumptions
5"/o
1m Johnson Assoc Assumptions
0%
2000
2001
2002
2003
2004
2005
Option Value December 1
Note: Moody's proxy disclosure (2000·2004): 5 year term, 30% volatility. 2005 Moody's assumptions: 6 year term, 23% volatility
Jolmson Associates: 7 year term, estimates of volatility using historical and imp!ied rates
7
Summary and Potential Directions
• Market comparators expected to increase bonus and long-term compensation =:5°/o-10°/o+ from 2004
• Moody's proposed increases in 2006 GMD and SMD target total compensation will maintain market
positioning at about 551h-6oth percentile
- Proposed 2006 target changes for EVPs and above will position total compensation ·at about 651h
percentile. Bulk of increase driven by significant changes in Black Scholes value and only partial
reduction in shares granted {although more aggressively than for lower level managers and
professionals)
- Overall, total compensation positioning versus market will be about the same as prior year
• Management equity change to 50°/o stock options and 50o/o restricted stock reasonable. Valuation of
awards continues to be realistic
8
JOHNSON ASSOCIATES, INC.
)
Senior Executive Market Compensation
EVPs & Above
Goggins, John
EVPs & Above TOTAL
(excluding R. McDaniel & J. Dering)
$4,331
$11,590
$5,032
$13,200
$6,575
$10,800
$8,900
$15,850
(1) Moody's target compensation includes 16.7% down\ollard adjustment to bonus for EVPs & above
(2) Previously matched to CFO, currently Head of Global Regulatory Affeirs & Compliance
SMDs TOTAL
$3,134
$7,251
$3,407
$7,890
$4,650
$7,375
$5,625
$10,000
GMDsTOTAL
$5,989
$11,455
$8,395
$12,641
$7,750
$11,800
$9,050
$15,125
$13,454
$30,296
$14,834
$33,731
$18,975
$29,975
$23,575
$40,975
GMDs
GMDs & Above TOTAL
(excluding R. McDaniel & J. Dering)
9
JOHNSON ASSOCIATES, INC.
Cash vs" long-Term Compensation Mbe GMDs & Above (excluding R. McDaniel)
120% r····················'-· ·
'
100°/o
!
I
l~
!
80% ::·· ················
60%
40%
20%
0%
2005
2006
Moody's Target
Moody's
Preliminaty Target
2005 75!h%i!e
2005 fv1edian
lllfoody 1s
Market
10
Total Cash Compensation: GMDs & Above (excluding R. McDaniel)
2005
2006
Moody's Target
Moody's
Preliminary Target
11
Total Long...Term Compensation: GMDs & Above (excluding R. McDaniel)
200%
106'%.>
89%
(Options as
67% of Total
Long-Term
Compensation)
(Optwns as
50% of Total
Long-Term
Compensation)
2005
2006
Moody's Target
Moody's
Preliminary Target
12
Total Compensation: GMDs & Above (excluding R. McDaniel)
200°/o
180%
160%
+···················
1085 Market 75tft %ile ··
140%
115%
2005
2006
fv1oody's Target
Moody's
Preliminary Target
13
APPENDIX
14
JOHNSON ASSOCIATES, INC.
2004 CEO Compensation
Mellon Financial
McGuinn, M.G.
MBIA
Dunton,G.C
Safe co
McGavlck, M.S.
AmSou1h
Rltter,C.D.
Fair Isaac
Grudnowski, T.G.
Pres, CEO
Pres, CEO
XL Capital
O'Hara, S.M.
PMIGroup
Haughton, W.R.
COB, CEO
MGIC
Culver, C.S.
COB, CEO, Pres
First Horizon
Glass,J.K.
Pres, CEO, COB
Ambac Financlal
Genader, R.J.
Pres, CEO (CEO from 112412004)
Franklin Resources
Flanagan, M.L.
Pres, Co·CEO
Franklin Resources
Johnson, G.E.
Pres, Co-CEO
Everest Re
Taranto, J.V.
COS, CEO
Assured Guaranty
Frederico, D.J.
Pres, CEO
Regions Financial
Jones, C.E. Jr.
COB, CEO
Old Republic
Pres, CEO
ZUcaro, A.C.
Jefferson Pilot
Glass, D.R.
CEO (from 3104), Pres
Radian
Filipps, F.P
COB, CEO (rotired Apri/30, 2005)
Nationwide Financial
Jurgensen, W.G.
CEO
Raymond James
James, T.A.
COB, CEO
Hudson, C.B.
COS, Pres, CEO
Torchmark
Bagby, R.L.
COB, CEO and COB & CEO of Brokerage Company
A.G. Edwards
M&TBank
Wllmers, R.G.
COB, Pres, CEO of M&T Bank Corp. CEO of M&T Bank
25111 Pe1C91ltile
Median
75111 Pe1C911tile
(1) Option Value = (numbar of options) x (exercise price) x (113 factor to approximate Black·Scholes value)
$850,000
$933,333
$779,247
$1,150,000
$995,000
$625,000
$1,000,000
$775,000
$644,231
$813,215
$525,000
$789,138
$789,138
$1,000,000
$700,000
$900,000
$693,203
$925,000
$725,000
$281,700
$285,000
$800,000
$494,000
$544,606
$584,904
$2,000,000
$1,636,775
$0
$1,600,000
$1,400,000
$780,392
$285,000
$1,012,500
$2,650,000
$2,650,000
$2,000,000
$1,650,000
$643,750
$584,125
$925,000
$1,350,000
$1,007,366
$1,900,000
$300,000
$1,084,737
$500,000
$812,071
$779~7 $1,4oo,Ooo
$912,500 $1,950.000
15
$5,221,745
$2,377,333
$779,247
$3,150,000
$2,631,775
$625,000
$2,800,000
$2,175,000
$1,424,623
$1,098,215
$1,537,500
$3,439,136
$3,439,138
$3,000,000
$2,350,000
$1,743,750
$1,277,328
$1,850,000
$2,075,000
$1,289,066
$2,399,063
$1,100,000
$1,578,737
$1,044,808
$1,358,645
$2,175,000
$2,912,500
$0
$2,299,847
$3,922,667
$0
$4,729,066
$7,421,250
$2,269,372
$1,667,107
$1,818,667
$2,509,367
$2,457,000
$0
$0
$0
$1,001,669
$0
$2,233,875
$1,766,000
$0
$997,058
$0
$1,406,000
$0
$0
$0
$1,001,669
$2,284.610
$0
$5,400,022
$1,925,000
$4,333,747
$0
$0
$1,509,600
$2,532,600
$973,989
$0
$1,950,100
$2,350,014
$2,350,014
$2,617,650
$1,502,494
$2,808,401
$0
$0
$1,350,000
$0
$437,472
$0
$308,840
$0
$0
$1,350,000
$2,375,007
$2,100,000
$1,148,564
$1,167,000
$0
$0
$0
$2,041,600
$2,573,622
$0
$0
$0
$0
$0
$0
$584,125
$388,000
$0
$1,046,520
$0
$0
$0
$0
$0
$0
$1,097,542
$5,200,000 $10,421,745
$7,699,669 $10,077,202
$7,947,666
$8,726,913
$5,482,311
$8,632,311
$5,896,066
$8,527,863
$7,421,250
$8,046,250
$3,776,972
$6,576,972
$4,199,707
$6,374,707
$4,834,256
$6,258,679
$5,082,989
$6,161,204
$4,407,100
$5,944,600
$2,350,014
$5,789,152
$2,350,014
$5,789,152
$2,617,850
$5,617,650
$2,504,163
$4,854,163
$2,808,401
$4,352,151
$4,095,328
$2,818,000
$2,154,000
$4,004,000
$1,350,000
$3,425,000
$3,332,644
$2,043,578
$437,472
$2,836,535
$1,406,000
$2,506,000
$306,640
$1,867,577
$0
$1,044,808
$2,252,007
$4,049,664
$2,85Q,333 . $5,944,600
$5,141,495
$8,580,087
50%
76%
91%
64%
69%
92%
57%
66%
77%
82%
74%
41%
41%
47%
52%
80%
69%
54%
39%
61%
15%
58%
16%
0%
41%
57%
72%
JOHNSON ASSOCIATES, INC.
"''
2004 Second Highest Paid Compensation
BlackRock
Genworth Financial
Mellon Financial
First Horizon
MBIA
Lincoln National
R~ions Financial
XLCa~ltal
Ra~ond James
Safeco
Le99 Mason
MGIC
Ambac Financial
M&TBank
Nationwide Financial
Assured Guaran~
PMIGrou2
Torchmark
Jefferson Pilot
Am South
Old Republic
Everest Re
Franklin Resources
Radian
Ka~ito, R.S.
Mann, T.H.
Elllott,S.G.
Baker, G.L.
Brown,J.W.
Gotta, J.H.
Moore,J.W.
Tobin, C.R.
Trocin, J.E.
Mead, C.
Fetting, M.R.
Sinks, P.
Lassiter, P.B.
Brumback, E.L.
Thresher, M.R.
Mills, A.B.
Smith, L.S.
McAndrew, M.S.
Stonecieher, D.A.
Steehenson, E.W. Jr
Slmeson, W.A.
Gallagher, T.J.
Tatlock, A.M.
Kasmar, R.J.
Pres & CEO, Mortgage Insurance
SVCOB
Pres First Horizon Fin Svcs
Executive Chairman (former CEOl
Pres & CEO, Lincoln Nafl Life Insurance
Pres, CEO Designate
EVP, CEO of Insurance Operations
EVP, Eguity Capital Markets
Co-Pres of Insurance Subsidiaries, CFO
SrEVP, Pres Le99 Mason Asset Mgmt
EVP-Field Oeeralions
COB, CEO (!etlred from CEO e_ost 11241042
EVP of M&T Bank Co!!!, Pres & COO M&T Bank
Pres, COO
CFO
Pres, COO, Director
COB - Insurance Oes. Pres & CEO - Globe
COB, (retired from CEO f?E.SI 2104)
SrEVP; Gre Head - Regional Bkg
SVP Mortgage Guaran~
Pres, COO
VCOB, Member • Office of the Chairman
Pres, COO
Median
75th Percentile
(1) Option Value= (number of options) x (exercise price) x (113 factor to approximate Black-Scholes value)
$350,000
$556,190
$660,000
$571,345
$779,769
$600,000
$810,000
$518,750
$228,750
$516,667
$295,834
$303,077
$76,154
$446,154
$509,346
$500,000
$500,000
$750,000
$800,000
$440,000
$308,146
$469,231
$596,535
$455,000
$7,977,915
$1,200,000
$1,055,000
$3,651,241
$1,512,000
$1,851,563
$982,125
$800,000
$2,580,000
$1,075,000
$2,243,000
$279,184
$0
$330,000
$1,070,685
$1,000,000
$767,700
$200,000
$800,000
$383,000
$475,000
$550,000
$650,000
$615,000
$8,327,915
$1,756,190 $4,420,000
$1,715,000 $1,341,580
$4,222,586
$239,579
$2,291,769
$0
$0
$2,451,563
$1,792,125
$114,132
$1,318,750 $1,969,067
$50,400
$2,808,797
$1,591,667
$0
$2,538,834
$260,350
$582,261
$909,333
$76,154
$0
$776,154 $1,986,173
$1,580,031
$547,759
$1,500.000
$480,800
$970,000
$1,267,700
$950,000 $1,124,800
$1,600,000 $5,739,500
$823,000
$924,868
$783,146
$664,125
$1,019,231
$0
$1,246,535
$0
$1,070,000
$335,504
$500,000
$800,000 $1,409,375
$590,238 $1,168,750 $1,783,141
16
$1,350,000
$1,350,000
$0
$6,176,190
$3,150,008
$4,491,588
$0 $1,359,516 $1,599,095
$3,820,000
$0 $3,820,000
$0 $2,100,000 $2,100,000
$2,441,654
$0 $2,555,786
$754,600
$0 $2,723,867
$649,980
$700,380
$0
$1,408,433
$294,668 $1,703,101
$546,350
$286.000
$0
$348,289 $1,020,800 $2,278,422
$3,685,500
$0 $3,685,500
$0
$0 $1,986,173
$0
$574,938 $1,122,697
$0 $1,202,000
$721,200
$0
$0
$970,000
$0
$0 $1,124,800
$0
$0 $5,739,500
$227,000 $1,151,868
$0
$475,000 $1,139.125
$0
$0
$628,236
$628,236
$383,909
$0
$383,909
$0
$335,504
$0
$408,152
$229,888
$958,717
$746.400
$0 $1,276,000
$277,751 $2,486,445
$9,677,915
$7,932,380
$6,206,588
$5,821,681
$6,111,769
$4,551,563
$4,347,911
$4,042,617
$3,509,177
$3,294,768
$3,085,184
$2,860,683
$3,761,654
$2,762,327
$2,702,728
$2,702,000
$2,237,700
$2,074,800
$7,339,500
$1,974,868
$1,922,271
$1,647,467
$1,630,444
$1,405,504
$2,972,934
$4,500,650
JOHNSON ASSOCIATES, INC.
.,
2004 Third Highest Paid Compensation
Menon Financial
Lincoln National
Regions Financial
Safeco
Legg Mason
O'Hanley, R.P.
Vaughan, R.C.
Horsley, R.D.
LaRocco, M.E.
Scheve, T.C.
Pres FTN Rnancial
Operations
VCOB, VP Mellon lnstiMional Asset Management
EVP, CFO
VCOB,COO
Co-Pres of Insurance Subsidiaries
SrEVP; Pres & CEO Legg Mason Wood Walker
EVP & CFO of M& T Bank Corp & M&T Bank; VCOB &
CFO of M&T Bank
EVP,CFO
VCOB, Portfolio Risk Assessment & Internal Audit
President, Assured Guaranty Corp
EVP, CFO, Chief Investment Officer
SrEVP; CFO
VP, Insurance Corp.
EVP,CAO
Pres, COO
EVP, General Counsel
Communications Co.
EVP, CFO
President International & Strategic Investments
SVP, TiUe Insurance
Pres. of Enhance Fin. Svcs Gp
VCOB and VCOB, EVP, Dlr of Ops of Bkg Co.
VP, Chief Marketing Officer (until 816104)
M&TBank
Pinto, M.P.
MGIC
Lauer,J.M.
Ambac Rnancial
Boyle, D.L
Assured Guaranty
Schozer, M.J.
Nationwide Financial
Rosholt, A.A.
Am South
Mooney, B.E.
MBIA
Budnick, N.G.
Br111,T.G.
Torchmark
Heick, C.
Raymond James
Simpson, M.L
Franklin Resources
Jefferson Pilot
Stone, T.M.
Everest Re
Limamo, S.L.
Shuster, B.M.
PMI Group
Yeager, R.K.
Old RepubUc
Radian
Kamarck,M.
A.G. Edwards
Kessler, RJ.
Fair Isaac
Nowacki, W.F., Jr
25111 Peroentfle
lvletriBn
75th Pen:entile
(1) Option Value= (number of options) x (exercise price) x (113 factor to approximate Bleck-Scholes value)
$517,737 $3,425,000 $3,942,737
$590,617
$700,000 $1,290,617
$525,000 $2,000,000 $2,525,000
$515,000 $1,590,286 $2,105,286
$575,000
$507,938 $1,082,938 $1,159,335
$516,667
$775,000 $1,291,667
$0
$297,916 $2,108,000 $2,405,916
$173,567
$0
$754,800
$1,026,726
$0
$932,314
$1,408,433
$270,000
$0
$400,000
$330,000
$730,000 $1,986,173
$330,462
$299,888
$630,350
$613,800
$374,122
$820,000 $1,105,650
$370,000
$450,000
$920,147
$350,000
$675,000 $1,025,000
$480,800
$721,200
$171,666
$889,611 $1,061,277
$491,943
$0
$819,667
$924,868
$436,667
$383,000
$0
$589,455
$0
$589,455 $1,961,333 $1,200,000
$750,000 $1,031,067
$0
$600,000
$150,000
$253,750 $1,180,000 $1,434,127
$50,400
$212,478
$671,344
$406,250 $1,077,594
$0
$399,943
$946,806
$490,675
$456,131
$883,000
$0
$694,231
$613,458
$0
$294,231
$400,000
$330,000
$450,384
$780,384
$517,333
$0
$900,000 $1,165,483
$120,750
$265.483
$0
$435,000
$935,000
$335,504
$500,000
$0
$824,797
$202,084
$822,733
$0
$168,129
$348,929
$532,500
$0
$348,929
$0
$313,958
$793,237
$176,850
$0
~.125
$491;943
$622,733 $1,061:zT7
$400,000
$0
$517.202
$894.806 $1,291,142 $856,783 $56().572
17
$1,599,095
$2,723,867
$1,316,130
$1,700,000
$2,091,649
$1,702,868
$443,567
$5,541,832
$4,014,484
$3,841,130
$3,805,286
$3,174,587
$2,994,535
$2,849,483
29%
68%
34%
45%
66%
5'70A>
16%
$0 $1,986,173
$689,040 $1,676,962
$0 $2,025,797
$0 $1,202,000
$516,348 $1,008,291
$227,000 $1,151,868
$1,249,997 $4,411,330
$0 $1,031,067
$0
$262,878
$0
$399,943
$160,500 $1,043,500
$613,458
$0
$0
$517,333
$0
$120,750
$0
$335,504
$0
$168,129
$0
$532,500
$480,450
$0
$0 $1;151,868
$382,224 $1.688.481
$2,716,173
$2,307,312
$2,845,797
$2,227,000
$2,069,568
$1,971,535
$5,000,785
$1,781,067
$1,697,005
$1,477,537
$1,990,306
$1,307,689
$1,297,717
$1,286,233
$1,270,504
$992,926
$881,429
$1,430,241
. $2,227,000
$3.489.936
73%
73%
71%
54%
49%
58%
88%
58%
15%
27%
52%
47%
40%
9%
26%
17%
60%
27%
$294,435
$0
49%
59%
JOHNSON ASSOCIATES, INC.
2004 Fourth Highest Paid Compensation
Mellon Financial
LeggMason
First Horizon
Safeco
Regions Financial
MGIC
Dineen, R.W.
Canter, S.E.
Bain, P.L.
Burkett, C.G.
Ruddy,J.W.
Fleischauer, J.l. Jr.
Pierzchalski, LJ.
Ambac Financial
Am South
MBIA
Uhlein, J.W.III
Bagby,C.W.
Corso,C.O.
EVP, CEO of Fin Prod & Services Ops of Co.
Pres & CEO, Uncoln Financial Advisors
VCOB; COB & CEO The Dreyfus Corp
SrEVP&CAO
Pres Retail Fin Svcs & Memphis Fin Svcs
EVP, General Counsel
Regional President
EVP-Risk Management
Infrastructure, Consumer Asset-Backed, Conduit and
Struct.lns. Grps
SrEVP; Grp Head - Consumer Bkg
VP, Chief lnvesbnent Officer
EVP of M&T Bank Corp; EVP, COB & CEO of MidAtlantic Division of M&T Bank
CFO
General Counsel
EVP,CFO
EVP; Pres and CEO of Eagle; MD, Asset Mgt.
Pres, COO (resigned 5/5104)
EVP; Pres Jefferson-Pilot Benefit Partners
SVP, Chief lnfonnation Officer
EVP, CAO, General Counsel & Secretary
SVP, Secretary & General Counsel
EVP,CFO
EVP, Oir of Sales & Marketing of Bkg Co.
SVP; MD, CEO - Bermuda Re
VP, Research & Development
M&TBank
Sheehy, E.J.
Black Rock
Audet, P.L.
Michener, J.M.
Assured Guaranty
Torchmark
Coleman, G.L.
Raymond James
Riess, R.K.
Nationwide Financial
Gasper, J.J.
Jefferson Pilot
Bates, R.O.
Franklin Resources
Bolt,J.J.
PMI Group
Bacigalupi, V.J.
OldRepubnc
LeRoy, S.lll
Radian
Quint,C.R.
A.G. Edwards
Miller, P.M.
Everest Re
de Saram, M.S.
Fair Isaac
Rosenbemer. L.E.
25th Percentile
Median
.75th Percentile
(1) Option Value =(number of options) x (exercise price) x (1/3 factor to approximate Bleck-Scholes value)
$650,000
$1,935,417
$1,300,000
$317,117 $1,125,061
$1,100,000
$0
$1,973,000 $2,268,834
$173,567
$253,000
$0
$535,000 $1,059,942
$208,331
$0 $1,182,188
$732,000 $1,112,000
$0 $1,070,472
$248,804
$442,969
$842,969 $1,043,401
$516,887
$0
$613,800
$292,687
$612,379
$365,125
$689,040
70%
36%
47%
16%
57%
54%
65%
73%
$788,697
$924,868
$588,400
$365,110
$0
$0
$0 $1,153,807
$227,000 $1,151,868
$470,014 $1,058,414
$2,278,807
$1,918,768
$1,864,504
51%
60%
57%
$650,000 $1,069,469
$350,000
$300,000
$260,000 $1,105,000 $1,365,000
$90,067
$900,000
$350,000
$550,000
$300,500
$575,000 $1,031,067
$425,000
$150,000
$228,750 $1,110,000 $1,338,750
$50,400
$392,504 $1,061,820 $1,454,324
$0
$474,024
$550,000 $1,024,024
$211,920
$401,782
$390,000
$791,782
$0
$409,440
$729,440
$491,467
$320,000
$153,960
$520,217
$402,500
$366,257
$455,000
$335,000
$790,000
$204,851
$809,905
$0
$202,172
$607,733
$530,148
$305,148
$225,000
$294,460
$336,345
$457,917
$0
$336.345
$110,942
$319,769
$365,175
$738,805
$361,174
$308,809
$505,000
$859,620
$839,250 $1,162.500
$401,654
$744.973
$0
$195,000
$450,750
$0
$187,475
$0
$0
$550,333
$0
$0
$0
$153,515
$0
$0
$0
$0
$365.121
$0 $1,069.469
$26,000
$311,067
$751,250
$0
$0 $1,031,067
$0
$237,875
$0
$0
$147,000
$358,920
$0
$550,333
$0
$491,467
$153,960
$556,460
$0
$204,851
$0
$153,515
$0
$294,460
$0
$457,917
$0 '$375,832
$891,158
$0
$208,740 $1.314,457
$1,719,469
$1,676,067
$1,651,250
$1,606,067
$1,576,625
$1,454,324
$1,382,944
$1,342,115
$1,220,907
$1,076,677
$994,851
$963,420
$824,606
$794.262
$1,352,322
$1,697,768
$2,424.271
62%
19%
45%
64%
15%
0%
26%
41%
40%
52%
21%
16%
36%
58%
28%
49%
59%
$250,000
$410,000
$356,090
18
$875,000 $1,125,000
$356,900
$766,900
$450,000
$806,090
JOHNSON ASSOCIATES, INC.
.·~
2004 Fifth Highest Paid Compensation
Lincoln National
Mellon Financial
Regions Fmancial
Safeco
Ambac Financial
MGIC
LeggMason
Am South
Fi~tHorizon
Assured Guaranty
BlackRock
Raymond James
Torchmark
MBIA
Nationwide Financial
Franklin Resouroes
PMI Group
M&TBank
Jefferson Pilot
A.G. Edwards
Radian
Old Republic
Fair Isaac
Everest Re
25th Percentile
Driscoll, J.T.
Lamere, D.F.
Miller,P.D.
Senegor, Y.
McKinnon, W.T.
Lane, J.H.
Mulroy, T.P.
Mayer, W.C. Ill
Martin, LB.
Samson, P.A.
Connolly, R.P.
Averitt, R.G., Ill
McWhorter, A.L.
Whaley, A.M.
Karas, A.A.
Balo,J.R.
Lofe, D.P., Jr
Sadler, R.E. Jr.
May, W.H.
Goldman, A.E.
Yaruss, H.S.
Kellog,J.
Sjoblad, SA.
Shoemaker, K.T.
Pres & CEO, Lincoln Nationallnvesbnent Cos &
Delaware lnvesbnents
Wealth Mgmt
Regional President
EVP, Chief Information Officer, Chief Strategy Officer
SMD, Chief Risk Officer
SVP, General Counsel
EVP & Head of Equity Capital Markets
SrEVP; Grp Head ·General Bkg
Pres Bus Fin Svcs & Tennessee Fin Svcs
President, Assured Guaranty Re lnfl
General Counsel
Pres and CEO of RJFS
Pres, CEO· Liberty & UILIC
VP, Chief Risk Officer
SVP, Non-Affiliated Sales
SVP,CFO
EVP,CFO
EVP of M&T Bank Corp, COB of M&T Bank
EVP, Marketing & Distribution
Corp. VP; Dir. Of Market Analysis of Bkg Co.
EVP, Sec, General Counsel & Corp Resp. Officer
SVP, General Insurance
VP, Consumer Solutions
Comptroller, Principal Accounting Officer
Median
75th Percentile
(1) Option Value= (number of options) x (exercise price) x (1/3 factor to approximate Black.Scholes value)
$450,000
$470,000
$400,000
$375,000
$244,231
$266,539
$250,000
$400,000
$441,938
$350,000
$250,000
$229,524
$463,750
$375,000
$400,000
$401,169
$315,000
$521,731
$413,556
$220,254
$278,000
$344,067
$362,693
$186,923
$269,404
$375,000
$434,843
19
$1,648,828
$1,551,000
$442,969
$525,000
$881,250
$243,177
$1,438,000
$348,160
$100,000
$525,000
$1,000,000
$920,000
$80,000
$430,000
$567,563
$373,750
$400,000
$500,000
$96,058
$566,478
$355,000
$137,500
$2,098,828
$0
$0 $1,200,000 $1,200,000
$2,021,000
$131,548
$466,706
$0
$598,254
$842,969 $1,043,401
$516,887
$0 $1,560,288
$900,000
$242,325 $1,298,781
$0 $1,056,456
$1,125,481
$513,513
$366,784
$880,297
$0
$509,716
$613,800
$303,307
$669,040 $1,606,147
$1,688,000
$86,783
$181,000
$0
$267,783
$748,160
$924,868
$0
$227,000 $1,151,868
$541,938
$185,496
$0 $1,052,620 $1,238,116
$875,000
$240,400
$360,600
$601,000
$0
$1,250,000
$175,000
$23,500
$0
$198,500
$1,150,113
$131,242
$50,400
$0
$181,642
$543,750
$749,867
$0
$0
$749,867
$605,000
$568,400
$470,014 $1,058,414
$0
$967,563
$152,805
$160,380
$313,185
$0
$774,919
$476,784
$476,784
$0
$0
$715,000
$478,533
$478,533
$0
$0
$1,021,731
$0
$0
$0
$0
$509,614
$706,400
$130,500
$836,900
$0
$786,732
$118,165
$118,165
$0
$0
$633,000
$153,235
$0
$153,235
$0
$481,567
$161,000
$137,500
$298,500
$0
$362,693
$355,000
$0
$0
$0
$355,000
$55,000
$241,923
$0
$134,961
$134,961
$0
$269,423
$59,496
$0 $27M63
$566,063
$0
$458,985
$823,985 $173,248
$599,627
$0
$0
$829,391 $1,099,544
$346,277
$210,345 $1,187,967
$607.450
$3,298,828
$2,619,254
$2,403,257
$2,198,781
$2,005,778
$2,115,863
$1,955,783
$1,900,028
$1,780,054
$1,476,000
$1,448,500
$1,331,755
$1,293,617
$1,863,414
$1,280,748
$1,251,703
$1,193,533
$1,021,731
$1,346,514
$904,897
$786,235
$780,067
$717,693
$376,884
$1,208,076
$1;462,260
$2,088,342
36%
23%
65%
59%
44%
76"/o
14%
61%
70%
41%
14%
14%
58%
57%
24%
38%
40%
0%
62%
13%
19"/o
38%
49%
36%
23%
40%
60'!(,
JOHNSON ASSOCIATES, INC.
')
2004 CFO Compensation
Lo~Tenn
aa%of
Comp
Uncoln National
Safeco
XL Capital
M&TBank
Assured Guaranty
MGIC
Nationwide Financial
Jefferson Pilot
Am South
BlackRock
Torchmark
Everest Re
Franklin Resources
PMI Group
Vaughan, R.C.
Mead, C.
de St. Paer, J.
Pinto, M.P.
Mills, A.B.
Lauer,J.M.
Rosho~. A.A.
Stone, T.M.
Moone~. B.E.
Audet, P.L
Coleman, G.L.
Limauro, S.L.
Baio,J.R.
Lofe, D.P., Jr
Co-Pres of Insurance Subsidiaries, CFO
EVP,CFO
CFO of M&T Bank
CFO
EVP,CFO
EVP, CFO, Chief lnvesbnent Officer
Communications Co.
SrEVP; CFO
CFO
EVP,CFO
EVP, CFO
SVP,CFO
EVP,CFO
CFO, Treasurer, Secrelaly & VP; EVP, Treasurer, CFO
& Dir of Law & Com~liance, Dir of Admin at B~ Co.
EVP 1CFO
A.G. Edwards
Kel~. D.L.
Radian
Quint1C.R.
25th Percentile
Median
75th Percentile
(1) Option Value= (number of options) x (exercise price) x (1/3 factor to approximate Black-Scholes value)
$515,000
$516,667
$537,500
$400,000
$500,000
$330,462
$171,666
$490,675
$436,667
$260,000
$425,000
$294,231
$401,169
$315,000
$1,590,286
$1,075,000
$650,000
$330,000
$1,000,000
$299,888
$889,611
$456,131
$383,000
$1,105,000
$150,000
$400,000
$373,750
$400,000
$2,105,286
$0
$1,591,667
$1,408,433
$1,187,500 $1,230,667 $754,800
$730,000 $1,986,173
$0
$1,500,000 $480,800 $721,200
$630,350
$613,800 $374,122
$1,061,277 $491,943
$0
$946,806 $883,000
$0
$819,667 $924,868
$0
$1,365,000
$90,067 $195,000
$575,000 $1,031,067
$0
$694,231
$613,458
$0
$774,919
$0 $476,784
$715,000 $478,533
$0
$223,385
$3351000
$309,808
$400,585
~1006
$651,865
$455,000
$380,688
$455,566
$0
$204,851
$67,550
$486,372
~31467
20
$875,250
$7901000
$726,250
$847,459
$917~ !112311875
$173,776
$0
$0
$0
$399?88
$1,700,000
$1,703,101
$1,985,467
$1,986,173
$1,202,000
$1,676,962
$1,008,291
$1,043,500
$1,151,868
$311,067
$1,031,067
$613,458
$476,784
$478,533
$3,805,286
$3,294,768
$3,172,967
$2,716,173
$2,702,000
$2,307,312
$2,069,568
$1,990,306
$1,971,535
$1,676,067
$1,606,067
$1,307,689
$1,251,703
$1,193,533
45%
52"k
63%
73%
44%
73%
49%
52%
58%
19%
64%
47"k
38%
40%
$173,776
$2041851
$478,096
$0 $1,037,283
$243;917 !116821722
$1,049,026
$994,851
$1,293,693
$1,980,921
$2?051543
17%
21%
40%
48%
59%
$689,040
$516,348
$160,500
$227,000
$26,000
$0
$0
$0
$0
$0
$0
$0
JOHNSON ASSOCIATES, INC.
'
·~
.
2004 General Counsel Compensation
l.ong-Tenn
as%of
Comp
Sa1eco
MGIC
Lane, J.H.
Assured Guaranty
Michener, J.M.
General Counsel
Franklin Resources
EVP, General Counsel
Simeson, M.L.
BlackRock
Connolly, R.P.
General Counsel
EVP, CAO, General Counsel & Secretary
PM! Grou2
Bacigaruei, V.J.
Old Republic
SVP, Secreta~ & General Counsel
LeR~,S.U1
Radian
Yaruss, H.S.
EVP, Sec, General Counsel & Co~ Rase. Officer
25th Percentlle
Median
75th Percentile
(1) Option Value =(number of options) x (exercise price) x (1/31aclor to approximate Black-Scholes value)
$380,000 $732,000
$243,m
$266,539
$350,000
$550,000
$406,250
$671,344
$250,000 $1,000,000
$320,000 $409,440
$386,257
$153,960
$355,000
$278,000
$275,135
$327,044
$335,000 $407,845
$369,693 $595,500
21
$1,112,000
$509,716
$900,000
$1,077,594
$1,250,000
$729,440
$520,217
$633,000
$604,804
$814,720
$1,0861196
$1,070,472
$303,307
$450,750
$399,943
$175,000
$0
$0
$0
$0
$0
$226;868
$239,154
$424,742
$4121845
$613,800
$300,500
$0
$0
$491,467
$402,500
$1531235
$0
$23,500
$0
$153,960
$0
$0
$11,750
$177,671
$1,319,276
$1,606,147
$751,250
$399,943
$198,500
$491,467
$556,460
$153,235
$349,582
$523,963
$893,257
$2,431,276
$2,115,863
$1,651,250
$1,477,537
$1,448,500
$1,220,907
$1,076,677
$786,235
$1,184,849
$1,463,019
$1z767,403
54%
76%
45%
27%
14%
40%
52%
19"k
25%
43%
52"~
JOHNSON ASSOCIATES, INC.
2004 Equity Award Grants
*Shares Outstanding reflects disclosure in 2004 Annual Reports. Stock options and restricted shares counted equally on share basis.
Therefore, underweights utilization of Firm's granting restricted stock
Company
as Percentage of Fully Diluted Shares Outstanding
Dollar Value of Market Cap (S millions)
2l!tlons
Total Granted
Restricted
Stock
Total Granted
Restricted
Stock
Fair Isaac CoJporatlon
7.2%
0.0%
Assured Guaranty Ltd
2.6%
1.4%
Amsouth
2.5%
0.1%
First Horizon National
2.3%
Raymond James Financial
2.0%
Genworth Financial
OPtions&
Restricted Stack
oettons
$200
7.2%
3.9%
$0
Options&
Restricted Stock
$200
$43
$23
$67
$217
$5
$222
0.0%
2.6%
2.4%
$103
$1
$104
0.3%
2.3%
$48
$7
$55
3.2%
0.0%
3.2%
$466
$0
$466
Mellon Financial
1.5%
0.3%
1.8%
$195
$41
$236
Moody's 2005 Comp Year
1.5%
0.3%
1.8%
$233
$40
$273
M&TBank
1.8%
0.0%
1.8%
$207
$0
$207
XL Capital
1.3%
0.4%
1.8%
$123
$39
$162
Regions Financial
1.2%
0.4%
1.6%
$166
$61
$227
PMI Group
A.G. Edwards
1.5%
0.5%
0.1%
1.0%
1.5%
1.5%
$52
$15
$2
$33
$54
1.4%
$1n
$53
$48
Moody's 2006 Comp Year
MBIA
1.0%
0.8%
0.3%
0.4%
1.2%
0.0%
$58
$85
$33
Jefferson Pilot
1.2%
1.2%
$248
$91
$0
$85
Old Republic
1.1%
0.0%
1.1%
$52
$0
$52
Torchmar1t
1.0%
0.0%
1.0%
$53
$0
$53
MGIC
Radian
0.6%
0.3%
0.9%
$36
$16
$53
0.9%
0.1%
0.9%
Everest Re
0.8%
0.1 o/o
0.8%
$38
$41
Ambac Financial
0.4%
0.3%
0.8%
Franklin Resources
Nationwide Financial
0.7%
0.0%
0.6%
Legg Mason
0.5%
0.0%
0.0%
0.8%
0.6%
Lincoln National
Safeco
0.4%
0.0%
BlackRock
0.0%
25th P~le {excluding Moody's)
Median {excluding Mooily's)
75th Percentile {exdudlng Moody's)
$32
$147
$3
$41
$4
$26
$45
$58
$8
$156
$39
$0
0.5%
$56
$5
$39
$61
0.1%
0.5%
$36
$6
$42
0.4%
0.4%
$0
$25
$25
0.1%
0.1 o/o
$0
$6
$6
0.6%
0.0%
0.8%
~
$38
$0
$49
1.0%
1.7%
0.1%
0.3%
1.2%
1.8%
•
$53
$5
$141
$25
$60
$160
22
I
I
JOHNSON ASSOCIATES, INC.
)
)
2004 Equity Award Grants (3X Restricted Share Weight)
.. Shares Outstanding reflects disclosure In 2004 Annual Reports. Restricted stock weights at 3X stock options on a per share basis to create
"apples-to-apples" comparison
as Percentage of Fully Diluted Shares Outstanding
Dollar Value of Market Cap (S millions)
Total Granted
oetlons
Total Granted
Restricted
Stock
Fair Isaac Corporation
7.2%
0.0%
Assured Guaranty Ltd
2.5%
4.0%
3.0%
Company
Restricted
Options&
Restricted Stock
Oe!lons
7.2%
6.5%
stock
Options&
Restricted Stock
$200
$0
$42
$15
$69
$200
$111
$98
$113
$21
$69
A.G. Edwards
0.4%
Raymond James Financial
2.0%
0.9%
2.9%
Amsouth
2.5%
0.2%
2.7%
$48
$217
$14
$231
XL Capital
1.3%
1.3%
2.6%
$122
$116
$238
$347
3.4%
Regions Financial
1.2%
1.3%
2.5%
$164
$183
First Horizon National
2.3%
0.1%
2.4%
$103
$2
$106
Mellon Financial
1.5%
0.9%
2.4%
$194
$121
$315
Moody's 2005 Comp Year
1.5%
0.8%
2.3%
$231
$121
$352
MBIA
0.8%
3.2%
1.3%
$57
$486
1.0%
1.8"~
$177
$0
$139
$155
$486
Moody's 2006 Comp Year
0.0%
0.8%
2.0%
3.2%
$98
Genworth Financial
M&T Bank
1.8%
0.0%
1.8%
1.6%
$207
$0
$52
$36
$7
$59
1.5%
$49
$85
1.5%
$32
$77
$110
$85
$0
$85
$75
PMI Group
1.5%
MGIC
0.6%
0.2%
0.9%
Ambac Financial
0.4%
1.0%
$317
$207
Jefferson Pilot
1.2%
Safeco
0.0%
1.1%
1.1%
$0
$75
Old Republic·
1.1%
0.0%
1.1%
$52
$0
$52
Everest Re
0.8%
0.9%
0.2%
0.2%
1.0%
$40
$12
1.1%
$38
$8
$53
$46
0.0%
0.1%
1.0%
Franklin Resources
1.0%
0.7%
0.8%
$53
$147
$0
$25
$53
$172
Nationwide Financial
0.6%
0.0%
0.6%
$39
$0
$39
$53
Radian
Torchmark
0.0%
1.2%
Lincoln National
0.4%
0.2%
0.6%
$36
$17
Legg Mason
0.5%
0.1%
0.6%
$56
$14
$70
Black Rock
0.0%
0.3%
0.3%
$0
$18
$18
[25th Percentile (excluding Moody's)
0.6%
0.0%
1.0%
Median (excluding Moody's)
~5th Percentile (excluding Moody's)
1.0%
1.7%
0.2o/o
1.0%
1.6%
2.6'%
23
~
I
:
$38
$1
$55
$53
$16
$73
$95
$193
$141
JOHNSON ASSOCIATES, INC.
)
2004 Equity Award Outstanding
,. Shares Outstanding reflects disclosure in 2004 Annual Reports. Stock options and restricted shares counted equally on share basis. Therefore,
underwelghts utilization of Firm's granting restricted stock
Authorized
8.5%
21.1%
13.2%
5.0%
10.2%
15.3%
13.3%
17.9%
7.0%
10.7%
16.0%
12.3%
15.6%
4.2%
9.9%
16.1%
13.9%
11.6%
11.6%
9.6%
5.7%
7.2%
12.5%
6.9%
6.6%
8.6%
9.0%
Outatandlng
17.4%
14.1%
8.2%
9.1%
7.9%
5.7%
8.4%
8.4%
8.5%
8.1%
6.8%
7.1%
7.0%
6.4%
6.2%
5.6%
4.0%
4.6%
5.1%
4.6%
4.6%
4.1%
4.3%
3.5%
4.0%
3.4%
2.3%
Stock Outstanding
0.0%
0.3%
1.0%
0.0%
0.9%
2.9%
0.1%
0.1%
0.3%
0.9%
0.2%
0.1%
0.7%
0.0%
0.1%
1.5%
0.6%
0.0"/o
0.1%
0.0%
0.3%
0.1%
0.7%
0.1%
0.5%
1.4%
Restricted Stock
17.4%
14.4%
9.2%
9.1%
8.8%
8.5%
8.5%
8.5%
8.5%
8.4%
7.7%
7.3%
7.1%
7.1%
6.2%
6.0%
5.4%
5.2%
5.1%
4.9%
4.8%
4.4%
4.4%
4.2%
4.1%
3.9%
3.7%
25th PercenUie (excluding Moody's)
7.5%
4.4%
0.1%
4.9%
Median (excluding Moody's)
75th Percentile (excluding Moody's)
10.90.4
13.8%
6.0%
8.1%
0.2%
0.7%
6.6%
8.5%
Company
Fair Isaac Corporation
First Horizon National
Mellon Financial
Torchmark
XL Capital
A.G. Edwards
Amsouth
Legg Mason
M&T Bank
Moody's
Raymond James Financial
BlackRock
Uncoln National
MBIA
Jefferson Pilot
PMI Group
Ambac Financial
Regions Financial
Nationwide Financial
Radian
Old Republic
Genworth Financial
Franklin Resources
MGIC
Everest Re
Safeco
Assured Guaranty Ud
O.O"k
24
Outstanding
$481
$625
$1,081
$502
$735
$187
$717
$986
$988
$1,245
$161
$401
$601
$487
$450
$210
$295
$638
$306
$207
$228
$607
$876
$203
$209
$226
$39
Stock Outatandlng
$1
$12
$133
$1
$80
$95
$10
$7
$0
$40
$21
$12
$10
$50
$0
$4
$110
$85
$1
$5
$0
$42
$13
$38
$7
$34
$24
Restrtcted.Stock
$482
$637
$1,214
$503
$815
$281
$727
$993
$988
$1,284
$182
$413
$611
$537
$450
$214
$405
$723
$307
$212
$226
$649
$689
$241
$216
$261
$62
!
$214
$5
$246
$465
I
$635
$12
$41
$704
I
$466
JOHNSON ASSOCIATES, INC.
)
,)
2004 Equity Award Outstanding (3X Restricted Share Weight)
*Shares Outstanding reflects disclosure In 2004 Annual Reports. Restricted stock weights at 3X stock options on a per share basis to create "applesto-apples" comparison
as Percentage of Fully Diluted Shares Outstanding
Dollar Value of Market Cap (S millions)
Shares
Authorized
8.5%
21.1%
15.3%
13.2"k
10.2%
16.0%
5.0%
10.7"k
13.3%
17.9%
7.0%
4.2%
13.9%
12.3%
15.6%
11.6%
9.0o/o
16.1%
9.9%
6.9%
9.6%
11.6%
7.2"/o
8.6%
5.7%
12.5%
6.6%
Options
Outstanding
17.4%
14.0%
5.4%
8.0%
7.8%
6.7%
9.1%
8.1%
8.3%
8.4%
8.5%
6.3%
3.8%
7.1%
7.0%
4.6%
2.2%
5.8%
6.2%
3.5%
4.8%
5.1%
4.1%
3.4%
4.8%
4.3%
3.9%
Restricted
Stock Outstanding
0.1%
0.8%
8.1%
3.0%
2.6%
2.7%
0.1%
0.8%
0.4%
0.2%
0.0%
2.0%
4.3%
0.6%
0.4%
1.8%
4.0%
0.4%
0.0%
2.0%
0.3%
0.1%
0.9%
1.5%
0.0%
0.2%
0.4%
Options&
Restricted Stock
17.5%
14.9%
13.5%
11.0%
10.4%
9.3%
9.2%
8.8%
8.7%
8.6%
8.5%
8.3%
8.1%
7.7%
7.4%
6.4%
6.3%
6.2%
6.2%
5.5%
5.2"k
5.1%
5.0%
4.9%
4.8%
4.5%
4.3%
~5th Percentile (exctudlng Moody's)
7.5%
4.4%
0.2%
5.2%
Median (excluding Moody's)
~5th Percentile (excluding Moody's)
10.9%
13.8%
6.0%
8.0%
0.5%
2.0%
7.5%
9.1%
Company
Fair Isaac Corporation
First Horizon National
A.G. Edwards
Mellon Financial
XL Capital
Raymond James Financial
Torchmark
Moody's
Amsouth
Legg Mason
M&TBank
MBIA
Ambac Financial
Black Rock
Uncoln National
Regions Financial
Assured Guaranty Ltd
PMI Group
Jefferson Pilot
MGIC
Radian
Nationwide Financial
Genworth Financial
Safeco
Old Republic
Franklin Resources
Everest Re
25
Options
Outstanding
$481
$621
$177
$1,060
$723
$158
$502
$1,238
$715
$985
$988
$481
$287
$400
I
i
I
I
Restricted
Stock Outstanding
$3
$36
$269
$392
$236
$63
$3
$118
$31
$21
$0
$146
$319
$35
$30
$251
$69
$13
$600
$630
$38
$209
$450
$200
$207
$306
$604
$224
$228
$875
$208
$114
$14
$4
$126
$102
$0
$38
$21
$213
$14
$465
$628
$36
$123
$0
Options&
Restricted Stock
$484
$658
$445
$1,452
$959
$220.
$505
$1,357
$746
$1,006
$988
$629
$606
$435
$630
$881
$106
$223
$450
$314
$221
$309
$729
$326
$228
$914
$229
$310
$494
$742
JOHNSON ASSOCIATES, INC.
MOODY'S
2004 Cornpetithre Market Compensation Update and Projections
Introduction
Johnson Associates was asked by Moody's to prepare a brief summary report on 2004 year-end
competitive positioning. The objective is to provide the Compensation Committee with an indication of
where Moody's 2004 and 2005 target total compensation for senior professionals will be positioned against
the competitive marketplace. In addition to assisting Moody's, Johnson Associates provides advice to a
number of direct comparators and other financial service firms across industry sectors.
The business environment in 2004 has impacted most major financial service firms in a positive way.
Continued strong bond issuances and other fixed income product investments have produced strong
business results and increased compensation across firms. Additionally for majority of financial service
comparators, other business units like those focused on corporate finance, equities, and private
equity/venture capital, compensation will have also contributed positively to year-over-year results, funding
company-wide bonus and equity pools at a 10°/o-15°/o increase over 2003.
The upturn in compensation is expected to continue into 2005 as earnings momentum is sustained across
the majority of sectors. Moody's will likely need to somewhat aggressively use equity awards and adjust
2005 individual compensation opportunities to remain competitive.
\\mdynyclp03\users\CiarkJa\Moody's Doc:uments\Board Mee11ngs 2004\Board Leners•Presenlallons\GC 12·14·04
Jonnson Compensauon Updme.ooc
2
JOHNSON ASSOCIATES, HNC.
Table of Contents
Page
4-5
• Overview of Moody's Market Positioning and Proposed 2005
• Summary and Potential Directions
6
• Senior Executive Market Compensation
7
• Cash vs. Long-Term Compensation Mix
8
• Base Salary Compensation
9
• Target Bonus Compensation
10
• Total Cash Compensation
11
• Total Long-Term Compensation
12
• Total Compensation
13
• Total Compensation (with Contribution by Element)
14
• Appendix
15
16-23
-
2003 Executive Compensation- Proxy Analysis
-
2003 Equity Award Grants
24
-
2003 Equity Award Grants 3X Restricted Share Weight
25
-
2003 Equity Awards Authorized and Outstanding
26
-
2003 Equity Awards Authorized and Outstanding - 3X Restricted Share Weight
27
\\mdYflyclp03\usern\CiarkJa\Moody's Documents\Boatd Meetings 2004\Board Letters-Presenlallons\GC 12·14-04
JollOSOil Compensation Upelale.doc
3
JOHNSON ASSOCIATES, INC.
·~
''
Overview of Moody•s Market Positioning and Proposed 2005
• Similar to previous years• exercise, Johnson Associates benchmarked Moody's senior executives
(Group Managing Directors and above) to market comparators
- Comparator group emphasizes other rating agencies and financial guarantors, with additional
reference to broader financial services and to a lesser degree investmenVcommercial banks (more
relevant for Team MD's and below)
• Analysis focused on target compensation for 2004 and 2005 relative to market. As a group, executive
2004 target compensation at market median, with proposed 2005 targets at :65th percentile, or between
market median and 75th percentile
- Consistent with the past few years, actual incentive (EPIC) payouts expected to be down year-overyear, however actual projections generally still above target levels
- While turnover has increased somewhat, management does not believe retention of senior
executives will be an issue this year. Driving factor is embedded, unvested equity gains from
previous option awards
- Moody's rising stock price has help to bridge potential gap to market. Even with lower year-overyear annual bonus payouts, the increase in equity value delivered to participants has helped
maintain market positioning. Without the proposed increase in equity awards, market positioning
would be a competitive issue
- Although equity has preserved Moody's market competitiveness, recognize current pay mix is over
weighted toward equity and likely not optimal long-term
1\mdynycfpOO\Users\CiarkJa\Moody's Documents\Board Meetings 2004\Board LeHers-Presentations\GC 12-14-04
Jonnson Compensation Updato.doc
4
JOHNSON ASSOCIATES, INC.
Overview of Moody•s Market Positioning and Proposed 2005
• Johnson Associates supports management•s proposed· :::25°/o increase in 2005 target total
compensation. Proposal incorporates both market movements and promotions
- Ideally, given the current mix of pay Johnson Associates would recommend larger increases to
target bonus and more moderate increase to equity, however given the circumstances believe
management•s proposal is reasonable
- Current Moody•s outlook for 2005 is uncertain, and thus increasing target incentives with strong
likelihood of below target payouts might be counter productive
- Equity would provide better retention over the near term
- A heavier emphasis on restricted stock vis-a-vis stock options to provide some downside protection
• For 2005 propose a serious review of cash incentive targets, not only for senior executives, but also, for
Team Mo•s and below where lures of other career opportunities will be real and present. Believe
current and potentially growing gap to market of target/actual cash incentive not sustainable
• In total, Moody•s continues to be positioned at the 75th percentile for equity utilization, which is
reasonable given current situation. Over time, if stock price is maintained or increases further, would
expect annual utilization to decrease somewhat
- In addition to significant individual awards, the mix of stock options (i.e., 75°/o of long-term award)
versus restricted stock (i.e., 25°/o of long-term award) a contributing factor
- Support management's proposal to increase proportion of restricted stock (i.e., from 25°/o to 33°/o), in
line with competitive practice, but also to protect the Company. Given large option holdings, a
decreased or languishing stock price would reduce .. hand-cuff• effect of unvested awards
\lmd)'nydp031users\CiarkJa\Moody's DoaJments\Soard Meetings 2004\Soatd Letters·Presentatlons\GC 12·14-04
JohnSon Componsa11on Update.doc
5
JOHNSON ASSOCIATES, liNC.
-~
Summary and Potential Directions
=
• Market comparators generally expected to increase bonus and long-term compensation
10-15o/o+
from 2003
- In contrast, majority of Moody's senior management expected to receive lower cash incentive
payouts. However proposed increases to target cash and especially equity award value will help
maintain market positioning
• Moody's expected to generally be positioned at 2004 market median. Strong market compensation
environment expected to continue into 2005
- Support Moody•s proposed :25°/o increase for 2005 compensation which places Moody's between
the median and 75th percentile. While it is an aggressive move, although virtually all of it is in longterm (and includes a significant Black Scholes value)
• During 2005, consider reviewing and potentially adjusting bonus targets to ensure competitive
opportunity for meeting performance expectations
- Continue to review mix of pay (i.e., cash versus equity) as well as proportion of stock options versus
restricted stock
\lmdynydp03\users\CiarkJa\Moody's DocumeniS\Board Meetings 2004\Board Letters-Presentatlona\GC 12-14-04
Johnson Compensation Update.doc
6
JOHNSON ASSOCIATES1 INC.
Senior Executive Market Compensation
EVPs&Above
2004 Target
EVPs & Above TOTAL
(excluding J. Ruttrerfunl & R. McDaniel)
$3,987
2005 Target
Total
Total
Total
$9,105
$4,343
$11,867
2004 Market Compensation
$5,950
Median
75th%1le
$9,475
$7,925
$13,800
(1) 2005 Target compensation for J. Rutherfurd reflects full year equity award, but board retains discretion in determining finaVactual award
(2) Previously C. Murray matched as Head Human Resources, currently matched as Head MIS International
SMDs
~
-
; ....
-
---
- - - -
- - - - - - - -·
~·
~
----------
-----
------
SMDs TOTAL
$2,980
$5,973
$3,134
$7,452
$4,135
$6,250
$5,125
$8,900
GMDs TOTAL
$5,605
$9,666
$5,903
$11.834
$7.360
$10,725
$8,625
$13,825
$26;460
$21;61&
s:Ss;w
. . , ~~.· < • :, ..
~MD.~Si'~~TQ!AL
(i»tr;hidlngJ; Rilthtirfurd& R. Mt:Dsn/SI) , $'120672
l\mdynYcfp03\users\Ciark.Ja\Moody's OOQJments\Board Mee~ngs 2004\Board Letters·Presenlallons\GC 12·14·04
Johnson Compensallon Updale.doc
'... :'
·. $1~;381
7
$So;964
: ~.;
:$11~431i'
JOHNSON ASSOCIATES, INC.
Cash vs"
Long~Term
Compensation Mix
Gfii1Ds & Above (excluding J. Rutherfurd & R. ftllr:Daniel}
<".-..·''-'.'.'.'.'.•.• •.•.•.• '·'·'·'·'·'·' ........... •.· •.•.• ·.•.•.• •.• ...... •.•.•.· ·.• •.· .................................................................................................................... ~........ -~ -- ...~ ................................................................................. .
60"/c
OLong-Term
OTota! Cash
40%
0%
2004 Target
2004 75th %ile
2004 rv1edian
2005 Preliminary
Market
8
Base
Sa~ary
CompansaUon
GMDs & Above (excluding J. Rutlterturd & R McDaniel)
200%
.
------------
--·-·--------·-·----------------·--·-·--------------------------~-------~---~--------~----------~-~--~-~----~-~
--~---------------------~~--
~~~--~---------~-~---~-~------~-~-~---~-----,
180%
160%
* Aggregate
140°/c - -------------------------· --- ---12()<''{,
.....
ru
t:ro
1 00% _._.,. , , , -, , , , , , , ,., ,., , , , , , , ,., , , , ,., ,., , , , , , , ,., , _,
:E
60%
40'%
20%
0%
2004
2005
Moody's Target
Moody's
Preliminary Target
:::.r.-·tly· .yct~.J.0~1·;,..~a· r::~(;:art,.,:;~lt~~;r~~y·;.., Oi~o(;_;n'I(':W \{H,..;,:u~ ~·.it:<:l~:,:;::. ~·C)t:V!\l;{:XH :"ll <;'! !f·t~.: I·' ;o.~~~t~::r:lt:of::~~GC ;.~· ~ ~-t!-t
~1ch:~s<::1 Ct:rr:~·..·lY~Rt:o!'• ( lp::1a~ t... c...,._-
MD t-.
at;ove base salary
compensation to market
9
Target Bonus CornpensaHon
GMDs & Above (excluding J. Rutherfurd & R. McDaniel)
200%
·----------------------------------------------------------------------------------------------------------------------------------------------------------------------------~~~~-~--~~~----- ~----~~-
-----
--~----~~---·----···········
180°/o
160°/o
i40%
compensation to market
120%
.....
Ill
X
l...
m 100%
:2:
80°/o
60%
40%
20%
0%
2005
2004
Moody's Target
Moody's
Preliminary Target
10
Total Cash CotnpensaHon
GMDs & Above (excluding J. Rutherfurd & R. McDaniel}
200%
180%
160'};;.
---~Aggregate
above total cash
---- --- compensation to market
140°/o
~
X.
"{I!(
100'1o
~
80°/c
60°/o
400,·b
20%
0"'/o
2004
2005
fv1oody's Target
Moody's
Preliminary Target
\:..;;Ktffl\-'V!~-,.o:s~: :·· ~r:~\C!:"~t'f:.J::-:\~.~ ..>t'~:v:? {~f· ...~unr:,:1nl>"9-o;:J·:l ~/1"!•:1:r~u=~ 2n;:_.;'J.:.-<='·H1l (:~i.:::;(:-y Prc:.~·t:rf;:,)JI(~•·s' ~?5(" ~£ 1-:HN
..lchn:;:.:.:-1 Crm--·p<::~rl!~:o~Ef'~l U~xJ::~.t:' 6--.:..::
TotaJ LongwTenn Compensation
GMDs & Above (excluding J. Rutherfurd & R. McDaniel)
200%,
••••••••••••••••••••••••oo••oooooo••••ooo•o•••·•~-••••w.woo~•·.··"'"···•-.•.•...•.•.•....... ~..
-----------------------------------·-·····································--·tss.%--------------------------------------------------------
180% ·····
*Aggregate GMD & above
total long-term compensation
to market
160%
140%
-
"120%
erm C'ompensmifm
~
X
t-
((l
100%
2:
130'%
80%
60'Vo
101"';<>
(Options as
67'!/<, of Total
Loog-Tr:mn
Compensation)
(Options as
75% of Totai
Long-Term
Compensation)
40%
20%
0°/o
2004
Moody's Target
'.'.;n;Jyrt;:'} 'lpc:;".u$er:::: \Cfa: ~vJ.a\~;-:oct,;y'S f.'{.:<:u:: :-::·-·i:::\B<.Y.::.n1 fr~:::d:Jr:.t)::: :_:[X).:!'·r.,t'K:rd t ~,:;_:tf! r::..~Pt.(:~!:nl:::l:r,; ;::::GC i ~-: · 1.~~<)4
..h>:-:n.-;c~t) Cvm;-:.:~psr:ii:...'·n :.;):<riale lk;..:
2005
Moody's
Preliminary Target
i2
Total Compensation
GMDs & Above (excluding J. Rutherfurd & R. McDaniel)
200%
180%:,
'"Aggregate
above total compensation
to market
'160°/o
2004 Market 75th %ile Tow! Compensation
140~10
120'}~
h(.
$
~
llw.
m
100~{,
~
80%.
60%
40°/o
20%
0%
.2005
2004
Moody's Target
Moody's
Pr&liminary Target
~:.:;~~~).····y<:l'pO~)·t~s.;;:r :.~(a:,: kJ~J'•MV(xi:'{~· 1)(;( ~:H1~11 :$.•fX:•.)t~; t~~~·.'~:~i; ·~~; ~-'CDA \fl.:;l;.Hd :t ...·H~::r!··f'•t·.=.e; .~::;,.A!:~\G.C
.:n:·:r·:~<Y• r.c·:~:ne...-.~:;tlJf>'l t!p.J:,~e t~fX'"
; -..::;. '! .}-!1·~
i3
Tota~
Compensation (with Contribution by
E~ernent)
GMDs & Above (excluding J. Rutherfurd & fl McfJaniel)
$45[\,1
.................................................................................... ··········~~~~~
$40M
2004 Murket 75th %ile Taw! Compensatimt
$35M
x .Aggregate GMD & above
totai compensation to
market
$30M
$20M
$10M
$5fv1
$M
2004
2005
Moody's Target
Moody's
Preliminary Target
··~::l!1)ul~<f.pa.J':l~.-;:,.~.~c~;:.,r-:f,~;;·.M.;;v:.:-h; ~ f),)O:.d·Ht:(t~:..-\:J:x..:,...J M'0~A::g!, ::.r,.r;~:ne··n:.i t ,..~ttm,-Pr!·~;,~r·l<l.:~t"·n:..\~;..c.!c::r.~~:;fl Cr·m~J. .... f1-t2t•On ux~:~:.di,..~
l2 14 H4
!4
APPENDIX
\\mdynydp03\users\CIIIIkJa\Moody's Doruments\Board MeeUngs 2004\Board Lel1em·Presentalions\GC 12-14-ll4
Johnson Compensation Update.doc
15
JOHNSON ASSOCIATES, INC.
.~)
....'
'
2003 Executive Compensation - Proxy Analysis
Chief Executive Officer
r---------------------------------------------------------------------------------------------------------~
Buo
O!hor
Bonua
Mo!lon Financial
Du;ponuaua. B.
MoGuiM, M.G.
MBIA
BK~Wn,J.W.
Llnccln Nollonol
Bosc:la,J.A.
SoolhTrusl
Malooo, W .0. Jr
SQraco
M<Govid<. M.S.
AmSoUih
Rittcr,C.D.
Fir.i:l: Tenno:;soo tt;n
Gla... JK.
Jefl'Bn~DnPiklt
Logg Mooon
Stonecipher, D.A.
MaSQ.n, RA.
Financial Securily Auwanco
Cochran. R.P.
Ambae FanandaJ
L.assl2er,PB.
XL Capllal
O'Ham, B.M.
E-Re
Taran:o, J.V.
COBan:ICEO
COB, CEO
COB, CEO (&lopping down as CEO !>16104)
COB, CEO
COB, CEO, Pros
COB,P.... CEO
COB, Pres, CEO
Pres. CEO, COD (from 1111041
COB, CEO (ri:!Jrod from CEO pool 2104)
COB, Pres, CEO
COS, CEO
COB, CEO (Rilired from CEO pool 11241il4)
P=.CEO
COB, CEO
COB, CEO
COB,PrBS,CEO
Pres., CEO
Pros, CEO
COB, CEO
COB, CEO
Opllon
Yofuatn
c..h
Salary
$13,012,085
S5,000,000
$2,323,200
S5,227 ,200
so
$2,025,000
S2.941,013
S6,970,256
so
so
S2, 750,000
$0
S8,234.680
S5,097,671
so
so
S5,910,075
$3,054,333
$0 $3,640,000
$1,030.000 $4,000,000
so
$900,000 $1,125,000
S750,000 $2,000,000
S11,936,269
$156,517
so
S8,234,680
S10,964,680
so
S5,200,000
$1,060,290
$5,200.000
$10,297,571
$451.315
S500,555
S270,078
S848,966
S67,370
$914,326
S239.820
$1,008,928
$259,175
$12.358,461
1°4
S412,500
S68,968
$412,500
$954.366
S116,036
S12,351,548
so
$500,555
$87,822
S10,813,076
$14,000
$284,078
$0
$142,481
S9.824,801
$9,180,467
$128,597
$0,046,409
S10,000
so
so
$8,622,182
$7,911,926
3'4
5'4
5'4
3'4
10%
3'4
12'4
$0
$7,83BAB0
0%
6%
5%
S520,301
S10,024.898
S5,356,784
$0
$838,537
$4,114,623
S2,650,000
S695,402
S6,690,723
$2,860,000
$4,111,660
so
$1,152,000
S5263.660
S9.540,723
$6,123,680
$0
$0
$2,036,762
$3,384,658
$2,255,101
S2,075,750
$2,310,469
S6,641,32D
S8,678,082
S233,820
$8,000
$4,228,597
so
$4,228,597
S1,002,328
$0
$263,067
$7,613,255
S7,901,926
$0
$6,600
$10,000
so
so
so
so
$3,708,800
S3,708,800
$7,398,800
S349,680
$90,000
$439,680
so
so
so
so
$4,303,892
S6,963,892
$5,426,667
$764,346
S1,272,416
$1,134,858
$2,250,000
$394,171
$7,244,688
$490,000 S3,200,000
S680.000 $2,000,000
$1,000.000
so
$0 $7,638,659
$0 $3,690,000
$0 $2,860,000
$263,067
$2,339,167
$1,964,725
$0 $1,000,000
$0 $2,600,000
S5,426,667
$0
$1,000,000
$1,800,000
$0
$2,231,100
$750,000
$419,198
$0
S1,169,198
$1,525,768
S1,608,600
$800,000
S1,200,000
$0
S2.000,000
$1,224,767
S1,013,600
Old Republie
NaOOmvidfl Financial
ZUCI1ro,A.C.
Jury..,...,, W.G.
WaddoU & Rood (2)
Tucker, K.A.
Frankl!n Resowces {31
Johnson, C.B.
COB, CEO (resigned from CEO poslllon 12/31103)
$594,330
$2,000,000.
Torchmarl<
Ht.doon.C.B.
coa,P.... ceo
SBOO,OOO
S300,000
so
so
Radian
Fiipps, F.P
$335.000
SO S I ,060,000
Roeho, G.A.
Jamm~, T.A.
COB,CEO
COB,Pr=
COB, CEO
COB, CEO on:l COB & CEO of Boo~or"'lo
$725,000
T.RowePrtce
Bagby, Rl.
Company
$13,673,651
S163,017
so
Haughton, W.R.
Edwan~a
S9,911,269
so
Joi'BS, C.E. Jr.
A.G.
S638,751
$095.000 S1,006.000
Regions Flnancb!
MGIC
Raymond Jgmoa
1,116
S454,500
$6,500
$1,000,000 $1,850,000
$1,000,000 S1,726,248 $3,183,827
PMIG""'J'
Culver,c.s.
LTII'
so
$1,000,000 $2,1140,000
$850,000 $4,247,571
R..1
Stock
S10,933,908
S315,091
$59,485
$374,576
$0
$7,338,468
$8,426,867
$94,764
$0
$94,764
S134,428
$6,655,859
1%
$2,231,100
$5,031,100
S653,372
S29,308
S682,680
S1,158
$5,714,938
12%
$3,134,3611
$4,303,564
$301,233
S10,200
S311,433
$134,624
$4,749,621
$2.238,367
$4,238,367
$213,220
$152,720
S365,940
so
$4,604,306
7'4
8%
S619,231
$418,922
so
$1,036~153
.S1,165,333
$520,161
$0
$1,117,440
S2,602,934
S3,839,087
S98,190
$11,800
$109,790
52,457
S3,951,345
3%
S677.700
$510,167
so
$1,167,867
S1,661,300
$0
$510,167
$2,171,467
S3,359,334
S94,979
so
$94,979
S14,311
$3,486,824
3%
$300,000
$771,919
so
so
$1,071,919
S1.816,290
so
$1,816,290
S2,886,209
$249,782
$6,000
S255,782
S40,000
$3,183,971
$2,000,016
so
$400.000
so
so
$400,000
S2,400,016
$189,530
so
$169,530
S269,314
$2,858,860
8%
7'4
$2,594,330
$0
so
$0
so
$2,594,330
so
S7,557
S7,557
S75,222
S2,677,109
S1,100,000
S1.421,517
so
S1,421,517
S2,521,517
$104,241
so
S104,241
so
S2,625,757
0%
4%
$1,072,167
S185,000
$1,237,167
$2,297,167
S216,910
S218,910
$61,231
S2,575,307
8%
so
$2,300,000
so
so
so
$26,085
$26,085
$1,500
$2,327,585
1%
S249,984
so
so
so
so
$249,9114
S2,057,133
$0
so
so
S38,810
S2,095,943
0%
$211,752
$0
S1,538,755
so
S100,744
S100,744
so
$1.639.499
6%
S800.018 $1.200,000
$300,000_ $2,000,000
so
$2,300,000
S263,250
s1,300,013
$243,888
S1,607,149
so
so
S456,000
S671,003
so
S1,327,003
so
(1) Opt:lon Value= (number of options) x (CIU!Id:le pial} x (1/3)
(2) Value of long·letm corn,..,..lion rolloc1a 2002 o,..r<fo; 2003!1Wllr<fs to be onllCKJI1Cod pool·proxy
(3) CEO b a principal ahamh:ltser of lhe comp.ilny Gnd tus compcnsaUon b signiranlly lower than other CEO peer5
16
JOHNSON ASSOCIATES, INC.
2003 Executive Compensation - Proxy Analysis
Paid
u...
solary
on 516104)
Mellon Fillonciol
John Hancock
CFO,Sr.EVP
ACE L1m~ed
Financ&al StteuJity Assurance
P""'· COO (wi2 bo CEO on 512712004)
Pros, COO
Ambac Fln.1nd.1l
NaOOnwide Financial
Gcnildor, R.J.
Prco,COO
GaSper,J.J.
Pres, coo
franklin RCSOiJTCC3
Flonagan, M.l.
Gott.u, J.H.
Lincoln National
WoddcU & Reed (2)
Jeff"""" Pilot
HonmaM, H.J.
Banton, J.W.
Glo ... D.R.
XL Capital
Tobin, C.R.
SoulhTrusl
T.RcwePrice
Rogc~B.C.
Safeeo
loggMIUion
Talbot R.H.
Am South
G;boon, S.D.
Torchrnark
McAndrew, M.S.
Regions Financial
Horoley, R.O.
M&T Bank
Pinto, M.P.
Firat Tennosaeo Not'l
Burl<ott,C.G.
B!ln~ley.
JW.
Raymond Jom03
Saylor, v.c.
MCIC
Okl RepubUc
MocLcod. J.S.
E-Ro
PMIGrnUI>
RDdian
Simpaon, W.A.
Galloghcr. T.J.
Sml:h,L.S
Kasmar, R.J.
Pre:~, Member· Offlce of tho PrM {Co-CEO from
111104)
E.YP,
L~n
Nafl Lifo Insurance
S7oo,ooo
Olhor
Cosh
Bonus
$0
S6GO,OOO
$550,000
$700,000 $1,641,000
$975,000 $2,000,000
$300,000
$425,000
$735,596
S2.800,000
$862,500
S901,266
S785,759
$504,807
$1,050,000
S1,413,604
Prco, Clllef 1""""'"'811! Office:
S800.000 $1,200,000
Formor Prco, Fonner Pres & CEO· DaM
Pres, (CEO frnm 3104)
CEO of XL lnsu:anco Gbbal R1sk
VP (Chief 1nW31m811! Officer from 111104)
Pres,Ue11.1nveolmenls
S702,500
S612,000
o,..,..,..
Sr EVP; COB Logg Mooon Wood Walker
VCOB, CFO, Grp Hood· Fin.& Crodl (1o resign
af1or 214104)
Pte$, CEO .. Unled American, G~ Qnd Ameriam
lneomc
VCOB,COO
EVP & CFO ol M&T BoM Corp & M& T BaM; COB
M&T Bank
Pre> Rolal Fin SYCO & Memphis Fin S.a
SVP, Fbtedlncomo-RJA
EYP-Fidd Opono1ions (rolired 1130/04)
SVP Mortgogo Guammy
Pre$, COO
Oir,Pm~~.C".OO
Proo,COO
CFO, Treasurer, Socrolary & VP ant EVP,
fll)I!UI'cr, CFO & Oirof law & CompfbncoGnd Oir
of Admin at
S768,439
$650.000
$400,000
$425,000
S300,000 $2,100,000
$525,000
$297,917
$735,000
$2,350,000
Root
LTIP
Stock
S100,000
$1,210.000
$4,322,687
$2,000,000
$1,822,987
$4,937,618
so $2,341,000
so $2,975,000
so
S1,161,600
$5,163,647
$2,613,1100
so
$5,163,647
$7,504,647
so
so S3,100,000
so 51,287,500
so
$2.526,300
S1,792,296
so
$2,668,860
$383,368
so
$3,775.200
S2,686,860
$2,909,868
S6,750,200
S5.788,880
S4,197,166
so
so
S1.792,296
$3,929,158
$1,193,333
S1.134,132
so
$0
$1,483,533
so
$0
S1,950,000
so
$523,600
$370,000
$0
S2,327,465
S1,950,000
S1,503,496
S2,007,133
$2,092,470
$4,163.223
$3,968,411
$3,500,496
$0
$0
$500,000
so
so
so
S2,136,862
S1,835,758
S1,918,411
$2,000,000
$0 $1,490,939
$0 $1,262,000
so
so
so
$825,000
$2,400,000
S1,260,000
so
S2,647,917
51,722,470
$1,295,667
S869,000
S1.522,503
S131,533
S1.503.498
so
so
5846,100
so
S181,479
$0
$197,746
$2,143,767
$8611,000
$1,901,735
so
$0
$131,533
$3,498,072
S3,354,470
$2,969,767
S93,524
S495,100
$0
S293,769
$152,511
S381,397
S7,800
$12,000
$386,250
$90,000
S36,309
ss,ooo
so
S169.1147
$169,529
S273,745
$8,754
$35,137
$373.727
$78,181
$6,400
so
so
$0
S26,085
$3.269,000
S3,161,735
so
S119,403
$2,779,450
$0
$14,000
$10,000
5101,324
$507,100
$386,250
S393,769
$188,819
$387,397
$290,163
S1,287
$315,094
so
so
so
$9,754
$204,964
S199,529
5273,745
$380,127
$78,181
so
S5,880
$174,453
S7,699
s2s.oas
$133,403
$10,000
$4,500
$0
5527,165
S8,462,291
S9,013,034
S7,451,544
G%
5%
$6,172,649
$4,385,985
54,316,555
4%
$4,171,977
$4,079.055
$3,867,478
S3,779,517
$3,734,597
$3,574,132
8%
!W.
0%
5%
5%
7%
10%
2%
$3,299,585
$3,295,138
4%
so
S2,7B9,450
0"4
so
1%
$470,000
$432,400
so
S902,400
51,195,250
$0
$323,000
$1,518,250
$2,420,650
$267,235
$28,200
S295,435
$0
$2,716,085
11%
$722,753
S300,000
so $1,022,753
$1,421,517
so
$1,421,517
S2,444.270
$937,938
S791,875
so
$1,425,375
S2.363,313
S167,3B2
so
S2,541,190
$2,5:10,695
4%
so
so
S67,389
$0
S507 .938
S96,921
S99,993
$96,921
$430,000
so
S633,500
S359,326
$250,000
$420,308
$472,647
$146,000 $1,540,014
so
$609,32S
so
so
$1,738,317
S2,347,643
$27,406
S10,612
S893,155
S1,687,213
so
S954,000
$6,000
S46,565
2%
5%
$324,982
so
$556,720
$425,000
S102,534
$0
$33,720
$2,099.248
$0
S2,023,822
$2,065.528
$1,700,633
$2,387,371
$2,179,941
S53,333
S582,667
$1,130,687
$378,315
$38,018
$108,534
$1,710
so
S1,189
S1.736,317
S178,667
so
$19,535
0%
4%
$1,158
so
S1.785,229
$1,664,293
$1,628,169
$1,589,066
$41,554
- $1,566,543
$308,846
$310.8511
$446,538
$426,000
$455,000
$250,400
S425,000
$0
S559,246
S735,858
$500,000
so
S646,538
$493,900
so
$213,791
so
sesa,1s1
$77el,487
S304,850
so
S759,850
$458,500
so
so
S448.220
so
S150,150
so
_so
so
$1,141,387
$918,900
$448.220
$775,497
$609,650
$1,654,758
S1,392,756
$1,414,288
S1,369,500
$52,997
Nolappllcablo
S220,872
S164,576
$155,489
so
$11,600
$20,000
$13,381
S10,200
so
so
$64,597
S20,000
S234.253
$174,776
S155,469
7%
1%
14%
11%
10%
(1)0p1ion V•lue "'(number of optiotti) x (extrtdsoprit;.") ill (113)
(2) Val•• of long·1Cml com,..,..lon roflocta 2002 owoRI>; 2003 awards ID bo aMOIR>Cod 1IOSI·"""'l'
17
JOHNSON ASSOCIATES, INC.
-.l
2003 Executive Compensation - Proxy Analysis
.----------------------------------------------Third Highest Paid
BOlo
Salllry
Frcdorico. D J.
Budnick, N.G.
MBIA
G.E.
VCOB; Pres. and COO of Auured Gual8nty
VP,CFO
PrBa,Member· Offlceoflhe Pros (co-cEO from
1/1/04)
FronkHn Resources
Uncoln National
Johnson,
Vaughan, R.C.
EVP,CFO
MGI!on Finandlll
O'Hanley, R.P.
VCOB, VP Mellon IMlll:ution:~l Asset Managomenl
Jefferson Pibt
Mlokuoh, I<..C.
VCDB (unli 2104)
XLCap;tal
Luck, F.E.
Kennedy, J.A.C.
EVP, G"'UP Opcrotlom
VP and Director. Equ!:ly
T.RowcPric:o
s.reoo
Mood, C.
SVP, CFO. SocrBia'Y
Am~c:Financial
Boyle,D.L.
Jkl:g:.n. AB. Jr.
Slephenoon, E.W. Jr
VCOB, Pol1folio Mgml GR>up
ReWon:s.Financial
AmSou1h
SoulhTIU5l
First Tennessee Nat1
Financial Sec:urity A~rance
LeggMason
Torchmark
Ra~mand
James
Pru & CEO, Morgan K60J3n 8. Co.
StEVP; Grp Head- Rogional8kg
Coley, T.H.
Mallin, LB.
BI"OW'er, R.B.,Il
MD, Chief Undermillng OffiCer
Scheve, T.C.
BriU, T.G.
SIEVP & CAD; Pms & CEO Legg Mason Wood
Walker
EVP,CAO
PMIGroup
Helck,C
Lofo.D.P.Jr.
MGIC
Lauer, J.M.
Rodbn
Komnrck,M.
M&T B.ank
Shoolly, E.J.
Na1cnwidtt Financial
Threshor, M.A.
Woddell & Rood (3)
Everost Ro
Sundeen. J.E. Jr.
Llmauro, S.L.
Old Republic
Yoagttt,R.K.
VCOB
Pres 81.13 Fin Sw:s & Tonn8S3ee Fin Sw:s
P.... coo
EVP, CFO
EVP,CFO
Pros. or Emance Fin. Svcs Gp
EYP or M&T Bonk Corp; EVP, COB & CEO of Mid·
Atlantic Oivluion of U&T Bank
Prco & COO· Elocl. CFO
SVP, CFO, Treaswor
EVP, CFO. CompUoUor
SVP Tllla lnsutance; Pros, Old Replbic Nan n1o
ln=anc;o
CVP and Oilodorol Markot Analysis lor tho
Co.
Bonus
Op11on
Valuot',
Other
c..h
Rat
LTIP
S1oct.
$600,000 $1,192,601
$975,000 $1,000,000
$575,000
S500,000
$0
$1,792,601
so $1,975,000
$0 $1,075,000
SO
$1,055,558
$1,166,733
$4,349,272
$1,583,327
$550,000
$1,000,000
$763,303 $1,050,000
$515.000 Sl,545,116
$0 $1,633,303
$0 S2,061l,l16
$1,193,333
$0
$1,134,132
so
$1,500,000
Sl79.467
St,800,048
$1,038,533
$1,403,206
$110,869
so
so
so
$724,167
so
$1,304,625
$1,084,200
$443,450
$831,894
$523,600
$178,667
so
S155,662
$163,390
$1,599,171
$0
$730,016
$330 $1,010,943
so
S587,3n
$0
$491,103
$0
$719,164
$164,147
S872,617
$419,016
$393,300
$428,867
$164,100
$0
$94,234
$159,150
S214,264
Sl39,961
S525,000
S900,000
$612,000
$500,000
$;100,000
$475,000
$300,000 Sl,900,000
$450,000
$860,614
S350,000
$412,500
Sl30,000 $1,670,000
$425,000
$463,250
$397,333
$765,853
$420,308
$459,712
S240,000
$800,000
$249,171 $I ,350,000
$590,016
Sl40,000
$250,000
S760,613
$300,000
$267,375
$171,672
5318,231
$264,164
$435,000
$0
so
so
$0
so
$0
so
so
$22,586
$0
SO
$1,425,000
Sl,112,000
sns,ooo
$2,200,000
Sl,110,614
$752,500
$1,800,000
$868,250
$1,185,772
$880,020
$1,040,000
$0
$564,883
S925,200
so
$0
so
so
$0
$0
$0
S2,638,885
S2,738,733
S4,613,885
53,813,733
so
S221,875
$221,876
S2.327.465
Sl,500,000
$4,160,768
S3,560,116
$0
$2,214
$40,961
$2214
so
Sl82,393
S223,354
$22,092
$3,118,542
$110,141
Stt6~6
$82,516
$2,912,048
S2.730.733
S2,924,167
$2,740,588
S2,630,090
$2,243,450
SI,B4S,I44
Sl,971,172
$2,010,687
Sl,967,200
S32B,306
S73,442
so
$225,000
S261,800
$954,000
5927.200
Sl,693,542
SI,B00,048
Sl.961,733
S724,167
SI,S29,974
$1,867,590
$443,450
SI.056,894
$785,400
Sl,13ll,667
$927,200
$0
$348,247
$1,947,418
so
S377,136
so
$972,617
S659,117
S576.186
$964,720
SS68,628
Sl,702,633
Sl,670,060
Sl,l45.541
Sl,475,823
Sl,287,992
$0
so
$169,467
so
$0
$0
$388,973
$364.615
$325,000
$270,915
$250,000
$255,199
$441,000
S350,000
$0
so
so
so
$608,973
S619,814
$766,000
$620,915
$616,700
$546,459
$0
$0
$0
so
$453,393
$334,865
so
so
so
so
S616,700
$546,459
$453,393
S334,865
Sl,425,673
Sl,l66,273
Sl,219,393
S955,580
$252,ll50
S675,000
$0
$927,950
$89,800
so
$0
$<lll,800
SI,017,750
$0
$105,247
$90,322
$191,898
S263,045
S213,568
SIOI,026
$98,555
so
S69,119
so
Sl46,179
$46,539
$147,164
S27,3110
Sl44,420
SB.715
S3,560
so
S26,085
$6,000
$31,646
$2,850
S30,310
so
$6,000
S90,000
SIO,OOO
so
so
so
SII,GOO
so
S332,866
S73,442
$26.085
Sll1,247
$122,168
Sl94,548
S293,356
S213,568
Sl07,026
Sl88,555
SIO,OOO
S69,179
$0
$146,179
S58,139
$147,164
5%
5%
$4,162,962
$3,805,562
0%
4%
$0
so
56,100
$51,483
$0
$3,317,915
S3,244,914
$2.956,776
$2,955,127
$2,851,835
$2,752,258
$2,437,998
$2,236,499
$2,190,840
$2,169,197
S2.15H55
so
$146,802
$4,875
so
so
10%
2%
1%
4°4
4%
8%
13•.4
10%
5'4
9'4
so
$1,957,418
1'4
so
$1,771,812
Sl,731,772
Sl,545,291
$1,533,962
SI,490,60B
4%
Sl,464,991
Sl,316,693
Sl,229,810
SI,I09,754
St,029,146
Sl44,889
Sl53,016
Sl,315
so
S10,417
$1,158
Notoppllcablo
so
so
Sll,398
so
6%
$61,712
$253,571
$0
$55,453
SI0,612
S6,000
so
$8,127
Notappicablo
S38,002
$150,420
S5,371,541
$4,401,527
$305,919
0%
9%
4%
10%
3%
11%
0%
14%
0%
(I J Option Valuo • (numbor of opllono) • (O<Otdse ptice) • (1/3)
(2) L•ll!J-I•nn awardaaro oxpoclod !Jillnla undor.......,.. Guaronly spin-off based on oxpodod 1?0 prjco
(3) Valuo of bng-tctm compcl1$oltion reflccb 2002 .Qmlnls; 2003 .owards to bo ,announeod po$1·pmxy
18
JOHNSON ASSOCIATES, INC.
..
-~··
.
'
2003 Executive Compensation • Proxy Analysis
S ololy
-
uo.....
S525,000
S600,000
$0
EVP
Pres & CEO, Lhcoln N.atianallnvc3tment Cos &
S500,000
S994,001
so
Do!aware Investments
$442,635
S1,457,923
CFO
VCOB; COB & ceo Tho On>y!us Colp
EVP. Chloiiii\IOOimorO Offlcor
$630,000
S500,000
$386,250
$420,000
$375,000
S625,000
$750,000
$400,000
$588,000
$442,969
so
so
so
so
, - - - - - - - - - - - - - - - - - - - - - - - - - - F o u r t h Highest Paid
John H•ll<O<k (2)
Linc:o1n National
ACELimllod
MtakmFinancial
Dlbcoll,J.T.
9anCfoft, P.
canter, s.E.
XL Capitill
Gr~elham,
Sa!oro
L::r.Rocco, M.E.
Pre!, COO- Pert10nal l~ncD
RogloM Fl""nclol
T.RowoPrN:t1
Fleischouor. J.l. Jr.
Rogonal PIWklort
Test~.
JeiTansan PUot
SlOne, T.M.
Fin:ti"C:bl Security Assurance
Stem, B.E.
Bagby,C.W.
ThomQS, E.L. Jr.
Am South
First Tcnnessoo Nat1
fiBnk&l Roscurws
LeggMoson
C.V.
M.D.
Tallo<k.A.M.
Suirvan, J.A.
VCOB, VP, Chief tnve:stmanl Offil:cr
EVP: CFO ll T""'...-cr; Pres Jeff.....,.P;]ol
CommunicatGn:~ Co.
MD, Genorol Counsel, Secretary
SIEVP; GrpHead -ConswnerBkg
EVP,In101001Rolo Ri>l< Mgr
VCOB, Member. Office of the Chsinnan. Pees
Fiduciaoy Truo!lnl'l
SVP & Head of
Income CspUIMarl<ols
F"""
Other
Colli>
SO
so
$300,000
$2,000.000
so
$475,000
$240,000
$432,000
$800.000
SO
$435,000
$463,788
so
so
so
$596,690
5526,500
S248.338
$1,350,000
$375,000
$371,030
$1,900,558
$1,255,000
St,250,000
S605,761
S1,t72,441
so
$346,750
$1,001,680
$1,437,965
$171,000
S435,600
St96,729
S788,250
St,008,000
S817,969
S2,300,000
St.036,533
S1.21B,261
S791,675
so
S633.500
so
SS07.000
$1,040,000
$667.450
$0
so
$0
S145.275
S1,200,000
so
$113,906
so
St58.t83
$0
St.97B,222
$3,472,223
S315,968
Sl,546,750
S1,437,480
S3,447,308
$2,692,480
$2,998,620
S2,593,783
S2,529,719
$168,287
S87,204
S1o4,000
$52,834
so
S26,oas
$268,598
S6,590
S90,000
S1.748.620
$1,807,533
S1,521,719
S1,425,375
$0
so
$2.243.344
$2,300,000
1147,203
$1,014.653
S927,200
$1,921,653
$1,967.200
so
S96,6t5
$74,508
595,522
$810.000
$834,818
S631,894
$155,954
$0
S927.200
$225,000
so
$642,150
S1.056.B94
S998,104
$1,866,894
$1,832,922
598,555
$239,872
$95,837
so
$1,123,150
So
S1?.1,723
S1,922,913
$0
$1,598,338
5493,500
S157,640
$300,223
so
S164,100
so
S321,94ll
$1,920.278
50
$89,291
$203,250
S7,800
so
$257,558
$203.250
$104,415
S74,508
$109,522
S140,038
S26,085
$275,181!
$22,500
$188,555
$262,372
$2,493
$98,330
$4,402
S10,000
$4,402
$10,000
$0
S271,220
S50,393
$111,540
so
so
$4,500
12%
5%
$5,000
S1,932,315
$0
$1.930.278
0%
1%
S1.733.242
8%
St.574.258
S1,510,Bll8
4%
Eubanks, R.G.
COB & CEO • Bani<
Cons.umer Asse!-backed S6Curihos, and Sbucturcd
S419.333
$376.322
so
S795,655
S523.600
so
S261,800
S785,400
$1,561,055
$148,087
$0
S14S,Da7
lnsuronco
S210,000
$581,250
so
$411,693
$258,354
$0
S111.246
$0
S393,300
Torchmari(
S299.231
S445,016
so
$547,016
so
S822,983
$1,369,99!1
S56,184
S51,838
so
so
S820
so
$870,641
$750,000
SB22.983
$298,211
S11,600
$0
AverlH,R.G.,III
S102.000
$646,021
$41)5,000
$44,584
$51,838
R.Dymar.:l James
$213.602
$0
S78,105
$453,393
S1,481,297
$1,454,514
S112,961
EVP-Rioll Ma""9om...
Pres, CEO - Llbolly & UILIC
Pr.. and ceo of RJFS
SVP, Chid Malf<c!lng OfflcDf
SVP. Salus lor Financial SorW:oa
S670,047
S964,038
$19,233
Pietzchnlski.l.J
McWhorter, A.l.
$0
S377,136
S93,728
MGIC
S791.250
$470,476
$0
S378.322
S453,393
S1,247,163
$1,203,393
50
so
so
so
so
S40,152
S14,065
S315,000
S335,000
S480,7B8
$0
$0
$610,444
$455,850
S382,853
S466,232
S382,653
$468,232
S993.097
S922,082
S117,445
S6,000
S10,200
S148,238
Pres ollnl.«'land Stmtcgle lnvmtmcnts
S210,444
S140,850
S202,005
so
S64,735
$0
so
so
so
S300,333
so
S246.950
$405,828
$425,000
S121,549
S5t9,967
S537,005
S005,768
S474,415
S706,193
$942,_833
S905,768
S642,914
SB32,609
S109,888
$40,739
$37,933
so
St0,812
$0
so
S51,283
PMIOroup
BUich, T.W.
Karas, R.A.
Shusler, B.M.
Rod ion
o.,;,o,c.R.
M&T Bank
Old Hepub11C
Sadler, R.E.. Jr.
LeRoy, SJII
A.G.Edwgrds
Kcwior,R.J.
Waddol & Rood (3l
EVP,CFO
EVP ol M& T Bank Corp, COBol M& T Bonk
SVP, Socrct.Dry & General Counsel
VCOBond VCOB,EVP, OiroiOpool BkgCo.
S400,000
S352,BB8
S188,226
so
so
$0
so
$121,549
so
$388,499
so
$126.416
$0
$0
S99,495
$126,418
S127,645
S109,688
$51,351
$37,933
S51,283
4%
6%
1%
S1.958.580
so
S27,328
Uhlcin,J.W.III
Natlcnwklc Financial
3%
13%
SoulhTMI
Not appl!t:able
S142,236
3',(,
S2.155.755
S2,129,266
AmbacFinancW
so
so
so
so
so
7"1o
G%
$2,196,641
$0
so
$6,100
$225,000
S345,000
S3,704,866
S3,166,958
S3,153,428
S2,719,832
S2.639.241
S2.383.382
S2,330,585
S20,858
$970
S10,842
so
9%
7%
S1,421,837
4%
S1.287,315
St,2t7,458
S1,141,334
0%
0%
13%
S1.134,463
It%
S1,073,580
S958,089
S891,&e9
10•J.
S883.Bll2
6%
5%
4%
{1) Optton V.olue ~(number of optJo.rD) x (oaorcisu p1ico) 1 ~113)
(2) Option \f,Qiue .. (m.ntbor of opliaNI) a (mBR:i&e price) 1 (1/4)
(3) VCJIUC of long-lorm compensation reflects 2002 awom:l:~; 2003 awards to bo amounCGd posl"'fHG•Y
19
JOHNSON ASSOCIATES, INC.
2003 Executive Compensation - Proxy Analysis
a...
Bolary
MBIA
Wc~.R.L.
$900,000
so
$442,969
SVP, GOIIOl'alCCunsel
S525,000
$430,295
S375,000
S380,000
VCOB; COB & CEO Mellon Now Engbnd; Pros
PrivllloWeollhl.lgmt
$400,000
S532,000
S79t,875
$1,102,418
S900,000
so S1,300,000
Pres & CEO, Uncoln Financial Di::5tlibutom
VCOB, Director lnves1n'ierd Set\'ic:us DM:sio:1
S325.000 S1,000,000
$300,000 S2,000,000
Sr. EVP
SrEVP: Grp Head- Regional Bkg (now CFO aflm
seoo.ooo s1. 192,801
so St ,325,000
$0 S2,300,000
so S1,792,B01
S82.886
so
so
S385,000
$404,2W
$535,692
$406,000
$249,111 S1,2S2,500
so
S789,250
so
S941,692
$0 S1,53t,67t
Menon Financial
lam61'e, O.F.
AmScutl1
ACE
Lim~otl
legg Milson
RMip6,J.S.
BOO:lOn,J.M.
BlOck
so
$1,166,100
Regional Pr•ent
Tbampson. W.V.
Roll
v~''l
S817,969
$912,000
EVP, CEO Renurance Operations
M;u..,PD.
Ruddy, J.W
Nntiom1
Opllon
Cash
so
so
Keetrg, H.C.V.
Linco~n
Olhor
so S1,4.25,000
so
$430,295
XL Caplal
Reglons Finl!ncial
Sefeco
T.RowePrico
Johni-lancock
Bonua
Mooney,B.E.
2/41041
Krnmcr, 0.
MU:roy, T.P.
VCOB; COBol Aasurod Guamnly
EVP & Head of EqUity Copilot Moll<CIS
SoothTru>t
Sc:hmldt. E.F.
VCOB-Bank
Franklin Resourcoa
Lippman, W .J.
work lor co)
F'1t18ncial Security Assurance
Torchmam
MGIC
Simon,J.W.
MD,CFO
Colem.on, G.L.
EVP, CFO
Fiok,J.D,
FirsiT.,.....Nat'l
Hom,R.
EVP, Strategic Planning
COB (relire<l 1213110:))
Wocldcll & Reed (21
Ambac Financial
Strohm, M.D.
SVP,COO
Doyle, K.J.
MD, G""""'t Counsel
Joffcrson Pkll
Raymond James
Batoo,R.D.
EVP; Pros Joffcrsan-Pibt Boneftr: Partners
Rioss,R.K.
EVP; Pros and CEO of Eagle; MD, A....t Mgt
PMIGI'O<Jp
Baclg>tupi, V.J.
SEVP, Soc and Gcncrut Counsot
Notionwido FlnanOal
Pho!on,M.D.
SVP, Tech & Operation>
Sr VP, Soc, Gencnlt Coul1$d & Co<p Rospon>lbilty
LTIP
S1,000,000
S925,200
S633,500
S131,374
$0
S1,425,375
$2,243,344
S143,136
S1,378,928
S2,288,928
S643,214
so
so
$800,000
$926,080
$800,000
S2,226,080
so
so
so
so
so
so
so
S831,894
S203,280
St57,840
so
$435,600
$155,000
S225.DOO
so
so
S1,056,894
S638,880
$3t3,740
$2,091,300
S4o,m
S2.125,000
$2,300,000
$1,792.801
$1,846,144
S1,580,572
$67,204
S88,425
$58,173
S12,987
S100,480
S117,309
S6.735
so
$379,161
$233,727
so
$26,085
$11,077
$23,100
$152,534
S40,777
$145,377
S99,392
so
$0
S107.215
S117,309
$26,085
$390,238
S32,309
S1t4,316
so
$7'15
$2.102.971
$1.911.268
$1,855,411
$256,827
$0
$10,000
so
S15Z.534
S10,000
S118,B95
$178,162
so
$6,100
$330,667
S315,797
$0
S640,464
S523,EIOO
so
S219.912
S743,512
$1,389,976
so
$0
$118,695
S481,668
$240,000
S390,000
$300,000
S920,426
S325,000
S184,000
S-465,000
S216,250
S308,000
S332,308
S520,000
S500,000
so S1,001,668
$302,452
so
S649,040
$0
$468.952
$649,040
S1,468.620
S1,389,040
so
$70,126
$27,783
$0
$27,783
S70,128
$822.983
$770,436
SW.225
$46,908
so
$11,600
$50,225
$105,665
$6,000
No1applicablo
$0
$16,893
$58,508
$111,665
$0
$1,845,411
$2,614,244
$2,388,721
&•.c.
S2,388,320
4%
$2,365,603
$2,356,825
5%
$2.326.065
$2.183.8t4
2%
5%
1%
18%
$1,514,771
SVP (resigned as exec officer in 2003, mntinues to
so
so
$740,000
S530,000
St84.500
so
$1!22,983
$0
$495,000
$393,300
so
S405,000
$0
so
S920,426
$730,000
so
$360,000
$2W,OOO
SD
$0
$544,000
S7t5,000
$691,774
St29,113
so
so
S908,024
$437,113
so
so
S512,802
S339,252
so
so
so
so
S131,616
$430,728
S180,494
$430,728
S339,252
$1,352,983
$1,265,436
S920,426
S1,168,385
S1,038,341
$857,290
S1,039,640
S667,841
$652,054
S140.000
S195,000
so
S374,267
so
$52,583
so
so
$0
$377,136
$0
$438,365
so
So
S120.074
so
S79,033
$0
$142,290
$0
S438,385
$494,341
S142,290
S64,440
$211,739
$0
St12,818
S119,485
so
$0
S1,496,403
2%
$1,459,168
5%
$0
S1,403,208
4%
so
St.323,944
4%
$200,100
$1,232,191
9%
$14,726
$1,183,111
0'4
so
S1,119,673
S1,073,689
$1,073,403
20%
so
$33,763
$48,995
S1,039,654
12%
$0
S9n,539
13%
10%
Radian
YHil.aS,H.S.
Otf~«~r
S278,000
$174,619
so
$452,619
S275,700
$86,0116
so
S361,7(11l
S614,325
S92,820
$0
S92,620
$10,233
S917,118
A.G.
Mlllor,P.M
EVP and Olroctor SoSos. and Marttotlng ol Bkg Co.
s 188,248
$522,588
so
$708,836
$54,433
S63A95
so
5117,928
S826,764
so
$40,114
$.40,11 ..
so
S876,B78
B"'mbock, E.L.
Kcllog,J.
EVP of M&T Bank Col!>, p,.. I COO M&T Bank
SVP, Gonaruii(DJ~Uncu
S344,902
$326,667
S230,000
S87,500
so
so
S574,902
S414,167
$0
so
$0
so
S574,902
S546,567
$25,858
No1uppbblo
S10,612
so
$38,470
$0
Edw-'!irdG
M&TBank
OkiRBPublic:
so
7%
S4.880
so
S10,200
S6,000
$81,333
S216,399
$0
$122,618
$125,485
0%
....
$7~7.3~3
5%
$56t,288
0"4
(1) Option Valw • (numborol oplloro) a(-asepr1co)x (113)
(2) VaiUD of long•latm compensa!Xm nrfiDcts 2002 aw.~rds; 2003 awardslo bo lilnOO.oocud pos1-pro:cy
20
JOHNSON ASSOCIATES, INC.
~
·~
·~
2003 Executive Com~ensation - Proxy Anal~is
Baao
Salary
ACEUmitecl
Financi31 SocLriy Assurance
Preo. COO (wil be CEO on 5127120041
Ambac Financial
Nahonwido Financial
Grccnbo<g. E.G.
McCarthy, S.W.
Gonador. R.J.
Gasper, J.J.
Frankl!n RC$01Jfce8
Flanagan, M.L.
SoulhTrust
R~Fina1w:ial
Bllnlon,J.W.
Homloy, R.D.
Waddell & Rood (2)
Henmann..H.J.
PuliS, Chief lnvestmeru Offtc01
PMlGroup
Sm~h,L.S.
Olr, Pres, COO
Ra~ondJomc>
Holck, C.
Pre::~,
Everes1 Re
GeUaohor, T.J.
Kasmar,R.J.
Radi<ln
p.,.,coo
Prm,COO
Pres, COO
Pre:r.. Mom bet'~ Off.::e of the Pros (Co-CEO from
111104}
Former Pres, Former PrM- 8 CEO • Ballk
VCOB.COO
COO
PrO$, COO
Bonua
Otllor
Coah
S700.000
so
$975,000 S2.000,000
$300,000 S2,SOO,OOO
$425,000
$735,596
S2,526,300
$2,613.600
$0
S383,366
S1,792,296
so
$1,161,600
$0
$a&2,500
$0 S1,287,500
$901,286 $500,000 S2,136,a&2
so
S785,756
S702,600
S1,050,000
$0
S1,835,756
S1,193,333
$1,134,132
S788,439
$1,490,939
$1,4e3,533
so
$430,000
$600,000
$425,000
S507,936
S1,200,000
so
so
so
S937,938
$2,000,000
$638,791
51,010,943
$791,875
S6:13,500
S1,503,.198
$775,497
$564,663
$946,538
$759,850
$0
$459,500
$250.000
$446,538
$455,000
$213.791
$760,613
$500,000
$304,850
so
$330
$0
$0
so
$0
$94.234
$446,220
$150,150
so
$2,688,880
so
so
$0
S523,500
$0
$0
$0
$0
$0
so
$316,094
$2,1188,680
S2,909,866
$1,792,296
S5,788.880
$4,197,186
$3,929,155
S293,769
S152,511
S381,397
SDD,OOO
S36,308
$6,000
$383.769
S188.019
S387,397
$2,327,485
$4,163,223
$3,498,072
so
$8,754
$273.745
so
$0,754
S273,745
$99.993
$169,529
$164,576
$67,389
$0
so
so
$220,872
S13,381
$155.489
so
S2,007,133
S1,425,375
$1,503,4116
$775,497
$659,117
$446UO
$509,650
$2,363,313
$3,503,486
S1,414.2e8
$1,670,060
$1,392,755
$1,369,500
S11J,200
S7.451,544
$6,172,649
$4,385,985
$4,316,555
6%
4%
9%
s1.15a
$4,'.71,977
S3,779,517
$2,530,695
$3,667,476
$1,589,006
$1,731,772
$1,628,169
0%
7"4
7"4
5%
11%
0%
14%
S41,554
$1,566.543
10%
so
$0
so
so
$7,699
S167,362
$169,529
S174,778
$0
$174.453
$0
$234,253
$155,489
$61,712
so
5~
(1) OplionValuo• (number of optians)•(exe:ei>e pri<c)• (113)
(2) Valuo Qf long-t-cnn compensation reflects 2002 awards; 2003 owards to be announced poSI·prm:y
21
JOHNSON ASSOCIATES, INC.
,,
')
·~
.
·.
2003 Executive Compensation - Proxy Analysis
Chief Financial Officer
a...
Salary
Unco!n Na1ianal
1\Cf!.
Um~ed
s.roco
AmSoUih
XL Capital
Vaughart R.C.
VP,CFO
EVP,CFO
Bonua
Other
Optk>n
Roll
C..h
Valuo 1' 1
Stock
LTIP
$700,000 $1,641,000
$500,000
$575,000
$0 $2.341,000
$0 $1,075,000
so
$5,163,647
S1,188,733
S550,000
$1,000,000
S3,813,733
so
5221,875
$221,875
$515,000 $1.545,116
$0 $2,060,116
so
$0
$1,500,000
$1,500,000
S3,560,116
StB2,393
S40,96t
S223,3S4
$435.600
$1,3114,825
S1,001.880
$0
$1,437,480
S2,692,480
so
$203,250
$271.228
S3, 168,958
8'4
S155,66.2
$189.487
S1,629,974
S2,740,588
S105,247
$203,250
$8,000
$111.247
so
$2.851,835
4%
$1,518,250
$1,814,78J
$2,420,650
$2,389,783
S287,235
$73,442
$28,200
S295.435
S73,442
so
$2,716,06~
11%
so
S218,336
$2,681.~
J%
S27,406
$10.612
$38,018
$1,710
S2.387.371
2'1'.
S6,590
$275.188
so
$2,196,841
13°.1.
so
S630,000
S825,000
$0 $1.255,000
$450,000
S660,614
$0 $1,110,614
Glboon, S.D.
214104)
5432.400
$300,000
S902,400
$1,195.250
$0
$323.000
EVP.CFO
EVP & CFO of M& T Bon~ Corp & M& T Bank; COB
M&T Bank
EVP; CFO & Treasurer; Pres Jeff~~
Comml.nicati:tntJ Co.
S470,000
$475,000
$0
do 51. Paer. J.
so
$775,000
$1,036,533
$578,250
so
$359,328
S250,000
so
S809,326
$1,738,317
$0
so
$1,738.317
$2,347,643
$475.000
$432.000
$867.450
so
S147,203
$1,014,653
S1,921,653
$300,000
S267.375
$907.000
S587.375
$419.016
$159,150
$0
$578,166
$1,145.541
$268,698
S148,119
$146,119
$253,571
$1,$45,291
9%
$319.231
S171,872
$491,103
S393,300
S214.284
$377,136
S984,720
$1,475,823
$46,539
$11,600
$58,139
$0
$649,040
$649,040
S1,389.040
$70,128
S70.126
$530,000
$822.983
$0
$922.993
$1,352,983
S50.225
so
so
so
so
$50,225
$0
$1,533,962
$1,459,166
$1,403,208
4%
$740,000
$0
11%
Pinlo,M.P.
Jcftcrson PiSot
Stone, T.M.
PMI Group
Lofo. D.P• .k.
Lauer, J.M.
$240,000
~$500,000
S390,000
$140,000
so
so
so
so
so
TOrehrN;rk
Colcman.G.L
EVP,CFO
EVP,CFO
MO,CFO
EVP,CFO
Natiomvi:le Fit~Qncia!
WaddeU & ROBd (2)
Throsher,M.R.
Pres& COO -Eicd,CFO
$364,615
$255,199
$0
S619,814
*t8.469
so
SLirxieen. J.E. Jr.
Limauro, S.L.
Quint,C.R.
SVP, CFO, Treosurer
EVP, CFO, ComplroUor
$325,000
S441,000
$0
$0
$453,393
$270,915
S350.000
$0
$786.000
$620,915
$0
$334,865
so
so
so
so
EVP,CFO
CFO, fllWUJI'Ct, Sccrot:ny& VP and EVP, Troasurll)l',
CFO & Dir of Law & Comptiancc .and Dir of Admin at
Co.
$335,000
$202,005
$0
S537,005
$306,333
$99,495
$0
Everest Re
Radian
6%
CFO
SVP, CFO, SD<rGiary
VCOB, CFO, Grp Head- Fbl. & Credi (lo resign anor
M&T Bank
MGIC
Financial Security Assurance
5%
Bancroft, P.
Mead, C.
Simon,J.W.
5%
4%
$546,459
S1, 166,273
$144,420
$6,000
$150.420
so
$1,316,693
$453.393
$1,219,393
No!appbb.le
so
$0
$10,417
$1,229,810
0%
S334,665
$955,580
$144,889
$9,127
$153,016
$1,158
$1,109,754
14%
$405,628
S942,833
$109,888
so
5109,888
$20,856
S1,013,580
10%
(1} Option Vcluc •(number of opliono) l(OX«CISO p:ic:c) l(113)
(2) Value of long-term compensation refloc:tG 2002 .QW.Qrda; 2003 awards to be announced JIO$t-pro.y
22
JOHNSON ASSOCIATES, INC.
2003 Executive Compensation - Proxy Analysis
-
Salory
$380,000
Sa!oco
F"nzncial Security Assurance
Frankm RCS<>urces
Amb.Dc Financ:ml
PM! GrouP
C»:f Republic:
Simpaon, M.L.
Doyle, K.J.
Bac"aalup~ V.J.
LoRoy, S.IU
MD. General Counsal, Soc:retary
EVP, GenemiCoonsel
MD, GC1l011ll Counsol
SEVP, SO< Wid Genosal Counool
S240,000
SB71,098
$184,000
$300,000
$352,888
General Counsel
Bonus
Opllon
Olhu
Caah
Rost
Stock
Vatual'l
LTIP
$532.000
$800,000
so
$912,000
$1.102,418
$131,'374
$143,136
$1,376,926
so
so
so
S927.200
S927,200
$260,000
$360,000
so
so
S1,040,000
S931,098
$219.333
5374,267
$151.250
$120,074
so
$129.113
$121,649
so
$430.728
$246,950
so
so
S370,583
$494,341
$430,728
S368,499
so
S544,000
$437,113
$474.415
$0
so
$121,549
$2.288.828
S1,967.200
$88,425
$9M55
$12,967
$90,000
$1,301,881
so
$14,593
$1,038,341
$867,841
$842,914
$64,440
$112,818
$37,933
$18,693
$10,200
$0
S!l9,382
S188.555
Sl4,593
$81,333
so
so
so
so
$122,818
S48,995
510,.842
$37.933
$2,388,320
S2.155,755
S1.316,274
$1,119,673
$1,039,654
.s•••.
•e~
4'll
9%
1%
1%
12%
4'll
(1) Option Value= (nmabcr of optigns) ll: (exercise price) J. (113)
23
JOHNSON ASSOCIATES, INC.
2003 Equity Award Grants
* Shares Outstanding reflects disclosure In 2003 Annual Reports. Stock options and restricted shares
counted equally on share basis. Therefore, underwelghts utilization of Firm's granting restricted
stock
Company
as Percentage of Fully Dil11ted Shares Outstanding
Total Granted
Options &
Restricted
Options
Restricted Stock
Stock
First Horizon National (formerly Fi:!rt Tennessee)
3.0%
0.2%
3.2%
T Rowe Price
2.9%
0.0%
2.9%
Am south
2.6%
0.0%
2.6%
. Not avaltabie ·
2.5%
Moody's(as o1 FebrUary 11, 2004)
..2.5%
Ace Limited
1.4%
0.6%
2.0%
Mellon Financial
1.6%
0.4%
1.9%
Nationwide
1.9%
0.0%
1.9%
Safe co
1.7%
0.1%
1.8%
Franklin Resources
0.4%
1.8%
Regions (pre-merger)
1.4%
1.6%
0.2%
1.7%
AG Edwards
0.7%
1.0%
1.7%
XL Capital
1.3%
1.0%
0.4%
0.6%
1.6%
Raymond James
Ambac
1.5%
0.1%
1.6%
M&T Bank
1.5%
0.0%
1.5%
PMI Group
0.0%
1.4%
MBIA
1.4%
1.0%
0.2%
1.2%
Old Republic
1.0%
0.0%
1.0%
Radian
1.0%
0.0%
1.0%
1.0%
1.6%
Jefferson Pilot
1.0%
0.0%
Torchmark
1.0%
0.0%
1.0%
MGIC
0.6%
0.3%
0.9%
South Trust
0.9%
0.0%
0.9%
Legg Mason1' 1
0.8%
No! available
0.8%
Everest Re
0.4%
0.1%
0.5%
Lincoln National
0.0%
0.5%
Waddell & Ree(J<' 1
0.5%
0.5%
Nol available
0.5%
25th Percentile (e.cludlng Moody's)
0.9%
1.1%
0.0%
0.1%
0.3%
1.0%
Median (excluding Moody's)
75th Percentile (excluding Mcody's)
1.5%
1.5%
1.8%
( 1) Restricted Stock Grants Not Available
Z4
JOHNSON ASSOCIATES, INC.
2003 Equity Award Grants 3X Restricted Share Weight
* Shares Outstanding reflects disclosure in 2003 Annual Reports. Restricted stock weights at 3X stock
options on a per share basis to create "apples-to-apples" comparison
Company
as Percentage of Fully Diluted Shares Outstanding
Total Granted
Restricted
Options&
Options
Stock
Restricted Stock
AG Edwards
0.7%
2.8%
3.5%
First Horizon National (formerl~ First Tennessee)
3.0%
0.5%
3.5%
A£e Limited
1.4%
1.8%
3.2%
TRowe Price
2.9%
0.0%
2.9%
Raymond James
1.0%
1.8%
2.8%
Mellon Financial
1.6%
1.1%
2.7%
Amsouth
2.6%
0.1%
2.7%
Franklin
. . Resources
.
Moodys (as o1 February 11, 2004)
1.4%
1.1%
2.5%
2.5%
NOtava'llabte
2.5%
XL Capital
1.3%
1.1%
2.3%
Regions (pre-merger)
1.6%
0.5%
2.0%
Safeco
1.7%
0.3%
2.0%
Nationwide
1.9%
0.0%
1.9%
Ambac
1.5%
0.3%
1.7%
MGIC
0.6%
0.9%
1.5%
MBIA
1.0%
0.5%
1.5%
M&TBank
1.5%
0.0%
1.5%
PMI Group
1.4%
0.0%
1.4%
1.0%
Radian
1.0%
0.0%
Old Republic
1.0%
0.0%
1.0%
Jefferson Pilot
1.0%
0.0%
1.0%
Torchmark
1.0%
0.0%
1.0%
SouthTrust
0.9%
0.1%
0.9%
Legg Mason<'l
0.8%
No! available
0.8%
Everest Re
0.4%
0.2%
0.7%
Lincoln National
0.5%
0.1%
0.6%
Waddell & Reed<''
0.5%
Not available
0.5%
25th Percentile (excluding Moody's)
0.9%
0.0%
1.0%
Median (excluding Moody's)
75th Percentile (excluding Moody's)
1.1%
1.5%
0.3%
1.6%
0.9%
2.6%
( 1) Restricted Stock Grants Not Available
C.\Oa:.i•lner'lt& .enc~ sec~wz:;ao~\Loc.al Secmq31rcmporwy lntlfMt F'les\OI..Klt8\~N010n u~ Pr~ectiO"'s 1201 04 RqJort ~Ema:f..xts
25
JOHNSON ASSOCIATES, INC.
2003 Equity Awards Authorized and Outstanding
*Shares Outstanding reflects disclosure in 2003 Annual Reports. Stock options and restricted shares counted equally on share basis. Therefore,
underweights utilization of Firm's granting restricted stock
as Percentage of Fully Diluted Shares Outstanding
2004 Additional
Company
Authorization Requests
Shares Authorized
Options
Oustanding
Restricted
Stock Outstanding
Options + Restricted Stock
Outstanding
T Rowe Price
X
9.4%
17.9%
0.0%
17.9%
First Horizon National (formerly First Tennessee)
X
22.5%
14.4%
0.3%
14.7%
15.4%
9.4%
1.3%
10.8%
19.3%
10.6%
0.0%
10.6%
29.3%
9.0%
1.1%
10.1%
Lincoln National
Legg Mason11 >
X
Waddell & Reed
13.1%
7.9%
1.0%
8.9%
Regions (pre-merger)
15.5%
8.2%
0.4%
8.7%
Torchmark
11.1%
8.5%
0.0%
8.5%
XL Capital
7.5%
7.8%
0.6%
8.4%
AG Edwards
11.5%
5.8%
2.5%
8.3%
13.3%
7.7%
0.3%
8.1%
7.7%
8.0%
0.0%
8.0%
Mellon Financial
Amsouth
X
X
M&T Bank
Ace Limited
X
6.1%
10.6%
..
",
1.1%
7.2%
0.0%
7.1%
7.1%
' I ,' . ~
Moody's (as of Fobril~ry 11, 2004)
10:8%'
7.1%
Raymond James
16.2%
6.0%
1.1%
MBIA
5.8%
6.5%
0.2%
6.8%
Jefferson Pilot
9.6%
6.4%
0.0%
6.4%
12.7%
5.0%
0.9%
6.0%
15.9%
5.8%
0.0%
5.8%
Nationwide
11.7%
5.2%
0.1%
5.3%
Safeco
7.9%
5.0%
0.2%
5.2%
5.2%
Franklin Resources
PMI Group
X
14.0%
5.0%
0.2%
Radian
X
9.1%
4.9%
0.0%
5.0%
South Trust
X
7.0%
4.7%
0.1%
4.7%
Old Republic
5.7%
4.4%
0.0%
4.4%
MGIC
9.3%
3.8%
0.4%
4.2%
Everest Re
6.7%
4.1%
0.1%
4.1%
25th Percentile (excluding Moody's)
8.2%
5.0%
0.0%
5.2%
Median (excluding Moody's)
75th Percentile (excluding Moody's)
11.3%
6.2%
8.2%
0.2%
0.9%
7.1%
Ambac
15.0%
8.6%
(1) Restricted Stock Outstanding Not Available
C·\Oocumt!nb and SciMgs\fJzgt!'r.crn\Loetll Seti!OQ\1\Temporarylnkl:met Fllos10LK318\Compcnsation Updalo Projocllons12 07 04 Report Appenel~;~ Erna:il.:ds
26
JOHNSON ASSOCIATES, INC.
")"·•·
·"
2003 Equity Awards Authorized and Outstanding 3X Restricted Share Weight
"'Shares Outstanding reflects disclosure in 2003 Annual Reporls. Restricted stock weights at 3X stock options on a per share basis to create "applesto-apples" comparison
as Percentage of Fully Diluted Shares Outstanding
2004 Additional
Authorization Requests
Company
Shares Authorized
Options
Oustanding
Restricted
Stock Outstanding
Options + Restricted Stock
Outstanding
17.9%
T Rowe Price
X
9.4%
17.9%
0.0%
First Horizon National (forme~y First Tennessee)
X
22.5%
14.4%
0.8%
15.1%
15.4%
9.2%
3.9%
13.1%
AG Edwards
11.5%
5.5%
7.2%
12.7%
Waddell & Reed
29.3%
8.8%
3.1%
11.9%
Lincoln National
Mellon Financial
Legg Mason< 1)
X
13.1%
7.8%
2.9%
10.7%
X
19.3%
10.6%
Not available
10.6%
7.5%
7.7%
1.9%
9.6%
15.5%
8.2%
1.3%
9.5%
XL Capital
Regions (pre-merger)
16.2%
5.8%
3.4%
9.2%
Ace Limited
X
10.6%
5.9%
3.2%
9.1%
Amsouth
X
13.3%
7.7%
1.0%
8.7%
Torchmark
11.1%
8.5%
0.1%
8.6%
M&TBank
7.7%
8.0%
0.0%
6.0%
Franklin Resources
12.7%
4.9%
2.8%
7.7%
MBIA
5.8%
6.5%
0.7%
7.2%
• Not available_.··
7;1%
6.4%
0.0%
6.4%
15.9%
5.8%
0.0%
5.8%
14.0%
5.0%
0.7%
5.7%
5.7%
Raymond James
fiAoody's (as
9r February 11, 2004)
1o:ao/o •
9.6%
Jefferson Pilot
PMI Group
X
Ambac
... /?A;%
Safeco
7.9%
5.0%
0.7%
Nationwide
11.7%
5.2%
0.2%
5.4%
MGIC
9.3%
3.8%
1.3%
5.1%
Radian
X
9.1%
4.9%
0.1%
5.0%
South Trust
X
7.0%
4.6%
0.2%
4.9%
Old Republic
5.7%
4.4%
0.0%
4.4%
Everest Re
6.7%
4.1%
0.2%
4.3%
25th Percentile (excluding Moody's)
8.2%
11.3%
15.0%
5.0%
6.2%
8.1%
0.1 o/o
0.7%
2.8%
5.7%
8.3%
10.3%
Median (excluding Moody's)
75th Percentile (excluding Moody's)
(1) Restricted Stock Outstanding Not Available
C \Ooc:urnonts ond Sol~g•\111zoerUn!LoCDI 5ert.ngs\Tompor•'V lntemet Fila$\Ot.l(31fi\Componsallon Upclala ProJ&ebons 12 07 04 Repor1 Appondo: Emolld3
27
JOHNSON ASSOCIATES, INC.
~~
~ '
ooc~y
r<
'
('
.
1(''... ornpensat10n
, Committee
'
.
s ~.__,orporatwn
.1o vemance a.nc
To:
!\1
Fron1:
Andrew Kriegler
cc:
Ray McDaniel
Date:
December 6,. 2007
Re:
2007
Competitivt~
fV!arkt>t Compensation Update and Pro;iections
·-----·-~----------------------
The fol!m:vi-ng report, prepared b~l Johnson Associates, provides a sumrnary of market
cornpensation conditions and projectio-ns for year-end within our eompensation
eomparator group and broader tlnancial services. 'll-w report also includes benchmark
compensation information i'()r Moody's ChiefExecuti\lC Officer and his direct reports,
the Senior Vice President and Chief Hurnan Resources Officer as weH as the Executive
Vice Presiclems and Senior Managing Directors of r•Aoody 's Investors Service.
Alan Johnson will be happy to ans<.ver any questions you have regarding this infom1ation.
MOODY'S
2007 Competitive Market Compensation Update and Projections
December 6, 2007
Introduction
For the October Board meeting, Johnson Associates was asked by Moody's to prepare a brief 2007 summary
report on market compensation conditions and projected year-end competitive positioning. The objective was to
provide the Governance and Compensation Committee with a high level update at that meeting, and at year-end
present more detailed market compensation analysis and market perspectives which is the focus of this report. In
addition to assisting Moody's, Johnson Associates provides advice to a number of direct comparators and other
financial service firms.
Market Environment
Unlike 2006 where compensation generally increased, the outlook for 2007 compensation is mixed. A strong first 78 months will allow a number of firms to post flat or positive year-over-year results in spite of the recent turmoil.
The current perception, or expectation for a mostly down market, differs from reality where incentives for a number
of financial services firms will be flat, and a handful of Wall Street and asset management companies will be up
significantly from a strong 2006 base. Across comparators, the larger issue looming, is the anticipation of a much
more difficult and uncertain 2008.
Depending on business mix and trading positions, the issues in the mortgage backed security space proved to be
either a large or non- event for Wall Street firms. Compensation at the margins expected to range from -20o/o to
+20% or more. However compensation for the majority will be flat to up 5o/o. Incentives for traditional fixed income
also will range from flat to up 5o/o, with variations by product and proprietary trading results, like mortgage backed
securities where incentives are projected to be down =40o/o. Guarantor incentives expected to experience a similar
range (i.e., flat to up 5o/o).
The current outlook for hiring has moderated from the first half of the year. A number of financial firms currently
have nsoft freezes" in place and are planning for a reduction in campus recruiting. To date, selective reductions
have mainly occurred in the mortgage backed and related COO areas. Most firms are delaying additional actions
until the beginning of 2008 when they are hoping to have a better feel for the business environment. Depending on
credit markets, may see some continued demand for risk and nwork-ouf' professionals. In general, however,
retention should be less of an issue.
C:\DoaJ
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Jnd Settings\northumn\local Settings\Temporary lntemel Ales\OLKSO\GC 12 18 07 Item 3b 2007
ket Camp Update FINAL.doc- jalmt
.J
JNC.
JOHNSON ASSOCIAT .
)
)
)
Table of Contents
• Overview of Moody's Market Positioning and Proposed 2008
Page
4
• Senior Executive Market Compensation
6
7
• Cash vs. Long-Term Compensation Mix: SMDs & Above (excluding R. McDaniel)
8
• Total Cash Compensation: SMDs & Above (excluding R. McDaniel)
9
• Total Long-Term Compensation: SMDs & Above (excluding R. McDaniel)
10
• Total Compensation: SMDs & Above (excluding R. McDaniel)
11
• APPENDIX
- 2006 CEO Compensation - Proxy Comparator Analysis
- 2006 Second Highest Paid Compensation - Proxy Comparator Analysis
- 2006 Third Highest Paid Compensation- Proxy Comparator Analysis
- 2006 Fourth Highest Paid Compensation - Proxy Comparator Analysis
- 2006 Fifth Highest Paid Compensation - Proxy Comparator Analysis
- 2006 CFO Compensation - Proxy Comparator Analysis
- 2006 General Counsel Compensation - Proxy Comparator Analysis
- 2006 Equity Award Grants
- 2006 Equity Award Grants (2.5X Restricted Share Weight)
- 2006 Equity Award Outstanding
- 2006 Equity Award Outstanding (2.5X Restricted Share Weight)
12
• Summary
C:\DoQiments and Seltingslnolthumnllocal Settlngs\Temporary Interne! Files\OLKOO\GC 12 18 071tem 3b 2007
Compelllive Markel Comp Upda!e FINAL .doc- ja/mt
3
13
14
15
16
17
18
19
20
21
22
23
jOHNSON ASSOCIATES, INC.
Overview of Moody's Market Positioning and Proposed 2008
• Similar to previous years• exercise, Johnson Associates benchmarked Moody•s senior executives
(Senior Managing Directors and above) to market comparators
- Comparator group emphasizes other rating agencies and financial guarantors, with additional
reference to broader financial services and to a much lesser degree investment/commercial banks
- This report focuses on the CEO, direct reports, EVPs and SMDs only
• Analysis compares target compensation for 2007 and 2008 relative to market. As a group, executive
2007 target compensation at about market median
- Cash compensation continues to be well below market while value of long-term significantly above
Consistent with the past few years, actual incentive (EPIC) payouts expected to be down year-overyear, and different from previous years, projected to be only =65o/o of target. Whereas competitors
broadly expect to be ''flat" to up 5o/o
Management does not believe retention of senior executives will be a major issue this year given
general market conditions
Unfortunately the large decline in stock price has resulted in underwater options and decreased
value of unvested historical awards. In previous years, the healthy appreciation in stock price has
helped maintain competitive positioning and has softened the impact of decreased EPIC payouts
For 2008, adjustments in target cash and equity awards for Moody's senior executives (excluding
CEO) result in an approximate 3o/o year-over-year decrease. Overall decrease in line with 2008
market outlook (i.e., increased uncertainty and lower compensation projections)
• Market comparisons for Moody's senior executives incorporates a number of dynamics and market
movements, in addition to significant changes to Moody's job scopes/oversight
- International market compensation, particularly in London, has surged. Exchange rate differentials a
bigger issue. Competitors taking a more "local" view of market
C:\Oocur
CompetL
J d Settings'mrthumn\Local Selllngs\Temponuy Internet Flles\0LK80\GC 12 18 071tem 3b 2007
.. el Comp Upda!e FINAL .doc- ja/ml
J
JOHNSON AssociAT
_)Nc.
)
Overview of Moody•s Market Positioning and Proposed 2008
• In utilizing both stock options and restricted shares at Moody's, a "rule of thumb" has been applied that
five stock options equals in value two restricted share. Said another way, stock options are assumed to
be worth =40o/o of their face value, with restricted shares at grant at 1OOo/o of market
- This "rule of thumb" approach for Moody's continues to be realistic, based on current Black Scholes
analysis. For current awards there appears no obvious reason to change it. However, the value
trade-off should be monitored to insure that the planned amount of value is delivered regardless of
the mix between stock options and restricted stock
- If near term high stock volatility becomes norm, fewer options per restricted stock share should be
awarded
• Through the course of business cycles firms often adjust the mix of stock options to restricted shares
depending on circumstances
- Senior management is recommending the CEO and other select senior executives receive 1OOo/o
options for this year's award
- Current common practice is to award a blend of stock options and restricted stock
- Granting 1OOo/o of stock options is not an uncommon practice; especially when stock prices have
experienced significant declines. A swing to all options is often intended to signal a vote of
confidence in future financial performance
C:\DoQmlenta and Settlngslnorlhumnllocal Sellings\Temporary Internet Flles\OLKBO\GC 12 18 07 Hem 3b 2007
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5
JOHNSON ASSOCIATES, INC.
Summary
• Market comparators expected to have flat to slightly increased bonus and long-term compensation from
2006
• Moody's proposed decreases in 2008 senior executive (CEO, direct reports and SMDs) target total
compensation will result in market positioning at about market median
- Overall, total compensation positioning versus market has declined year-over-year
- Moody's 2007 actual payouts will decrease year-over-year whereas competitors expected to be flat
or slightly increased
-
Management does not expect retention of senor executives to be a large issue
• Significant turbulence and uncertainty expected for 2008. If current conditions persist, would expect
moderate to large declines in financial service compensation
• Use of both restricted stock and options competitive practice. Valuation of awards continues to be
realistic but needs to be increasingly monitored
C:\Docur
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f_d Settlngs'nOflhumn\LOCal Seltlngs\Temporary Internet Flles\OLKIIO\GC 12 18 07 Hem 3b 2007
_;et Comp Update FINAL .doc- ja/m!
.J
JOHNSON ASSOCIAT __)NC.
)
Senior Executive Market Compensation
Note: MoctJy's proposed taiQBis Include 16.796 downwlltfl adjustment Ill bonus tor. R. McDan/81, M. AlmBida, B. Clarlcson, J. Goggins. and L. HuiHN
au dllta In $000'8
CEO & Direct Reports
Name
ntle
Matched ntle
Total
Cash
McDanlei,Raymon!l w
Chainnan & CEO- MOO
COB, CEO
$2,080
Clarl<son,Brian M
-------------------President 112 Executive
President & COO- MIS
EVPsiSVPs
SMDs
Total CEO & Direct ReportS (exd McDaniel):
t~.EVP$~
$4,160
$11,214
$4,301
$10,160
·. $,1f~12-
'·$6;&.12
'$$,~.
$?'i~t1
...
$5,550
$9.125
$7,275
$12,350
~~--
~75
$6iiOO
•$9~
$9,551
$24,767
$9,792
$22,788
$12,050
$21,600
$16,550
$29,800
:$7i4,71'
$1.~iC)26
. $7;63S•
:·1~~f
_•_,$!J~
$1$;®11
$.1~9'?5
$2t,60(1
TOIBI SMDs
$4,192
$8,952
$4.360
$8,464
$6.225
$9,750
$7,895
$13,050
tOialQSOiPl~.!l·(eledMcl)an~~-~~~~. .-:;" . .
'_·.:·1'•
• _-,_
,")
. ·' ·'··· •.·
.
,._,·'·
.1jl~
~- $11111115
$2~835
$2o;81o·
$2Si3&o. :··:·-·
...
$$4;$50
Total All EVPa & CEO, Dlred Reports:
TollllA!I'~Bieeqia~~(~:-~~·-
C:\DOCUments and Senlngalruxlhumn\local Settings\Temporary Internet Flles\OU<OO\GC 12 1B 07 Item 3b 2007
Competitive Market Comp Updale FINAL .c!oc- jalmt
7
$15;17&
':.:"· ...
JOHNSON ASSOCIATES, INC.
Cash
vs~
Long..Term Compensation Mbc: SMDs & Above (excluding R. McDaniel)
12:0.0%
$26.0M
$25.4M
100.0%
80.0°/c
DLongTenn
1---'
IDTotai
!
$15.8 M
$20,9 M
40,0%
$11.1 M
20.0'?/c
0.0%
2007
rv1oody's Targ1;;t
2008
2007
2007
Moody's
Median
75th%ile
Preliminary Target
Moody's
G;~f:lCOJ(
(;omp~ti
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H:h?mat Fi!e~\OU•:&~\GG t2 13 D? !t;:·m 8b 2007
Market
Cash
Total Cash Compensation: SMDs & Above (excluding RN McDaniel)
200.0%
180.0%
160.0"/..,
140.0"/o
120.0%
.....
~
.._ 100.0%
···························.·
~
2
~%
M%
80.0%
60.0"/o
40.0°/o
20.0°/o
0.0%
2007 Moody's Target
2008
Moody's
Preliminary Target
i:;:10(]CI.Jm~·nt~
and S.e:-Uif~9!$~~unht~mn\t~ca: S.~-::-ui(!lJ:>\T~~:o!p.n;-;:~r>'
(:Qmp•21:t!~;.·e M<:1t!t~:~~ GC'.mp UpC~~~ FIN/'-.L .Coc- jaJrr.t
!(f!Nnet
M!~~~OU<HO\GC: ~2
1fl Oi" lte'm :J:b
~~on:;
9
200.0°/o
1so.ocic
158°/o
160.0°/o
140.0%
120.0°/o
-
jl
100.0%
....
m
z
80.0%
oO.o";;,
40.0%
20.0%
0.0%
2007 Moody's Target
2008
Moody's
Preliminary Target
(::\0(<;<.:
Compet~
SeHit~:~s'flClrih:;mn\Loc;j~ Senln(:;.\Tf!ftlp~(~ty ~::to?rm~i
C~;.:rt;.: t:odat~ FlN.t.L .l±oc ·· jalr.1t
Fik:s\OLK(!O\GG 12 iil 07 ltem .3b :?Cn~r
Total Compensation: SMDs & Above (excluding R. McDaniel}
200.0%
180.0%
160.0%
2007 Market 75%ile
140.0%
120.0%
i06%
.....
101%
2007 Market Median
]!
.... iOO.O"!o
l'!:j
:a:
80.0%
60.0%
40.0%
20.00/o
0.0%
2007 Moody's Target
2008
Moody's
Preliminary Tilrget
C:\J)Qc::;rn,e:1~S! <:thd Bt.~'n.lm)::;'<tto::h:.m-;!'J\Lv::v.~ :~~ttiflgr,\l:.)mpo:<al:llt1N:lmc.::1 Fi!t:!::1.0Lf\H:iJ\.GC 1:~·
CD!nfR~t,t!v!S t~1:.Hk~1 Go:-m-:1 Updah:: FtNN.. di)C ·· jairttf.
JS !Ji"" j:~;m :3b ;?;007
ii
APPENDIX
C:IOoaJr
Compe!1
)r.C:
Selllnga\northumn\LoCBI Settlngs\Temporary Internet Flle&IOU<80\GC 12 18 071tem 3b 2007
_;}"'"' Comp Update FINAl. .doc -ja/mt
.J
jOHNSON ASSOCIAT __ _)INC.
.")'
·;.
;
2006 CEO Compensation
CEO
Executive
Poahlon
Base Salary
Rest Stock
Bonus
$7,225,133
$11,948,859
$5,049,474
$4,475,927
$3,875,795
(1) Option Value" reported value or (number ol opllons) x (exercise p!loe) x (113).
target IIWIUd values for recent grants; does not reflect payouls from past ~es
NOTE: One-time awarda annualized over appropriate watlng period
(2) LTI? Value "
C:\Documents and Sett!ngs'Vlo:lhumnllcK:al Settlngs\TemporaJY lntemm Files\OLK80\GC 12 18 07 hem 3b 2007
Competitive Market Comp Update ANAL .doc- JBim1
13
JOHNSON ASSOCIATES, INC.
2006 Second Highest Paid Compensation - Proxy Comparators
Poaltlon
so
$885,000
$780,1114
$0
$0
$0
(1) Option Value= reported value or (number of opllonS) x (exen:lsepdce) x (113).
(2) LTl? Value~ la!geiiiWII!d Ylllues lor recent gmn!s; does no! reflect payouls lmm past cydes
NOTE: Ona-tlme awanlll annuallad approprlatu -tlng perkld
C:\Docur
CO!npell
J d Seltlngs'northumn\Local Settings\Temporruy lntemel Rles\OLKSO\GC 12 18 07 118m 3b 2007
el Comp Update FINAL .doc- jalmt
.)
JOHNSON ASSOCIAT __}NC .
··)·
..
2006 Third Highest Paid Compensation - Proxy Comparators
StusW,B.M.
FUoso. R.
Preslderlllnl'l&
S!Jalaglc lnveslmenls,
Pro:!ldenl & CEO PMI
Copilal
$003,847
so
$415,000
1485,550
1900,550
1628.862
so
so
1628,662
$1,'130,412
$214,573
$141,901
$2,214,346
$250.001)
11.540,000
$1,790,000
$124,838
$281.998
so
$3811,1135
12,184,131
so
$75.830
$2,1113,1i00
(1) Opllon Value • mported value01 (ntmxuofoptlons) X(exen:isepdoe) X(113).
(2) LnP Valuo • tall!GiawaJII values for recent gmnl!l; does IJJloullect P8l'OU1S lrom past C'jdos
NOJE: -.,..entaannuelb:ad 0'1111' approprlale-.; ..,.tad
C:\Doa.unenl8 and Selllngslnorthl.lmnll.ocal Settings\Temporal)' lmemet Rlos\OLKBO\GC 12 18 07 Item 3b 2007
Competitive Market Comp Update FINAL .doc -Jalm1
15
jOHNSON ASSOCIATES, INC.
2006 Fourth Highest Paid Compensation - Proxy Comparators
(1) Option Value ; reporllld volue or (number ol opllons) x (-lse p!lce) x (1/3~
(2) LTIP Value g large1 awanlvaJues lor RJCelll grenls; dOeS not ruftect payouts 110m past cycles
NOTE: Ono-tlmeawanlll1111nU8IIzed- epprop1ate waUna period
C:\DoCU'
Compet
~~Selllngslnorthumn\LoQII Selllngs\Temporary lmemel Flles\OI..KSO\GC 12 18 07 nem 3b 2007
__/"' Comp Update FINAL .doc- ja/m1
,)
jOHNSON ASSOCIAT _)INC.
.•)
.•
2006 Fifth Highest Paid Compensation - Proxy Comparators
Fifth Highest Paid
Poaltlon
Baae Salary
Banua
Gibbons, T.P.
Gelbatd,A
Zucker, M.S.
(1) OpUon Value= reported value or (number of options) x (mcen:lsepllce) x (113).
(2) LTIP Value • target award values lor rncent grants; does not reflect payou!s 110m past cydeS
NOTE: OniHime awerda annualb:ecl OYBr approprtata -tlng period
C:\Documents and Seltlngslnollhumn\Local Seltlngs\Temporary Internal Rles\Ol.KSO\GC 12 18 07 Item 3b 2007
Competitive Market Comp Update FINAL .doc- jafml
17
}OHNSON ASSOCIATES, INC.
2006 Chief Financial Officer Compensation - Proxy Comparators
CFO
Executive
Position
Base Salary
Bonll8
Rest Stock
LllP 121
(1) Opllon Value'"' reported value or (number of options) x (exercise price) x (113).
(2) LTIP Value= lalget award values fm' recent grants: does not relleet payouts from past cydes
NOTE: one-time IIWIII'ds annualized over appropriate vesting period
C:IDOOU•
Cornpetl
)'~.Setllngslnonhumn\Lcx;al Seltlngs\Temporary lntemm Rles\OLKBO\GC 12 18 (lT 11em 3b 2007
_j' Comp Upda!e FINAL .doc- jalml
)
JOHNSON ASSOCIAT __ )INC.
)
2005 General Counsel Compensation - Proxy Comparators
Executive
Rest Stack
Poal!lon
Stem,B.E.
$0
LTIP 1Z1
$134,607
$2,493,463
$2,051,706
$1,zJ7,285
(1) Option Value= reported value or (nwnber of opUons) x (exercise price) x (113).
(2) LTIP Value= target award values for rac:entgrants: does not refleot payouts from past cycles
NOll:: On.Cime IIWIII'da annuBIIacl over appropriate vesting period
C:\DoaJmsniB and Sal!lngslnorttwmnll.oc:al Settings\TemporBJY ln!emlll Rlas\OLK80\GC 12 18 07 Item 3b 2007
Compelllive Marklll Com;! Update FINAL .doc- jalm1
19
jOHNSON ASSOCIATES, INC.
2006 Equity Award Grants
£j_f'l~~~_9_i_al
Old
Secur.ity Asswance ______ _
,,.,.._.._.,,,ll.
Bank of New York
---MG!C
0.8%
0.0%
$0
0.7%
$~6
$Hi
···········---------------·--.-·-~·················--······················--
S56
0.1%
0.8''iv
1.3~~
G:\00<1.2
G~rnp:_;~
0.1%
0.2%
0.7%
1.1"!(,
0.6%
15%
\nri ~{.tHi-ng.';.\nr~:t1hurn:1\.U.x.:<:J Sc-Hitt!Jt\r~tft~KHary l~:t~mt:t Ftt&:::~\OL~:80\GC 12 ~S 07 ~:em '3:ti 2!YJ7
Up>.f(ll({ fH~/'J•. :ic< '"" i«-~r'nl
)~:Y.r;t C·::.mp
$45
$5
$45
$20
$87
$60
166
2006 Equity Award Grants (2 .. 5X Restricted Share Weight)
'Nots: Dollar Wtlue of market cap reflects face value of optlr:m& and restricted share awards
and James
A.G.. Edwards
BlackRock
$1 i3
~~~----~-----------··
$39
$173
·-·~-~--
_2<"_!:-Capita!
1.2"/o
$14
Old Republic __
1.1%
$45
___
$150
___:__~-------------·······
$0
S1t>4
$45
···--------····················--··················
_ ___:_:.::_:_-'---- ........••.. _0._9_%_'-~----·-~-f---~---$_:3_9_____ .......~-~----------~-<1:8_0_
0.1?;,
0.2%
1-2:%
$i8
o.so;,,
0.6%
1.5%
$45
1.3%
H>%
C:\tJ::>o.J:~~~nt!!- ;:u:d -Sr.:minH15\'1oat:wnn\L().t:.~! StH:ri.gs\l[:mp,omry lr:1un:~!· n~!!:~\OLK$0'\BG
C'·mp~titive ~..tiaJl!'(."!t Gorflr,. Upoztf: FH'-Y!.L .de.; .. ir./mt
'i2 t8 07 !tern 3:.> 2UUi"
$13
$50
150
21
$149
2006 Equity Award Outstanding
Wow: Dollar value of market r:ap refteots ftrce value of options and restricted sharE~ awards
_;::~_S?:a.P.~~-~-----J\.G. Edwards
-~----
$229
$880
.1\mbac Financial
r.:·\J)Ow
co.n~r}~:t
3.5'}~
3.8%
0.3%
5.0%
5.3~b
0.5%
6.1~S
6.6%
1.3%
7.0%
·::nd SettH11J~:Sl!1!1hlm:n\.lf!(.:!i SeJiing2\Ternpcmry kttt·:l'n~~~ Fi!efS~.OLKt~t·{).(; ·t~~ 180/ ~f!nl3b 2007
::/he~ Cc~p Up-:"!<1<.~:'::! nt~,:~_L -!k1~ ·· ;0/mt
$2i8
$-'17£!
$i8
$230
S44
$52t)
2006 Equity Award Outstanding (2 .. 5X Restricted Share Weight)
'Note: Dollar value ot market cap reflects face value of options and restricted share awards
Assurance
ASSI,l~(;:t) __(>:U.f\!_~nt~-
Ravmond James
~-·--- ······--------.··~·········
····-·------------······
PMI (3_r_ou--"-p_ _
Zions Bancorporatian
3-7%
07%
5.2.%
6.6%
3.2%
C:\O:x::vmr:rtl.B. Rt~fJ 3!'-!11lf"l1fS-\;tlOt~llu:t1n\Lr.!:~::::~!8~:tun.gs\Tf-:mj;(}r~~~ln\.r.r!!~)l f~He~\OL:KHC9.GC l;~ 1{1 (17 itHl1 3h
Compe111i'IO M ..:~t~~t (.{~mp Uprl.1f$'! f;IN!\L do.t:: •a jolmi
7.5%
8.7%
1.3%
zoo;·
23
$210
$471
$44
$109
$227
$:.H2
$653
$1,193
rtJ~OODY'S
20.03 Cornpetitive Market Compensation Update and Projections
.·.,:JJ.:~}j_
Introduction
Johnson Associates was asked by Moody's to prepare a brief summary report on 2003 year-end
competitive positioning. The objective is to provide the Compensation Committee with an indication of
where Moody's target and actual total compensation for senior professionals will be positioned against the
competitive marketplace. In addition to assisting Moody's, Johnson Associates provides advice to a
number of direct comparators and other financial service firms across industry sectors.
The business environment in 2003 has impacted most major financial service firms in a positive way.
Continued strong bond issuances and other fixed income product investments have produced strong
business results and increased compensation across firms. However, for a minority of financial services
firms, in particular those focused on corporate finance, equities, and private equity/venture capital,
compensation will essentially be flat to 2002.
The upturn in compensation is expected to continue into 2004 as earnings momentum is sustained across
the majority of sectors. Moody's will likely need to adjust 2004 individual compensation opportunities to
remain competitive.
C:\Doruments and Settlngs\clarl<ja\Local Settings\Temporal)' Internet Files\OLK383\Compensatlon Update
Pro]ectlons 12.02.0322.doc\ck- 2:54AM
2
JOHNSON ASSOCIATES, INC.
.-)
..
...
l
Predicted 2003 Market Incentive Changes
•
Moody's competitive positioning will erode at year-end 2003 which will impact needed
adjustments for 2004.
30%
30%
20%
~
10%
Credit/Risk
Positions
PIP
Direct Broad
Financial
Regional
Wall Street
Comparator
Guarantors
Banks
___Gmup
____
___(Mortgage_
Market)
-20%
-30%
-40%
-50%
-50%
EPIC
-60% ~----------------------------------------------------------------------------~
C:\Documents and Senlngs\clarkja\Local So1tlngs\Temporary Internet Files\OLK383\Compensalion Updalo
Projecllons 12.02.0322.doc\ck ·2:54AM
3
JOHNSON ASSOC][A TIES, INC.
2003 Financial Services Compensation Environment
•
Financial Industry near term revenue outlook promising
-
Continued optimism toward 2004
• Overall compensation outlook is up with significant variations between businesses
-
Wall Street fixed income departments are expecting large increases, most notably municipal and
asset finance which are having strong years. Bonus awards in these segments should be up 30o/o
from 2002, driven by excellent results. Unlike previous years, other business segment results will not
limit fixed income compensation
-
Other relevant comparator groups/positions (i.e., financial guarantors, credit/risk positions, direct
broad comparator group) projected to increase bonuses by 15%
• 2003-2004 EPS estimates continue to be increased
- Compensation accruals are flexible and will respond to earning requirements
•
-
Continued use of stock options before impact of option accounting charge in 2005
-
Firms beginning to use more restricted stock and considering performance share-like programs
Financial services firms continue to selectively upgrade talent but little net new professional hiring
occurring. Major exception is professionals with risk and credit skills for which there is strong demand
at all experience levels
-
Less focus on headcount reduction. Net new hiring may occur outside the U.S. and firms will
outsource technology and other services to lower cost locations
C:\Oocuments and Settlngsldarkja\Local Settlngs\Temporory Internet Flles\OLK383\Compensatlon Update
Projections 12.02.0322.doc\ck ·2:54AM
4
JOHNSON ASSOCI A 'fES, INC.
')
)
2003 Financial Services Compensation Environment
• Base salary increases expected to average about 3.5o/o - 4.0o/o in New York City for major financial
service firms. Since many firms manage on a total compensation basis and with incentives linked to
results, net cost impact of base salary increases generally small
• Percentage of firm stock utilized across comparators for 2003 equity programs expected to decrease
slightly from 2002 due to increased stock prices and reduced competitive need
- Comparators utilized
2.0o/o-2.5°/o of shares outstanding for stock options and restricted stock.
Major investment and select commercial banks often utilize 3o/o-5°/o+ annually for equity awards
- Moody's proposed 2004 run rate of 1.8°/o well within competitive range (see appendix, pages 23-26)
=
C:IOocuments and Settlngs\darkja\Local Settings\Temporary Internet Flles\OLK383\Compensatlon Update
Projections 12.02.0322.docld<- 2:54AM
5
JOHNSON ASSOC][ATES, INC.
Moody's 2003 Projected Market Position
• Moody's 2003 business results will likely result in professionals and executives total compensation at or
below the soth percentile of direct comparator market. Additionally, majority of comparators will
experience year-over-year bonus increases, while Moody's incentives will decrease
- This is a shift from previous year positioning of between 50th and 75th percentiles. Driving factors are
a significant decline in bonus payouts and essentially flat long-term award values
- Most notably, for 2003, SMDs and TMDs will be positioned below market median
-
-
An increase in 2004 equity awards would help boost competitive positioning, but without target bonus
increases, especially considering Moody's projected 2004 results, 2004 compensation will most likely
be below market
Proxy disclosure of comparators in early 2003 likely to show, on average, increased total
compensation of about 15°/o. Moody's actual 2003 total compensation for senior executives unlikely
to draw undue attention (see appendix pages 14-22)
• Graphs and data on the next several pages show positioning for Moody's projected actual
compensation this year assuming current projected financial results
-
Importantly, the Compensation Committee retains discretion on Moody's actual 2003 incentive
payouts by individual and across areas
C:\Doo.Jments and Settings\darkja\local Settings\Temporary Internet Flles\OLK383\Compensa11on Update
Projections 12.02.0322.doc\ck ·2:54AM
6
JOHNSON AS SOCIA TlES, INC.
··~
Senior Executive Team - John Rutherford Direct Reports
Moody's Total
Compensation
Projected
2003(1)
Target
Projected 2003 Market
Total Compensation
75th Percentile
Executive
Market Match
Rutherfurd
CEO
$3,748,590
$4,281,990
$4,325,000
$5,200,000
McDaniel
#2 Executive/President
$2,444,126
$2,782,284
$2,775,000
$3,350,000
Woodham
Head Business Unit (MKMV)(2)
$1,927,000
$1,989,868
$1,600,000
$2,200,000
Murray
Human Resources
$1,218,230
$1,376,218
$925,000
$1,200,000
Dering
CFO
$1,187,860
$1,321,591
$1,325,000
$1,725,000
Median
(1) Reflects base salary, 2003 stock options, and cash bonus on projected 2003 financial results
(2) Reflects different position match than 2002 (Strategy/IT)
C:\Oocumenls and SeHings\darkja\Local SeHings\Temporary Internet Files\OLK383\Compensa!ion Update
Projections 12.02.0322.doc\ck- 2:54AM
7
JOHNSON AS SOCIA 'TES, INC.
i40"/"
r··w•.·.·........................................... ~ .... .-................................... w--·•
........................................ .
120%
2003 A1arket 'I'ota! Compensar.fon Lael
100%
·W·O•O•o•o•O•O•.•O·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.·...-.o
20%
0 /0
0(
2003 Target
2002 Actuaf
.m 8ase
200:3 Projected
············
D Bonus !ill Value of Option Gr?~~ .
* Includes John Rutherfurd's direct reports, SMDs, GMDs and TMDs. Excludes John Rutherfurci, Raymond
McDaniel, Mara Hliderman and ap,oroxitnatefy 3 TMDs for whorn year over year inforrnation was not available
:}\t;J)(..)nx·•·1:-. Nl:J ~:-~:H. ::9::·.:.f:.~ii':j;..iL.;-,;::~.: r~~-:~:f1 il !:. .;: ··:nfn··,<~::.~ l:-:1•.:u.•:~ f j:~:..-:_.;t')J. h.j:r3,f· -:-·n~rv·~··::.;~:~~.:r-. Uf~d... f~:
p,.Dl<S(i:G ..S 1(' 0},{1;?.,~:: li-VL':~:~. · 2.::-i ;'1.M
SfV1Ds vs" Guarantor Market
100% 200} Market
7~~~raf
Compensu!ion Level
2003 Target Total Compensation
2003 Forecast Total Compensation
9
GMDs vs. Guarantor f\flarket
!O{J% 2(1{)3 Market Tot(Jl Compensation Lt:nd
2003 Target Total Compensation
"Ex'Cfudes Mara Hilderman
(;·::hx:t.·::v:nt~~ .::u:d S:~t: :f:f;:::::~~.f;Jf~.;:}·LI;f:~,; :~9:H·np · ~ e~rlp:.J:.:.:i(Y !na: ~!''{:t Fit~x.'·OL :-·~:n3··.~}.>::::.1 ~:·:::· c~i:w· t lflt~:.~f(·
Pr0jt:·.:~:(•ft~ 12 {):l.Cl:~/.~~ t:r,f.\:;!.\. ;?.:1-~ .4M
2003 Forecast Total Cornpensation
TMDs
140~t
VEt
Guarantor and WaU Street Market
:-·······•••••••••••••·•···••••••••"-'"'"''•'•••··--·•••••••••••••••••••••••••••••••••••••w ..
w•~•--·---·-·•·······•-········•·•··•--.->"•'-··~·~····•••••·•·•·••••••••••••••·•--·•·•·••••••·--··• .. ••••••••••••••••wu••~-•,
* Illustrates aggregate TivlD
(excluding Support) totai
compensation compared to
j {}1] 0 o :!005
VifaH Street Market
Guarantor Market
~~-·Ofx':Hr"~mt:~
:;>r:d
~.--:H:n.;~\~!.~:::~c-·Lcc.at !S=..=~~:$>~J::':if~·'~'pv::r:-' :n!(~;:;;,'~ f:tr.·{.r>t
F•:v:t~;;ltn:.~·- 12.~(~ f)J.?~ c!c._,c:~-? ~A i\~·i
n1arket
Aiarket l'otcli Compen.wfion ren·l
:"\3!:D'•Co ·v:-:o··.::t.e:
U;;dt<~~J
·:~..
··~
Summary and Potential Directions
• Market comparators generally expected to increase compensation
-
=15o/o+ from 2002
In contrast, majority of Moody's senior management expected to decline by at least 15°/o, due to
reduced growth in financial measures
• Moody's expected to generally be positioned at or below 2003 market median.
compensation environment expected to continue into 2004
Strong market
• Consider reviewing and potentially adjusting bonus targets to ensure competitive opportunity for
meeting performance expectations
- Increased long-term equity awards would also help competitive positioning
C:IDocuments and Settingsldarkjallocal Senlnga\Temporary Jntemet Flles\OLK383\Compensatlon Update
ProjBCtlons 12.02.0322.doclck- 2:54AM
12
JOHNSON ASSOCIATES, INC.
I~
·~
1
APPENDIX
C:\DocUmenls and Se!lings\darkja\Local Se!Ungs\Temporary Internet FllesiOLK383\CompensaUon Update
Projections 12.02.0322.doc\ck. 2:54AM
13
JOHNSON ASSOCIATJES, INC.
~
Moody':\004 Proposed Target Compensation) Relation to Updated Proxy Data <,l
2003 Base
Salary
Bonus
Total Cash
Moody's Options @
Bonus% $17.08, Competitors Restricted
@ 1/3 grant price
Stock
Total Cash
CEO
----------
Long-Term
Total Longas%ofTot
Term
Total Comp
Comp
LTIP
----
---
$1,674,774
$3,285,711___42.4°/~
$3,776,94§_
$5,690,410
61.3%
$6,286,521
~~~46,338
72.4%
--
$4,309,200
59.5%
25th Percentile
$603,224
$732,5_96
$1,300,490
53.1%
$1,563!222
$0
$0
Median
$805,400
$1,133,613
$1!913,886
60.2%
$2,491,858
$125,735
$0
$1 ,024,?~_0
$1,505,350
$2,340,050
68.2%
$4,882,608
$843,284
$529,019
$873,600
$873,600
$1,747,200
50.0%
$2,562,000
$0
$0
$2,562,000
75th Percentile
Moody's ProposedRutherfurd
%Median
77.1%
91.3%
83.0%
102.8%
$408,780
$520,354
Si986,07!_
50.4%
$585,254
__$4§g~600
$617,378
Ji1,19J,009
57.0%
$1,445,694
-$692,250
~1 ,065,469
$1,726,761
61.4%
$2,181,461
$564,485
$564,485
$1,128,970
50.0%
$1,878,800
108.5%
67.8%
75.7%
96.9%
#2 Executive
25th Percentile
Median
75th Percentile
Moody's Proposed McDaniel
%Median
117.0%
91.4%
94.3%
87.7%
130.0%
$0
____ g;o
- $1~:3.?!51
- _$0
-------
$737_&55 --
$0
$758,7~f}
$2,372,756 - 41.8%
$1 ,780,919_ _$3,391 ,575
59.8%
$161 ,78L_j_2,935,63_3_____!4-._938,545
70.2%
$0
$1,878,800
105.5%
$3,007,770
88.7%
62.5%
104.5%
#3 Executive
25th Percentile
$321,20Q_
$332,063
$723,185
43.7%
$294,280
$0
$0
$529,940
$1,404,001
38.8%
Median
$406,440
$433,276
$877,706
51.9%
$695,463
$188,732
$0
$981,639
$2,144,615
52.7%
75th Percentile
Moody's Proposed Woodham
%Median
$526,500
$659,295
$1,207,046
59.7%
$1,427,725
$524,247
$84,519
$1,921,493
$2,936,623
66.8%
$0
$0
$1,366,400
$2,181,926
62.6%
$478,067
117.6%
$337,459
$815,526
41.4%
$1,366,400
77.9%
92.9%
79.8%
196.5%
139.2%
101.7%
118.7%
#4 Executive
25th Percentile
$309,400
$27'5,971
$646,927
40.6%
$161,922
$0
$0
$495,655
$1,234,996
31.3%
--
Median
$363,520
$~76,625
$795,780
51.1%
$445,127
$161,458
$0
~~69,092
$2,099,813
50.6%
75th P~~~tile
Moody's Proposed Murray
$480,172
$558,613
$990,213
55.3%
$1,041,065
$444,499
$71,659
$1,573,392_jg_.472,709
- -68.8%
--
$0
$0
$1,477,852
52.0%
%Median
$430,500
118.4%
$278,752
$709,252
39.3%
$768,600
74.0%
89.1%
76.8%
172.7%
14
$768,600
88.4%
70.4%
102.7%
JOHNSON ASSOCIATES, INC.
Moody\:\004 Proposed Target Compensation) Relation to Updated Proxy Data 11 >
2003 Base
Salary
Bonus
Total Cash
Moody's Options @
Bonus% $17.08, Competitors Restricted
Total Cash
@ 1/3 grant price
Stock
')
Long-Term
Total Longas% of Tot
Term
Total Comp
Comp
LTIP
#5 Executive
25th Percentile
Median
75th Percentile
----Moody's ProposedDering
%Median
$261 1701
$234,60_0~"----'$'-'6_14_,,_15'--'5~~37_,5%
$46,000
~~$"--'0:___
-~~ 40,005
$1 ,021 ,929
25.1%
$0 __$534,099
$1 ,435,156
46.1%
__S)335 ,000
$371 ,322
$~01) 1,-'--77'---4.:____:_4-=..;8·--=-3°"-=Yo_
$333,326
$431 ,600
$538,341
$969,119
66.2%
_,_$7_:__:7--=.9=,8-'--77,__~$~166,9_3c_2~~-'--$6'--'6,084_
$962,849
$1,999,287
55.0%
$430,500
$278,752
$709,252
39.3%
$854,000
$854,000
$1,563,252
54.6%
87.9%
81.4%
256.2%
~-~~~~~~~
128.5%
75.1%
$0
$0
$0
159.9%
108.9%
118.5%
Comparison with CFO Data
25th Percentile
$316,gQQ_ _ _$303,025
$600,878
43.8%
$3~.~2
$0
Median
$342,952
~~90,585
J743,679
52.0%
$817,334
$51,933
$613,813
$1,088,042
58.6%
$1 ,564,311
$398,013
$278,752
$709,252
39.3%
$854,000
$0
71.4%
95.4%
75.6%
104.5%
75th Percentile
~~---~$c__4:_7:__4,500
Moody's Proposed Dering
$430,500
%Median
125.5%
$0
l~_1)!98
______:o:__:$0
$1,193,509
$15~813
-$1,896,546
$2,731,036
$0
$854,000
$1,563,252
_
71.6%
$1,174_.§_15
46.1%
$1,887,4~54.5%
82.8%
71.0%
54.6%
100.3%
(1) Proxy Competitor 2003 compensation estimated as follows: base salaries increased by 4%, bonus 15% and long-term 15% of 2002
compensation. For many/majority of these firms actual2003 compensation is a reasonable estimate of 2004 target compensation.
15
JOHNSON ASSOCIATES, INC.
-
....,.
.
'
2002 Executive Compensation - CEO
John Hancock (2)
McGuinn, M.G.
Legg Mason(3) _ _ _ _
Mason,~
U~lnNatlo~-----
Boscia,,._J=.A."'---=COB_.CEO
Amsoulh
Riuer. C.[), _ _~C~O~B~, Pr.es. CEO
Safeco
_ _ _ _ _ McGavick,
MBIA
- - - - - - ' B00rown.. J.W.
_ _ _ _ _ ___,Sf"-'onecipher, D.A.
JetfefsonPIIol
------~Malone,
SOulhTrusl
M_.S~
W.O. Jr
- - - - - - - - $1,000,000
$1,100,000
$2,100,000
$7,803,750 _ _$~1~1~,69~5~,1'-'0"-1- - $3.506,243
$900,000
$1,200,000
$2,100,000
$4,214,329
COB, CEO _ _ _ __
Monon Financim
$7,674~§_.§60,333 _ _ _ _ $_()
$650,000
$1,934,855
$2,764,855
------~$963,000
_£,713,100
-----~$950,000
Pres, CEO
COB, CEO
COB, CEO
COB, CEO, Pres
O'Hara._ B,M_._ _ Pres.. CI:O
Ambac Finan,.,ct:::a,_l_ _ _ __
Lassiter, P.B.
COB, CEO
First Tennessoo Narl (4)
Glass, J.K.
Pres. CEO ("P!"'in1od CE0,_7'-'-1-"1610=2:<..)_ _ __
ACE Lirniled
$330,()()()___!?,;M4.~
__ COB, CEO
_ _ _ _ _ _ DuperreBIJh_,B_._ _ C2QB and CEO of ACE Limited
____
$3,473,333
____$_()_____!1_,_092,000 _$~,447.900
71%
$9,144"',000=----"'60%'-'-'----
$4,669,154
$618,047
$581.363
$5,868,564
$3,717,920
S1.eoo,ooo
$2,400.000
$7,717,920
$8.467,92()~
$5,522,460
$7,326.,_.566=--_
$1,604,106 __$"'5'-',068=•:=59=-c7'---
so
$453,863
_ _ _ ____:S,_.1_..,000=,000
$2,546,522
$3,546,522 _...:S2=,B,D2:::.•,;::333,___
so
$972,810
_ _ _ _ __,$_1 ,000,000
$1,000,000
$2,000.001) _ _
$4,340,000
$862,500
so
$660,000
$750,000
$1,41_,0,000=-----=-$4-"',9'-'1-"'0,833
$333,~
-------"$=68.,.3=,923
S1,0t4,420
$1,698.343
$3,074~
$5,202,500
$1,065..,,2,_,.6:0:.9_ _ __ so
$4,f40,174
$1.792,050 _ _ _
$3,492,200
$798,046 -~11!_12,000
$2,010,8_~~9.867
$1,544,750_
$1 ,000,000 _$1 ,600,000
$2,000,00Q__ !_1 ,1153.167
Everest Ro
Tarant~
MGIC
Culver, c,s_.__ Pres .. CEO
$588,462
$420,240
$1,008,702___$2,~52.000
Filipps, F.P __ _____g>B,CEO
$725,000
__$971 .S()Q_
$1,696,500_ _$~!!!-?!iO
$525.~
so
$_52~,~()()__
$1,396,431
$0
52%
72~
. S5.63B~.5~17_ _7:c1..c%'--$5,684,700
61%
$5,615.2_&;1_
64%
$4,4~~·!67
42%
-- 75%
so
$1.853.167
$0 .•
$3,0"{6._400
$4,065.102
$1 ,96922_7
$3.666~%
- - - - - $478,477
--~
-~$899,476
$7,202,500
___,_,75:_:%"-----
_$_6,654,219 _ _79%
$2,192.500~,!__5()
Jones, C~.E,_,_.J=r,__._ ____,C-=O~B-~Pres, CEO
$8,623.~~
~$~3,77=5'-'-,
14-'-'3,___ $7.321.665
_ _ _ _ _ _.$992,500 - $1,200,000
$473,077 _
$9,667,022
---"$0"---_,$"--'750,000
$669,448
Wilme111, R.~~- f>res. CEO of M& T Bank (;()rp._C_OB & CEO of M& T B"""--------
92%
_$1 ,BI!5__._~___R,755,000
_ _ _ _______!1,134,658
COB. CEO
$25,105,()94
42%
----"S"'-0__ S3,408,833 _ __:c$6"'.8.,.82=·1"'67c__
$3,696,100_____!4_,!!55.900
_Regions Financial~---
M&TBank
$23,005.()94
$7,000,918
$3,272,0]7 -- _!>_~%
$0
_ _ _ _ _ _ Jurgensen. W.G.
COB, CEO
_ _ _ __.,Haughton. W.R.
COB, CEO
_ _ _ __.$,_..650.000
$908,664
$1,558.664
$1,525,767
so
so
$1,525,767
$3,084,431
49%
_()_ld Republic (5) - - - - - - - Zucaro. A.(:, _ ___,P_:_res=•_.,C,_EO.
_ _ _ _ ___.$635.021
$654,116
$1,289,137_!1_,?90,667
so
$0
$1,790.667
$3,079.804
58%
~allonwido
Financial
PMI(lroup
- - - _ _ _ $293,538
$890.22=1_ ___,$'-'175, 126
Tl>'chmark
Hudson, C.B.
COB. Pres, CEO _ _ _ _ _ _ __
5800,000
$400,000
$1 ,200,000
$1,248,000
$0
s~o,__-=s"-'1'"'-'248,000
$2,448,000
51%
Waddell & Rood
Tucko1, K.A.
COB. CEO
S800,016
$1.20(),000
$2,000,016
so
$400.~
_s=-=o,___S4oo.OOO
$2,400.0_16
17%
S300,_QOO
s1 .eoo,ooo
$0
_$1,900,000
0%
--~$,_,0'----_$125,000
$1,606.522
~
T.Rowe Pnco,__
_ __
00
Roc;~§~-·___C:OB, Pres
R_BX!"ond James (6)
Jamos, T.A.
~berger
Borman
__,L~~~o~·~J.,_B,_._ ___.C~EO,Pros _ _ _ _ _ _ __
A.G._Edwards - - - - - - - Bagby,R.L
Fran~lln
RosCJI!rces (7)
COB. CEO,__ _ _ __
Jollnson,C.B.
COB, CEO and COB & CEO of Brokora£!EI Company
st,900__._D!_lQ _ _ .
so
$0
~~-900.000
$1,481,522
so
$125,000
_.s.,1~.ooo=,,ooo"'---"S=330=.o._.11
51,330,011
$0,___~S2:.:7.:oo•::::ooo==--
- - - - - $456,578
$647,407
5554,707
so
COB, CEO
$0
$270,000
$1,600,011
17'Yo__
$93,669
so
$93,669
$1,197,654
8%
____ so
so
-~--$554,707
0%
$1,103,905 ----"'$0._
$554,707
~~o
so
jt) Op!lU<1
-,, ,. {humbaro!OjJ!IonsJ:.: (axe;cisu ·p-rice) x (1i3)
(2} Option Value= (number of options) x (exercise price) x (1/4), total cash includes $3,506,243 retention award
(3) Includes $844,688 bonus to pay 1998 loan principal
(4) Includes 125,000 options granted on promotion to CEO
(5) 50% of bonus is deferred until 55 years or later (retirement)
(6) Includes commissions
(7) CEO Is principal shareholder, his compensation is significantly lower on this account
16
JOHNSON ASSOCIATES, INC.
2002 Executive Compensation • Second Highest Paid
OpUon
Voluel'l
Mellon FinWlCial
John 'i__ancock (2)
MBIA
ACE Llmllod
Elllott,§.G.
-----~M=o~. T.E.
·---~--_[lu~on. G.C
-------=G:.:-re:-:en,..be..,rg. E.G.
Horn. R.
First T011nessoo Nert
Pres._._ _ _ __
$600.~
$0
$600,1li)!!_B,~4,6.,000
VCOB ACE Umllod
$822,684
$1200.~
$2,022,-,684=_--'!$::!2,297,500
$-"1•co51'-'6"',3"'50"'------$0
$912,~ 11
$1.305.033
$2,2 I 7 ,44o:4c__~$"-'1'"'902=,6,90-_
$1,380,686
COB
__
$650.~
$450.~
$3.700.000
$1,240.~
$515,~
$703,832
$1,218,832
$1,736,667
_ _ _ _G::::.•::.:"="=de,.,r'-R"'.J,.,._----'-Pres,
',
Coo
$400.~
$600.~
,s•..~.~
$2,357,200
------'G'-'aspe="'''=J=.J._.----'P~res, COO
$725,~
$534,700
S1,259,700
•..__-"'St,...,44=0,,52e;6:__~
-----~8a,nlon. J.W.
Jelferson Pilot _ _ _ _ _ _ __,a,a,les
,,_,R=D.
00
COB, CEO· Bank _ _ _ _ _ __
EVP - - - - - - - - - - - -
- 69%
$266,697
so
'"$2"',62=3•:::89:;.7_---'C$3::!,62~3,897
72%
$712,058
$144_.222
~$2"',2"-'96=,8.::;06:___-$:.:3.556.506
65%
$3,500,012
$3%
$3,439.~
74%
$800,~
$1,080.~
$421,875
$532.~
$1,880.~ _ _ _ _$0~-· $1,50..""3''.:496=----=$0
$275.0~
gn5.~
Sr_E_V_P __ _
$2,500.~
$1,503,496
$3,383,496_ _~
$321,278
$311,866
- g_396,282
- $3,350,15~7_ _7~2%~
$1,24_1;_,!)1l0
$463,726
so
$1,709,726
$326,867
_$0
$953,.:::.87"'5'----__,$"'1"',7=63,.1:.:'37"-
~~~or ,_R.E. Jr, __ Pres ol M& T Bank, EVP ol M& T Bank :::.Co=rp"-----
$473,077 ~()()()___~ $973,077
$1,,895,()C)O_-
Gtbson, S,ll.___~V_(:()B. CFO. Grp Head· Fin. & Credil
$455.~
$1,266,2~--
H..=or"'sl"'oy,_,,-"R"'.D"'.---'VCOB. COO
$396.077
$146,~
SVP, Fixedlncom.o:_R}I\. _ _ _ _ _ _
_
$632,i-<;()___S1_,.087,450
$453,309
___$849,386
$1.700.~
$623,867
$1,846,~~.333
so
Si!_
Konn~."J"'.A"'.C'-'.-~V._P_an=d--'Diroclor ·Equity
Torchmarl<
McAndrew, M.S.
COB, Pros. CEO· Unitod American, Globe and American Income.
$700.~
$270.~
5970.~ _
MGIC
MacLeod, J.S.
EVP-Field Opera~~(ln,..s_ _ _ _ _ _ _ __
$285,769
$265,500
S551"'.2"'69'----_.s"''=·27"'6"''~=
Radian
Kasmer. R.J.
Pres., Cc-00'-"---------
$455.~
$457,275
~dRo~~lc~(~5L)____~
Simpson, W.A.
SVP
Smilh,L.S.
Dlr, Pros, coo
-----~$292,700
_ _ _.=.Ga=ll!!i!ho"'r,'-'T-".J"-._ __o_Pc.cr&S=, COO
EVP,COO
VCOB .\.Pros and VCOB, Pros, 0~. ~~~~--& Mktg Div. ol Bkg Co.
..$912,275
___,5,_,1,2,_4,8,.~=
$910,0Q!l__!!,_2~700
$526,867_ _ _ _~$0
$463,130
$867,130
$7~.200
$4._.20'3~,0,_,1,2_~$4.:.::00=,~=-~$8.23,012
5305,773
$3~.~
$500.~
$315,~
----'$2=4~1·~n~o_......,S439,725
S,ll,!5,~
so
-~28,333
$2274,,!!31_ _ _
19%
$4"-=5-"'5'"'667""---_ _.$=2,255,667 ---=2::.0%c:__
$1,248.~
$2,218.~,____.::5::.6%:.:,_~
$1,276,1J(J()
$1,027,269
70%
S225.22::.6_ _S,B=81 .376
$1,793,651
49%
so
---'$0"'---- $526,867 - ..
_.s.,o'-------'s,o
so
II%
$1,581~_sg.868,700
$0 _ _ _ _eo,$0'---
_......,s"'o_ __.,S285.~
!88• ,4~9~5_ _~5=83,320
66%
$1,441,767. __ ,s,g,~t.l$3
_.s""o______.so
~658.150
--$2.888,077
$326,867
_ _ _$0
$375.~---
$0
53%
$1 .895.~
so
$617,900
. $3,250.349
.-~so
so'-------~$0=
T.Rowe Price
Malza, R.
29%
$3,938.865
$2,529.~
Brinkley, J.W.
Neuberger Bennan
$5,216.~
$2,719,833
$1,841,533
MIITBMk
A.G. Edward
...,s,__________=E~aro~·II·F.IV
$1,516,000
_....:;$0"-----'~80,400
Legg M,_.ason=---
------~_I!I' •. V.C.
$963,167
_ _ _s_o_ _ . 5139,500
$1,540,623
Everest Re
$0
:::.$9c.:1.:::.0·~~=--.:::;S2,389.500
$728,123_ _ $812,50()
_PMI Group
$276,QIXJ=---._ _ __;$"'0
$1 ,658"',4"'79=---._:S:;.I,,36::_1cc,l:o:33
Johnson, G.E=.----'-Pccre=•·~M.ember- OHi:o of tho Pres _______ _
RaymoodJames(4)
$5,996,1Kl1!______~
_,;$3:::•:::.81:.:300
,8:=c50=----_$5,836,5¥_ _65%
_ __:.So:68:::2,,"'500:::...._ _,S::.97,_,5.979
_ _ _ __:.M:::-e:-a::::d,._,C:::,._ _ _ SVP, CFO, Secrelary._ _ _ _ _ _ _ _ __
AmsOUih
$9,03!.~779-=-_.:::;8::.6%"
_ _ _ _..::$4..:;5"'5"''~=--$4.55,000
Waddell &.._,.R,_,ee:-dc___ _ _ _ _ _,_H...
emn=an=n'-''H.:.:.J::.:._ _.P=res., Chlollnvoslmenl O'"'H:::Ic=oe._r_ _ _ _ _ _ _ __
sara co
$0 -~$7'-''--'789=,779=--
$8,334,=~~5~_86=-"%
_ _V~a=u~gNm~~,R~·~C._._~EV.P,CFO
Lincoln National
Nalionwida Financial
~$~1,~24~8~.~~--=$2~,8~~~.~~4
$607,693
_ -~nJr.,N.M.~ ___ EVP.CEOoflnsuranco~llons==-------
XL Capilal (3L_
SOuthTrust
--~~~~·~~-~$~~8.~
SVCOB
_cFO, Sr. EVP
$7~,200
$1,729,367
$1,571,330
45%
~$30=5'-",77-=3----'$1 ,128.7=:85:;__.::2,;_7%:.:,__
so
$265.~
so
$83.320
26%
$764,815
- 1, %.
(f) Option Value" (numbe-r oi op!loris) x (exercise ~nee) x (113)
(2) Option Value= (number of options) x (exercise price) x (1/4)
(3) Other cash Includes $2.6 million bonus under contract renegotiation
(4) Includes commlssl011s
(5) 50% of bonus is delarred until 55 years or later (retirement)
17
JOHNSON ASSOCIATES, INC.
'l
2002 Executive Compensation -Third Highest Paid
Posldon
ACE LlmHod
Uncoln Na~onal
MBIA
Franklin Resources
LTIP
S"'r".E"-'V'"'P_ _ _ _ _ _ _ _ _ _ _ _ _ _ ~------ $600,000
$462,000
$1,062,000
$2,601,250
Pres. and COO o! ACE Umltad, COB or ACE INA
$850,000
$600,000
$1,450,000
~S_9_!9,_Q()O
Gona. J.H.
EVP, Lincoln Nafl uro Insurance _ _ _ _
$400,000
Welii.A.L.
VIce P r e s . - - - - - - - - - - - - - - - -
Bel, M.A.
Frederico, D.J.
-----~F=~~~~.M~.L~--~Pr~e~s.~M~e~m~oo~~eot~ePros
_ S4.396~....
2"17_ _ _ _ _---=;so~__S"'6::.:,997=•c.:.467::.:___ _,sa=.059.4~-St,5tG,350
so
SO
$2,435.350
$3,885,350
63%
$426~.;_336,333
__$3,559,190
66%
$295,000
$820,000
$672,650
$956,900
$650,000
$2,479,550
$3.299,550
75%
----------"$.:..:72"'8"',1,.::19::__.,.,S6.._,1,_2.,..500=
$1,540,619
$1,246,000
$463,726
so
$1,709,726
$3,250.345
53%
72%
$525,000
$2,058~~4~70
s,=-o----'s""t""B.3.~_
Jeller6011 Pilot
Glass, D.R.
Pres
$596,635
$270,000
S6e6.63S
52.242.070
$3,108,705
Seleco
Talbot, R.H.
Pres, Ule & lnvestmon~
$525,000
$500,000
$1.025,000
$1,315,429 _ _ _
$1~8"-4"',9"-77-'----'S'-'t'-'73"',99=8- $1,674,404
$2,~699,404
XL Capital
Keeling, H.C.V.
EVP, CEO Reinsurance OperatiOns
$482,910
$500.000
$982,910
S.,1'".2"'4o.,..ooo='--------"S"'34,_,5,,ooo=-----"s"'-o- st.585.ooo
s2,567.9to
62%
M&TBank
Pinto, M.P.
EVP & CFO ol M& T Bank Cotp & M&T Bank
$323,077
$330,000
S653,077
$1,642,333
$2.295.410
72%
Ambac Flna~--
Bivona.F.J.
CFO. VCOB, Fin & lnv Grp
$310,000
$300,000
$610,000
51.~.683
50"------50=---s~"'1.~669=.683=-~- 5:2.279.603
73%
!_awMason
Mutrov. T.P.
SVP
S24t!,OOO
$1,440,000
$1,680,000
$326,867
$174,200
B_~
Fleischauer, ~J.I. Jr.
Reglonatpresldcn.._t_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __..$..,362.,887
$346,188
$709,075
$823,867
$617,900 ---~S~O~~S~t~,4~4t"",7'-'6c..7_--"$2,t50,842
$564,400
$976,400
$881,310
so
Financial
Amsouth
StephellSOil. E.W. Jr SrEVP: Grp Head- Regional Bk~
Mellon Financial
---
Canter. S.E.
-~--
1 --··----·-.Rowe Pnco
_R~ymond
James (3)
_ Reynolds, W.T.
$412,000
VCOB..___ _ _ __
$450,000
_$858,750
-~1~,3(Jll,75Q -
~- $201,630
$463,290
VP and Director • Fixed lriCOlllo
$300,000
$1.300.000
$1,6()(),000 _
_$227.633
$0
Groono, MA
Chmn RJFS, EVP RJF (retired 12115102)
Briii,T.G.
EVP,CA~O..___________
$569,0~16..___:S~tc::30.=000=---"S""'899,01_~
Lauer, J.M
EVP,C£Q__ __ _
$53,333
S:!Bt,6~t5'---_S4=32~.,692
First Tennessee Nal'l
Torchmartc
-----~--
MGIC'--------
$0
__!814.~7-
50
$0
$219,000
S_i!__
$1,642,333
$501.067
$1,100,310
~ -~~$~.920
$2,181,067
!2,076.710
23%
67%
~
$1,973,670 __34_%
___
$0
_$227,_8~3
~2.10.5=98,__ _ _ _,50
$263,931
$1,703,879_ _1~-
12%
$0
~~.599
$1,647.906,____-=5"-1·~10_
$073,600
$0
$0
$673.600
$1,572,616
$305,385
-=Sc..t65=,4~5~t----=-$4"-7-"'0'"'83"'6'------~$6=50,667
$206,351
$0
$1,057,018
$1,527,854~ _6~-
$233,583
$600,0~1~6_ _ _ _
$_1,827 ,833
56%
Radian
Kamarck, M.
Pros.~ ol Enhanco Fin. Svcs G p " - - - - - - - - -
$179,845
$716,695
$1,514, 7"68'----'4'-7%"---
SoulllTrust
Eubanks. R.G.
Pros &Chlol Banking O::::n::::lce::::r_--=B::::an-::kc_________
$357,500
$327,564
$685p64
$400,333
$0
$201,768
$602,101
$1,287,165
Wadden& Reed
Sundeen, J.E. Jr.
SVP, CFO, Treasurer
$300,000
$399,Bn
$699,877
50
$453,393
$0
$453,393 --"$!.!1,.:.:153=.270=---=39%
PMIGrouP
Seaman, C.J.
Pres olln1efl and Straleglc lnvestmen!S
_ _ _ _ _ _ _ _ _$~3'-'1"'2,~000=--~$34=8=!J27
$680,927
$445,993
$0
50
$4_45_.993='----"$.:..!1,~106,920
~0%
Nallonwido Financial
Karas. R.A.
SVP, Sales lor Financial Services_-~
$539,900
$311,633
St ~,030
$39,994
$505,657
48%
Neulle~_Be,-:r,m,.an:____________::Su:::nd=ma=n.=P=.E.._._---=.EV.:cP,____
_ _ _ _ _ _ _ _ ____,S4Q(),C100
$139.900
_ _ _ _ _ _ _ _ _ _ ___,$=500=,000=--$=262,520
$762,52=0_______-"50=------'$"'262=·=500=--
$0
$1.045,557
47%
_:S.,2,62,,:::soo=-_ _,Sc:1,,02::::5::c,02=0__ 26%
-=Ev"-'o"'rcst=R'-"o~----------=L:::Im:::au=ro"-',S=·=L.~_ EVP, CFO, Comp~oJier_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __,$2=54"-,4~62~
~50.000
$504,462
$463,292
SO
so
$463.292
$967,754
48%
Old Republic~-----
LeRoy. S.lll
SVP &.,.G--:en..,e..,rar=C.,.ou,n..,se,_l_____________
$235,902
$575,597
$263.3~:33
SO
$0
$263.333
$838,930
31%
A.G. Edwards
Goldman, A.E.
C"!Jl. VP: D~,_QI_I.!!l'_k&! Analysis ol Bkg Co.
S51l_7,952
$0
$90,932
50
$339,695
_ _ _ _ __,S,2::::09"-',5="7'-"8----"$38B==•374 ~-
$90,932 _
___,$=68=8.:::1il;::_B4:____
_,_,1~
(1) Option Value= (number of options) x (exercise price) x (1/3)
(2) Option Value = (number of options) x (exercise price) x (1/4)
(3) Includes commissions
(4) 50% of bonus Is deferred until 55 years or later (retirement)
18
JOHNSON ASSOCIATES, INC.
2002 Executive Compensation - Fourth Highest Paid
Option
Rest
Value 1' 1
Sloclc
Bu~,~.A~-----~E~V~P~,G~o~oo=r~ru~Coo~n~~~~~------------------------
~500.000,______,$"'330=,000=--'$830=:!:·000=- -$1,560,750
$..,2,,53,1,_,.2~00"'-------------'S~D:___ 5<1.091 ' ""950..._____,$<1=,92"-1'-',9"'50"'-------'83=%
Uncoln Nallonal
Siensrud, L.=:J·~---=E:.:.V:..JP'c:L:::Incol=n::.:N:.::a:.of'-'1L=ll.=.o"'ln"'su"'ra"'n"'ce"--------
$<125,000~__,$4=02'-',9"'56"'------"$8=2:.:.7!::,9=58
$1,736,667
____:S<::Dc_____;S..,812,500 _
_Jefferson Pllol
Mlelwsh, K.C. ______:v,_,c..,oe"'-----------------
$600,000- - s 180,000
$2,136,040
____$_0____ ~~!1,.~
$2,31~~8..__$3=,099=•e:64.::8:__
75%
$590,000
$2,112,650 -
72%
MBIA
_Budnick, N.G.
Ambac Finan=clal::;________ __ ____!QY!~~- O.L.
_)(i:_f_iljlital_
_____________Lll_sard~_R:_R.
ACEL~~o~d~-------------~B=•:::~:.:.roft~·~P._
VIta Pres., CFO
_yf__o~~~!!'~~_MDmt
S525.ooo
$318,750
$550,000
$500,000
________ -----------------"'seoo=..,.oo....o
$600,000
EVP, CEO of Fin. Products i)~_51l_rv~e~QP.e=.or=at=lons=----------
CF0 ACE Um~ed
Regions Financias
Miller, P.O.
Region~ Presideni.___________________________________,S34=9,ri!J
Legg Mason
Scheve. T.C.
SrEVP
-----~P,.:e,n,'-'J,_,.L::_._ _ __,EV=P_,&'-"CCO of
M&TBanll
_ _$_2:--9s"',ooo=--'S""B2""o,.ooo=_ _.._S.672,650
-- $350,000
Gr':l_!I.P-
M&T Bank Corp & M&T Bank
$780,000-
S2,,,48,o,_,,1_::18..__ __,7"'3%-"'----
_$1,0.,_50,,000='-------'$:.:.1•:::0=:85:,;.000=-
$276,000_________SQ_____!1_.361.000
$2,41_1,_1J(_JQ_~
$1,_,.200=,.,000=----$4=59,.,500...___
$689,250
$1,889,683
S1,372,500
$307,692
$325.000
$1,612,500
_$~3=26~·~86:.:.7____---:;$:_:188=,000=---
----------=$=370,000
$481,000
$851,000
$681,310
so
VCOB
$500,000
$707,500
$1,287,500
5201,630
$<133,143
T.Rowo Prk:e
Riepe, J.S.
VCOB
$300,000
51,600,000
$1,900,000
so
Sa loco
LaRocco. M.E.
$395,000
$250,000
$~5,()()()
$<148,939
$650,000 __~1,098~ -- --~373,000
_ LIJlPmlln_. W.J.
Franklin Rosourcos
----------·---
___ t,1_anln, L.B.
MGIC
_____ --------~halskl._ LJ.
Torchm.,.ar"-"k.________
McWhoner, A.L.
Raymond JIIJTlOS_ {:!)_
Trocln, J.E.
SrEVP: Grp~ead • Regional Bkg
SVP
Pres Bus Fin Svcs & Tonnossoo_ Fin Svc_s__________
_
$384,615
$384,615
EVP·Risk Managemenl
$283,077
$154,782
COB, Pres, CEO • Liberty 8o UILIC
$<125,048
$136,000
_EVP • Equity Capital Markets Group RJA
$<137,859
5850.887
$305,000 -
$268,437
~VP· Chief Marketing Ollicer
$320,000
s34o.ooo._____,._s_..,BBO=,ooo=-------"so,.__
Radian
Ouint.C.R.
EVP,CFO
$320,000
$268.000
$588,000
_Neubers:<>• Be:•::::1l11c::a:on:_______
Slel!!"'c!i-":·.
EVP
$750.000
$112,513
$882,513
NaUonwk:le Financial
Phelan, MD.
SVP, Tech &Q!>er:::aiiO==·c:::ns..________________
$318,608
Bacigalupi, V.J.
EVP, Soc and Gonoral Counsel
$290,000
CFO. Treasurer, Secrelary & VP and EVP, Treasurer, CFO & Dlr ol Law &
A._.."'G,.E_,dw=ards=----------"Ke:::UV:~·c:D~.L:o:._ _ _ _ Complianco and Dir of Admin at Bk9 Co.
Everes.:..lR:.:•=----------'Bennott, P.J.
SVP: MD, CEO· Bermuda Re_
CUd Ropubllc'-'('-'4L)------------=B=oo.::;n~e"-,C=--=S'-._
SVP & TreasU1er
$59!_4_37
_ $2Q9.900=_...:S:.-::52=8"'-,7-"'08'----S573,783
$385,821
$592,391
__ $268,577
$100,000
$368,577
$163,333
$93,254
$206,770 _
23%
so
S1,951,310 _ _:5:.:o6'.:.:V.'---
--~~==~·77~3~__,$~1=-~~.2~~
33%
S1243,854
$1,88_8"8~
88%
_so
$744,700
$1,843,71~
40%
$600,016 ____ ____!0
$788,605
$1 .~_5.915____ ~
__ _
so _______ocso'--
so
$873,600
__ _!0___
$2!;9.200
$205.067
-
$1,48~70%
$1,434,648
61%
$1,400,!J!5 _ ____!_9%
___
$20~,768
$602,101
$1,195,538
$<153.393_ _ _ _ _ $0
$453,393
$1,113,393
41%
$131,994
5489.894
$1,Qn,8!14
45%
$<100,333
$357,900
so
$21~1,100,310 -
$193,023 _______S() ____$1,043,690
__S__s.E;1.048 ___ ~873.~_[10
$53,333
$283,783
67%
SO ____,$4'-'92=,8o::6.:_7_---"'S2"''-"10,5,.36"'-'7
S129.266
$370.~
--~769,230 ~-889
_ _ _ _ __,$:_::182,000
_____c~_,_.T:.:.,_,H,_.------""Division Pres. Bank
$2,348.7~--~
$2,136,513
_______$~0~------~$0
_.W_,a,.,.ddei=I..:&:.:R,_,ood=---------------'B"'u:::lch:::o_,T,_..w.._._.___
SouthTrusl
$1,148.750
S632,692 __--'!'.S1,_,,38=9·::::66:::_7_ _ _ _ so
O'Hanley, R.P.
_ _ _ _ ____:M:::•::.~Yc::•"-r'-"w:.::.C::.:·..::II:_I_
so
S345.669,_____,$6
67:___ $617,90()'----------'s"'o---'-s1~.4~4._1,767
0094=,7c::4,_6____.._S8,2,3,.B00
$240,000
$2,932,650
S-"14._.1_,,68=5..__ _ _____,._s,o_ __...s1,811.36B
$668,750
Mellon Financial
Amsouth
$850,000
$2,549, 16-::7_____,S..,3,,3::_n,_,,_::123:::____ 75%
$162,500~------'$"'0'-----
$281,447
$383,83.._7_ _ _ __,$:::_0_
so
so
S256,58=7____;So=83=:•=:200=----
$0
$162.500
$1,025,013
16%
S460,552
$989,260
47%
$383,837
$937,620
39%
$682,710
13%
S90,319 _ _ ___,s,o_ __.:!S90,319
so
$0
so
S368,5n
0%
so
so
~200
_$319,787
20%
(i) Option Value = (number of options) x (exercise price) x (113)
(2} Option Value= (number of options) x (exercise price) x (1/4)
(3) Includes commissions
(4} 50% of bonus Is deferred until 55 years or later (retirement)
19
JOHNSON ASSOCIATES, INC.
2002 Executive Compensation- Fifth Highest Paid
Sloctc
.,J<>IIn Hancock (2)
Ford,M.R.
MBIA _ _ _ _ __
Caouette, J.B.
~_Cepllal=._ __
de St. Paer, J.
::::Amsout==h:..________
Mooney, B.E.
$500,000
$385,000
$885,000
$2,861,375
$194.208
VIce Pros.
$525,_()00
$295,000
$820,000
S672,650
$0
EVP,CFO
---~-00.000
S700,000
_ Sr_g'.'P; Grp Head· Regional Bkg"-----·----------"$38=5.,000
__ $459,000
$1,100.~930,000_ _
$138,000
$524,_000·=--$8=8-"1'"'-31,_,0:..__ __
---~$0~~~~.~~~~--$~3~,94~0=·~~
78%
$2":!4_2.650
65%
_!!,~.ooo _ ..... gtsa.ooo
49%
$2t9,0110,.__ _,S..:,1•.:.:100=,3:.:1D::...__"'-S1:_,:.9"'2,_5,-,.2.:.:10
57%
$850,000
_ _s_o_
so
$245,004
$1,350,000
~1.595.004
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __,$300=,_,00=0
$1,600.000
St.OOO,OOO...__ _ __,S'-"0'-----SO
EVP: CFO & Treasurer! Pres ot JcHcrson·Pilot Communications. Co.
$459,999
$349.270
$809,27!' ____~::,:87..:::6!0,1:::50:..____
~0
$142,500
_,U=nc_,ol::n:.:N:::a:::llo:::;n,..ai.__ _ _ _ _ __,Tc::ho=mpsoo, W.V.
Pres & CEO. Lincoln Financial Disl:iblllors
$325,000
$492.792
S817,792
so
-'-AC=E_,Um=~e_,d:...__ _ _ _ _ _ _.:.K=ramer,
VCOB·ACE Limlled,___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _S-::535=•cc692~
$400,000_---'C$9"'3"'5_,,6c=c92=-----$32=-"1'"'650=----"$4'"-8_,2,._,4~7~5
SrEVP
Legp Mason
--~ta.MD.
T.Rowe Prtce _ _ _ __
Jollarson P~ot
Slone, T.M.
D._
_Ruddy, J.W.
Saleco
VCOB
$380,000
SVP, General Counsel
5207,000
~_.500
$567,000
$163,433
S694,667
$888,533
Pres & CEO, Morgan Kee_g_an _&_Co.
$130,000
$1,370,000
$1,500,000
VCOB
$345,000
$637.500
$982,500
- - $~,44 7
$420.559
$757,006
__s:rro.ooo
s120.ooo
$490,000
$_?48,800
Lamore, D.F.
First Tenncssoc Nat"l
Thomas.
Torchmark
CotelllAn,G.L
EVP,CFO
Sctunl!lt,_E.F.
Division Pres • Bank
SouthTrust
-
-------·----- - -
MGIC
en.. Jr.
EVP. CFO (went on disability leave 12/1102)
As."!'l_~~~-'
$201,630
-
S8n,500
ssss,OIIO=.._ _ ___,Scco_
5~3~333
$285,000
$278.890
$563,890
_______ _
- $184,000
---=$266=:::·500=---$223.==11'-'0'----"$469,610
S7~,ooo
Complrotler,
SVP, CFO
P~nclpal
AccoonHng Offlcer
60%
$255,000
Lorenzen Jr.. J.M.
Shoemaker, K.T.
43%
$1,238.600
S687.soo
$456,331
Adams, J.S.
s~.324,696
$748,800__
$300,000
$559,000 _ __,$,..392=,8,..6::._7_
EVIlrestRe
$567,690
$0
$190,000
$375,000 .
Old Republic (4)
so
so
$1,450,815
51%
$139.100
VCOB o1 M&T Bank Corp & M&T Bank
$468,315
59%
$319,231
CampbeU, C.L.
so
- ~,_(lll(!__$_1_,!():!_.8-46
MD, General Cou_n~l_ __
~!!!lank
0%
- 32%
$266,685
-~!1_..1_7_6,!92
Doyle, K.J.
EVP,CIO
_ __.,SO::...__"'-S1'-",~00,000
48%
$0
Thresher, M.R. _ _.S.._.V.,P-",C , _ . . F , _ , O " - - - - - - - - - - - - - - - - - - - -
VCOB and VCOB, EVP, Dlr of Cps ol Bkg Co.
$1,827.099
$201,768
Ambac Financial
Kessler, R.J.
sns,ots
so
Nallonwlde Financial
Kassen,M.M.
46%
66%
$6~0110'---------=$0
SVP, CO() __
A.G. Edwards
53%
$1,739.817
$400,333
EVP; Pros and CEO o! Eagte_; MD,
Neuberger Berman (3)
S1,754,459
$804,125
$4~8.046
Strohm, M.D.
EVP, CFO
$936,667
so
$576,691
Rie08, R.K.
_ ___,Yc::a,_.ru.,ss,.•..'.:H:.-.S::.·_ __,s..r..:.v_P. Soc, Gener~l(;ounsel
$242,000
$271,691
Waddell & Reed
Radian
56%
$133,889
_F!IIymond James_
~Group
0%
$1,827.927
_ _ _ ___,$2"53=,84=6- $195_.000
- _ _ _ _ _ ___.S,..305=,000....._
----"Fts,...k.._,.,.J.,..D. ______ _EVP, Strategic Planning Ooined firm Feb2002)
$t,92!._7~3c_7_ _1~7-"%'---
_$1,018,650
so
~so~------~s~o________,so
VCOB, Member· Olflce of the Pres-.- - - - - - - - - - - - - ' $ = 5 5 5 , 5 8 3
Reglons Financlalc..__ _ _ _ __,M:::.:otga=-"· A.B. Jr.
$326.733
so ------"$"'0_ _,$1,000,()00
$852,Q83_ _ _ _.=5=.D_ __,s~n=Sc~-
-'-F:::ran:::;kl::::i::.n:..:R:::••o::ou:::r.:::co:::sc..__ _ _ _ __,Tatlock. AM.
Melloli Financ=ia.,l_ _ _ __
_$163,300
$1,522,650
$0
_ _ _ _ _ ___.,S1.86,5::.7=.8__..cS.,3:::.94.:.c,0==9:::B_
so
so
$131,438
$438.385
$78,105
$438,385
$1,008,938
13%
$993.385 ---~
so
----~0
$392,867
$951,867
41%
$281,447
$139.ttt
$39,994
$460.552
$918.~
50%
$352.100
so
so
~.100
$9t 5,990
38%
S298.250 --------------=$~109$75
$408,125
$897,735
45%
so
~-----50
so
$750,000
0%
_:S~80.676
so
$92,280
so
$92,280
$672,956
14%
$628,518
_SO
so
so
$750.00Q_
$460,01 B
$168,500
$166,154
$50,000
$216,18-4-
$92,658
--------'so~~-------'$0
__ St 68,333
$35.270
$223,6()3
$79,000
______,s:::.o________.so
$0____~$~62=8~,5~1:::8____=.~=~---$82,:::.656=.._.....,oS~3=08"-,8'-'1~2----'30%
$79,0110
$302,603
26%
(1) Option Value= (number of options) x (exercise pnce) x (11'3)
(2) Option Value= (number of options) x (exercise price} x (1/4)
(3) Retired 12131/02 and therefore had to forfeit this year's option grants.
(4) 50% of bonus Is deferred until 55 years or Ialor (retirement)
20
JOHNSON ASSOCIATES, INC.
·~
·~
2002 Executive Compensation - Chief Financial Officer
Option
ValuaC 11
John Hancock (2)
Lincoln National
Molooey, T.E.
____ _Jiaugllan. R.C.
$607,693
$539.000
$1,146,693
$2,601,250
--------~-5,()00
$703,832_
$1,218,832
$1,736,667
$953,875
$1,763,137
CFO,Sr. EVP
EVP,CFO
$4,586.~-
$0
$7,187,352_
$8,334,045
86%
$983,167
$2,719.83J
$3,938,665
69%
$321,271l__ -
$311,866
$2,396282
$3,350,_1~7~--
$590,000___
$()__
_ _ _ $421,875
$532,000
Vica Pres.,~_Q_
$525.000
$295,000
$820,000
$672.650
$850,000
$2,112,650
$2,932,650
72%
Gibson, S.D.
VCOB, CF9~_Grp Hoad ·Fin. & Crodlt
$455,000
$832,450
$1_.087,450
$1,266,250
$0
$3__!~.000
$1,581250
$2,668,700
59%
ACELimHod
Bancron. P.
CFO ACE Limiled
$600,000
$6()0.000
$1,200,000
$459,500
$689,250
~0
$1,148,750
$2,348,750
49%
_M&T Bank
Pinlo,l\,l_.f,__ --~p & CFO of M&T Bank Corp & M&T Bank
5323,07~
$330,000
$653,on
$1,842,333
$0
$0
$1,842,333
g_295,410
72%
73%
Sa~-----
M•ad, C.
SVP, CFO, SllCfolary
MBIA
Budnick. N.G.
Amsou1h
-----·---- ---
_Ambac Fina~~i~l
Bivona, F.J.
CFO, VCOB, Fin & lnv Grp
$310,000
$300,000
$610,000
$1,689,663
$0
$0
$1,669,663
$2,279,663
XL Copi!al
do SL Pact, J.
EVP,CFO
$400.000
$700,000
$1,100,000
S9JO.OOO
$138,000
50
$1,068,000
$2,168,000
49%
Jefferson P~t
Stone, T.M.
EVP; CFO & Treasurer, Pres ~~fJerson·Pi!tJt CommurQtions O?~
$459,999
$349,278
$909.2n
$876,150
so
$142,500
$1,018,650
$1,827,927
56%
MGIC
l..aue1,J.M.
EVP,CFO
$305,385
$165,451
$4_!0.636
$850,667
$206,351
$0
$1,057,018
$1,527,654
69%
First Tennessee Narl
Thomas, ElL Jr.
EVP, CFO jwonl on dis!lbt1ily loava 12/1102)
$336,447
$420.559
$757,006
$147,131
$420,559
so
$567,690
$1,324,696
43'Yo
Torchmark
Colcmon, G.L.
EVP,CFO
$370,000
$120,000
Waddell& Reed
Sundoon, J.E. Jr.
S_YP, CFO, Treasurer
Radian
Everest Re
Oulnt,C.R.
___LI~ro.S.L.
_
$490,000
$748,800
so
$0
$748,600
$1,238,800
60'Yo
_ _$300,0_()()___~99,87!______!6!)9,877
$0
$453,393
so
$453,393
_ _ _$1,153,270
39%
$588,000
$357,900
S4ag,i!_~_
45'Yo
$504,462
--
$463,292
$320,000
EVP,_CFO
EYP._ CFO. Comptroller
--
$2_88,QO<l_ -
$254,4~-- _$~50,<100_
$131.994
_$0
so
$1,077,894
$967,7_54
48%
$460.~~___$918,883
SO'Yo
3B'Yo
$463,2_9!__
NalionMde Financiru
ThraSher, M.A.
SVP. CFO
~~9.231
$139.100
$4_58,331
$281,447
PMIG1oup
Lorenzen Jr.. J.M.
EVP,CFO
$285.000
$278.890
$5~,890
$352,100
$0
so
$352,100
Kelly,D.L.
CFO, Treasurer, Secre1ary & VP and EvP, Treasurer, CFO & Dlr ol
Law & COmpliance~~~ Dlr of Admin at Bkg Co.
$206,770
$385.621
--~~~~-1
$0
$90,319
so
$90,319
$682,710_~
SVP,CFO
$188.333
$35,270
$223,603
579,000
so
so
$79,000
$302,603
A.G. Edwards
Old Republic (3)
_-'dams· J.S.
- ----.!!._39.11_1- -
$39,994
$915,990
28%
(1) Op1ion Value = (number oi options) x (exercise price) x (1/3)
(2) Opllon Value= (number of options) x (exercise price) x (1/4)
(3) 50% of oonus is deferred until 55 years or later (retirement)
21
JOHNSON ASSOCIATES, INC.
·,
""'-
'
~
.
2002 Executive Compensation - General Counsel
Jo!ln_H.'!..ncoc_k 121
Budd. W.A.
5afeoo
Ruddy,J.W.
Ambac financial
Day~. K.J.
Op!lon
Rest
VaJwl'l
Stock
EVP, Genor81 Coun:~ot
$500,000
$330,000
$830,000
$1,560,750
__5_VP, General Counsel
$380.000
$207.000
$507,000
$888.533
11.1[)._ (leneral Cou"'"'t
$1~~-- .~!.fi,O_()()_
$559,000
$133.~-
-~9_~!~---- - ~0
8aCIIJ8__1_1.~1,_\' J ~Sec aoo General Counsel
$290,000
$263.763
$573,703
$363,837
-~i!n
Yai"US8,H.S.
Sr VP, Soc. General Counsel
$266,500
$223,110
$489,610
$298,250
01<1 Republic (3)
LeRoy,S.III
SVP & General Counsel
$339,695
$235,902
$575,597
$263,333
PM1_9roup
$2.531,200
so
so
so
$4,091,950
$4,921,950
$125,942
$1,148,364
__!1. 735,364
66%
$0
$392,867
$951,867
41%
39%
83%
----
so
$363,637
$937,620
__$109,875
$408,125
$697,735
45%
so
$263,333
$638,930
31%
(1) Opiion Value= (number of options) x (exercise price) x (ii3)
(2) Option Value= (number of options) x (exercise price) x (1/4)
(3) SOOA> of bonus is deferred until 55 years or later (retirement)
22
JOHNSON ASSOCIATES, INC.
J
2002 Equity Award Grants
* Siocf< opiiam~ rmd reslt'/r?.!.~.d...S.ftf!r:;;s cot.mie.d equally on share {)_a_s_f.s.:...TJli'f.!:g!f!·':.'?.L.Y!Jif.0''Neights utifization of Fin_r;.:_s._fl!_?.!nfl!!JL!.].stricted stock
i__
i
I.
Company
as Peco.nta9" of Fu!IY Dilutffifl Sham• Oui.'tanrl!ng
Options
Total Granted
Aostdcted
Stock
2.9~1",
t·J;,ut;erger 8mtnc<n
:3
Jehn Hancock.
·;~;:~
~t6·~~'
J. 1%
2.5~-~~
XL Capi.tal
Sale co
Options &
Rest St~9k
!... .
......
"'""'"""'"" ol Ful"df.t¥!1!".'""
""'"'• ""'""""'""~-l-.·
Total Gmntnl
~
l="lestrictetl
0 tlons _________
Stock.
Options &
........ B..~~t Stocli..
1 '1'~·:,,
4.0%,
3.0%
i .2·'_)1,:,
42%
O.CY''~
4.0~~~.
3.9~~~
03%,
:':,·:.:,,~
0.1%
~1.W:.~
3.9'~~
0."1%
4.0':-~~
3.20::~..
0.0(:'~
8.2rlr~
21·r:t
.:.> /0
0.2%
2.70!~
0.0%
:3.1':-~-
.
0.2%
c:.6~ 6
0.1%
2.4~{.
R aymc:-nd Jw1ms (2)
Ace
0.3%
L;~dt:ed
1.8~\.•
2.1':-:,
Not Disc!osed
2.0c;.
0.0%
20•};,
I.(J"C.·<·
1 .!;)';~,
flt·gions (>I)
fvi:::ite:n
Fi(l:::ncti~l
AtTt[-;tfJG
Fin~mr;:rd
o o·;;,
!.8''.;,
1.:_;-;,;,
OJY>~
No.tiorw·,.ridf: {2}
1.40c<,
00%
~}1811~
l.:J%
(2)
{2)
!4'):,
1.•1%
Uncoln National
AG i::dl•,ards
1)5'>:,.
p~,.H
1.1%
Gmuf)
0.7\'"~{.
1."1%
0.0%.
TDrchm<Jrk i2)
0.9%
Old nepubiic
(L9%,
0.9%
o s·;;,
o.n:,
0.8'<·<.
0.0%
0.0"';0
0.0':{.
i1; DtJ-B!} not wrcJH·~Jn
F(~brvary ~003 qrants
(.:.:) Rr:,;.-;1::\Ael1 stoGh gri:nt.a-0 info:m?.tion avtt.ilf!blc !;fdy JfJf f(JP fivE; t:>.S'cutlvzs
Fi::.:.~fl·~ ~~or.::.: <tu;~
;(,
:t~!uln
Mm£-FF't
t<..::r~g-on t::~np!oyees
0.0%
(),()%
-----------~------~~-------"--'-'-'"-'-~·------~------~~....;;;c.;...:.;;........~~-~
0.0%
Ul%
f'JiCdi~n
I 0%
:i.O%.
0 B'--::~
0.0%
?5tti Perce:<tiiG
i~;; lnr;:Bd~:-~: c;;'lf:)m· ~~r'W'1!<~~J
1.0%
0.1%
0.0%
{:3)
UJ%
O.O"i.
0.0%
MGlG
0.0%
1.0%
2002 Equity Awards 3A Restricted Share \1\fe!gM
Neu1'>erge-r 6en113:1
~LO~:?
3.5~:·;~
6.fti~
Jol1n ~·ian\/.'>Ci~
~-). ~~~~.
{),{J<:·(,
.·t. ~''"i't.
3.9':~
0.4t3~.
·~.3'%
3.2%
0.0%
3.~?';;:.
2.S~·~
o.s~;;
3.0'}f:
XL
C~:>pltal
Am Lirniied
2.o~-s
j .O~rv
3,0%.
1/Vadde!i & Reed
l.i)~·;;
'!.2":&
3.0":-~
2..4~~
0.3%
2'.7<vo
0.3~S
Salt co
Raymond .James {L)
2.5%
FranJ·~!in Rt~E:·OUH:&S
M~.1ibn F~n~n:>id~
AG Edt""mrds
2.1~~.
MBIA(2)
2.1';:.
1.2%
~, ""'~·
i.4'~~.
N<ttiO:)widcJ (2)
l.inc~:I:"J NatiOrlE:.!
0.1 -::.~.
!.3%
rr};11 GrtJU.fJ
o.o';;
11~:,
O.H~)
r\'1GlC
'forchma:k (2)
Old
0.8'}{.
0:0:%
n.rr-=:s
1.0%
0.0%
1.(1%
0.0%
r~~puw!ic
Ev(:mGI fie (2)
0.8%
0.9%
O.<l%
O.fl%
0.0%
0.8%
0.8~·r_.
o.rr·:t(.
o.O'=Y~
o.o%
.........................;.;;....;.......~~----~~c._----.. ·----~------~----········---2l>lt1 Pmcr:>ntilt;
i.O%
Median
1.5%
lSlh Pr::rc:entile
~ 1) Dces no1 ~HrJu!J:·= Fl:'t.::rui:ty 2003 gt-=ml~~
(2) riPstw::<xl swc.k CifClJm.xl inl.;--lnn;J.1~:Jn !!\'3!~abl'r~ only :or !(,p ti~,..r· oG!=.tH~ut:v~·=s
(~~) {q:::!tl(~t::~: uptirm~_,. u::::nk-.1 tt: ~-(:!.O~!l !vh'"J!\ldll 1-(~::eu.,:n \.;(ff!f::')¥~1 {;.~:,
1,4) :=1:;;c·3! 2003 d3tn
1.4':·~
!),()'_{.
____..::O::.··C::.i".:..:i":..._-~~--············-----o_.u_·,_;:._.----~ ..- - - - -....;;.O;;,Jo..l"~~----1.0%
OX1%
L1%
1.6~'&
0.1%
2A·:X>
f).7t;~.
---~ ................~·-------"'-'__;_;;___
• Stock options and nmtd~~M.~~?...f:5?}.{f'!.~~-t!J}gually on sh<-::re basis. Therefore, lifJd6t"t1l<J{qhts utmzath:m of P!rm',<; grn~?J.!!Y]l.L~f-!~·icted stocl\
i
as P~~!~.::~!.;~g~::..?.!__Fwl!y Diluted S!:J~~!~ OutstantHt1g
I
Sh<1res AuthOrized
Options.,. Restri(~fect Stock
Outstandin
T f.'tow<? Pnce
22.5%
V'/Bddc-!1 & P.f!eH
Fit'$! Te-O:Oi2 S':?::~j
Company
!.c;gg fvi"asnn (1)
r,~&T
(~~)
Bank
.,
!_____,____________~.?.~.f~l~:?.\Y-0.M offt~i!:,rUnd/Wte>!J·Sh~_~§~.PY.;§!¥'~~~!.'2~.........~
I
Shares Authorlz.ed
0 tions + Restricted Stock Outstandlno
18_1.)'-:t::.
2G.2vl.;-
2.2.8. 0/:r
29.5";.,
17 .(}~··~
41.8'~"-
~i.4~fc.
~~'!.'J%
15.(~~·::-
28 1%
i ~; .9l~<~
16.2';<j
1 ~;.sr~fo
'19.~3~~.
: ..t3~·(,
17.9%
10.-tY.%
21.8;.;;::~
11.1%
i6.6%
9.0'%
Nwbcrgor Berman
9.5%
Regions (4}
15.9'}~
AG Edwards
13.8%
XL Capital
Ui%
7.9%
John Hancm:k
Ate Umiteti
li./'Y.,.
7.8%.
10.9':·<·
12.2:0
1o.cn:-.
·JJl%
11.0%
Jefft?rson Pilo1
MBIA(5l
10.7%
r.%1!on Financial
Pr.~1~· Group
fr:;1nklin
!3.3'}~
i2A''l~
6.8%
9.0'>"~
5.9%
w.n<.
f.h~::,otm::oc.
10.8':.'~
52'}~
45%
EvBresi. Re
Safeco
4.3~:.
Sou!h'fru<;t
OliJ Republic
Ndttonwfdw (5)
117%
MGIC
iO.'I%
25th P;3rcenme
iv1edian
________
11.2c>~
.;;;:;,.;,.:;_
10.H'%
_____
~l.8''l~
,_ .........................
5A%
11.7%
75t_t}_f.~~~!!.~---···· ..·· .. ·~~~----1.:.:f':::..l:.:-i):..·'":.:·l:':__ _ _ _ _ _ _ _ _ _;;c1:\£~!~...............~~~~ i)
..
Fi:;c;1l :"!'CO:~ fiata
(~!} 0f>1h~Hf; ouis;~;=:_nd·:ng
ct::.; ~ p\~l{'t:llt:E:.}i'; -:A cmuf:::d ~~har~)"s !.hJ not mflect r";;s!riGt?;,fJ :=:t<.lCi<.. i::]f:sr~t~; hc,·c~Jt!~:;.! ~k:la ~sn't ~\V~-'~trab!e.
\3} MCC!t!~/:~ au!nDilZC::d •n:":li.iries i6.t)M {lm!H Pjan) plus 5.C5M r2001 P!-~n) ft:~;:~ -l ~tv'i IDNf! f.. F~tJ~!r''.~(~:;).
~.1J int~tJ:dU~) or~h(}f::. ~F·;;:rHf~d h) H;::.;;:jn i',-1:..Hgi.ln f{~~~IJ8fl 8:~rip:t;y<~ ..~~;
(5) Fiestfi::tc~..: $~·\".~ch fnforma~:~;n. ~v~;!r-th:$ o~il}' icr ~QP ~l·_;.:c: 't;-.xr::ct~~f','~;f;-
25
9
·1'":,<:~___________ ••••••••••••• __
_ _ _ _ _...;c........c:
2002 Authorization & Outstanding At<vards
ax Restr~cted Share ·weight
__ , .......... ..
.....~~:-~!:~~eent;xg~ •ot• F(l!!y_Uii~H.~~~~~--~h§x~S?~st<indin 9.....
~
·------~~-£>fl'LC:~:!-~~~~ of FuHy Oilute-cl Shar<:s ~!:l.!~_tan~t-~fL ....
Options + Restricted Stock
Options +Restrict<;!;! Stock
Shares .il.uthorized
Company
Outstanding
Shares Authodzecl
'!8.13';~,
29.2'%
T Rov.:e Pritt:
············~~~,......,--.
11L''·i.,
Outstand!nq
:02.2%
2!3. 1"S
18.2'~;;.
14.5~1~
l<;fJG Mason (1) (2)
Lirv>~ln
Naiional
M&TBank
1'?.6%
1 L 1';'o
15.·1%
10.1%
11 .2~0:-.
17.9"l;
'10.0~1:-
11.1%
12.4%
21.1.no
10.9~"'
Ace Limited
11.0%
!>.mbat Flnnnci&l (5)
J(.i!1:n t1i!m:nck
XLCipit<ll
1(1.0%
11.0•;;,
Tordil·nnd< {5)
MFll/\ (5)
F ranktin
!D.J%
RG:~.;:;urces
Jeiiamon Plio!
PM1 Croup
Rildirlfl
7.9~!...:
Saieco
4.7%
8.7%
South.Tn.Js!
Natil..lilWi-d~·
13.2%
(S)
3.9%
MGIC
Old RBpublic
_______
....................•••9.-t~z'l
::..:..:..;.::._
10.0%
10.8%
'?Sth PCtC:111fl::e
Median
-~-~--~~~:f?§:___________________________ ~-~:...-~:...··. :.'..y:...=·~------:.
7t•!:l Ps•rwn1!~?~ ............... ~~>·~~~~~~~-i_S-'.._s_o;,.;..,._ __
~ 1)
ns1.:ai ~?003 U::-!tH
(:?) Op~:u(!~~ uut::.t;md:ing ,a~;.~~ pN!;entu[i~~ of dF~}h::d ~;~1at(=::~ tio nc:~ r~::HB·ct !·:-:.:~tnctt:c! ot~.o~:k gr;~rJ.i~ u;;-r';;.HI~(:
(~~! Mc!xiy·~; au:jwrr:):w: indud12:~ 1f:.fit•,~ ("!998 Pljn)f.•fv:> ~).fl!v\ (2Dn1 Pl~m) !(!~~ 4.5M (ON8
t·H lnc:ud-8-5 r;pt~.:-:.n~: ~F:'lrlh~d ·:c; ff:!<<~::
t5.J i:iesiliCW·:l
3-
diW) lsn't
antdatJ~e.
HE:Hr£;~:s),
lvk_,r~;dn l<t~~i~ii>n (.:mp:l(>Y•)~;~:.
:::~t,ck ~nfonn;.:tkJn :.w~ri~;;t;it~ on~y £.:.);
Wp
ti 1t'~
exen.}i:vt;s
JOFH"<JSON ASSOCIATES, lNC
)
MOODY'S
2002 Competitive Market Update and Projections
December 4, 2002
JOHNSON ASSOCIATES, INC.
19 West 44th Street, Suite 511, New York, New York 10036
(212) 221-7400 • Fax (212) 221-3191
Introduction
Johnson Associates was asked by Moody's to prepare a brief 2002 summary report on year-end
competitive positioning. The objective is to provide the Compensation Committee with an indication of
where Moody's target and actual total compensation for senior professionals will be positioned against
the competitive marketplace. In addition to assisting Moody's, Johnson Associates provides advice to a
number of direct comparators and other financial service firms across industry sectors.
Once again, the 2002 business environment impacts Moody's and select comparators very differently
than major investment and commercial banks, and asset management firms. In simple terms, strong
bond issuances and movement to fixed income investments has produced strong business results and
increased compensation. This is in stark contrast to firms specializing in equities, corporate finance or
commercial loans who face reduced compensation levels. Moreover, the year-end compensation
process in many investment and commercial banks will be unusually painful as a result of overstaffing
and guarantees, inflated employee expectations, and the impact of ongoing scandals.
We believe year-end 2002 presents a real opportunity for Moody's and similar firms to gain ground on
broader financial service firms both in terms of compensation positioning, but also employee retention
and attraction.
1.12002\Moody's\Updale and Projections.doc-ja-12/4102-5:40 PM
2
JOHNSON ASSOCIATES, INC.
Predicted 2002 Market Incentive Changes*
20%
,~,~--.----···············································································································································································································------····················
E
0
J::
~ -1 0% t.~@;~:;:;~:;:~~;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:::;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;:;
c
Ill
.c
@Financial Guarantor Group
0 Public Asset Management Firms
{)
mMajor Commercial Banks
'#
0 Investment Banking Firms
-30%
* Professionals and Executives
-- In addition to increases for direct comparators, many retail and mortgage oriented financial service firms have had
excellent years. While the hiring market is currently quite lirnited, senior credit/ risk positions are in high demand.
2002 Wall Street and Broader Compensation Environment
• Near term revenue outlook not promising
- Expected recovery now projected for second half of 2003
• Overall compensation outlook is down with significant variations between businesses
- High performers will still be "taken care of' in order to retain talent
- Broadly Wall Street fixed income departments expected to be flat or pay modestly increased
bonuses
• 2002-2003 EPS estimates continue to be reduced or moderated
- Compensation accruals are flexible and will be reduced to achieve earnings
- Compensation guarantees are still problem in some firms
- Continued use of stock options to moderate compensation decline
• Some firms are now reporting larger headcount reductions, but many have not made widespread
cuts. To date mostly division specific cuts, especially investment banking
- Companies are attempting to reduce headcount quietly other than through "layoffs"
- Severance including partial bonuses funded from compensation accruals
• Base salary increases expected to average 4.0o/o in New York City for major financial service firms
(range 3.5%-4.2°/o). Since many firms manage on a total compensation basis and with incentives
linked to results, net cost impact of base salary increases generally small
- Morale impact of base salary freezes has been quite negative
1:12002\Moody's\Updato and Pro]ecllons.doc-ja-12/4/02-5:40 PM
4
JOHNSON AssOCIATES, INC.
.__,
2002 Wall Street and Broader Compensation Environment
• Percentage of firm stock utilized across comparators for 2002 equity programs expected flat over
2001, and consistent with prior years
- Comparators annually utilize 1.4°/o - 3.0°/o of shares outstanding for stock options and restricted
stock. Major investment and select commercial banks often utilize 3o/o-5o/o+ annually for equity
awards. Moody's guideline of utilizing ::::2.5°/o of shares outstanding for stock options well within
comparator mainstream (see appendix)
- In addition, Moody's equity awards outstanding at end of 2001 year-end almost exactly at
comparator group median
1:\2002\Moody's\Update and Projecllons.doc-ja-12/4/02-5:40 PM
5
JOHNSON ASSOCIATES, INC.
Moody's 2002 Projected Market Position
• Moody's 2002 excellent business results will likely result in professionals and executives total
compensation at about 75th percentile of direct comparator market driven by above target bonus
awards. However, even with a disappointing year, comparable Wall Street positions continue to
provide greater compensation opportunities even if gap closed somewhat
- The restructuring of Moody's compensation program over the past two years increased target
incentives to market. In both 2001 and 2002, these changes produced more competitive
compensation
- Adjusted option awards for 2003 not likely to impact competitive positioning since reduction in
number of options awarded partially offset by increased stock price
- Proxy disclosure of comparators in early 2003 likely to show, on average, increased total
compensation of about 5-10o/o Moody's actual 2002 total compensation for senior executives
unlikely to draw undue attention (see appendix)
• Graphs and data on the next several pages show, we believe, a defensible position for Moody's
projected actual compensation this year assuming excellent financial results and continued business
progress
- Importantly, the Compensation Committee retains discretion on Moody's actual 2002 incentive
payouts by individual and across areas
1:12002\Moody's\Update and Projectlons.doc-ja-1214102-5:40 PM
6
JOHNSON ASSOCIATES, INC.
Senior Executive Team -John Rutherfurd Direct Reports
Moody's Total
Compensation
Projected
Target
2002*
2002 Market Total
Compensation
Executive
Market Match
Rutherfurd
CEO
$3,337,000
$4,130,772
$3,750,000
$4,500,000
Dering
CFO
$1,134,500
$1,460,350
$1,150,000
$1,500,000
McDaniel
#2 Executive/President
$2,178,850
$2,727,650
$2,400,000
$2,900,000
Woodham
Strategy/Technology
$1,901,000
$2,346,900
$1,000,000
$1,300,000
Murray
Human Resources
$1,106,600
$1,485,800
$800,000
$1,050,000
$11,802,188
$14,865,386
$11,400,000
$14,250,000
Totals:
Median
75th Percentile
Reflects base salary, March 2002 stock options, and cash bonus on projected 2002 financial results
1:\2002\Moody's\Updato and Projoellons.doc-ja-1214/02-5:40 PM
7
JOHNSON ASSOCIATES, INC.
SMDs Guarantor Market
140%
120%
1OM-& 2002 Market Total Compensation Level
"" Illustrates aggregate
100%0============~====~~=~======~~~====~~=~~~~-~~==~-~~-~~~--==========--=~~=«~ SMD total compensation
compared to Guarantor
market
80'%
60%
40%
20%
0%
2002 Target Total Compensation
2002 Forecast Total Compensation
8
9
TMDs
150%
Guarantor Market
Wall Street Market
* Illustrates aggregate TMD
(excluding Support) total
compensation compared to
market
125%
JOmt:, 2002 Market Total Compensation Level
100%
. . . . . . . . .,•,•,•,•,•,•,•,
····~··········
75%
50%
25%.
0%
10
Summary and Potential Directions
• As in 2001, Moody's comparators have improved business results versus other financial service
firms. In fact, results and corresponding incentive compensation expected to be above 2001 (i.e.,
+10°/o)
• 2002 compensation environment more favorable for Moody's than in recent years
-
Provides opportunity to improve market position somewhat with a favorable impact on employee
retention and attraction. First half of 2003 provides unusually good hiring environment
• Considering the 2002 difficulties, at many other firms this is a year where effective compensation
delivery and communication will be particularly appreciated
- Reinforce the positive aspects of Moody's employment
• 2002 target total compensation for executives and senior professionals almost exactly at market
median. Actual total compensation at;; 75th percentile driven by projected excellent bonus awards
-
Projected 2003 Moody's base salary increases averaging 4% in line with market levels. Reduction
in normal stock options per executive 8% to stay within 2.5o/o annual guideline offset by higher
stock price, netting slightly higher present value
=
- Target 2003 total compensation for executives and senior professionals increasing 3-4o/o vis-a-vis
2002 target appears sensible
- As always, Compensation Committee must insure 2003 business plan and goals provides
appropriate difficulty - neither unduly easy or stringent
1:12002\Moody's\Update and Proieetlons.doc-ja-1214/02·5:40 PM
11
JoHNSON AssociATES,
INc.
APPENDIX
1:12002\Moody's\Updato and Projeelions.doc-ja-12/4/02-5:40 PM
12
JOHNSON AssOCIATES, INC.
2001 Executive Compensation - CEO
Option
John Hancock
D'Aioaaandro, D. F.
lincoln Nallonal
Boscia, JA.
Mellon Financial
.t.lcGuin_'!,_~~G.
Amao.,ulh::___________:Rc::il:::l•,.,r•._.c,.o"'.
Brown, J.W.
MBIA
Prna, CEO
_ _ _ _ _ _ _ _ _ _ _ ___,_S1:.::,000=•.::00:.:0:___$~1,_,,6"'00
00,,ooo""----~5~0-~$2=,8~00~,0~0~0-~S1=5,396,333
coa,ceo
$330,000
COB, CEO
_ _ _ _ _ ...__$850,!100
COB, CE:.:O:___ _ _ _ _ _ _ _ _ _ __
__C()B. Pros. CEO
COB, CEO
$7,344,888
Pres, CEO
.:.A::::C=:E.=li::om"'ije=.:d=---------=D"'upe=rre:::•:.:•:::I~,_,B::.·_ __,C=OB and CEO of ACE limited
$875,000
$1,200,000
SO
_ -~·~75,000
$945,000
$1,814,400
$0
$2,759,400
$1,500,000
COB, CEO
S650.000
~~an
_____ O'H.11ru, B.M.
XLCa.pilal
MGIC
Culvor,C.S ..
-'M'-"&'--T-"B-"an.c.k~_ _ _ _ _ _ _ _ Wilmars,
R.G.
______ _!~_ughton, ~.R...
PMIGn>up
Fir!.t Temessel!l Nn2'1
S13,235,02_1_
__,S~75:.:0~,00~0_
so
$4,084,800
$7,630,633
$10,390,033
42%
73%
__,S:;:5,,5~78~,1.:.:2:.:5_ _~$~1,,37._,3~,1._,1_,_1_ _~S1:.::,552~,~~71:___~58~,5:.:04~,1~07:___~$~9,~25~4~,1:.:07:___~9:.:2~%:___
_$4~,861_
$6,194,860
~8,807,070
70%
COB, Pros. CEO
Pms.,CEO
_s2,19~----so~_ _s;:.;5:.:;,4:..-1.:..4,"'33"'3=--~s7~,6:.:3=9!::,3~41=--'""'7~1.:.:%~-
S2,4~,()()0 _ _$4_.~5_,3_33__ -------'S:.:O:___
so
$3,058,108
$2,338,833
$0
S999,135
$3,335,968
~.392,074
$930,000
so
S1,550,000
$3,849,500
S413,335
$0
$4,062,835
S5,612,835
so
so
S850,000
$2,673,901
so
S1,950,000
S_4,623,901
S5,473_.9_01
... S6!!_~--~$:=:900=,4:.:50~-
.:..R:::•9'o:·o=n:::•.:..F"'in:::•na=·•:...l_ _ _ _ _ _ Jo_!!aa, C.E. Jr.
$5,560,333
$0
$1,400,000
S62D.~_
Jurgenaen, W.G.
$3,545,833
_$0___ S2,6_12._41_0_______$l,7_40,79J ______ $0 . _.
CEO
Ambac Financi:el
Nationwide Financial
$0
_ _$b_8_"18,867_ _ $4,8~._1~5_ _ $1,341,5_18_ _ S9"',0:.:3:.:9,,350::.:.__:-.$1,_.1.!..:,1_,_14:.::,3:.:5:-:0____,8._,1.:.:%'----
---~S::9~25~,00~B~_:S~1~,300~,000~~---SO _ _,S2=,'-"U~5:.c,OO~B._----'S"'3"',2~19~,3~33
$1.000,000
Malone, W.O.
_S~1~,852=·~54~9_ _ _ _~SD~~S~1~7~,24,8,882._~S'-'19'",84=8,"-88~2~_~8~7%~_
$5_,_58__D,:!_l3_ _ _ -- __$0- -
_ _ _ _ _ _ _ __cS07._;::;90:.:;,9._,7;:.2_ _ $1,389,~----~SD::..__~S,2,.:.:1B:.:D,,2:::07'---_S::3o:,2:.:48"-',2::.:4:.:8_ _.::S1.:.c,5:..:7.:c7•c::12::.:4'----~$90=5,2,3:..:7_ __:5:.:5,_,,7.=:30:c,809=--=$'-'7'::.:91:.:0!::,8.:.:16:___.:c72:.:%.:__
Evon>al Ro
SoulhTrusl
p,674,688
. $2,100,000 _ _ __,;S0=--~$2=,9=.:50:.:;,0:.:0~0_ _,S"'5"',3"'33:.c,54=7_ _ _ ___,SD~-~$3:.c,1.:.:22=,8;::;33=---"S8::.:,4..::56=,380=---'S'-'1-"1''-'406=,3:.:8=.0_ _7'-'4'-'%'--
$1,112,410
McGavicl<, M.S.
$0
_$7~0~,0:.:0~0_ _ _ _~SD~---=-$0~_
Jotleraon Pilol
Safeco
Rosl
$750,000
$871,875
$1,000,000
52%
72'!>
84%
--------
so
$1,575,450
$2,738,950
S928,626
$0
S3,887,586
$5,243,038
70'!>
-~
$1,621,875
$1,906,000
$1,532,500
$0
$3,438,500
S5,060,375
66%
$1,000,000
so
$2,000,000
$2,000,000
S988,910
$0
$2,988,910
$4,988,910
60%
$532,697
$566,983
SO
S1,099,680
S1,447,000
$707,542
$0
S2,154,542
S3,254,222
66%
COB, Pros, CE0.___ _ _ _ _ _ _ _ _ _ _ _ _ _.-::34:::5:.:5,_,,7~70
$500,000
$0
S955,770
S2,210,310
SO
$0
~~,2_10,:1_~0
$3,166,080
70%
$0
$1,569,821
--'p~"'"'""'"'-'C:.:E:.:Oc..__ _ _ _ _ _ _ _ _ _ _ _ _ _ _
COB, CEO
_ _ _ _ _ _ _ _ _ __,$62=5,,000=_ _.::$:!:944=,62=1_ _ _
_ _ __::Hom=•.:cRc..·---~C:=OI!, CEO
.:::S8:::6-"1,.::12~2_
_S,-'1-",4=39"',2:::50=..._ _ _ -~ _____o.$0"---"$-"1'"-43;:.;9:.c,2:.:5~D_ _,$=3!::,00=.:9:.c,D:.:7.:..1_ _..::48'-'%=--
_:S1,076,4:::03:=__ _ _S::::O:.__S"-'1"',9:.:3'-'7,5=:2:::5_ _~$:.:.776=,3~87:.__ _ ___,SO:=__ _ ___,Sc:.O_ __::S.:.:77c::B,,3"'87:.__=:$2,713,912 _...c2=:9:.::%:._
Waddaii&Rood
Tuckar, KA.
COB, CEO
__ $800,016
SO
$0
$800,016
$1,784,000
$0
SO
S1,784,000
$2,584,016
69%
Old Republic
Zucaro, A.C.
Pros, CEO
$812,204
$443,960
$0
S1,056,1~
_ ___!1.4_35,73_3
$0
so
S1,435,733
S2,491,897
58%
COB, Pros, CEO_ _ _ _ _ _ _ _ _ _ _ _ _ __
$800,000
$400,000
SO
__ _.sgC)O.~--- _!!,,2_73_,~33
SO
---'S:::D_ __,S'-'-1''--=273,333
S2,473,333
51%
_$6_!)0,015
$0
$1,600,015
so
S1,7oo.ooo
so
s2,ooo,ooo
so ______ __$11 _ _ .
s2,ooo,ooo
0%
Ton:tunarl<
... _tjudsan, C.B.
Neuberger Ba~n
Lana, J.B.
T.Rowo Prico
Ra~o,G!c~-~C~O~B~._,_Pro~s~------------------
Rcymoncl James
CEc:).._Pro.=•----------------~51:,:,00='!·.~0- _
-~J:.:•:.:me=s.__,T::c.Ao:.·_ _ COB. CEO
s3oo.ooo
$533,314
so
so
$254,750_~$~1,~10:.:0~,0"-1.:_4_-=S38B==~·7.:..40~---"'S~1,~72:::3~,5:.:04~-----'S:::D_____,S._,18:::7~.~~--------=SO=-._
$472,830
51,233,544
SO
$1,708,374
SO
S107,514
SO
S533,314
so
_.::S.:..18:.:7~,4:;:82~---"S~1,~91.::0~,9:.:8.=6____1.::0"-%~S~07,514
S1,813,888
6%
(1) Option Value= (number of options) x (exercise price) x (113)
1:12002\Moodys\Charts email 12-02-04Appendix Pg 1-5 HiS
1
JOHNSON ASSOCIATES, INC.
2001 Executive Compensation- Second Highest Paid
John Hancock
_Bell, M.A.
Mellon Financial
Sr. EVP
S115,385
. $1,422,000
-=E~IU~o~~S~.G~---~S"'VCOB
S841,867
-~586,000
Haldeman, C.E.
Pros, CEO· Lincoln Nat lnv. & Del. Mgt.
ACELim~od
Frederico, D_,J.
Pres. and COO ol ACE Umll<ld, COB of ACE_IN,~A_ _ _ _ _~S6:::00=,4~27:.__
_ __,D,un~!on,=G=.C:..__ _ Prea.
MBIA
.;.F.:;ra::.:n:=kli"'.n-'-R"'••~o=u==•'--------Fianagan, ~~~·
Nationwida Financial
$800,000
Pres. Member- Office of the Pra_a
S57~.~
Lusardi, R.!!:.._ _
EVP, CEO of Fin. Producla and Services
$550,000
Banlon, J.W.
COB, Pres, CEO· Bank _
$650,000
_ ~Ge~ader, R.J.
Pres,COO
~
---~M-"o"'-'IJ'I,n, A.B.Jr.
SBOO.OOO
SB25,000
_ __.S~O:.__.;o.S.._,1,~18~3C!'!,3!!:78~-.!.S~3.~07,_..5'!':,0~00~_ _ S1.Q84,025
SO
54,159,025
$5,342,403
SO
$3,361,1_18
$180,000
$2,584,928
$3,779,928
$Z,482,0S3 ..
_,S~3,'-'41_,_,9,,2~8J,__-'7::.3%"--
$0
$2,380,700
$3,380,700
s~,~7,50_.,35::__-"S3oc,1_,_,000
5,c::03,.,5c__
S964,769____,$"-'1,:::07:.:8:e:.2=.61,___ _,S:::2:e:.28:::2:.e,8:.:3.:_7_
$1,195,000
S2,404,928
___,So..:1:c:,Oc..77:..c,9::3:=.3_ _.::.S1:.:.,4'-'04'-"'"'150~-------'$0
$1,600.000_
so
S500,000
S130.000
S1,370,000
S1,512,203
$0
$780,700
$0
$326,867
S3,101,871
11%
- -· . __!!l___S946,1_~ _!1,766,248
so
so
$1,788,246
$2,714,402
65%
so
$1,191,250
$2,691,250 ~. ~~~--
so
S1,800,IJ0'1..... _
S1,500,000 _...,::S.;.,1,c,;19o..:1c.:.2:::50=-----~SO-__
~---.!Cso~_.;o.S.._,1,9:'!oo=.ooo~-- SBS5.333
so
so
$800,000
$1,784,000
SO
_ _ _S_I) -~SB=6::5~,33~3____,S2=·:::5:::85~,3=3:=.3_ _ 27%
$0
so
S1,784.~
S2,584,000
69%
$2,471,50_1
86%
$2,203,333
58%
$425,212
so
$850,212
S1,345.265
$278,023
so
$250,000
so
S930,000
S1,273,333
$0
$0
$1,273,333
sareco
Talbol. R.:':!:_ .
Pres. LWe & lnve.~tmonts
---'S4=n-".soo='----'s,.,s,_,99~·~034""-
so
5457,940
s1,014,380
so
1313,114
PMIGroup
_Smith,L.S.
Dir, Pres, COO
$281,750
-'!S1~,4~38~·~009~_ _ _-'!:so~_ S1,897,759
$1,075,524
SO
S1,374,330
_ _ _ _ _ _ _ _ ___,S370,000
$505,000
so
$675,000
Glasa. J.K
Pres, COO
$556,235
S454,676 _
Nou~~m•n _ _ _
Matza, R.. _ _ _..o:Ec:V'-P'-'C=:OO:::_
,
S500,000
S~D_0,022
Everest Ro
MGIC
A.G. Edwards
____ Gel~r.'-'T-".J:.:_._ _:P.:.~:::c•• COO
S1,076,..$.,34,___ __,S3"'00=,1~9o~_ _,.,S2:.:56"'.~250=~
S29B,806
First Tennel!lsee Nafl
67%
so
$425,000
SVP
70%
----
so
$680,000
Gre=•:::n:::•c:·M:::."'A::..._ _,_E\!P: COB of RJFS
-
S2_83,335
Pros., COO
__ Simpson, W.A.
68%
$328,667
. $2,775,004
COB, Pres, CEO- Unrted Am&ncen, Globe and American lncom
Raymond J~~-~
-'$~4<!:,3:!:25:::.6:::6:.:.7_ _7:.:8:.::%:..__
52%
McAndrew, M.S.
Old Republic
76%
S1,!35,033
Torchrna:1<
_ Kasmar, R.J.
75%
S5,52:-c3,_,4"300
8 _ ___,8o::9%-'=--
51,673,438
S1,621,269
Ro<fjan
54%
54.923,438
S446,15_o4
5600,000
___.:!S~3,'-'-!40~2~,2"!50~
17,722,,..,97,_,6,___ _,84::_%:.:..__
17,202,742
S1,750,000
so
------~S300,000
~.493,309
$1,500,000
$0
Pres. ChiCif_lnves_lmcnl Officer
$950,636
SB.319,677
SO
$862,203
$3,871,540
$4,719,250
$2,500,000
Undisclosed _ _ _ _ _ __
KeMody,_J.:..A.C,,~_,M,o=--~
___ --~- Henmann, H.J.
Weddell & Rood
SO
11,1J71,133
S2,174,o.,o::.o-----=:so::.__..cS~1"',7-'4"'9,""1&:..:7_ __,s3,923,167
82%
SO
$275,004
M&T B~--~~~-.
R_egiona Financial
so
S5,970,833 _ _ _$"8"-00"',2::.:84:..;__ _S2=05"-',600=-----=SB""'"-77"'6"",7-'-17'---~18=,314,102
S1,311,000
· - - - - ~~. ___$637.500
·- ~ri_!!I<~~~.W, ___ SrEVP
T.Rowe Prica _ _ __
S1,600:,::•4!!27_
$44=0~,000=--~S497=·~200~_ _ _.:!SO"......._ $937,200
Southlrus1
Ambac Financial
SO
VCOB, CFO, Grp Head· Fin. & Credit
XL Capitlll
_l,!g~~·on.
S800,000
_ _,S.:_71:.:8,._,,2,89,___..cS2=46:o:,500=-- _$~
Mielwsh, K.,_.,C::..._ ___:Vi:.::•ce=Cnairman, EVP 1o Nov 2001
!:Ams=o:::uth"'-'-----------'G=ib~. S.D.
_ _ _s_o_ _ s1._229,867
_ _ _ _ _ _ __,S:.:_76:::3:.e,3:..:7.::.8_ __,S4"'00,000
--------=G::•~·~~'·~J=.J.:..·_ _P~s.COO~-----------
Jefferson Pilot
S1,537,385
_,S2=,4~7::,9.~57~5:.__ ___,s~o~_:!'s3,....279,575
Lincoln National
$600,000
so
_ ~2_11~625
$292,4&9
S2.010,673
- __111~-
SB05,700 -----"SO::__ _ _--'CSO,__ __,SB0=5·.:.:70::0c___,Sc:1,9_BD,D30
31%
$729,220
__C!so~_...!S~1~,o~1o~,9~1~1_ __.S44!:!:!2~.,-::34~o_
so
$0
$729,220
$1,604,2211__
45%
so
so
5442,349
$1,453,2eo
30%
. ~3.30:::5_ _ _ __,S:::O_ __,S~33~3~,30~5::....._:!-'$1,~J.~,327
25%
S1,000,1J2~
SO
$415,38~5.___-'!S~38~5"'=,000~_ _ _-'!S:::D_ __-'!'S780,385
$528,110
SO
SO
$526,110
SO
__ go90.9~1::.4_ __:4:.:9-"'%'--
$1,306,495 -· ~
$287.697
S222,488
$0
S510,165
5462,333
$277,530
so.
S759,663
S1,270,()41! -~-'6"'0%-"'-
_ ~ _I~BQ.bJ,.:.:R::::.L=.__ _..::V.::C.::O=.B: E\,IP. Oir. Of Branch Dl_v. Q!.!_kg'-'C,o,_._ _ _ _ _ ___,$26=1,630
__$853,877
so
$1,115,507
so
$107,~
so
$107,514
$1,223,021
----'~==""~r,_,,J~.M~.'---~EVP.CFO
9%
{1) OptiOn Value =(number ot oplions) x (exercise price) x (ii3)
1:\2002\Moodys\Charts email 12.{)2-04Appendix Pg 1-5 Hi5
2
JOHNSON 'AssOCIATES, INC.
2001 Executive Compensation- Third Highest Paid
John Hancock
Molonoy, T.E.
CFO,Sr.EVP
$516,346
_G::;;I::;;as:.:s'-',0"'.'-'R'--.----'-P"'re~s,'-'Eo.cVP~&'--T'-'re=asurer to Nov 2001
Jollereon '-'Pi.,.to._t_ _ __
$672,000
S1, 1~.346 _ _,S:::5,,3,.,29:.o:,5:.:00=----"'-'S900=.,.,038:::
so
so,___""S""1,"'o35=,096=---'S"'2.""482=,5'-'1"'3_ _ _ _.....-cso,_
$172.500
SO
_ _ _ _ _ _ __,_S5"'1"'o"'.o"'96,___S525,ooo
$6,229,536
$7,417,884
84%
- _$2,6::;;5:.:5o..:,0.:.13=---"$"'3,"'690=,1:.::0"-9_ _7:.:2:.c%,___
Franklin Resources
Johnson, (;.E.
Pres, Member- Office ollllo Pres
$780,,.:.:13:.:2'--_..:.S4:.cOO=,OOO=----~SO
$1,180,132
S2,501,54!
SO
Uncoln National
Vaughan. R.C-' _
EVP.CFO
$515,000
$0
$1,181,171
S1,536,293
so
MBIA
Budnick. N.G.
Vice Pres., CFO
so
S855,ooo
5803,250
$675,000
S900,DDD
$2.378.250
$3,233,250
74%
.. $1,333.333
$380,350
$0
S1.713,683
$2,813,683
61%
$878,000
$878,000
so
$1,756,000
$2,776,834
63%
.:.:X=.L.=C::!ap:::ils::;;t_ _ _ _ _ _ _ ____,Brown Jr.. N.M.
_ _ _ ___,S,52,5,.ooo=_ _S,3:::30,,ooo=---
EVP, CEO of lnourancc Operations
_$6_50,000
-----=S=ch:::mc::•:::tzried:;:.t. G:!:.._~~ and CEO of ACE Euro110 and ACE Global Mkls
ACE Limited
----·---
11666.)71
Amsou!h _ _ _ __
Stephenson, E.W.
SrEVP; Grp Head- Regional Bkg
_!Attllan FimmciaL_
O'Hanley, R.P.
VCOB
_
"-$450=·~oooo=...._ _ _.=.so,_ __,_S1'"'",1'"'oo"'.'-'-oo'"'o'--
$1,020,834
S4oo,ooo
S376.ooo
_so
_ _ _ _ _ _ _ _Soc500=.ooo=---"S960.ooo
so
$1,460,000
$293,267
so
$1,700,000
S514,000 _ _ _:.._S:::D'------'SO:.::..__:.._S:::5c..14'-',000=_ _ S2,214,000 _
$776,000._ __.S7=65:"'9:::0.:.0_ _~S9:::5::.:7•=:37:.::5:..__ _ __,S:::...O
MD~------------
$300,000
S1,400,000
S240,ooo
S1.440,ooo _ _ ____,.s~o=--_.:.S1:..:,e=8o,oo~----~~~~?
Pinto, M.P: ___ _§y.f~_CFO_of I\I,\!_B811k Corporation & M&T Bank
_R!gions Flna~cial __ -------'-'-Ho"'raley. R.D.
Ambac Financial
_ __,Bi::;;.Y:.::o=na, F.J.
S3,681_.671!_ _ __::66=.:%::.__
so
SVP
------- -- --
$2,501,547
__,S2=,4=.:37"',4:.:60:::..__-"$"'-3,6:::1:.=8.::,6:::31:..__=67%
$500,000
_Logo Mason
M&TBank
S901,16,_,7_
$520,834_-
.:.T."-R~owe=P'-'n'-'·ce"-----------'-'R"l''lolds. W.T.
_ _ __::M:::u::.::I"')'_,_TJ': .. _
so
V-Chair, ExecFinanciaiOfflccr ______
_ _ _CFO. VCOB, Fin & lnv Grp
__ EVP ___ . _______ _
$400,545
$142,898
S174,200
so
_S828,_1_54___S1,438,7QL___ _ _ _ _s_o__ _
$1,723,275
$2,499,275
$838,710
$2,296,710
...:SO=.._.-::S:::50:..:1.e:,06::::7_
~3_%_ _
___,S2,,".181,067
23%
so
S1,436,702
s~.062,656
70%
so
S1,373,195
$2,035,695
67%
S357,000
$375,388
so
_S732,388
S782,400
_S310,000
S352,500
so
$662,500
S1,216,500
so
$500,000
$1,239,880 ________,S:.:O_ _ _ _ _~SD:_
84%
S156,895
~~-~~~----·
Hechler. R.L
Torchmarl<
Bnll, T.G.
EVP,CAO
$549,000 ___ )_gli.OOO_ _ _ -~=-O__..:.S:o:c67:.:5,~0 _
S891,333
so
so
$891,333
S1,566,333
57%
Radan
Quint, C.R.
EVP,CFO
$300,000
S250,125
so
S550,125
$674,977
S247,617
so
S922,595
$1,472,720
63%
Firs.t Tonnossoa .~N"'at-'-'1_ _ __
Kelley. J.C. Jccr·c___S::;;rE=VP'----
$501,945
S501,945
so
S1 ,003,890_
$338,115
so
so
S33_8,115
S1,342,005
25%
Neuberv!~r
$500.000
$500,022
$0
S1,000,022
so
_.::S""33:.:3-",3c=-05'--___-_S1 ,:3_33,327
25%
S368.333
s~ ~~oa
______s"o'----$4=82,_,.6"'4"-1
. _S1~1.933
$256,538
S199,472
Sun_dman, P. E.
EVP
Safeco
Ruddy.J.W.
SVP. General Counsel
MGIC
Pienchalski, L.J.
EVP-RISk Manall"mon_t
Raymond James
Putnam, J.S.
EVP; Pres and COO of RJFS
PMIGroup
Seaman. C.J.
&oo!hTru~s~t
_______________ _ Sch'!'idt, E.F.
Borman
----
--~~~-----'so=-
--------
-
so
_ _S:::1"-7o,.ooo=---"S"'662=.5,so,___
S456,010
_,s"'13,,44=8- s1 ,046,008
S482,333
$20,625..__
_S::.:3:::c33,.30=5_ _ _ __,SO:::.___
_$1,239,880
$1,739,880 _____ !1.~--
$153.750
.. ~83,397
$719,081
$1.201,722
S248,820
so
$731,153
S1.187,183
82%
__:S:::1'-"16,_,7,_,4c:,O_ _ _ __,SO,__----"S"-'13::.7..:,365=._ _$1,183,373
12%
Pras of lnter'land Slrll_l_e~i:::.c-"ln:::.ve::.:stm=e"'n"'ts'-------
$300,000
- _$365,000
$0
$665,000
~~8,940
SO._ _ _ _...:S:::D'----'$4=98"',940'-"'----'S-"1..:.:16:::3.e:,94.:.:0:._
Division Pres- Bank
$285,000
S284,272
so
S569,272
S33:3_,_833
so
S2D7,228
$541,061
S1,110,333
43%
. _49~----
Nationwide Financial
Karas, R.A.
SVP, Salas & Flnanci~I_Sel'licee
S38&,539
_S140,700
so
S527,239
$171,514
S399,656
SO
A.G. Edwords
Edwards, B.F.IV
VCOB; EVP, Dir. OfSalos& Ml<tg Div. OfBkgCo.
S226,640
Si75,_139
$0
S1,001,979
$83,326
so
so
$83,326
$1,085,305
8%
Old Republic
Boone, C.S.
SlfP_ & L~:::•:::su,_re,r_ _ _ _ _ _ _ __
so
$639,163
$119,644
so
so
$119,644
$758,807
16%
Everaa1Re
Umauro, S.L.
EVP, CFO. Comptrollor
so
$1~~.0_40._ __.$6=33:.!:,5,_,7:;.9_
. _$413,668
$225,275
$241,539
S200.000
-~0 _____.~~4~1,5:::3:::9_____.S:::1~92"',04~Dc__________,$0~-----
_ S57!.17_0 _...:S:::1:o.:,0,98::..,4::.:D::o9_
____,5:::2c::%'---
_.::30%=--
(1) Option Value= (number of opilons) x (exercise price) x (1i3)
1:12002\Moodys\Chans emaii12-02-04Appendix Pg 1-5 HIS
3
JOHNSON ASSOCIATES, INC.
2001 Executive Compensation - Fourth Executive
Base
John Hancock - - - - - - - Ford, M.R.
Annual
Banua
Poaltlan
-'!S::::50~o,,OO::::O,___
EVP
PrM, Member- omcc of the ~~~~
Franklin Resources_
Johnson. C.E.
Lincoln National
Slcll_s_~d,J,_.J_._ _~f>. CEO lincdn Ratiramon1 & Lincoln Nan Lifo Insurance _ __,S4=25"',ooo=---'S"'721.833
-------'WeiU, R.L
MBIA
_ _ _ _ _ _ _ _ S780, 128
__:o$~0----!$~1,~060,000
_.:S!-'56,0=,000
S4oo,ooo
Vice Pres.
$252,000
$330,000
SO
SO
EVP, CFO, Treasurer
$344,102
$450,000
Moonay, B.E.
SrEVP; Grp Head- Regional Bkg
$345.000
$369,1~ _ _ _ _$_0 _
Mellon Financial
Cantur,S.E.
VCOB
$450,000
$825,000
_ _ _ _ _d:::e:..:S:::I.'-'P..:a,..er, J.
_l.egg Mason
AmbacFinonoial
_!ICE
Li_l!l_il!~_
__
T.RowePrico
S0.__-"$1~,8!'.1~4,,000=---"$2!!·::::60"'8!.!,1~02.__ _.7'-"0%
S1.723,27~5_
__,S,2"',4=.37"-,4::.:2:::5_ _:._71:.:%o__
$0
51,275,000
$344,430
$167,063
$670,028
S2,145._c.D:::2:::8_ _4c:,1:..:%"---
$1,812,50:::0.__--"'S3:::2:::6"',8::::67.__~S166,000
SO
$492,887
$2,105,387
23%
_ __,s,_o_ _ _ _ _so=---=$1,436,702
52,039,364
70%
$2,034,0_36
67%
S~
$602,692
Boyle, D.L.
VCOB,_P_2rtlolio M~roup
1330.000
$337,500
SO
S88007'-',5"'00~-~S~1~).~16~.5~0~0_ ___.$150.036
SO
$1,356,536
Marshlll_l. C0Z.
Exuc A8sisl2nt to COB,_S~fo9ic Initiatives, ACE
_ _ S554.500
$400,()(1()
SO______ $954,500
_,-S4.:.;8:::2'-=,900~
SO
S1,08,_,8,'"'23:::3.__S:::20!:,0:::22~,..:;73:::3.__..:53"%~
MGIC
Macleod,J.S.
_VCOf!. ___
M~ ____
_ _ _c.,Ka=""'cc rck, M.
---·--------
$30D_plti___!!.B10.000__
CE()_·-~Lbc!.IIY.~
Ull.IC
SO
$1,436,702
$585,,,33:::3c____
_$2,000,000
$320.000
S334,4~- _ _ _ _
so__
$654,404
$428,377
5150,000 _
S576,377
__ - -.. --~11,11-48
$138,0~0...
EVP; CFO 1!. Treasurer llinco ~ov 2001, Pras.2_f JolletSOn·Pilot
COB, Pros,
SO
____
so_ _ _ $535,048
SO
SO
.
S138,000
S1 ,088,338
$1,884,71~
---"6"-5%"'---
$0
$0
~~~1,333
$1,426,381
az%
S99,961
~1,274,900
S99,981 ~---~SO~~
S1, 175,029
SO
EVP-FicldOperutians
$251.077
S228,748
$0
$479,825
$482,333
---~-~--""S343,918
S272, 138
SO
$818,05._:4_ __:S:::30058,,-"1D:::O:____ __:S,._,1..:.35,._,,86=3
Raymond James
Riess, R.K.
_ _ _ _:5285.000
Divlllion Prea • Ba=n::.k_ __
S277,18_0_ _ _ ~_
. . _____S3DD.OOQ ___ S213,483
EVP; Pros and CEO or Eagle; MD, Asset Mgt
S187,500
Corp. VP; Dlr. Of Marl<ot Analyo.,_.is:_o,_,fB=.:k,.,g. =C:.::o:__._ _ _ __
$203,_..13"'0:____~S~71!.!1~.2;!_77.____
Sufooo
P_iurson, R.A.
SVP, CFO
Nationwide Fln;ncla1
Th111sher, M.R.
SVP, Finance._ _ _ _ __
PMIG""'p
Bacigalupi. V.J.
EVP, Soc and General Counsul
First Tonna9Seo ~~!~
Thomas. E.L. Jr.
CFO,EV~P
LeRoy, 5.111
SVP & General Counsel
Bennett, P.J.
SVP;_ !liD, CEO- Bermuda Re
_____________
$738,510
_ _.=s32=5·!::ooo~_ _.s_72,117
S293.269
$181,223
$333,833
SO
$207,228
$570,818
SO
SO
$928,010
$22,344
so
$914,407
$0
S107.514
so
S136,45o
$115,313
S346.105
s1~?c:·588=----'S"'3"'99"',s:;;:56=--~
_ _ _ _.....z:$27().000
S200,000
$0
S580,000
$402,900
S2B7,osa
so
1584,198 _
S154,056=--------=so
$80,000
SO
$0
_ __,S,;BO,a,_,,7.=26,___~$2~2:4,333
S339,615
S80,017
$493,963
so
so
so
so..__
$1,110,017
8%
_
_5~
45%
S541,..,,08,_1.___:S~1"-',1"'D3"',2::4:..:.1_ _4=9%
S570,818
$89=,383=_ _ _ __,_.SD=--~$1'-"-'11,7D7
so
_ _ _ _ _ ___.,S317,09a
_ _ _ _ _ _ _ $259.615
$0
$562,180
--~so~_..,.:!:$3~9:!,7·:!..11'.!7_
_.=S3:::3::::0,,;,:40:::8:____ _,S,_,_I7,_,8,,3,_,_18,__
_ _ _.....=S-=-0~--'$6:=..:;43"',5:::56:=...._$1,123,381
__ __!0:____ _.:5:::5'-"13_.,,4,_.6,3_
S134,ooo..,__ _ __,so,___~S427,2B9
0%
_SO
SO
Sundoo_!l, J.E. Jr~----~1!1'.· CFO, Treasurer __________ .
$2,000,000
SL32~.,soo""--~SI:_c,9,_,7_:4,,..,904=-_-"087%_
$89_1.333
$425,029
Coloy, T.H.
SO
S950.338
S750,000
Pres. of Enhanoo Fin. Svcs Gp
_ _ _ _S~----~-.SO
S7~"~-~~-~S~5~58.100.. _
EVP, CIO
South Trust
------'G=otdman, A.E.
Li~
Regional Pro_sidont
Wadduii&Roed
EvurastRe
64%
. 8()%
__
so
__FioiSChauur,_J_.I_. Jr.
_____________
$2,960,250
$325,000
Kaaoen,
~dRo~~i~c
$2,378.250
88%
$1,372,500
Nouba'IIOr !!!'!""!!...____
A.G. Edwards
$3,165,746
5277.692
ll'!~ar.A.L.
_
$900,000
$2,018,913
$240,000
Torchlllilrl<
Radian
$675,000
S765,900._ ___,S:::95.::;7,_.,3::::7c.=5_ _ _ ___,SO
$358,53~
78%
so.__.::;s2,,4-"7'-=5,,2.::;oo=---"s3,,&::::5:::5:r:,3=2B"'----
_ __,s.,o'----"S7:.:4:::3:r:,5:=00=-
S794.1.,02.__ ___,s,soo=,0~00,___--"$1~!)!'.1~4,,00"'0~
$714,150
14,821,517
EVP & ceo of M&T Bank corporation & M&T Bank
-~~--~-Stone, T.M.
Jefferson Pilot
--"S5,8,2,,0::::00:__ __,$80=3:.!,2:=50~
$3,781,517
SrEVP _ _ _ _
Riupa,J.S.
Regions Flnancl_!l_ _
SO
Pelt. J.l.
------'S"'Ch""eve, T.C.
M&TBank
$195,924
s1. 1eo. 1.,2e,___~S2!!·:::47~5~,2~oo,___ _ _ _~so
so
_ ___!$!'.0_ __...!$~1!.!,1~45~,8~3~3----'$1.275.413
Amsouth
XLC:..jlital
$3,565,593
S1,064,261
53%
$1,037,71"-7----'1-'-1%:=....._
S107,514
$1,021,921
11%
ss97,888
s994,985
eO%
_ s567,_,,2'!2~2_ ___,s::::964=,4,_91:......._..:5:..:7%::...._
$402,990
__,_s1,_,54"''"'o56~_
SO
SO
$224,333
so
so
$80,017
$962,990
42%
_,s,_,_738=,2_.,52,_.___ 21%
__ S73J,0~59,___ _,3_,_,1%,___
$419,632
19%
(f) OptiOn Value" (number ol opifons) x (exercise price) x (113)
JOHNSON ASSOCIATES, INC.
1:12002\Moodys\Cha:ts email 12-Q2.Q4Appendix Pg 1-5 HiS
4
2001 Executive Compensation - Fifth Executive
Baso
Annual
Rest
Slock
Bonus
John Hancock
Budd,~W.:..:.A:.:·c__ _;:EVP"-'-',..::G:::e:::ne"ra'"I..::C:.-oD::.:un..,s:--ol
$500,000
$480,000
so
$980,000
$3,256,917
$4,625,301
79%
Franklin Rasoureea
Gula, A.J. Jr,
$655,393
$200,000
$0
SB55,393
S1.~0.2_00
$1,880.2011
S2,735.593
69%
$429,800
so
S894,80D_
S1,101"',4"'9J,.__ _ _ _.,so'-----'56=51,_,1:..:6::.7_ __,s:.:1_,_,,7""52,_,.660=
S2.847,460
66%
__ S_!,!_~~fl<l-
$2,558,250
67%
_,s._,765=,9,aoco_ __:;::S95=7."'37'-"5'-------'so"'----'S:.:1,_,72:.:3o:,2::.75,____s2.401,325
72%
Pros, M<l."'ber ·Office ollh::o•:.:P..:.'":.:•:......._ _ _ __
Uncoln Naliona"-1_ _ _ __
Hunlor,_J.D,_._ _......::EV=P'-'.Go=no:-:•:::•:..:1C:.:D:.:u:::n&,_e:__l
$465.000
MBIA
CaoueHe, J.B.
$525.000
Amwu~!h~------
Mayer, W.C.
XL Capllal
Greelham, C.V.
~~
VICBPres.
$323,050
$0
$678,050
EVP,CIO
$345,000
$630,000
$0
$975,000
Res~ucomm.
Bkg
T.RowePrico
Testa. M.D.
VCOB
_S300,ooo
ACEUmiled
Kramer, D.
VC08-ACE Limited
$530,422
s400,ooo
LeggMsson
HimeWarb, R.J.
SrEV~P~--- - - - - - - - -
$245,004
$1,350,000
Rogio~~_Financial
Mlller,P.D.
Regionat President_
$310,000
Jefferson Piiol
Hopkins, J.[). _ _ ~'!"-&_~~era! C<lunoel
Mellon Financial
- --
_ L.amoro. D.F.
Schneider,
TorchmoEt_ _ _ _ _ _ _ _ _ _
~o!eman,
- - - - - --~0_!!,0~-
VCOB
$345,000
H:l-: ___EV_P__ _
G.L.
___~~:-~~!. General Counsel
$1.(166.667
so
$900,000
__ SJ04_,2~Q__ _
$1,700~ __ _!0_ _E.9!?2·~-----·___1Q__ - - - . ~
.,so.___--""S9,_3,o,"'42:.:2'----'s"'56:::5,_,,3:.:3::...3 _ __,54:.:8"'2.:::900,__ _ _ _
___:S:.:0_ ___:$:..:1-"',5=95"-',004=---"$=163,433
5286_....009~----"-So,____
~~5.ooo
_~ ~0 _ _
_S888,J50
5215,467
so
$454.000
S794,000
so
so
$470,000
$489,113
S144.320
__,s..
o_ __,s:.:ss8,109
$333,833
so
~~~~~!_!"1_-S_.
$250.000
S220,000
Eubank&. R.G.
Division Pros· Bank __________
5285.000_
$273,109
MG!C
Lano,_J.H.
SVP. Ganaral Coun1el
$217,692
S178,147
s 150,000
$0
__ _ _ $!_ ___ __:S:.:2:.::,000=,0:.:0.::.0_ _.:::0%:.:....._
so
51,068,233
SO
$228,330
~344,000 _ _ _
$_110,000
SoulhTruot
$1,370,947
_ S6_!~ • ,_oo,_,o:...__....:S"'9.:::3o"',9=4o____________S)1_. ______ __so_
so
Radian
----
SO
. J1.2oo.ooo ______
so_ _
$2,345,947
$1,998,6_55_ _ §:!%
__
-----"SO::..__ _S_,_,3=2G,,'-'73:::3_ __,i'-"1'""92:::1"',7.::.37;____...:1c.7%:.:....._
__,S:::57'-"6"',0"'09.___ _S,_,7_,&2,..,4:::00"'----"S5.,__58,100_
so
- - $543,750 -- -
_ _$1G3_.!00
$450,030
· - - - - - - - - - $7~0~00
EVP,CF<;l ______ _
so
SO
$355,000
SrEVP; Grp Head.
_....:S<:l:::BB"",3"'84c:......_ _ ____,S"'0_ _,$3.~5._301
-~-?~6__
so
so._ _ _s_,_,3"'93,,8.,.3"'9_ ___,S482--="''Jo=.3J=-----'52=1B:.::.ti00=------'s~o.
so
$1,555,940
60%
___,_S6,_,5~8.~35,_,9'--~S~1~.~~7~,1.09
43%
$930,940
$68,626
S1,266,656
5%
S784,000
S1,218,000
63%
5633,434
$1,103,434
57%
S701.933
S1,095,772
64%
$577,945
S1.047,945.
55%
_W_addd
__I_&_R~~'----------
Butch. T.W.
SVP, Chief Marketing Officar
$320,000
- $0
$470,000
$577,945
Raymond Jamos
Franke, T.s.
Pros and COO of RJA
52=29,._,000=---=$68=7-"',50:::;8::..__ _::S5,468
S921,976
S20,625
A.G. E<lwar<ls
Kessler, R.J.
EVP & Oir. Of Oporetio'-'n,_s.=of,_,B,k,._g.::.C.::.•:...·_ _ __
$170,630
$890,289
so
$860,919
so
S107.514
so
S107,514
Lorenzen Jr.. J.M.
EVP,_~O
S275,000
5285,000
so
$580,000
S337,744
. ___S_I?
so
$337.744
Pros, Parsonallnsurance
S390,000
$187.666
$0
$577,688
$145,300 _ ___,$,_,1"'45,,3:.:0,_0_ _ _ __,SO:::__-=.S2:::9o:=0,::.800::.=___ ___:S=66:::8::!,2:::8:::B_ ___:J:.:Jc::%;____
Laf!occo. M.E.
$0
S1,320,..,5"'00::..__S"-'1"',8"'9G"''"'509~_ _7:..:0%=-._
_ S!8,115 _ _ _ _ _....:S:.:O:...__ _...:S:.:9.::.8•:.:.74.:.:0:__ _,;_S1'-',0=2:::0:.:.,7.:.;16'---'1;.;:0.:.:%:...__
$968,433
11%
S297,1~
$134,000
so
$431,1~
$434,003
so
so
$434,003
Doyle. K.J.
MD, GonoraiC:::o:::u:.:ns,o'-1- - - - - - - -
S174.ooo
$335,000
so
S509,000
$291,9GO
SO
SO
5291,9GO
$600,9GO
M&TBank
CampboU, <:_._L.
VCOB ofM&!_\l_ank Corporation & M&T B_o_~------
$460,01!!_ ____S1G8,500
so
S62_8,51c:B_ _-"S3:::3o:,2:::66.,___ _ _ _ _,SO::o____
SO
$33,266
$661,784
5%
OldRapoblic
Adams,J.S.
SVP,CFO _ _ _ _ _ _ _ _ _ __
$449~
S82,808
so
S512.053
_S119,644
$0
$119,644
$631,698
19%
Fiat Tonnassae Nat'l
BurkoU. C.G.
Pros Rolail Fin Svca &
$246.923
$136,277
so
S383,200
::-:S.:.:10:..:.1•.::600=._ _ _ _.;,:;SO=-----"SO::..__---"S1:..::0_,1,~600=.._ __,Sc4,84=,8:.:0~0_ _ 21%
_evcrest"R,..e_ _ _ _ __
Burek, J.J.
SVP, General Counsel, Secretary__
$207,692
s 1G0,033
Nationwide Financial
~cFinsncial
_ _:..;Ph:::e:::la:::n!..:,M"'.=D.:...___..::S:.:V.:._P.:..·T:.:e:=ch &pporationo
Me~s
Fin Svca
_ _ _....:52=07"',6"'92~----"S::...O____ SO.
----~-
$0
so
$160,033
- $86_5...._.,1.:::57:...__:--50%'-C
$367.725
36%
44%
(1) Option Value" (number of oplions) x (exercise price) x (1/3)
JOHNSON ASSOCIATES, INC.
1:12002\MoodySICharts emsii12..02-04Appendix Pg1·5 Hi5
5
2001 Executive Compensation- CFO
Option
Value!11
_ _ _ _ _ _cc.M:::oloney, T.E.
John Hancock
_____go. §!::.!'.Y£'____ _
_ _ _ _ _ _ _ __cG-:::Iass, O.R.
Jeflerson Pilol
Pres. EVP & Treasurer to Nov 2001
.::U::::ncol=n:_N:.::a:::~:.::O:.::na::_I_ _ _ _ _ _ __.Vaughan. R.C, _ _E,_VP!!..!.•.::Cc:.F""O'-------
Amsoulh
Gibson&[):,_._ _ _v_,_,c,o,.,El_._CFO, Grp Head - Fin. & Cred~
MBIA
Budnick, N.G.
XL Capital _
Vice Pres., CFO
_ _._H:.::o:s=le:£y,'-'R"'.D~.'----'-V-_,C::::h,.-ai..,r,~Exec Financ,..·a,.lO,ffi'-"ce=r_ _ _ _ _ _ __
Ambac Financial
-----=Bi:.:.vo=na.f'J
Jeflerson Pilot
$510,096
$525,000 _
$515,000
$666,171
- - - - - - - - - - $440.000
-----'-p;"'·n.:::lo'-',M:::"-.P-'-._ ___;E=.V:.::P_&::...:::C.:...FO.::..::o.:_fM=&T Bank Corporation & M&T Bank
RI!Jiions Financial
$672.()00
so
$1,188,346
__;S'"'O'--.!:S-!!1,=:03:::5:.::,096~_---'!'":$2,4~2.513
so
$497,20_0_ _ _$_0 _ _;S:.:9:=-37:..c,2:::0:=-0_-=.'S1,CJ77.933
CFO, VCOB. Fin & lnv Grp
S344.,_,1~0~2_
__._S4:::50=,000=._ _ _.!:S0=-_$~794. 102
$0
$6,229,538
$~17.8B4:-__.::64::.'Yc:.::•_ _
SO
$172,500
$2,655,013
$3,690,109_ _.:.:72:.:%~-
---'s'-=o'----_-=-sa:::oc:.1'-''1B.:.:7c____:::S2,_,4""3"--7.~46=0 _
$1,404,150
_ _-::SB:::OO=,OOO=-=-_ _;S:.:1.c:,0:.:14-",000='------- SO
$626,154_
$357.000
$375,388
$0
S732,3B6 _ _.::.S.:.:762=-c,4:.::00:::__ _:::S5::5:::c8,'-'-100.::_::__
$352,500
$0$66
~'-'-2=-',5"-00'-"----"-$-"1,2=-1:.::6!-",5-'-'00'so
$576,377
$250,125
$0
$550.125
EVP,CFO
Lauer. J.M.
EVP.CFO
Torchmerl<
Coleman,_~:!:·
EVP,CFO
Weddell & Read
Sundeun2 _~J~_,_J!':___SVP.
sareco
Pierson, R.A.
SVP, CFO
$325,000
Nationwide Flnancial
Thresher, M.R
SVP, Finance _ _ _ _ _ _ _ __
$293,269
$134,000
$0 _
EVP,-'C"-F-=0'------
$275.000
$285,000
$0
$267,_[)98=-_ ___._SO=-___:S:::5:.::84~•.:_:196::-
------=$300.000
-------=$287,897
$1,436,702
S15o,ooo
Quint. C.R.
__5950,338
$222.488 ---~$0=-___:$:::5~1~0.~18~5._
$344,000
$1 _1_1:1,000
$300,000
S2:.:1c::3'-',4"'63::__ __:.SO::__S,....513.463
$72.117
so
so
FirstTennes=se:.:e..:.N.:::a;:.:rl_ _ _ _ __
Thomas. E.L. Jr.
CFO, EVP
$317.098
EverestRe
Lim_auro, S.L.
EVP, CFO. Complroller_ _ _ _ _ _ _ _ __
$~24~1~,5,..39~--$~2~00~,~000~----~SO
Old Republic
Adams. J.S.
SVP. CFO
_ _ _ ___::5:..:«..::9,_,44_,_..._5_ _ $62,608
6
$0
so
S156,695
$0
$0
$0
$3,41_9,,28:::3:___ _,_7::.3'Yc:,: o_ _
$3,233.250
74%
S"-1"",8._.1-"4,,__000::.:___ _cS::::2"-',60:::8:o:·.::10:::2:___.:_:70%=
$1,436,7=02=---_$.:.:2:.::.06=2.~856=---'-70%::_:.;.__
__,S'-'1'-",3"'20:::,600=--=$=2,,__05:::2,_,,88=8$1,373,195
$2,03_5,695
so _ _ _s~1"'38""':::oo:::o:___ $1,088,3_38
51.664,715
64%
67%
65%
------
$674,977
$247,617
$0
$92~.595
$1,472.720
$482,333
$277,530
$0
$759,863
$1,270,048 ____ ~
$0
63%
so
$764,000
$1,2!!!_,_CJ0q___ 63% -
$570,818
$1,!184,2~~ _--=:53::_:%-'C_
_ _c$._.1:.::36::.:•.cc450=-----=S:_:.1_;c15"',3'-'1-"3_ _ $_~6.105
$597,868
$764,000
$570,81! ____
_;$4=2~7,~26.,-9:___
$560,000
52,482,083
$3,61 8,a=-31=--_.::.B:_7%::__
_:::S0:___ _ _ _$0
$454.000
$397.117
SO
S803,25_-=o_ _---"s-=-67'-'5"'.ooo'-=----'s:.:eoo_::_::_,_,ooo::..:..::_ _ s~,378,25o
$0
MGIC
1:12002\Moodys\Charts email 12.02-04\Appendix Pg 6-7 HIS by tiUa\1214/0216:10 PM
$900.038
$330,000
$310,000
CFO. Treasurer
LTIP
$_296,154
_S!one. T.M.
-------=Lo=renzen Jr.• J.M.
-~'~36.293
s1,1 a1,111
Radian
PMI Group
$5,329,500
_ _ _ _ _ _ _ _ _ __cs,....s2s.ooo _ __._S3.,-3,o"'.oo:::o=-----=so=-_:::S85=5·:::ooo""-
_,;:d:.::e.::S:::1..:..P""ae"'r'-'.J:::_._ _""E"-V'-'P,,_,C"'F_.,O. Treasurer - - - - - - - - - - -
M&T Bank
$516,346
Stock
$994,985
60%
__-_5!!16~7~,568=_ __.5...,399.656
$0
$567,222
$984,491
57%
so
so
$337,744
_$897,744
38%
_ _.......:.so=-------=s:.::o____s_~.o56
$738,252
21%
_5.337,744
$154,056
$441,539
$192,040
$0
so
$192,040 _ ___:$6;::.;3::;:3:;.:,5:.:.79=.__ __:3:::0=%
$512,053
$119,644
$0
$0
$119,644
$631,698
19%
JOHNSON ASSOCIATES, INC.
''
2001 Executive Compensation - General Counsel
Ambac Financial
-----·
Doyle, K.J.
MD, General Counsel
Jefferson Pilot
Hopl<ins, J.D.
EVP & General Counsel
LinCOln Nationa.l _
Hunter, J.D.
EVP, General Counsel
· - - - - - - - -·
_!335,~-
so
$5_0~000
$400,000
$225,00Q_
$0
$465,000
$429,800
so
--~174.~ _
$291,960
$0
$625,000
$930,940
$0
$894,800
$1,101,493
$0
$153,750
so
$291,960
$800,960
36%
$0
$930,940
$1,555,940
60%
. !~51,167
$1,752,660
$2,647,480
66%
$383,397
5719,081
$1,201,722
60%
Safeco
Ruddy,J.W.
SVP, General Counsel
$368,333
$114,308
so
$482,641
$181,933
Radian
Yaruss, H.S.
SrVP, Sec, General Counsel_
$250,000
$220,000
so
$470,000
$489,113
$144,320
so
$633,434
$1,10=!A34
57%
Everest Re
Burak, J.J.
SVP, General Counsel, Secretary
$207,692
so
so
$207,6~2
$160,033
$0
so
$160,033
$367,725
44%
John Hancock
Budd,W.A.
EVP, General Counsel
$500,000
$480,000
so
$980,000
$3,256,917
$366,364
$0
$3,645,301
$4,625,301
79%
PMI Group
Bacigalupi, V.J.
EVP, Sec and General Counsel
$270,000
$290,000
$0
$560,000
$402,990
$0
so
$402,990
$962,990
42%
$33Q,408
$178,318
$0
$508,726
$224,333
so
so
$224,333
$733,059
31%
$217c692 ~.~4~
$0
$393,839
$482,333
$219,600
$0
$701,933
$1,095,772
64%
()ld_~!'publi~ _ _
MGIC
LeR?~ __ ._!;VP.~ .General Counsel
. Lane,J_.I-I.
--------
SVP, General Counsel
---~-
1:12002\Moodys\Charts ema~ 12.02~\Appendix Pg 6-7 HIS by titie\1214/0216:10 PM
7
·---·
JOHNSON ASSOCIATES, INC.
Mo,y's
2001 Awards
*Stock options and restricted shares counted equally on share basis. Therefore, underweight& utilization of Firm's granting restricted stock
as Percentage of Fully Diluted Shares Outstanding
.·.. •: \:3:as j)ercentage'C.fF~IIy;:Undl/utQd Sbai'$~..01Jt$~ndlng_,_,
Total Granted
Restricted
Options &
Options &
Company
Restricted Stock
Options
Stock
Restricted Stock
Waddell & Reed (1)
Regions (2)
First Tennessee
John Hancock
Torchmark (1)
Legg Mason
T Rowe Price
.....
MGIC (1)
Franklin Resources
XL Capital
0.0%
0.1%
4.0°1!-:-o------::--=-:-:-----0.0%
3.6%
0.1%
- - ·---·--,-=:--c---------0.0%
3.5%
-------------3.4%
0.0%
0.0%
3.1%
--c-c----------3.0%
0.0%
2.5%
0.3%
2.2%
0.2%
5.0%
4.0%
.
Safeco
SouthTrust
2.2%
1.9%
1.8%
1.9%
1.8%
1.8%
1.7%
1.4%
1.6%
1.6%
1.5%
1.5%
1.2%
0.5%
1.2%
0.9%
1.0%
0.8%
0.7%
0.7%
0.0%
0.3%
0.3%
0.0%
0.1%
0.0%
0.1%
0.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.7%
0.0%
0.1%
0.0%
0.1%
0.1%
0.0%
25th Percentile
Median
75th Percentile
1.3%
1.8%
2.9%
0.0%
0.0%
0.1%
M&T Bank
Mellon Financial
Amsouth
Radian
Neuberger Berman(1)
Lincoln National
W~shington Mutual
Ace Limited
Ambac Financial (1)
_PM_! Group
_
Raymond James(1)
Jefferson Pilot
Pfizer (3)
AG Edwards
Everest Re (1)
_!-!ationwide (1)
Old Republic
.MBIA (1)
-----
-- - - · - · · - - - - - - -
5.0%
4.1%
4.0%
3.7%
3.5%
3.4%
3.1%
3.1%
2.7%
2.4%
------·------
5.2%
4.3%
4.2%
3.9%
3.7%
---3.5%
3.2%
---3.2%
~--------------2.8%
------~----------2.4%
2.2%
2.2%
2.0%
1.9%
1.8%
1.8%
1.7%
1.7%
1.7%
1.6%
1.6%
1.5%
1.3%
1.2%
1.2-=-%,----------------1.0%
1.0%
0.9%
0.8%
0.7%
· - - - - - -----
2.2%
2.2%
2.1%
1.9%
1.9%
1.8%
1.8%
1.7%
1.7%
1.7%
1.6%
1.5%
1.3%
1.3%
1.2%
1.0%
1.0%
0.9%
0.8%
0.7%
1.3%
1.9%
3.1%
1.3%
1.8%
3.0%
(1) Restricted stock granted lnfonnation available only for top five executives
(2) Includes options granted to retain Morgan Keegan employees
(3) Restricted stock infonnatlon includes grants to top five execs plus Perfonnance-Contingent Share Awards
i;\2002\Moodys'4File]\Appendix Pg B Grants\1214/02\6;10 PM
8
.,. •
JOHNSON ASSOCIATES, INC.
Mo)y•s
2001 Equity Awards 2.5 Restricted Share Weight
*Restricted stock weights at 2.5X stock options on a per share basis to create "apples-to-apples" comparison
Company
I> J, )';:~~:~i:;,:;as:PEt'~~ntagE(of\~ully.URdUut«nVSh~~;QI.Jtstal)dlng<J;:,:'i~Jl·::·,,:•£'-f:
Total Granted
---'-=-=--=-----=-----
~~~~-~~------------~~~~~~------~
Waddell & Reed (1)
5.0%
4.0%
4.0%
3.6%
3.5%
3.4%
2.5%
3.1%
2.2%
1.9%
1.8%
Reg~_lls (2)
First Tennessee
John Hancock
Torchmark (1)
Legg Mason
Franklin Resources
TRowe Piice
XL Capital
Mellon Financial
Amsouth
AG Edwards
M&T Bank
Ace Limited
r-~~~~~~~~~~~~~~~~~~~~~~~~~
as Percentage of Fully DiJJJDil Shares Outstanding
Total Granted
1-Options &
Restricted
Stock
Restricted Stock
Options
0.0%
0.3%
0.0%
0.3%
0.0%
0.1%
0.7%
0.0%
0.4%
0.7%
0.7%
0.5%
2.2%
1.4%
1.7%
------- 0.0%
0.7%
1.8%
Neuber~erBennan(1)
0.1%
- -------------------:--:
1.9%
Radian
0.0%
-----------'--Lincoln National
1.8%
0.1%
Washington Mutual
1.7% ---~7.-----0.1%
Ambac
Financial
(1)
1.6%
0.0%
--~----'---~PMI Group
1.6%
0.0%
Raymond James (1)
__1_.5_"'--*'--- 0.1%
Jefferson Pilot
1.5%
0.0%
---Pfizer (3)
---1.2%
0.1%
'-'-----'---'----Everest Re (1)
1.2%
0.0%
Nationwide (1)
0.9%
0.1%
MBIA (1)
_ _ _ _ _____::_:0.8%
0.1%
0.0%
Old Republic
1.0%
Safeco
0.7%
0.2%
SouthTrust
0.7'*-c--o- - - - ' -0.0%
-----
Options &
Restricted Stock
5.2%
4.5%
4.2%
4.1%
3.7%
3.6%
3.2%
3.2%
2.7%
2.6%
2.5%
5.2%
4.2%
----4.2%
3.8%
3.7%
3.5%
2.5%
3.2%
2.3%
1.9%
1.8%
0.0%
0.4%
0.0%
0.3%
0.0%
-0.1%
0.7%
0.0%
0.4%
0.7%
0.7%
0.6%
2.2%
1.5%
1_8%
1.9%
1.8%
1.7%
1.7%
---1.7%
1.5%
1.5%
1.3%
1.2%
0.9%
0.9%
1.0%
0.7%
0.7%
0.5%
1.8%
0.0%
0.7%
0.2%
0.0%
0.1%
0.1%
0.0%
0.0%
0.1%
0.0%
0.1%
0.0%
0.1%
0.1%
0.0%
0.2%
0.0%
0.1%
1.2%
1.8%
2.5%
0.0%
0.1%
0.3%
MGIC (1)
0.5%
0.1%
25th Percentile
Median
75th Percentile
1.2%
1.7%
2.4%
0.0%
0.1%
0.3%
1.4%
1.9%
3.0%
--------
Rest
Stock
5.0%
4.3%
4.1%
3.9%
3.5%
3.4%
3.1%
3.1%
2.6%
2.6%
2.5%
2.3%
2_2%
2.1%
1.9%
1.9%
1.9%
1.8%
1_7%
1.6%
1.6%
1.5%
1.3%
1.2%
1.1%
1.0%
1.0%
0.9%
0.7%
0.6%
----~-----
Options
-------------
----------
2.3%
2.2%
---"--"---''-----2.1%
2.0%
1.9%
1.9%
1.9%
1.7%
1.7%
1.6%
------------1.5%
1.3%
1.2%
1.1%
1.0%
1.0%
0.9%
0.7%
0.6%
1.4%
1.9%
3.1%
(1) Restricted stock granted information available only for top five executives
(2) Includes options granted to retain Morgan Keegan employees
(3) Restricted stock information includes grants to top five executives plus Performance-Contingent Share Awards
1:\2002\Moodyo~Filoj\Appondlx
Pg 9 Grants 2.5112141U2\6:1D PM
9
JoHNSON AssociATES, INc.
Me Jy's
2001 Authorization & Outstanding Awards
*stock options and restricted shares counted equally on share basis. Therefore, underweights utilization of Firm's granting restricted stock
1-~i~,:;_: ,;t~!~F~:~~:%lAfEMUY Ur@(ffdf.#:\JSf!~ij~f.Q.~!J~!!!9~':,.;,j~"j;;i:
as o/o of Fully Diluted Shares Outstanding
Company
Shares Authorized
Opt. + R.S.
-------~
-----~---
-
6.8%
Torchmark (1)
10.1%
6.7%
Ambac Financial (1)
10.8%
---------- --------·
6.6%
XL Capital - - - - - 13.3%
6.6%
16.3%
R_aym_?n~ James ( 1)
6.5% _ _ __
17.8%
Neuberger Berman (1)
4.5%
Pfizer (3)
6.3%
6.0%
9.8%
Am south
-------------------=-:--:--5.9%
Jefferson Pilot
13.7%
5.8%
10.5%
Radian
----------5.5%
15.1%
PMI Group
-----------=
MBIA (1)
5.5%
8.6%
5.4%
10.0%
Mellon Financial
4.5%
12.1%
John Hancock - - --------,-9.0%
Franklin Resources
4.2%
---- - , - - , - - - - - - 4.2%
Washington Mutual
8.0%
4.1%
9.3%
_Old Republic
-----3.4%
SouthTrust
6.5%
3.1%
MGIC (1)
9.5%
----3.0%
13.5%
Nationwide (_,1>~---
Safeco
2.3%
4.5%
---=-----EverestRel1l __________
N/A
7.2%
25th Percentile
Median
75th Percentile
-
-
9.4%
11.9%
15.3%
4.5%
6.3%
7.2%
Opt + R.S.
Shares Authorized
Waddell & Reed ( 1)
18.2%
29.5%
18.1%
23.6%
T Rowe Price
------14.4%
First Tennessee
21.2%
------------16.2%
11.9%
Legg Mason
----~14-.-7°~~---10.3%
Lincoln National
-----·-------------------17.6%
9.6%
M&T Bank
8.1%
13.8%
AG Edwards
----=-:----- - - - - - - - -15.4% - - - - - - - - - - 7.2% - - - - - Regions (2)
6.9%
11.8%
Ace Limited
41.9%
22.3%
""C'c---22.1%
26.9%
16.8%
19.3.:::-:o/c:-:-o-----13.5%
-----,1=-7.-=-2.,...,%11.5%
21.3%
10.7%
--------~
-----16.1%
8.8%
18.2%
7.8%
--------:-::13.3%
7.4%
-------=-30.8%
11.2%
12.1%
15.4%-cc------
7.2%
7.2%
7.1%
19.4%
7.1%
21.7%
7.0%
4.7% - - - - - - 6.7%
---------10.8%
6.4%
15.8%
6.3%
11.7%
6.2%
17.8%
5.9%
--------9.5%
5.8%
11.1%
5.7%
13.7%
4.7%
10.0-=-:%:-------4.4% - - 8.7%
4.4%
10.3%
4.3%
6.9%
3.5%
---------:-::10.4%
3.2%
15.6%
3.1%
4.7%
2.3%
--------N/A
7.8%
-~-~-----
--
10.3%
13.5%
18.1%
----
4.7%
6.7%
7.8%
(1) Restricted stock granted information available only for top five executives
(2) Includes options granted to retain Morgan Keegan employees
(3) Restricted stock Information includes grants to top five execs plus Performance-Contingent Share Awards
1:12002\Moodys\Charts emaii12-02-041Appendix Pg 10 Oulstanding\12/4102\5:11 PM
10
,
JOHNSON ASSOCIATES, INC.
-)
Mo)y's
2001 Authorization & Outstanding Awards 2.5 Restricted Share Weight
*Restricted stock weights at 2.5X stock options on a per share basis to create "apples-to-apples" comparison
as % of Fully r:JiJJJDJI. Shares Outstanding
Company
Shares Authorized
Opt.+ R.S.
Shares Authorized
Opt. + R.S.
41.9%
30.8%
26.9%
19.3%
16.1%
17.2%
21.3%
12.1%
19.4%
13.3%
18.2%
15.4%
11.2%
22.5%
22.1%
17.0%
13.7%
13.1%
12.0%
10.7%
9.3%
9.0%
8.7%
8.2%
7.6%
7.4%
Waddell & Reed (1)
29.5%
18.3%
T Rowe Price ---'--'-------------,-,-,~-----------,-,-,-c:----23.6%
18.1%
First Tennessee
21.2%
14.5%
-----------~~-----------~-----Legg Mason
16.2%
12.0%
AG Edwards
11.6%
13.8%
lincoln National
14.7%
10.7%
M&TBank
17.6%
9.6%
AmbacFinancial(1)
10.8%
8.5%
----·.
Raymond James (1)
16.3%
8.3%
Ace limited
11.8%
8.0%
15.4%
7.5%
Regions (2)
XL Capital
13.3%
7.0%
Torchmark (1)
10.1%
6.9%
Neuberger Berman (1)
Amsouth
Pfizer 13)
Mellon Financial
Jefferson Pilot
Franklin Resources
Radian
MBIA (1)
PMI Group
John Hancock
Washington Mutual
Old Republic
South Trust
Nationwide (1)
MGIC (1)
Safeco
Everest Re (1)
25th Percentile
Median
75th Percentile
17.8%
9.8%
4.5%
10.0%
1,--3-,.7,.,.o/c,--o- - - 9.0%
10.5%
8.6%
15.1%
---------,--::--c7:---12.1%
8.0%
9.3%
6.5%
13.5%
9.5%
4.5%
7.2%
9.4%
11.9%
15.3%
---
6.8%
6.7%
·--6.4%
6.3%
5.9%
5.9%
5.8%
5.7%
5.5%
------------------4.6%
4.5%
4.1%
3.4%
3.3%
-------------3.1%
2.4%
N/A
21.7%
10.8%
4.7%
11.1%
-----15.8%
10.0%
11.7%
9.5%
17.8%
13.7%
8.7%
10.3%
6.9%
15.6%
10.4%
4.7%
------- - 7.8%
---~
5.5%
6.7%
8.5%
10.3%
13.5%
18.1%
7.3o/c=-o_ _ _ __
7.2%
6.9% ---------6.7%
6.3%
6.2%
6.2%
6.1%
5.9%
4.8%
4.7%
4.3%
3.5%
3.4%
3.2%
2.5%
N/A
-
- - - - - - - - - - --
5.9%
7.2%
9.3%
(1) Restricted stock granted information available only for top five executives
(2) Includes options granted to retain Morgan Keegan employees
(3) Restricted stock information includes grants to top five executives plus Performance-Contingent Share Awards
1:12002\Moodys\Charu email 12·02-04\Appondix Pg t t Oulstanding 2.51t21410216:t t PM
11
JOHNSON ASSOCIATES, INC.
MOODY'S
2006 Competitive Market Compensation Update and Projections
Decernber 4, 2006
(?.!2) 221.:7400 ,. Fax (212) :?.2l·-3l9!
Introduction
Johnson Associates was asked by Moody's to prepare a brief 2006 summary report on market
compensation conditions and projected year-end competitive positioning. In addition to assisting Moody's,
Johnson Associates provides advice to a number of direct comparators and other financial service firms.
The business environment in 2006 has generally been positive with overall incentive funding at financial
guarantors expected to be up =1 Oo/o and with investment banks expected to increase ::15°/o-20°/o. Within
sectors we expect a fairly wide range of incentive payouts, with some performing significantly better than
others. Projected fixed income increases of ::1 Oo/o-15°/o still strong and driven heavily by proprietary
trading. Generally financial services experienced very good performance in 2006. The first half of the year
proved to be stronger than the second half, but overall a surprisingly strong business environment, in spite
of significant market factors (i.e., oil prices, rising interest rates, housing market questions, etc.}. For many
comparators, international expansion provided strong revenue growth. Importantly, the increases to
comparator incentive compensation funding are on top of healthy previous year payouts.
We would expect the slow upturn in industry hiring to continue and accelerate somewhat in the first or
second quarter of next year. In particular, strong hiring is expected for credit, risk, and structuring related
professionals. Moody's and its comparators are likely to continue facing retention and recruitment issues
greater than those experienced for several years.
l
l_
}OHNSON ASSOCIA\_ INC.
Table of Contents
Page
•
•
•
•
•
•
•
•
Overview of Moody's Market Positioning and Proposed 2007
Summa~
Senior Executive Market Compensation
Cash vs. Long-Term Compensation Mix: SMDs & Above (excluding R. McDaniel)
Total Cash Compensation: SMDs & Above (excluding R. McDaniel)
Total Long-Term Compensation: SMDs & Above (excluding R. McDaniel)
Total Compensation: SMDs & Above (excluding R. McDaniel)
APPENDIX
- 2005 CEO Compensation - Proxy Comparator Analysis
- 2005 Second Highest Paid Compensation - Proxy Comparator Analysis
- 2005 Third Highest Paid Compensation - Proxy Comparator Analysis
- 2005 Fourth Highest Paid Compensation - Proxy Comparator Analysis
- 2005 Fifth Highest Paid Compensation - Proxy Comparator Analysis
- 2005 CFO Compensation - Proxy Comparator Analysis
- 2005 General Counsel Compensation - Proxy Comparator Analysis
- 2005 Equity Award Grants
- 2005 Equity Award Grants (3X Restricted Share Weight)
- 2005 Equity Award Outstanding
- 2005 Equity Award Outstanding (3X Restricted Share Weight)
- Black Scholes Model
a
4
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
JoHNSON AssociATES, INc.
Overview of Moody•s Market Positioning and Proposed 2007
• Similar to previous years• exercise, Johnson Associates benchmarked Moody•s senior executives
(Group Managing Directors and above} to market comparators
- Comparator group emphasizes other rating agencies and financial guarantors, with additional
reference to broader financial services and to a much lesser degree investment/commercial banks
(more relevant for Team MD's and below}
- This report focuses on the CEO, direct reports, and SMDs only
• Analysis compares target compensation for 2006 and 2007 relative to market. As a group, executive
2006 target compensation at about =60th percentile of market
- Cash compensation continues to be well below market while value of long-term significantly above
- Consistent with the past few years, actual incentive (EPIC} payouts expected to be down year-overyear, but above target. Competitors, almost uniformly, expect to be at least ''flaf' to generally up 1Oo/o
- However, management does not believe retention of senior executives will be a major issue this
year. Driving factor continues to be significant embedded, unvested equity gains from previous
equity awards
- Moody's rapidly rising stock price, over the past few years has helped to produce attractive actual
compensation
- For 2007, adjustments in target cash and equity awards for Moody's senior executives (excluding
CEO} result in an approximate 5°/o year-over-year increase. Overall increase within market range
• Market comparisons for Moody's senior executives incorporates a number of dynamics and market
movements, therefore some individual market references reflect greater year-over-year change than
others
- International market compensation, particularly in London, has surged
l.
l_
jOHNSON ASSOCIA~ INC.
(
.
·.
Overview of Moody•s Market Positioning and Proposed 2007
- Currently, Moody's has no clear "#2 executive," therefore additional weight given to CEO and
business heads (i.e., McDaniel, Mahoney, Clarkson and Murray)
- Unlike a number of comparators, senior executives have oversight of both Public
Finance/infrastructure groups, as well as structured/ asset-backed products. Therefore, receive
premium for complexity and market for structured finance
• In utilizing both stock options and restricted shares at Moody's, a "rule of thumb" has been applied that
three stock options equals in value one restricted share. Said another way, stock options are assumed
to be worth =33°/o of their face value, with restricted shares at grant at 100% of market
- This "rule of thumb" for Moody's continues to be very realistic, based on current Black Scholes
Analysis. For current awards there appears no obvious reason to change it. However, the value
trade-off should be monitored to insure that the planned amount of value is delivered regardless of
the mix between stock options and restricted stock
5
jOHNSON ASSOCIATES, INC.
Summary
• Market comparators expected to increase bonus and long-term compensation 1Oo/o+ from 2005
• Moody's proposed increases in 2007 senior executive ~CEO, direct reports and SMDs) target total
compensation will maintain market positioning at about sot percentile
- Overall, total compensation positioning versus market will be about the same as prior year
- Moody's 2006 actual payouts will decrease year-over-year whereas competitors expected to
increase
- Management does not expect retention of senor executives to be an issue
• Use of restricted mix stock and options competitive practice.
realistic
l
l
Valuation of awards continues to be
JOHNSON ASSOCI
A\_
JNC.
(
(
(
Senior Executive Market Compensation
Note: Moody's proposed targets include 16.7% downward adjustment to bonus for R. McDaniel, L. Huber, J. Dering and J. Goggins
i--~-~~
CEO & Direct Reports
Name
Matched Title
Total
cash
Total
Total
Total
-.--
--.~~"~~.
_2006 M~R~ET
1
Median
Total
.
75th%ile
Total
Total
Total CEO & Dlruct Reports:
$8,263
$23,934
t;r,ff17
$23,127
$10,976
$20,200
$14,450
$27,050
Total CEO & Direct Reports (excl McDaniel):
$6,183
$17,352
$5,an
$16,573
$8,225
$13,700
$10,950
$19,050
Total SMDs Only.
$4,125
$10,169
$3,817
$9,654
$6,475
$9,950
$8,175
$13,500
Total All SMDs & CEO, Direct Reports:
$12,388
$34,103
$11,694
$32,781
$17,450
$30,150
$22,625
$40,550
TotaJAU.SMDs, CEO Direct Repotta
(excl ¥cDankil):
$10,308
$27,621
$9,694
$26.227
$f4,700
$23,850
$19,125
$32,550
7
jOHNSON ASSOCIATES, INC.
Cash vs, long-Term Compensation Mbc SMDs & Above (excluding R~ McDaniel)
120"'/o
$26.2 M
$27,5 M
$32.6 M
$23.7 M
80%
• 0 Long-Term
: OTotai Cash
40%
2006
Moody's Target
2007
2006
20(:1{3
Moody's
Preliminary Target
Median
75th%ile
Market
Totai Cash Compensation: SMOs & Above (excluding R. McDaniel)
nxr
:
:::
t
::: ::::::_::_:_:_:::::: ::
t
em::::::::::::::c::::::::
140%,
120%
2006
2007 Moody's
fv1oody's Target
Preliminary Target
;;;::::::::::::::::::::::::::me:
m:ee:m:c::::::»:&
Total long-Term Compensation: SM!Js & Above (excluding
flo
McDaniel)
192%
180°/o
~ Aggre~1ate SMD
& above
totai cash compensation
to mar!<et
120o/o
80'~~
40%
20'3fo
0%
2006
2007 Moociy's
Moody's Target
Preliminary Target
Total Compensation:
SMDs & Above {excluding R. f!lic!Janiel)
200%
•!80''/o
• Aggregate SMD & above
total compensation to
market
160°/o
140%
-
~
~
,_
tiZ
120P/o
100<;<.
~
8Q%,
60°/o
40%
20%
0%
2006
2007 Moody's
Preliminary Target
Moody's Target
11
APPENDIX
l
l.
JOHNSON AS SOCIA\__ INC.
(
(
2005 CEO Compensation
Le!l!lMason
BlackRock
Northam Trust
E'Trade Financial
Compass Bancsharas
Mason, A.A.
Fink, L..D.
Osbom,W.A.
Caplan, M.H.
Jones Jr, D.P.
Mellon Financial
McGuinn, M.G.
Financial Security Assurance COChran, R.P.
Dunton, G.C
MBIA
Evel8st Re
Taranto,J.V.
Johnson, G.E.
Franklin Resources
MGIC
Culver, C.S.
First Hortzon
Glase,J.K.
Frederico, D.J.
Assured Guaranty
Ambac Financial
Genader, R.J.
Bank of New York
Renyi,T.A.
BB&T
Allison IV, J.A.
----Radian
Ibrahim, S.A.
Zions Bancorpoca!lon
SlinmOiiS,H.H.
Humann, P.L
Suntrust
PMIGroup
Haughton, W.R.
Bagby, R.L.
Roehe,G.A.
A.G. Edwards
T. Rowe Price 121
Old Republic
XL Capital
Raymond James
Regions Financial 131
Zucaro, A.C.
O'Hara, B.M.
James, T.A.
Moore,J.W.
COB, CEO
COB, CEO
COB, CEO
CEO
COB, CEO
COB, CEO (181inld from CEO post
February 13, 2006)
COB, CEO
CEO
COB, CEO
Pres, CEO
COB, CEO
Pres, CEO, COB
Prss,CEO
Prss,CEO
COB, CEO
COB, CEO
CEO (from Ma~ 4, 2005~
COB, Pres, CEO
COB, CEO
COB, CEO (to 181irs June t, 2006)
COB, CEO and Pres & COB, CEO, and
P18s of Brokerage Co
COB, Pres (to 181118 In 2006)
P18s,CEO
Pres, CEO
COB, CEO
Pres, CEO
CEO, Pres M&T Bank Corp; CEO of M&T
$500,000 $10,125,000
$1,000,000 $2,500,000
$750,000 $3,550,000
$975,000 $1,950,000
$0
$0
$0
$0
$2,925,000
$968,687
$500,000
$825,000
$1,000,000
$780,132
$750,000
$909,046
$700,000
$575,000
$1,000.000
$900,000
$725,000
-$750,000
$0
$0
$0
$2,466,667
$3,800,000
$2,475,000
$1,800,000
$3,430,132
$2,662,500
$1,228,046
$2,700,000
$1,775,000
$4,000,000
$1,881,000
$2,491,667
$1,2ao;<iiio
$2,301,488
$2,115,000
$509,000 $1,921,703
$0
$350,000 $3,300,000
$0
$548,465
$711.279
$0
$1,000,000
$0
$0
$300,000 $2,100,000 $39,506
$835,000 $1,402,935
$0
$2,430,703
$3,650,000
$1,259,744
$1,000,000
$2,439,506
$2,237,935
$1,000,000
$800,000
$1,500.000
$3,300,000
$1,650,000
$800,000
$2,650,000
$1,912,500
$319,000
$2,000,000
$1,200,000
$3,000,000
$981,000
$1,766,687
$480,000
$1,301,488
$1,315,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$4,001,850
$2,333,332
$3,205,133
$4,007,050
$0
$0
$0
$0
$714,319
$1,275,003
$2,616,900
$1,968,188
$2,645,990
$880,102
$1,125.561
$733,320
$1,832,160
$0
$0
$1,804,320
$0
$0
$171,110
$3,749,906
$2,667,900
$2,504,168
$0 $2,967,387
$2,382,007
$0
$480,029 $4,253,400
$0 $5,805,000
$5,601,400
$0
$3,850,068
$0
$2,497,499 $2,106,240
$1,919,176 $2,578,250
$2,124,992
$0
$1,600,036
$0
$0
$0
$0
$976,878
$820,241 $1,248,462
$0 $2,816,000
$0 $1,920,000
$8,669,750 $10,169,750
$4,837,501 $9,137,501
$6,172,520 $9,097,520
$6,389,057
$4,733,429
$5,805,000
$5,601,400
$3,850,069
$4,603,739
$5,209,745
$3,399,995
$4,216,936
$1,968,188
$~,622.868
$0
$0
$2,948,806
$3,941,561
$2,653,320
$1,832,160
$1,219,640
$0
$1,219,840
$0
$0
$0
$546,465
$0
$0 $2,500,000
$399,969
$0
$0
$0
$2,352,785
$2,500,000
$399,969
$171,110
26%
66%
53%
68%
$8,855,724
$8,533,429
$8,280,000
$7,401,400
$7,280.200
$7.266.239
$6.437.791
$6,099,995
$5,991,936
$5,968,188
$5,503,868
$5,440.472
$5,171,561
$4,954,808
$3,947,160
72%
55%
70%
76%
53%
63%
81%
56%
70%
33%
66%
54%
78%
54%
46%
$3,650,343
$3,650,000
$3,612,528
$3,500,000
$2,839,475
$2,409,045
33%
0%
65%
71%
14%
7%
=
(1) Option value # of options X .3 to approximate Black-Scholes value
(2) Company did not make equity grants because of substantial equity ownership
(3) No substantive IOng·term awards granted !his year In consideration of conslderable merger-related vesting of Union Planters awards in 2004 ($27,645,615)
13
jOHNSON ASSOCIATES, INC.
2005 Second Highest Paid Compensation - Proxy Comparators
T. Rowe Price
Mellon Financial
Kapito, R.S.
Lll!en, R.J.
McCarthy, S.W.
Hll!lhes,J.L.
FetllnQ,M.R.
Rogers, B.C.
Elliott, S.G.
XL Capital
PMI Group
MBIA
Raymond James
Bank of New York
Suntrust
Keeling, H.C.V.
Smith, LS.
Budnick, N.G.
Trocln, J.E.
Van Saun, B.W.
Wells,J.M.III
MGIC
BB&T
Assured Guaranty
Z"1011s Bancorporat!on
Regions Financial
Northern Trust
Franklin Resources
Compass Bancaharea
Sinks, P.
Klng,K.S.
Mllla,R.B.
Amo!d,D.L
Horsley, A.D.
Waddell, F.H.
Advanl, V.C.
Hegei,G.R.
Ambac Financial
Radian
A.G. Edwards
EverestRe
Uhleln, J.W. Ill
Kasmar, R.J.
Kelly, D.L
Gallagher, T .J.
Nard, C.S.
BlackRock
E"Tracle Financial
Financial Sscurlty Assurance
First Horizon
Le!j!! Mason
Old Republic
Praa,COO
Praa,COO
Pms FTN Financial
SrEVP, Pma L.egg Mason Asset MQmt
VP, Chief Investment Officer
SVCOB, Mellon Flnanclel & Mellon Bank
EVP, Global Hd of Bus Svca, CEO
Reinsurance Operatlona
Pma, coo, Director
VP, Pma, Insurance Corp.
EVP, Equity Capl1al Markets
VCOB,CFO
Pres, COO
EVP-Field Operations (Pms, COO from
$3,900,000
$3,000,000
$670,000
$590,000
$525,000
$600,000
$240,000
$605,no
$3,395,000
$3,219,000
$3,700,000
$1,155,000
$0
$0
$0
$590,000
$750,000
$960,000
$2,644,000
$0
$1,275,000
$1,560,000
$0
$0
$0
$37
$0
$775,000
$1,752,000
$608,945
Janucuy 2006)
coo
$352,308
$575,000
$697,520
$626,750
CFO
VCOB,CFO
VCOB, CEO Bus EntarpriBBB
Pres, COO, Pres Corp & !nst Svca
EVP, Advisor Svcs
CFO
EVP Inti, lnlrastr, Cons ABS, conduH &
Structlnsur Grps
Pres, COO
CFO, Treasurer, Secrelary & VP
Pres, COO
SVP, Mortgage Guaranty (from 6/t/05)
COB, M&T Bank Corp and M&T Bank
$500,000
$437,500
$612,500
$487,500
$454,188
$1,025,000
$300,000
$625,341
$700,000
$1,025,000
$424,057
$300.000
$455,000
$229,308
$494,231
$825,000
$675,000
$902,005
$200,000
$0
$0
$305,167
$378,928
$0
$453,125
$3,320,000
$3,995,385
$3,519,000
$4,050,000
$1,625,000
$2,884,037
$0
S2.357.no
$1,583,945
$0
$1,049,628
$0
$0
$0
$0
$1,201,750
$1,525,000
$737,500
$1,437,841
$1,187,500
$1,478,125
$878,225
$0
$0
$0
$0
$0
$1,125,000
$1,130,000
$1,131,313
$694,231
$884,095
$1,799,998
45%
$3,127,500
$114,400
51%
38%
43%
21%
83%
$1,361,250
$2,214,375
$1,076,460
$1,786,162
$0
$0
$2,697,375
$0
$1,381,517
$0
$3.167,679
$2,709,420
$1,130,214
$532,800
$500,000
$1,850,000
$0
$3,742,220
$2,980,214
$2,400,000
$4,332,220
$4,255,214
$3,960,000
86%
70%
61%
$581,340
$1,094,040
$1,653,600
$3.465,3n
$3,451,810
$3,237,545
32%
$2,172,043
$3,221,870
$3,201,466
$3,157,000
$3,137,501
$3,123,806
$2,854,938
$2,603,205
67%
62%
52%
76%
54%
58%
$2,339,416
82%
$2,332,660
$2,043,289
52%
45%
37%
$0
$45,360
$1,094,040
$483,000
$0 $2,400,000
$535,980
$0
$0
$0
$453,600
$0 $1,200,000
$0
$1,449,000
$612,000
$764,532
$1,118,923 $1,053,120
$550,716
$0
$1,173,591
$1,000,483
$0
$739,843
$0
$1,020,000
sn,669 $1,557,600
$512,374
$0
$666,975
$0
$1,125,080
$0
$721,548
$0
$832.650
$420,225
$375,010
$0
$0
$493,064
$0
$0
$668,399
$948,900
$0
$0
$483,300
$0
$378,928
$1,076,460
$1,999,716
$1,832,000
$2,400,001
$1,685,965
$1,667,438
$1,125,080
$1,461,191
$1,207,660
$913,289
$688,399
17%
51%
43%
$948,900
$1,799,712
$1,643,131
58%
$882,228
$1,546,323
58%
(1) Option value = # of options X .3 lo approximate Bleck-Scholes value
l.
l
jOHNSON ASSOCIA\_ -INC.
(
(
2005 Third Highest Paid Compensation - Proxy Comparators
BlackROCk
First Horizon
le!ll! Mason
T. Rowe Price
XLC!!j!Hal
Mellon FinanCial
E'Trade Financial
P~IG~
Bank of New York
Zions BanCOIJ)Oratlon
Assured Guaf!!!1L_
Northam Trust
MGIC
Schlossteln, R.L
Baker, G.L.
Scheve, T.C.
Kanne~.
J.A.C.
Tobin,C.R.
O'Hanle~. R.P.
Webb,D.E.
Shuster, B.M.
Velli,J.M.
Blackford, D.E.
Schozsr, M.J. _
Therlaul~
T.J.
Pierzchalskf, LJ.
Financial Secu!!!Jl Assurance Stem, B.E.
MBIA
Corso,C.D.
Barrl, J.D.
Com~ Bancshares
R!!!!lons F'manclal
Ul!!:!!urch, S.E. Jr
BB&T
Chatk,W.K.
Franklin Resources
Yun,W.Y.
Sun trust
Chan9:, M.A.
Renfleld-Miller, D.c.
Ambac Financial
Ra~ond James 121
Shields, K.A.
A.G. Edwards
Miller, P.M.
Pres
coo
SrEVP; Pres & CEO Legg Mason Wood
Walkar
VP, Director of Egultles
EVP, CEO of Insurance O[!!ralions
Man!!!l:!!ment
Pres, E'Trade ca~ilal Mkls
President International & Sbategic
Investments
SrEVP
COB, Pras & CEO California_ Bank & Trust
President, Assured Guaranty Corp
EVP, Pres Worldwide Operations &
Tachno~
EVP-Risk Management
MD, General counsel, Secreta~
VP, Chief Investment Officer
EVP
Director of Co!l!!?!!!te & Strategic lnitlatlves
SrEVP, Chief Credit Officer
EVP, lnstftutlonal
Co!E EVP, CFO
SMD, Chairman, Ambac Assurance UK
COB, CEO RJ Ltd
EVP, Dir of Sales & Marketing of
Brokerage
EVP,CFO
$600,385
$300,000
$350,000
$534,416
$525,000
$575,000
$2,879,000
$3,300,000
$0
$2,250,000
$1,888,000
$400,000
$825,000
$506,000
$1,250,000
$280,000
$891,667
~63.0QQ
$375,000
$487,500
$360,385
$250,000
$400,000
$414.369
$425,000
$416,250
$525,000
$420,633
$250,000
$224,747
$114,400
$0
$650,000
$753,549
$900,000
$550,000
$330,458
$515,426
$408,341
$650,000
$373,376
$745,000
$1,484.962
$2,458,938
$5,453,323
$0
$0
$500,000
$0
$0
$2,205,730
$978,600
$3,742,220
$1.240,779
$1,458,334
$5,384,730
$4,628,600
$4.276,636
$4,015,779
$3,921,334
$0
$0
$0
$0
$0
$3,179,000
$3,650,000
$534,416
$2,775,000
$2,463,000
$1,772,730
$978,600
$2,709,420
$214,106
!0
$906,000
$1,875,000
$743,000
$1,266,667
$699,656
$1,367,550
$552,162
$612,000
$1,850,000
$0
$0
$0
$0 $1,824,500
$1,020,000
$0
$1,137,500
$1,113,934
$1,150,000
$950,000
$744,827
$940,426
$824,591
$1,175,000
$794,209
$995,000
$1,709,709
$1,000,463
$0
$666,975
$0
$896,202
$710,856
$127,070 $1,125,900
$0 $1,350,000
$776,742
$0
$358,645
$0
$327,315
$0
$750,089
$0
$810,000
$0
$250,033
$0
.!<1
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$207,248
$433,000
$0
$532,600
$1,026,673
$625,002
$1,361,250
$633,332
$0
$873,896
$821,515
$874,118
$0
$302,400
$594,750
$45,360
$2,549,656 ~.~55,~
$1,367,550 -~,242,550
$2,176,662 $2,919,682
~1,632,000 $2,898,667
$0
$0
$1,667,438
$1,607,058
$1,252,970
$1,350,000
$1,450,638
$1,180,160
$1,201,433
$750,089
$1,112,400
$844,783
$45,360
$578,284
$0
$578,284
$2,804,938
$2,720,992
$2,402,970
$2,300,000
$2,195,465
$2,120,586
$2,026,024
$1,925,089
$1,906,609
$1,839,783
$1,755,069
41%
21%
88%
31%
37%
74%
42%
75%
56%
-
59%
59%
52%
59%
66%
56%
59%
39%
58%
46%
3%
37%
(1) Option vel us" II of options X .3 to approximate Black-Scholes value
(2) Excludes $1 ,634,521 in retenHon payments for Goepel McDermid acquisition
15
jOHNSON ASSOCIATES, INC.
2005 Fourth Highest Paid Compensation - Proxy Comparators
!!9llMason
T. Rowe Price
XLC!!(!IIal
First HorizOn
Baln, P.L
Bernard, E.C.
L.uck, F.E.
Burke!I,C.G.
Mellon FmanclaJ
Bank _ol New YOlk
E"Trade Financial
Northam Trust
MGIC
Blackflock
Zions Bancorporation
Financial Security Assuranc:s
PMIGrollp____
MBIA
Assured Guaranty
Regions_ Financial
B13&T
Lamere, C.F.
Lauer,J.M.
Wagner,S.L
.Anderson, A.S.
Bruwer, ~.B., II
Lola, C.P ., Jr
Brown,J.W.
Micltener,_ J.M.
Miller, P.C.
Graene, R.E.
A.G. Edwards
Ra)l!!!ond Jemes
Ambac Financial
Com~ Bancsharea
Franklin Reaouroes
Sunb'ust
Radian
Old Republic
Kessler, R.J.
Heick, C.
McKinnon, W.T.
Stone,G.R.
SlmEaon, M.L.
Sutlivan, T.E.
Kamarck,M.
LeRoy, S.lll
(1) Option va!ue
l_
~nks,C.R.
Gelbard, A.W.
MoniSOil, V'! .L.
VP
EVP, Global Hd of C!!!J! Svc:s
Pres, Tennessee & National B!!Q
VCOB; COB & CEO Mellon New England;
Pres Priva!e Wealth Mgmt
VCOB
CAO
EVP, Personal Financial Services
EVP,CFO
VCOB,COO
Pres, CEO Zions F:irst Nafl Bank
MD, Cltlef UndeiWIItlng Offlc:sr
EVP,CFO
Executive Chainnan (fcmner CEO)
General Counsel
R~gional CEO
SrEVP
VCOB and vcos; EVP, Cir of Ops of
Brokem~
Pres, COO
SMO, Cltlef RISk Officer
SrEVP
EVP
CO!J:! EVP, Chief lnfonnetlon OffiCer
fonner Pres. of Enhance Fin. Svcs GE!
SVP, Secre!!!!X & General Counsel
VCOB; COB, CEO of Mid·Atlantlc Div, EVP
of M&T Bank CO!J:!
$0
$600,385
$995,000
$0
$3.250,000
$825,000
$1,595,385
$470,000
$533,654
$575,000
$500,000
$1,750,000
$1,175,000
$1,431,000
$0
$0
$0
$2,220,000
,1,708,654
$2,006,000
$575,QOO
$722,346
$2,000,000
$0
$1,075,000
$0
$245,000
$0
$1,089,962
$2,250,000
$624,000
$900,Qil0
$0
$0
$0
$367,616
$25q,OOO
$379,000
$250,000
$360,000
$540,000
$375,000
$412,500
$393,750
$207,226
$266,000
$300,000
$411,250
$1,728,000
$600,0QO
$416,668
$321,691
$780,771
$1,100,000
$451,923
$700,000
$347,006
$700,000
$346,598
$311,843
$378,364
$186,257
$347,006
$669,500
$434,833
$0
$0
$0
$0
$0
$0
$269
$0
$0
$0
$0
$0
$0
$163,500
$1,367,550
$784,055
$600,0!J2
.1_,000,463
$450,008
$666,975
$0
$880,731
$0
~.388
-~
$1,150,000
$1,361,250
$2,458,938
$0
$0
$0
$947,555
$1,367,550
$3,167,555
$1,050,010
$1,667,438
$3,Q56,010
$2,742,438
61%
$1,591,587
$407,368
$2,681,549
$2,657,388
$2,626,538
~
15%
76%
52%
66%
0%
51%
~
$710,856
$0
$1,407,900
$594,s;Ja
$4,326,460
25%
$4,089,051! -80%$4,054,323
61%
$127,070 $1 '125,909_
$925,000
$0
$2,002,538
$1,252,970
$1,498,409
$2,402,970
$2,269,659
$2,268,000
$1,995,000
$771_,250
$2,268,000
$573.409
$0
$975,000
~.500
$0
$637,500
$829.368
$586,801
$256,204
$0
$843,005
$1,672,393
$715,641
$661,49!
$0
$246,846
$908,343
$1,623,984
$987,997
$1,366,269
$1,000,000
$0
$45,380
$578,284
$149,965
$200,274
$0
$0
$0
$578,284
$195,325
$497,849
$1,566,g81
$1,561,594
$1.497,649
$0
$0
$368,850
$746,891
$0
$0
$0
$0
$420,000
$493,064
$186,257
$558,080
$493,064
$598,673
$1,440,903
$1,369,500
$1,337,511
$1,256,630
$1,163,293
$694,012
$1,369,500
$781,431
$763,566
$564,621
$297,375
$378,041
$0
$138,080
$0
$412.416
$0
$0
$Q
$0
$1,020,000
30%
~.Olll_.g~---~
34%
~
56%
37%
13%
33%
52%
0%
42%
39%
51%
$446,154
=# of options X .3 to approximate Black..Scholes value
l_
jOHNSON ASSOCIA\_ .JNC.
2005 Fifth Highest Paid Compensation - Proxy Comparators
XLC~IIal
Giordano, P.S.
T. Rowe Prlce 121
First Horizon
E'Trade Financial
Bank ol New York
Mellon Financial
RiBI!B, J.S.
Martin, LB.
Simmons, R.J.
Hassell, G.L.
Canter, S.E.
Northern Trust
Tolh, T .J.
MGIC
Lane,J.H.
Financial Security Assurance Simon, J.W.
Chowdhu~. D.
le!l!IMason
PMI Groul!
MBIA
BlackRock
BB&T
Connell)!. R.P.
Willson Ill, C.L.
Ra~ond James
A.G. Edwards
Reslons Financial
Coml!ass Bancsheres
Riess, R.K.
Diederich, G.M.
Morllan. A.B. Jr.
Pl!!!!9!!r, C.D.
Ambac Financial
Wallla,D.W.
Sun trust
Reed1 W.R. Jr
Felger, G.M.
Tatlock, A.M.
Yaruss, H.S.
Zlons Banco!l!!!ration
Franklin ReSOUJces
Radian
eacisai!!EI. v.J.
Wertheim, R.D.
Pres
VCOB; COB & CEO The Dreyfus Co!!!
EVP, Pres Northern Trust Global
lnvestmen1B
SVP, General Counsel
MD_,CFO
SrVP
EVP, CAO, General Counsel & Secreta~
VP, General Counsel, Sacra~
General Counsel
Sr€VP
EVP; Pres and CEO of Eagle; MD, Asset
Mgt
EVP, Dlr of Branches of Broke!!!~! Co
Pres & CEO, Mo!II!!!! Kee{l!n & Co.
EVP
SMD, Portfolio and Market Risk
Manasement
VCOB, Geographic Banking & Sales
Admin
EVP, Wealth Mana!!!!ment
VCOB, Member· Office of !he Chairman
Assured Gua~
Yea9!!r, R.K.
Ballenaon, A.A.
Re!!!!!nsibllitv Officer
SVP, Title Insurance
Chief Aocoun!!!!g Officer
M&TBank
Czarnecki, M.J.
EVP, M&TBank Co!!! and M&T Bank
Old Rel!ublic
$350,000
$464,492
$500,000
$800,000
$500,000
$710,035
$1,506,000
$2,100,000
$900,000
$437,500
$550,000
$295,385
$250,000
$579,072
$225,000
$380,000
$350,000
$250,000
$381,250
$3,300,000
$800,000
$1,360,000
$401.250
$725,000
$1,050,000
$311,672
$0
$0
$0
$0
$0
$1,902,032
$1,050,010
$0
$0
$0
$1,359,664
$0
$1,667,438
$1,520,010
$88,502
$800,002
$2,900,000
$1,400,000
$0
$0
$234,812
$1,125,052
$0
$0
$987,500
$1,000,463
~74!457
$0
$666,975
$809,154
$0
$1,050,09Q_
$0
$0
$1,585,000
$761,250
$1,075,000
$0
$0
$0
$1,300,000
$692,922
$496,385
$710,856
$127,070 $1,125,900
$200,000
$0
$573,409
$925,000
$0
$0
$640,493
$1,252,970
$696,385
$0 $1,000,000
$388,806
$0
$2,654,938
$2,394,467
~
$1,498,409
$1,000,000
$0
$3,650,000
$3,076,559
$3,056,010
$2,900,000
$2,759,684
$0
$388,806
$244,346
$884,839
$0
$0
$0
$202,339
$556,023
$24,147
~
$2,302,970
62%
34%
0%
49%
63%
63%
54%
$2,281,365
$2,259,659
$2,075,000
31%
$1,688,806
$1,577,761
23%
56%
13%
36%
52%
66%
48%
$0
$156,979
$556,023
$0
$1,368,000
$961!,417
$1,500,000
$686,668
$24,147
$378,041
$0
$0
$368,650
$746,891
$1,570,339
$1,524,440
$1,524,147
$1,433,559
$755,134
$0
$993,957
$214,110
$135,048
$0
$349,158
$1,343,115
26%
$508,465
$313,667
$800,000
$0
$1,081,558
$706,917
$0
$371,848
$0
$240,000
$176,000
$240,000
$547,648
18%
44%
$1,190,000
$0
$191,623
$0
$0
$1,321,558
$1.254,584
$1,190,000
$224,120
$415,743
$240,000
$219,990
$130,000
$343,334
$1,128,000
$748,427
$1,370,000
$0
$0
$343,334
$236,823
$573,093
$393.250
$590,000
$278,000
$0
$300.000
$620,000
$280,000
$0
$0
$0
$0
$0
$329.231
$330,000
$0
$275,483
$780,530 $1,053,000
$450,008
$0
$1,174,527
$2,006,000
$376,850
$45,360
2%
$96,660
$0
$0
$0
$0
$96,660
$1,070,593
$992,143
$560,000
$91,600
$153,000
$0
$244,600
$804,600
0%
39%
10%
30%
$659,231
$0
$0
$0
$0
$659,231
0%
$654,850
$695,483
K.T.
(1) Option value= 11 of options X .3 to approximate Black-scholes value
(2) Company did not make equity grants becaiiS8 of substantial equity ownership
17
JOHNSON ASSOCIATES, INC.
2005 Chief Financial Officer Compensation - Proxy Comparators
Option
Base
EVP,CFO
Other
Bonus
Cash
$605,770 $1,752,000
$0
$500,000 $1,025,000
$0
$437,500
$300,000
$0
$500,000 $1,506,000
$0
$722,346
$0
$367,616
$424,057
$454,168
$0
$250,000
$600,000
$0
$411,250
$380,000
$0
XL Capital
EVP,CFO
$550,000
$275,000
Suntrust
Corp EVP, CFO
$420,833
A.G. EdwaJds
CF01 Treasurer, Secretary & VP
EVP,CFO
EVP,CFO
E1'rade Fmancial
Exat:utlva
Van Saun, B.W.
Mills, A.B.
Amold,D.L
Simmons, A.J.
Lauer,J.M.
Hegei,G.A.
Financial Security Assurance Simon, J.W.
Lote, D.P., Jr
PM! Group
MGIC
Compass Bancshams
EvemstAe
Position
VCOB,CFO
CFO
VCOB,CFO
CFO
EVP,CFO
CFO
MD,CFO
Restricted
Stock
$1,094,040
$0
$612,000 $1,020,000
$0
$764,532
$1,557,600
$600,002
$450,008
$0
$0
$880,731
$710,856
$739,643
$721,548
$0
$127,070 $1,126,900
$573,409
$925,000
$0
$2,357,770
$1,525,000
$737,500
$2,006,000
$1,089,962
$678,225
$1,050,000
$n1,250
sn,869
$625,000
$0
$666,000
$373,376
$0
$0
$794,209
$302,400
$229,308
$902,005
$0
$1,131,313
$331,731
$300,000
$0
$631,731
$335,000
$400.000
$0
$735,000
~
ootal
Value 111
Sal
~
COI11!)
$3,451,810
$1,832,000
$2,400,001
$1,050,o10
$1,591{>87
$1r461,191
$1.252.970
$1,498,409
$3,157,000
$3,137,501
$3,056,010
$2,681,549
$2,339,418
$2,302,970
$2,2(19,659
32%
52%
76%
34%
59%
62%
54%
68%
$1,168,000
$1,112,400
$1,991,000
59%
$0
$500,000
$810,000
$1,906,809
58%
$0
$0
$668,399
$0
$668,399
$1,799,712
37%
$606,565
$0
$806.565
$1,438,296
56%
$257,178
$0
$559,740
$1,294,740
43%
14%
(1) Option value~ ~ ol opl!ona X .3 to approxbnate Black-Scholea value
l
jOHNSON ASSOCI
A'\._ INC.
2005 General Counsel Compensation - Proxy Comparators
FinanCial Security Assurance
MGIC
PMIGroup
MBIA
Assured Guaranty
BlackRock
Old Republic
Stem, B. E.
Lane,J.H.
Bacigalupi, V.J.
Wertheim, A.D.
Michener, J.M.
Connolly, R.P.
LeRoy, S.lll
MD, General COUnsel, Secratary
SVP, General COunsel
EVP, CAO, General Counsel & Secretary
VP, General COUnsel, Secreuuy
General COunsel
General Counsel
SVP, Secretuy & General COunsel
EVP, Sec, General Counsel & Chief
$295,385
$360,000
$350,000
$375,000
$250,000
$378,364
$579,072
$401,250
$725,000
$800,000
$1,050,000
$188,257
$0
$0
$0
$0
$0
$0
$874,457
$761,250
$1,075,000
$975,000
$1,300,000
$564,621
$0
$573,409
$0
$382,500
$0
$412,416
$710,856
$925,000
$0
$0 $1,000,000
$637,500
$0
$388,806
$0
$0
$186,257
$1,520,010
$1,498,409
$1,000,000
$1,020,000
$388,806
$598,673
$2,394,467
$2,259,659
$2,075,000
$1,995,000
$1,688,806
$1,163,293
B3%
BBo/o
48%
51o/o
23o/o
51%
(1) Option value c II ol options X .3 to approximate Black-Scholes value
19
jOHNSON ASSOCIATES, INC.
2005 Equity Award Grants
'Note; Dollar value ot market cnp reflects face valu;;. of option& and msMcted $hata <~wards
0.9"%,
$1)
$46
$45
·~~~~~~-·~~··········································
0~9%., ..~.,.,~·+--·~.,.§§.!_i?.., .......................?..'.t'i..
$234
$$3
$23
'., .....................................
-- ' - - - - - - - -$75
-----!
8109
$107
cun.;
0.9%
i}2'3·~
1.2%
0.-1~~
LB"S~!
$89
S1i35
~ 1}
lnd:.xi-:?s 31Nard;,; asst.tmed a.<; fX''t t!f >-'\roeg1 acquisi~icn, ~J~ChY.!~~::- out;t~ft~1;nfJ ~~mpl'~~>·~e! opt!ons :n N~!t0cpo.3!t sut-sid!ar}1 {::: '! Os·:i cf !'-!et[}epc-:tit d:hJfed sh!3r·::s)
{2i
i3}
He~triGt~d stJUI'"J a.~.uards t1~S<~:o:::12~ ?Qof
~4}
prcJ:y f!XG{;t~tw~s cnly·
sh!!lt=S cf 0€~ia .:!tcck ao.,.¥~rfl{~l ~!) e:-:?.!~-:u:Jve.:::
Ex.:~~jx~«:: :~!'.."..':~rdt. dc;nr:mirE.lh::d in f-:.Nc :;h~}~(-:::..
E:xc~ucf!s.
2005 Equity Award Grants (3X Restricted Share Weight)
AG. i::dwards
$352
$319
2.4':.-~
$83
F===--------------!~~-.... ~!:.~?:.:........................ 9:'!:~ ..............................2....3___~---~'-··----r----'"-------S~.l~o~·~~---··--·······
"1.6%
0.5~-;;,
tW%
$113£1
$62
$4t:t
$231
$296
$384
· · · ·1.6.'%
· - - - - - - - - - ' - - - -2.-·~·~0
+ · - - . . : . : . . : . .$88
. . __________ ........................................................
.
0.5';:0,
1.9%
··························--··--·--·--··-~··!-~--··
$55
$19
$74
-~---·~I.~0~~~"----~--~~-9~"-~----····--l-------··~$c__1__4__ ~9...................... _$157
1.7~/;;.
+················----··----·----·····································································
1.n-:,
$50
··········1········--···--'c.·c:.........................
11%
$95
$63
17%
$93
{i} lrtelud-$$ awards assumed ,D.:s p:1IT :oi Amegy .acaui~a:cn. axciu&.!S Oi5!stlnrHng emp::r;yl:'~ (~'!H!.Hl:i in N~!Dt~rx.~;;~·!
(2) Exc!ud~s nham·:l nf Dnxit{ strJCk nwurr.k:t1 t<; f:Xf:;l.';t:t:vf:$
(3} A<:tst<>"t<x.l oh<if~o> »>WJ!<ls diB:.:los<;d it>t P!O'<'J <mlw!i\les tl1!~/
(4) ExchY.!;:s mvar<ls (..'<mominale'l in PNC: share;;
~l:bs~flia~y {~iO%
21
45
$·~·~............................?.1.?? .......... .
$224
of N~tDr?POSt! dth.:i:ed !!hare::)
$169
$264
2005 Equity Award Outstanding
0,3l)b
...-..-...-.-•..••... -
0,2')~
0.4<;;,
6.9·':.'~
%! 1
$250
,,.,,,,,,, ....................................t - - - - - - - · - - - - - " " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' " ' · · ·
.......6c.·c8:: .·'_},;, __,, ____1 .............. ~?~~---··············· _
6.5%
$449
................................_ , _ _,_,,, ......... .j................ : ..... : ... .
''' .§:.?.?~---····················---~---_f'_~~-'-----------------------·
$1 ,604_______________ _
S~5
$31
$480
$193
;,_,_
$!,$02 .
...................
__ __________
$93
$262
~------------------·········
:::17~~}
$222
~:.L5~to
fL 1a;;
7
'!.1%
5.1~<:~
$22<3
B.8%
S54l
8.5~\~t
$1,232
$730
$53
(l} Exc!uce2 &'tfe1RiS {k:nunl~nnwd in P·f".!G ~h;3n~::.;
{2} :Rest~i·'::~e~ ~l&f~ a 1}1!2n::!s dlsG~!:sed ·i:·~: f.!roxy m<B[.I.:1~'.ff:~a: cnftt
(3) h'l:dt.i-i.iRs ~w;~r·:J~; :~S5Hr::ed lj~~ p~i;l ~.;~ Aaw~r~ ::u;:;t:g;;n:.m, r:::.:;h!;;i::.~~ f:utst~~nt1if~S} (:mp:c):l{'<~} v'1:~t!o:1:~ in :·-.:~:10(:paS~! ~:...:t:~~;:J:~v. ·y
E~!'!!u--J;;:i ~;ta:-~-=:1 a: DB-xi« st..J:.:k t1'.\o'3rC'.:3d tr:: s-x·::.:urives
(:::: HJ~:-;, Q~ NG~Oep~-~it t1;hJ~~~t~ J~-~:..::tr(:$~
(·H
.r
2005 Equity Award Outstanding (3X Restricted Share Weight)
'Note: Do liar vatue of market cap retlf'JCt& fa.(;e vnlue of aptla.ns and rt~-stticted share awards
fles1rlct$j
Shaffis
Op1!ons&
li$lr!ctea Sh<Jres
$832
14.8%
$1.830
0.1%
$8
$1.837
4.5%
$1,449
·------·~~~-~···
6.1%
7
4.7%
$.609
1!.1%,
$221
7.0%
S281
$631
1.7~,::.!
3.3~/~
$156
1
(i) !:::<etudes «wm<m d<ltlOmina!etl ir, f'NC !li>;ues
(2) Exciu&~s zll<!ms. af Daxia stod<. f3W3J'ded lu ex<Ztuillies
(3) f~estr;cte~1 Sh.;!rf! a·~"t.ards disclo.::ad far proK}'" uxecuthtf:s en~;
(4) !r.dudes ilVl•1rci<> il!l:'>t><lle~l a~ p;~tt o: All!"rJ'f3~-<1liiSillon. exclt.~!;;a cutot;,miin·g ;m1p!r;yM urrtkxl<> in N;;;tO~puSit sut:s!dilll',l (" 1()% of Ne!Depoiill dilule<l !;hares)
23
$20
$616
l$
Since Moody's has been a public company stock option awards have been valued using the Black Scholes modeL
Unlike in some other organizations, grants were never considered a "free good" without a meaningful cost to
shareholders
-
A detailed analysis shows stock options at Moody's currently have a Black Scholes value in the 30%-35"Yo range using
current assumptions
This result runs counter to that found in many other organizations where larger absolute dividend levels and more
significant declines in price volatility have driven lower mode! values
45%
I
40%
I
~Moody'E
J5c:,~ .[
Assumption5
OJohnson Ass-:'!. Assumptions
?.000
2002
2C03
2004
20CB
Optlon Value: Octoh~r 18th, 2:!l06
Not~: Mo~)cl:':/ S 11S;::tm:p!ioos: 2000-£iJ(J.·L 5 yr:f:f t::rm. ;?,Q·~s ~.::...·tt~Wity 2005: 6 y~:,Qf 1~!ffl~ 23% 'JO!aHtlt':.t
:..HAlfi~on A~s:;~,iat~~ assumpH·:Jrh!: ;' ~~a;;u t?.lrn. vd~H!Iiiy G::.i·tu~ctti:(1 usir.g f'!ist;..m~a~ ;:J.ftd imp~it!d. iBtBs
1
2{)UfJ: 6 yr t0rn\ 2~3~-~ vo~aWily
Moody~s
CorporaUon 1 December 2008
r t
titi
uti
I
Hewitt
Consulting
Contents
~
Background and Objectives
~
Market Observations
m Market Data Summary
~
Appendices
- A: Proxy Analysis by Position
- - -· 8: Study Methodology
08952/PH017VF.PPTITOCCT-13578 12/2008
2
Background and
bjectives
m Moody's Corporation (Moody's) has asked Hewitt Associates (Hewitt) to conduct a
competitive review of the compensation levels for several senior executive roles
----- CEO and direct reports (7 roles)
----· One other senior role (Head of Structured Finance)
m The objective of this study is to compare current compensation levels for the
executives at Moody's to compensation of similar executive positions at
companies of comparable size and service offering in order to:
- Ensure that Moody's compensation practices are competitive with the market
- Provide a benchmark and framework for pay decisions for 2009
m For this competitive review, Hewitt assisted Moody's in developing a new peer
group of 21 companies ("proxy peer group")
----· The Governance & Compensation Committee approved in October
----- This was used for Moody's senior-most roles including the CEO and direct
reports; additional information is included in the Study Methodology section
08952/PH017VF.PPTITOCCT-13578 12/2008
3
r
t
08952/PH017VF.PPTITOCCT-13578 12/2008
r
ti n
4
arket
bservations-lnterpretation of Data
a Pay levels were compared to market median and 75th percentile levels
- Pay is considered at a median market level if it is within 10°/o-15°/o of the median
(above or below) for the relevant peer group
m External competitiveness is one element of the decision making process regarding pay
levels for individual incumbents
a
Other elements of pay decisions may include:
- Degree to which the incumbent's role is "matched" by the market job
- Scope of the market roles relative to the scope of the Moody's roles (in terms of
organizational size, level, and strategic impact)
----- Degree to which internal equity is important for certain roles
----- The level of experience of the incumbent in his/her current role
::>
Market data inherently reflects varying levels of experience and is viewed as pay
for "fully proficient" incumbents in aggregate
- Individual performance assessments
08952/PH017VF.PPTITOCCT-13578 12/2008
5
arket
bservations-Proxy- atched Positions
Actual Compensation Relative to Proxy Peer Group
fll
Aggregate actual total compensation for Moody's senior executives for 2008 is below the competitive range of
market median (+/- 15% of median) and significantly below the 75th percentile of the proxy peer group
~
Base salaries are within the market median competitive range
~
However, actual total cash levels significantly trail the market due to below market actual bonuses paid in 2008
for 2007 performance
fll
2008 long-term incentives approximate the market median but trail the 75th percentile
----
This finding is different from the results of our earlier "salary band analysis" shared in October
--··
That analysis was based on salary level, not on role/responsibilities
2
-------------------------------owo __________________ _
-1
Moody's -2
versus
Market -3
rn Median
D 75th Percentile
-4
-5
-6
Base Salary
08952/PH017VF.PPT/TOCCT-13578 12/2008
Actual Bonus
Long-term
Total Cash
6
Total Direct
arket
bservations-Proxy- atched Positions
Target Compensation Relative to Proxy Peer Group
~
2008 target total compensation (base salary, plus target bonus, plus grant date economic value of most recent
LTl award) for Moody's senior executives is within the competitive range of the market median and below the
75th percentile competitive range
~
Target bonus opportunities are above the market median and below the market 75th percentile
~
Target total cash approximates the market median and trails the 75th percentile
~
Please note that target bonus data is available only for those peers that disclose target bonus opportunities
---
Eight of the peer companies do not disclose target bonus opportunity levels
w Please note that the Group CEO roles have been excluded from this target analysis due to insufficient market
target bonus information for matching roles
20%
10%
0%
Moody's
versus -10%
Market
Ill Median
D 75th Percentile
-20%
-30%
Target Bonus
08952/PH017VF.PPTITOCCT-13578 12/2008
Target Total Cash
7
Target Total Direct
r
t
08952/PH017VF.PPTITOCCT-13578 12/2008
t
u
r
8
arket
bservations-Summary
ethodology 1
m We analyzed data from two peer groups for purposes of this assessment
- Proxy Peers (group of 21 companies approved by the Committee)
- Reference data: Hewitt TCM Financial Services Peers (financial services
companies including banks, diversified financials, and business services
companies regressed to appropriate revenue scope for each position)
:;_:,. Providing market data from a broader sample is often helpful as reference
m Moody's long-term incentive values have been calculated to mirror how peer group
equity awards were valued (to provide an "apples-to-apples" comparison)
----- Stock option values were calculated assuming full term assumptions (as
opposed to expected life under FAS 123R)
- Restricted stock is discounted to reflect the impact of the vesting schedule and
the likelihood of forfeiture
1 See
the Appendix for a more detailed explanation of the study methodology
08952/PH017VF.PPTITOCCT-13578 12/2008
9
arket
bservations-Summary
ethodology
m On an individual incumbent level,
=Base salary plus bonus
Total camp =Total cash plus long-term incentives
- Total cash
-
m However, these definitions do not typically hold up for market median summary
statistics
----- For example, the median base salary and the median bonus need not come
from the same company; therefore median total cash is not necessarily median
salary plus median bonus
m The proxy peer group statistics are "raw" or unadjusted while the TCM Financial
Services data is regressed or "size-adjusted" based on annual revenues
- The summary statistics for the proxy analysis are calculated for each pay
element discretely; therefore, the medians do not add across
----· Meanwhile, for the TCM Financial Services analysis, we based our regressions
on the elements with the strongest correlations to organizational size (namely,
base salary, total cash, and total compensation) and "backed into" bonus and
long-term incentive values
: : · The median summary statistics add across as a result
08952/PH017VF.PPTITOCCT-13578 12/2008
10
Market Data
Summary~Actual
Compensation
Moody's Executive Compensation Market Data: CEO and Direct Reports
Summary of Actual Compensation; totals exclude reference matches
Median
Proxy Data
Position
Actual
Bonus
Base
Moody's Actual
Financial Services Data from Hewitt TCM Database
Total Cash
LTI
Total Direct
Actual
Bonus
Base
Total Cash
LTI
Total Direct
Actual
Bonus
Base
Actual
Total Cash
L Tl
Actual
Total Direct
23
CEO (McDaniel)
$
814,000
$
2,060,000
$
3,059,000
$
2,636,000
$
6,040,000
$
963,000
$
759,000
$
1,722,000
$ 2,852,000
$
4,574,000
$
936,000
$
1,051,000
$ 1,987,000
$ 2,264,400
$
4,251,400
CFO (Huber)
$
408,000
$
501,000
$
835,000
$
501,000
$
1,666,000
$
415,000
$
251,000
$
666,000
$
637,000
$
1,303,000
$
510,000
$
528,000
$ 1,038,000
$ 1,040,400
$
2,078,400
Group CEO (Almeida)
$
411,000
$
638,000
$
1,281,000
$
646,000
$
1,849,000
$
435,000
$
353,000
$
788,000
$
672,000
$
1,461,000
$
450,000
$
401,000
$
851,000
$
765,000
$
1,616,000
Group CEO (Madelain)'
$
411,000
$
638,000
$
1,281,000
$
646,000
$
1,849,000
$
514,000
$
578,000
$
1,092,000
$ 1,173,000
$
2,264,000
$
545,000
$
366,668
$
911,668
$
765,000
$
1,676,668
Total
$ 3,548,000
$
6,025,000
$ 10,305,000
$
6,468,000
$ 3,971,000
$
3,345,468
$ 17,739,000
% Difference (proxy)
12%
$ 7,316,468
-44%
$ 6,848,401
$ 14,164,870
6%
-29%
-20%
Additional benchmarks for reference purposes:
coo
$
372,000
$
743,000
$
1,170,000
$
928,000
$
$
$
2,094,000
Group CEO (UK) (Madelain) 4
626,000
567,000
$
$
340,000
790,000
$
$
966,000
1,357,000
$ 1,070,000
$
607,000
$
$
2,035,000
1,963,000
75th Percentile
Proxy Data
Position
Actual
Bonus
Base
Moody's Actual
Financial Services Data from Hewitt TCM Database
Total Cash
LTI
Total Direct
Base
Actual
Bonus
LTI
Total Cash
Total Direct
Actual
Bonus
Base
Actual
Total Cash
L Tl
23
Actual
Total Direct
CEO (McDaniel)
$
980,000
$
2,755,000
$
3,760,000
$
4,126,000
$
7,886,000
$ 1,081,000
$ 1,478,000
$
2,752,000
$ 4,387,000
$
6,981,000
$
936,000
$
1,051,000
$ 1,987,000
$ 2,264,400
$
4,251,400
CFO (Huber)
$
464,000
$
1,082,000
$
1,612,000
$
936,000
$
2,208,000
$
475,000
$
405,000
$
867,000
$
873,000
$
1,682,000
$
510,000
$
528,000
$ 1,038,000
$ 1,040,400
$
2,078,400
GC (Goggins)
$
429,000
$
874,000
$
1,340,000
$
562,000
$
1,990,000
$
430,000
$
364,000
$
820,000
$
639,000
$
1,422,000
$
400,000
$
281,000
$
681,000
$
612,000
$
1,293,000
$
656,000
$
1,550,000
$
2,248,000
$
1,056,000
$
3,020,000
$
531,000
$
672,000
$
1,200,000
$
985,000
$
2,091,000
$
450,000
$
401,000
$
851,000
$
765,000
$
1,616,000
$
656,000
$
1,550,000
$
2,248,000
$
1,056,000
$
3,020,000
$
628,000
$ 1,098,000
$
1,661,000
$ 1,717,000
$
3,240,000
$
545,000
$
366,668
$
911,668
$
765,000
$
1,676,668
Group CEO (Almeida)
Group CEO (Madelain)
1
Total
$ 4,537,000
$ 10,727,000
$ 15,856,000
$ 10,405,000
$ 25,115,000
$
$
$
$ 3,971,000 $
-12%
% Difference (proxy)
3,345,468 $ 7,316,468 $ 6,848,401 $ 14,164,870
-69%
-54%
-34%
-44%
Additional benchmarks for reference purposes:
coo
$
541,000
$
1,009,000
1,504,000
1
Exchange Rate GBP to USD: 1 to 1.946378 (rate in effect 6/30/2008)
2
Stock options valued at:
3
$
$
1,960,000
12.24
Restricted shares valued at:
36.20 (Applies
Note: Market values have been rounded to the nearest thousandth
08952/PH017VF.PPTITOCCT-13578 12/2008
$
3,373,000
693,000
$
603,000
4
$
1,358,000
$ 1,697,000
$
2,390,000
Financial services data for UK position uses the following peer group of companies: HBOS, 3i Group, Alliance & Leicester, Alliance Trust, Cattles, I CAP,
London Stock Exchange Group, Man Group, Schroders, St. James Holdings, and SVG Capital; long-term incentives for both median and 75th
I
were assumed to be a target percentage of median base salary
11
Summary~Target
Market Data
Compensation
Moody's Executive Compensation Market Data: CEO and Direct Reports
Summary of Target Compensation; totals exclude Moody's Group CEO roles and reference matches
Median
Proxy Data
Position
Target
Bonus
Base
Moody's Target
Financial Services Data from Hewitt TCM Database
Target Total
Cash
LTI
Target
Total Direct
Target
Bonus
Base
Target Total
Cash
LTI
Target
Total Direct
Target
Target Bonus Total Cash
Base
LTI
23
Target
Total Direct
CEO (McDaniel)
$
814,000
$
1,118,000
$
2,236,000
$ 2,636,000
$
4,490,000
$
963,000
$
944,000
$
1,907,000
$ 2,852,000
$
4,759,000
$
936,000
$
1,221,000
$ 2,157,000
$ 2,264,400
$
4,421,400
CFO (Huber)
$
408,000
$
290,000
$
696,000
$
501,000
$
1,201,000
$
415,000
$
243,000
$
658,000
$
637,000
$
1,294,000
$
510,000
$
550,000
$ 1,060,000
$ 1,040,400
$
2,100,400
GC (Goggins)
$
385,000
$
379,000
$
799,000
$
369,000
$
1,209,000
$
373,000
$
190,000
$
563,000
$
409,000
$
972,000
$
400,000
$
320,800
$
720,800
$
612,000
$
1,332,800
Group CEO (Almeida)
$
411,000
$
196,000
$
530,000
$
646,000
$
899,000
$
435,000
$
373,000
$
808,000
$
672,000
$
1,480,000
$
450,000
$
440,000
$
890,000
$
765,000
$
1,655,000
GroupCEO(Madelain)'
$
411,000
$
196,000
$
530,000
$
646,000
$
899,000
$
514,000
$
619,000
$
1,133,000
$ 1,173,000
$
2,306,000
$
545,000
$
551,500
$ 1,096,500
$
765,000
$
1,861,500
Total
$ 2,726,000
$
2,573,000
$
5,673,000
$ 5,176,000
$
10,566,000
$ 2,976,000
$
9%
%Difference (proxy)
2,978,300 $ 5,954,300 $ 5,318,402 $ 11,272,702
16%
5%
3%
7%
Additional benchmarks for reference purposes:
coo
$
372,000
$
663,000
$
1,091,000
$
928,000
$
$
2,263,000
626,000
$
489,000
$
1,115,000
$ 1,070,000
$
2,184,000
Moody's Target
Position
Base
Target Bonus
Target Total
Cash
LTI
Target
Total Direct
Base
Target Bonus
Target Total
Cash
LTI
Target
Total Direct
Target
Target Bonus Total Cash
Base
LTI
23
Target
Total Direct
CEO (McDaniel)
$
980,000
$
1,632,000
$
3,006,000
$ 4,126,000
$
6,277,000
$ 1,081,000
$
1,219,000
$
2,764,000
$ 4,387,000
$
6,888,000
$
936,000
$
1,221,000
$ 2,157,000
$ 2,264,400
$
4,421,400
CFO (Huber)
$
464,000
$
475,000
$
862,000
$
936,000
$
1,568,000
$
475,000
$
299,000
$
804,000
$
873,000
$
1,624,000
$
510,000
$
550,000
$ 1,060,000
$ 1,040,400
$
2,100,400
GC (Goggins)
$
429,000
$
553,000
$
973,000
$
562,000
$
1,470,000
$
430,000
$
242,000
$
706,000
$
639,000
$
1,342,000
$
400,000
$
320,800
$
720,833
$
612,000
$
1,332,833
Group CEO (Almeida)
$
656,000
$
220,000
$
588,000
$ 1,056,000
$
1,133,000
$
531,000
$
606,000
$
1,180,000
$
985,000
$
2,107,000
$
450,000
$
440,000
$
890,000
$
765,000
$
1,655,000
Group CEO (Madelain)'
$
656,000
$
220,000
$
588,000
$ 1,056,000
$
1,133,000
$
628,000
$
1,007,000
$
1,655,000
$ 1,717,000
$
3,283,000
$
545,000
$
551,500
$ 1,096,500
$
765,000
$
1,861,500
Total
$ 3,225,000
$
3,977,000
$
7,298,000
$ 8,302,000
$
13,785,000
$ 2,976,000
$
2,978,300
$ 5,954,333
$ 5,318,402
%Difference (proxy)
-8%
-25%
-18%
-36%
$ 11,272,735
-18%
Additional benchmarks for reference purposes:
coo
$
Group CEO (UK) (Madelain)
541,000
$
737,000
$
1,226,000
$ 1,960,000
$
1
Exchange Rate GBP to USD: 1 to 1.946378 (rate in effect 6/30/2008)
2
Stock options valued at:
$
12.24
Restricted shares valued at:
$
36.20 (Applies to • • • • • • • •
3
$
$
3,086,000
4
693,000
825,000
$
$
654,000
865,000
4
1,633,000
1,690,000
$ 1,697,000
$ 1,361,000
$
$
3,268,000
3,051,000
Financial services data for UK position uses the following peer group of companies: HBOS, 3i Group, Alliance & Leicester, Alliance Trust, Cattles, ICAP, London
Stock Exchange Group, Man Group, Schroders, St. James Holdings, and SVG Capital; long-term incentives for both median and 75th percentiles were assumed to
be a target percentage of median base salary
Note: Market values have been rounded to the nearest thousandth
08952/PH017VF.PPTITOCCT-13578 12/2008
$
$
12
n I
r
iti
08952/PH017VF.PPTITOCCT-13578 12/2008
13
ALLIANCEBERNSTEIN HOLDING L.P.
SANDERS, LEWIS A.
Chairman of the Board and CEO
$4,719,749,000
$283,250
$0
$283,250
$19,325,689
$19,608,939
BLACKROCKINC.
F1NK, LAURENCE D.
Chairman and CEO
$4,844,655,000
$515,000 $25,235,000
$25,750,000
$18,173,452
$43,923,452
CME GROUP INC.
DONOHUE, CRAIG S.
CEO
$1,756,101,000
$875,500
$1,301,622
$3,490,372
$2,694,725
CORPORATE EXECUTIVE BOARD CO
MONAHAN III, THOMASL. CEO
DUN & BRADSTREET CORP
ALES!O, STEVEN W.
EATON VANCE CORP
$1,313,250
$875,500
$154,500
$2,188,750
$1,751,000
$532,716,000
$618,000
$675,191
$772,500
$1,293,191
$1,922,225
$1,599,200,000
$896,100
$1,931,250 $1,164,930
$2,827,350
$2,061,030
$3,212,240
$6,039,590
HAWKES, JAMES B. I FAUST Chairman of the Board and CEO
$1,084,100,000
$695,250
$8,497,500
$9,192,750
$3,132,074
$12,324,824
EQUIFAXINC
SMITH, RICHARD F.
Chairman and CEO
$1,843,000,000 $1,390,500
$2,080,559 $1,390,500
$3,471,059
$4,241,200
$7,712,259
FACTSET RESEARCH SYSTEMS INC
HADLEY, PHILIP A.
Chairman and CEO
$475,801,000
$283,250
$633,450
$549,004
$1,465,704
FAIR ISAAC CORP
GREENE, MARK N.
CEO andDir
$822,236,000
$566,500
$437,750
$1,095,750
$2,100,000
FEDERA TED INVESTORS INC
DONAHUE, J. CHRISTOPHEl President and CEO
$1,127,644,000
$957,900
$2,266,000
$3,223,900
$499,012
$3,722,912
FRANKLIN RESOURCES INC
JOHNSON, GREGORY E.
President and CEO
$6,205,769,000
$803,536
$3,244,500
$4,048,036
$4,011,290
$8,059,326
INTERACTIVE DATA CORP
CLARK, STUART J.
President and Chief Executive Office
$689,610,000
$584,010
$747,008
$1,039,360
$2,370,378
INVESCO LTD.
FLANAGAN, MARTIN L.
President and CEO; Dir
$3,878,900,000
$813,700
$4,892,500
$5,706,200
$1,550,034
$7,256,234
MCGRAW -HILL COMPANIES INC
MCGRAW, III, HAROLD W. Chairman, President and CEO
$6,772,281,000 $1,339,000
$2,060,000 $1,071,200
$3,399,000
$2,410,200
$4,281,858
$7,680,858
NASDAQ OMX GROUP, INC.
GREIFELD, ROBERT
President and CEO
$2,436,592,000 $1,030,000
$3,914,000 $2,060,000
$4,944,000
$3,090,000
$4,683,200
$9,627,200
NYSE EURONEXT
NIEDERAUER, DUNCAN L
CEO and Director
$4,158,000,000 $1,002,500
$2,060,000 $2,500,000
$3,062,500
$3,502,500
$2,635,543
$5,698,043
RISKMETRICS GROUP INC
BERMAN, ETHAN
CEO and Chairman of the Board
$309,000
$618,000
$618,000
$0
$618,000
THOMSON REUTERS CORP
HARRINGTON, RICHARD J. President and CEO
$1,569,839 $1,489,024
$3,058,863
$2,978,047
$3,009,035
$6,067,898
VERISK ANAL YTICS, INC.
COYNE, FRANK
$2,060,000 $2,781,000
$2,985,614
$3,706,614
$0
$2,985,614
Chairman and CEO
Chairman of the Board, President, Cl
$240,301,000
$7,296,000,000 $1,489,024
$802,200,000
Count
McDaniel, Ray
$925,614
$309,000
$525,609
$1,004,250
$1,331,018
$1,133,000
$1,109,619
19
19
19
12
19
12
19
19
$575,255
$690,229
$648,018
$1,167,634
$1,253,143
$1,067,555
$2,840,169
Median
$1,756,101,000
$813,700
$2,060,000 $1,ll8,065
$3,058,863
$2,235,615
$2,635,543
$6,039,590
Average
$2,699,202,895
$809,349
$3,337,163 $1,284,038
$4,146,513
$2,202,850
$3,929,610
$8,076,122
75th o/oile
$4,438,874,500
$980,200
$2,755,250 $1,631,768
$3,759,547
$3,006,035
$4,126,245
$7,885,792
$936,000
$1,051,000 $1,221,000
$1,987,000
$2,157,000
$2,264,400
$4,251,400
Chairman and CED
Notes:
1. Market cash data was aged to January 1, 2009 using an annualized rate of 3.0%
2. Target compensation was excluded where target bonus was not disclosed
3. Benchmark data hom Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum oflong-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
7. Morningstar's CEO was excluded as he owns 61.4% of the company and at his request, received $100,000 in base salary and no cash or equity incentive grant
8. UnionBanCal's CEO was excluded as a portion of his salary is paid by the Bank ofT okyo and he is not eligible for bonus or equity awards
08952/PH017VF.PPTITOCCT-13578 12/2008
$566,500
$812,218,000
25th o/oile
MOODY'S
$309,000
$2,781,000
$916,700
14
ALLIANCEBERNSTEIN HOLDING LP
JOSEPH, JR, ROBERT H.
SVP and CFO
$4,719,749,000
$190,550
$1,081,500
$1,272,050
$936,000
$2,208,050
BLACKROCK INC.
AUDET, PAULL
Mng Dir and CFO, Head of Cash Mgt Bus
$4,844,655,000
$267,800
$2,616,200
$2,884,000
$2,346,303
$5,230,303
CME GROUP INC.
PARISI, JAMES E.
CFO
$1,756,101,000
$334,750
$500,640
$289,688
$835,390
$624,438
$402,678
$1,238,068
$1,027,115
CORPORATE EXECUTIVE BOARD CO
YOST, TIMOTHY R.
CFO
$532,716,000
$412,000
$77,250
$207,406
$489,250
$619,406
$501,450
$990,700
$1,120,856
DUN & BRADSTREET CORP
KONIDARIS, ANASTASIOS G.
SVP and CFO
$1,599,200,000
$386,250
$362,109
$289,688
$748,359
$675,938
$492,289
$1,240,648
$1,168,227
EATON VANCE CORP
STEUL, WILLIAM M. I WHELAN, ROBERT l
VP, Treasurer and CFO
$1,084,100,000
$324,450
$1,287,500
$215,057
$1,827,007
$1,843,000,000
$448,050
$376,572
$851,120
$1,675,742
$475,801,000
$262,650
$458,350
$487,985
$1,208,985
$580,310
$1,116,363
$789,571
$2,983,471
$113,050
$1,216,294
$355,520
$1,018,204
EQUIFAXINC
ADREAN,LEE
Corporate VP and CFO
FACTSET RESEARCH SYSTEMS INC
WALSH, PETER G.
SVP, CFO and Treasurer
FAIR ISAAC CORP
OSBORNE, CHARLES M.
EVP, CFO
$822,236,000
$412,000
$124,053
FEDERATED INVESTORS INC
DONAHUE, THOMAS R.
President, FIT Holdings, Inc. and VP, Treasurer and'
$1,127,644,000
$793,100
$1,400,800
$1,611,950
$268,830
$824,622
$716,880
$721,000
$206,000
$536,053
$618,000
$2,193,900
FRANKLIN RESOURCES INC
LEWIS, KENNETH A
SVP, CFO and Treasurer
$6,205,769,000
$407,994
$695,250
INTERACTIVE DATA CORP
HAJDUCKYIII, ANDREW l
EVP, CFO and Treasurer
$689,610,000
$372,860
$289,824
INVESCOLTD.
STARR,LORENM.
Sr Mng Dir and CFO (U.S.A.)
$3,878,900,000
$463,500
$1,236,000
$1,699,500
$1,086,375
$2,785,875
MCGRAW-HILL COMPANIES INC
BAHASH, ROBERT l
EVP, CFO
$6,772,281,000
$901,868
$1,189,650
$2,091,518
$1,366,224
$3,457,742
$435,107,000
MORNINGSTAR, INC.
COOLEY, SCOTT
CFO
$201,972
$247,200
NASDAQ OMX GROUP, INC.
WARREN, DAVID P.
EVP, CFO
$2,436,592,000
$437,750
$978,500
NVSE EURONEXT
VANDER DOES DE WILLEBOIS, JOOST
EVP and Acting CFO
$4,158,000,000
$539,746
$769,050
$1,103,244
$248,548
$662,684
$621,408
$449,172
$515,000
$1,416,250
$952,750
$1,308,795
$114,296
$563,467
$615,034
$2,031,284
$357,634
$1,666,430
$1,568,000
$1,198,310
$976,928
$1,567,784
RISKMETRICS GROUP INC
OBSTLER, DAVID
CFO
$240,301,000
$242,050
$226,600
$197,640
$666,290
THOMSON REUTERS CORP
DALEO, ROBERT D.
EVP and CFO
$7,296,000,000
$878,867
$926,567
$878,867
$1,805,434
$1,757,734
$2,175,738
$3,98I,IJJ
$3,933,472
UNIONBANCAL CORP
MATSON, DAVID L
Vice Chainnan and CFO
$2,992,416,000
$494,797
$247,200
$399,640
$741,997
$894,437
$1,269,564
$2,011,561
$2,164,001
VERISK ANAL YTICS, INC.
ANGUILLARE, MARK
CFO, SVP
$802,200,000
$264,472
$309,000
$500,580
$573,472
$765,052
$438,846
$1,012,318
$1,203,898
Count
21
21
21
10
21
10
21
21
10
$802,200,000
$267,800
$289,824
$253,619
$662,684
$622,166
$357,634
$1,116,363
$1,132,699
Median
$1,756,101,000
$407,994
$500,640
$289,688
$835,390
$696,409
$501,450
$1,666,430
$1,201,104
Average
$2,605,351,333
$430,356
$7JJ,325
$380,425
$1,163,681
$824,604
$747,271
$1,910,951
$1,592,859
75th%Iie
$4,158,000,000
$463,500
$1,081,500
$475,345
$1,611,950
$862,090
$936,000
$2,208,050
$1,567,946
$510,000
$528,000
$550,000
$1,038,000
$1,060,000
$1,040,400
$2,078,400
$2,100,400
25th%ile
MOODY'S
Huber, Linda
Executive Vice President and CFO
Notes:
1. Market cash data was aged to January 1, 2009 usmg an annualized rate ofJ.O%
2. Target compensation was excluded where target bonus was not disclosed
3. Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum of long-tenn incentive (L 11) plus cash
6. L11 is the present value of the most recent awards (stock options, perfonnance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
$468,650
15
roup CE
INVESCO LTD.
TAYLOR, PHILIP A.
Sr Mng Dir and Head of NAn Retail (Canada)
RISKMETRICS GROUP INC
MINA, JORGE
Co-Head of Risk Business
INVESCO LTD.
LO, ANDREW T. S.
Sr Mng Dir and CEO oflnvesco Asia Pacific
NYSE EURONEXT
$3,878,900,000 $664,861
$2,790,920
$3,455,781
$1,799,672
$5,255,453
$240,301,000 $164,800
$206,000
$370,800
$165,240
$536,040
$3,878,900,000 $412,000
$1,442,000
$1,854,000
$185,991
$2,039,991
KINNEY, CATHERINE R Group EVP and Head of Global Listings
$4,158,000,000 $772,500
$901,250
$1,673,750
$784,287
$2,458,037
BLACKROCKINC.
KAPITO, ROBERT S.
President
$4,844,655,000 $412,000 $19,232,160
$19,644,160
$ll,027,133
$30,671,293
NYSE EURONEXT
FREEDBERG, HUGH
Group EVP and Head of Global Derivatives
$4,158,000,000 $793,100
$1,586,200
$2,379,300
$677,958
$3,057,258
FEDERATED INVESTORS INC
FISHER, JOHN B.
President and CEO of Federated Advisory Com1 $1,127,644,000 $628,300
$1,977,600
$2,605,900
$1,146,154
$3,752,054
MCGRAW -HILL COMPANIES INC
PRESIDENT
DUN & BRADSTREET CORP 3
Ldr Global Solutions
DUN & BRADSTREET CORP 3
Leader International
3
President-NA Personal Solutions
3
President-users
EQUIFAX INC
EQUIFAX INC
EQUIFAX INC3
Data pulled from Hewitt TCMdatabase submission and is not publicly available
President-NA Commercial Solutions
UNIONBANCAL CORP
3
SREVP Retail Banking
Count
25th o/oile
12
14
14
$367,766,500 $332,722
6
14
6
14
14
6
$184,936 $166,105
$495,062
$477,456
$332,659
$886,513
$872,275
Median
$1,916,737,500 $410,500
$638,424 $196,320
$1,281,024
$529,553
$646,454
$1,849,197
$898,518
Average
$2,218,732,167 $486,370
$2,162,332 $208,582
$2,648,702
$550,685
$1,406,139
$4,054,841
$1,000,549
75th o/oile
$3,948,675,000 $655,721
$1,550,150 $220,362
$2,24 7,975
$587,631
$1,055,687
$3,019,662
$1,132,586
MOODY'S
Madelain, Michel
Chief Operating Officer, Moody's Investors Service
$545,000
$366,668 $551,500
$911,668
$1,096,500
$765,000
$1,676,668
$1,861,500
MOODY'S
Almeida, Mark
President, Moody's Analytics
$450,000
$401,000 $440,000
$851,000
$890,000
$765,000
$1,616,000
$1,655,000
Notes:
I. Market cash data was aged to January I, 2009 using an annualized rate of 3.0%
2. Target compensation was excluded where target bonus was not disclosed
3. Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum of long-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
16
eneral Counsel
MCGRAW-HILL COMP ANIESINC
VITTOR, KENNETH M.
EVP and General Cmmsel
VERISK ANALYTICS, INC.
THOMPSON, KENNETH
SVP, Gen Cmmsel, Corp Sec
EQUIFAXINC
MAST, KENT E.
Corporate VP and Chief Legal Officer
NASDAQ OMX GROUP, INC.
KNIGHT, EDWARD
EATON VANCE CORP
DYNNER, ALAN R I PELLETIEIVP, Secretary and Chief Legal Officer
CME GROUP INC
3
$6,772,281,000 $549,505
$404,520
$1,079,170
$337,597 $242,256
$741,357
$646,016
$333,840
$1,075,197
$979,856
$978,500 $515,000
$1,416,250
$952,750
$615,034
$2,031,284
$1,567,784
$334,281
$2,306,731
$1,972,450
$1,084,100,000 $324,450 $1,648,000
$1,756,101,000
$1,599,200,000
UNIONBANCAL CORP 3
SR. EVP and General Cmmsel
$2,992,416,000
6
25th o/oile
$1,470,425,000 $334,750
$316,149 $240,741
Median
$1,799,550,500 $384,705
Average
$2,410,736,250 $394,061
75th o/oile
6
6
$691,327
$641,976
$333,950
$1,076,190
$971,592
$449,988 $378,628
$926,621
$799,383
$369,401
$1,471,997
$1,208,733
$673,329 $415,223
$1,085,792
$815,428
$459,593
$1,545,385
$1,233,013
$2,575,548,000 $429,253
$874,470 $553,110
$1,340,159
$972,835
$562,405
$1,989,669
$1,470,153
$400,000
$281,000 $320,800
$681,000
$720,800
$612,000
$1,293,000
$1,332,800
Senior Vice President-General Counsel
aged to January I, 2009 using an annualized rate of 3.0%
2. Target compensation was excluded where target bonus w.~s not disclosed
3. Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum oflong-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
$1,437,610
Data pulled from Hewitt TCM database submission and is not publicly available
Com!
w.~s
$1,864,823
$1,033,090
$1,843,000,000 $403,760
MD General Cmmsel & Corp Seer
Notes:
I. Market cash data
$752,938
$674,650
EVP, Gen Cmmsel andChiefRegOfficer $2,436,592,000 $437,750
Leader Legal
Goggins, John
$1,111,885
$309,000 $667,440
DUN & BRADSTREET CORP 3
MOODY'S
$562,380
$802,200,000 $365,650
17
Cl
CORPORATE EXECUTIVE BOARD C TOBIN, PH.D., GLENN I General Manager
SVP, Tech and CIO
$532,716,000 $489,250
$46,350 $242,791
$535,600
$732,041
$835,750
$1,371,350
$1,567,791
$1,599,200,000 $386,250 $482,813 $309,000
$869,063
$695,250
$636,599
$1,505,661
$1,331,849
$386,250
$463,500
$331,610
$717,860
$795,110
$414,989
$1,856,989
$709,670
$1,831,340
$1,610,920
$1,616,307 $2,000,706
$3,660,875
$3,617,012
6
5
DUN & BRADSTREET CORP
VIELEHR, BYRON C.
FAIR ISAAC CORP
NANN, BERNHARD
SVP, Chief Tech Officer
FRANKLIN RESOURCES INC
BOLT, JENNIFER J.
EVP-Ops and Tech
NASDAQ OMX GROUP, INC.
EWING, ANNA M.
EVP of Ops & Tech and CI( $2,436,592,000 $386,250 $735,420 $515,000
$1,121,670
THOMSON REUTERS CORP
WILENS, MICHAEL E.
EVP and Chief Tech Office! $7,296,000,000 $808, !53 $852,016 $808, !53
$1,660,169
Cmmt
$822,236,000 $309,000
$77,250 $154,500
$6,205,769,000 $463,500 $978,500
6
6
6
$1,442,000
5
6
$901,250
5
6
25th %ile
$1,016,477,000 $386,250 $178,641 $242,791
$618,966
$695,250
$470,392
$1,404,928
$1,331,849
Median
$2,017,896,000 $424,875 $609,116 $309,000
$995,366
$732,041
$673,134
$1,668,501
$1,567,791
Average
$3,148,752,167 $473,734 $528,725 $405,889
$1,002,459
$881,669
$821,554
$1,824,013
$1,784,536
75th %ile
$5,263,47 4, 750 $482,813 $822,867 $515,000
$1,361,918
$901,250
$804,230
$1,850,577
$1,610,920
Notes:
I. Market cash data was aged to January I, 2009 using an annualized rate of 3.0%
2. Target compensation was excluded \\here target bonus was not disclosed
3. Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum of long-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
18
Division CE
FRANKLIN RESOURCES INC
YUN, WILLIAM Y.
EVP-Institutional
$6,205,769,000 $540,750
$927,000
$1,467,750
$345,841
$1,813,591
INVESCO LTD.
YERBURY, ROBERT J.
Sr Mng Dir and Head of UK Retail (U.K.)
$3,878,900,000 $676,287
$2,993,404
$3,669,690
$1,024,648
$4,694,338
NYSE EURONEXT
THEODORE, JEAN-FRANCOIS
Deputy CEO, Head of Strategy and Dir
$4,158,000,000 $839,605
$1,505,644
$2,345,248
$699,542
$3,044,790
THOMSON REUTERS CORF
ROWLAND~
President and CEO, Thomson Financial
$7,296,000,000 $844,016
$1,721,130 $1,688,032
$2,565,146
$1,278,628
$3,843,774
EATON VANCE CORF
RICHARDSON, DUNCAN W.
EVP and Chief Equity Invest Officer
$1,084,100,000 $360,500
$4,223,000
$4,583,500
$1,566,037
$6,149,537
MORNINGSTAR, INC
REINKEMEYER, PATRICK
President of Morningstar Associates
BLACKROCK INC
NOVICK, BARBARA G.
Vice Chairman
FEDERATED INVESTORS INC
RISKMETRICSGROUF INC
SHARON
$2,532,048
$435,107,000 $231,750
$1,112,400
$1,344,150
$467,508
$1,811,658
$4,844,655,000 $309,000
$6,180,000
$6,489,000
$4,998,987
$11,487,987
MALONEY, EUGENE F.
VP andEVP, Federated Investors Mgt Compa $1,127,644,000 $875,500
$1,153,600
$2,029,100
$446,026
$2,475,126
LEGGETT, RICHARD
Head of Governance Business
$240,301,000 $300,000
$247,200
$547,200
$354,430
$901,630
FACT SET RESEARCH SYSTEMS INC
KENNEDY, KIERAN M.
SVP, Dir of Invest Banking and Brokerage Sv:
$475,801,000 $242,050
$375,950
$618,000
$396,497
$1,014,497
INTERACTIVE DATA CORF
HEPSWORTH, MARK
President, Institutional Business
$689,610,000 $334,750
$234,928
$407,900
$977,578
MORNINGSTAR INC
GILLIS ODELBO, CATHERINE
President, Individual Business
$435,107,000 $231 '750
$453,200
$278,420
$963,370
FACT SET RESEARCH SYSTEMS INC
FRANKENFIELD, MICHAEL D.
SVP andDir of U.S. Invest Mgt Svs
$475,801,000 $272,950
$473,800
$746,750
$487,985
$1,234,735
ALLIANCEBERNSTEIN HOLDING L.P.
FEDAK, MARILYN G
EVP
$4,719,749,000 $164,800
$4,120,000
$4,284,800
$6,606,000
$10,890,800
$178,523
$569,678
$513,273
$684,950
$3,810,676
$921,173
ALLIANCEBERNSTEINHOLDINGL.P.
FAY, SHARON E.
EVP
$4,719,749,000 $164,800
$4,017,000
$4,181,800
$6,426,000
$10,607,800
BLACKROCK INC
DOLL, ROBERT C
Vice Chairman
$4,844,655,000 $412,000 $21,630,000
$22,042,000
$6,935,820
$28,977,820
NASDAQ OMX GROUF, INC
CONCANNON, CHRISTOPHERR.
EVP of Transaction Svs
$2,436,592,000 $386,250
$784,860
$946,197
$2,117,307
BLACKROCK INC
BULLER STEVEN E.
MngDir, Head of AcctngPolicy andControh $4,844,655,000 $267,800
$1,570,750
$1,661,012
$3,499,562
BOURNE, JOANN M.
EVP
$2,992,416,000 $358,123
$164,800
$252,350
$522,923
$610,473
$438,487
$961,410
$1,048,960
BOEHNING, RICHARD
SVP
$802,200,000 $311,377
$103,000
$565,470
$414,377
$876,847
$444,972
$859,349
$1,321,819
RISKMETRICSGROUF INC
BERMAN, GREGG
Co-Head of Risk Business
$240,301,000 $195,700
$206,000
$401,700
$165,240
$566,940
FRANKLIN RESOURCES INC
ADVANI, VIJAY C.
EVP-Global Advisor Svs
$6,205,769,000 $540,750
$1,545,000
$2,085,750
$714,698
$2,800,448
UNIONBANCAL CORF
VERISK
ANALYTIC~
INC
MCGRAW-HILL COMPANIES INC'
PRESlDENT
MCGRAW-HILL COMPANIES INC'
PRESlDENT
MCGRAW-HILL COMPANIES INC'
EXEC VP-GROUF PUBLISHER
DUN & BRADSTREET CORF'
Leader J\1DR
DUN & BRADSTREET CORF'
Ldr Traditional S&MS
$1,171,110
$901,250
$1,838,550
$1,847,447
Data pulled from Hewitt TCMdatabase submission and is not publicly av.rilable
Connt
25th %ile
$515,000
27
27
7
27
7
27
27
7
$435,107,000 $254,925
$198,053
$158,715
$535,061
$464,996
$350,136
$923,935
$750,083
27
Median
$1,084,100,000 $311,377
$784,860
$252,350
$1,171,110
$610,473
$446,026
$1,811,658
$1,048,960
Average
$2,377,205,333 $390,091
$2,081,674
$487,431
$2,471,765
$876,431
$1,415,653
$3,887,418
$1,408,657
75th %ile
$4,719,749,000 $457,024
$1,645,940
$540,235
$2,455,197
$889,049
$1,151,638
$3,671,668
$1,584,633
Notes:
1. Market cash data was aged to January 1, 2009 using an annualized rate of 3.0%
2. Target compensation was excluded where target bonus was not disclosed
3. Benchmark data from He-witt's 2008 Total Compensation Measurement (T C:JVQ Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum of long-term incentive (LTI) plus cash
6. L TI is the present value of the most recent a-wards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
19
Human Resources
EQUIFAXINC
RUSHING, CORETHA M.
Corporate VP and Chief HR Officer
$I,843,000,000
$4I2,000
$343,63 I
MCGRAW-HILL COMPANIES INC
MURPHY, DAVID L.
EVPHR
$6,772,28I,OOO
$638,29I
$846,248
CORPORATE EXECUTIVE BOARD CO
JONES, MELODY L.
Chief HR Officer
$532,716,000
$442,900
$103,000
$22I,I22
$545,900
FAIR ISAAC CORP
DEAL, RICHARD S.
SVP, Chief HR Officer
$822,236,000
$278,100
$114,I76
$139,050
$392,276
DUN & BRADSTREET CORP
UNIONBANCAL CORP
3
3
Leader HR & Winning Culture
$I,599,200,000
EVP and Director--Human Resources
$2,992,4I6,000
$247,200
$755,63 I
$659,200
$712,760
$I,468,39I
$827,423
$2,311,962
$664,022
$668,600
$I,2I4,500
$I,332,622
$4I7,I50
$4I4,52I
$806,796
$83 I,671
$I,484,539
$I,371,960
Data pulled from Hewitt TCM database submission and is not publicly available
Count
25th %iie
$I,599,200,000
$337,425
$I43,I50
$I86,604
$480,575
$509, I98
$4I4,52I
$806,796
$850,535
Median
$I,843,000,000
$383,438
$343,63 I
$224,828
$755,63 I
$599,540
$55 I,394
$I,382,I76
$I,049,203
Average
$2,805,826,600
$409,85 I
$378,910
$223,864
$788,760
$576,605
$564,608
$I,353,369
$I,075,509
75th %iie
$2,992,4I6,000
$4I2,000
$447,344
$262,088
$830,782
$666,947
$712,760
$I,468,39I
$I,274,I77
Notes:
1. Market cash data was aged to January 1, 2009 using an annualized rate of3.0%
2. Target compensation was excluded where target bonus was not disclosed
3. Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
4. Total cash compensation is the sum of base salary and bonus
5. Total compensation is the sum oflong-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
20
c
ALLIANCEBERNSTEIN HOLDING L.P.
LIEBERMAN, GERALD M.
Dir, President and COO
$4,719,749,000 $206,000 $4,171,500
$4,377,500
$6,615,000
$10,992,500
CME GROUP INC.
GILL, PHUPINDER S.
President
$1,756,101,000 $618,000
$927,000 $463,500
$1,545,000
$1,081,500
$541,041
$2,086,041
$1,622,541
DUN & BRADSTREET CORP
MATHEW, SARA
President and COO
$1,599,200,000 $576,800 $1,036,438 $663,320
$1,613,238
$1,240,120
$1,838,905
$3,452,143
$3,079,025
FACT SET RESEARCH SYSTEMS INC
DICHRISTINA, MICHAEL F. President, COO and Dir
$475,801,000 $283,250
$633,450
$916,700
$549,004
$1,465,704
FAIR ISAAC CORP
CAMPBELL, MICHAEL H.
EVP, COO
$822,236,000 $386,250
$104,895 $193,125
$491,145
$579,375
$803,344
$1,294,489
$1,382,719
$277,815 $238,249
$635,225
$595,659
$407,900
$1,043,125
$1,003,559
$671,288
$2,051,488
$2,000,706
$3,660,875
INTERACTIVE DATA CORP
KING, JOHN L.
COO, COO ofFT Interactive Data
$689,610,000 $357,410
MORNINGSTAR, INC.
HUANG, TAO
coo
$435,107,000 $309,000 $1,071,200
THOMSON REUTERS CORP
SMITH, JAMES C.
EVP and COO
$7,296,000,000 $808,153
$852,016 $808,153
$1,660,169
UNIONBANCAL CORP
FLYNN, PHILIP B.
Vice Chairman and COO
$2,992,416,000 $689,308
$515,000 $695,250
$1,204,308
$1,384,558
$2,539,128
$3,743,436
$3,923,686
VERISK ANAL YTICS, INC.
STEPHENSON, SCOTT
COO, EVP
$802,200,000 $432,406
$618,000 $778,680
$1,050,406
$1,211,086
$1,051,752
$2,102,158
$2,262,838
10
7
10
10
7
Collllt
25th o/oile
10
10
7
$1,616,307
$3,617,012
$717,757,500 $321, I 03
$540,750 $350,875
$950,127
$838,580
$579,575
$1,612,150
$1,502,630
Median
$1,210,718,000 $409,328
$742,733 $663,320
$1,292,254
$1,211,086
$927,548
$2,094, I 00
$2,262,838
Average
$2,15 8,842,000 $466,658 $1,020,731 $548,611
$1,487,389
$1,101,229
$1,701,807
$3,189,196
$2,413,054
75th o/oile
$2,683,337,250 $607,700 $1,009,078 $736,965
$1,596,178
$1,312,339
$1,960,255
$3,608,692
$3,348,019
Notes:
I. Market cash data was aged to January I, 2009 using an annualized rate of 3.0%
2.
3.
4.
5.
10
$1,380,200
Target compensation was excluded where target bonus was not disclosed
Benchmark data from Hewitt's 2008 Total Compensation Measurement (TCM) Database is not publicly available, but is reflected in the totals
Total cash compensation is the sum of base salary and bonus
Total compensation is the sum of long-term incentive (LTI) plus cash
6. LTI is the present value of the most recent awards (stock options, performance shares, restricted stock)
08952/PH017VF.PPTITOCCT-13578 12/2008
21
tu
08952/PH017VF.PPTITOCCT-13578 12/2008
t
22
I
Study
ethodology-Components of Pay
m The following components of pay were reviewed in this analysis:
- Salary
·----· Target & Actual Bonus
- Target & Actual Total Cash (salary plus bonus)
----- Long-term Incentives (L Tl) (grant date value of most recent grant)
----- Target & Actual Total Direct Compensation (total cash plus LTl)
m Moody's compensation reflects:
- Current compensation (base salary, target and actual bonus, and long-term
incentives)
·----· Moody's LTl awards (stock options and restricted stock) have been valued in
the following manner:
. Stock options using the Black-Scholes option pricing model
----· Note: Valued using full term assumptions (not expected life as is used for
FAS 123R purposes) for both Moody's and the external market
. , Restricted stock at a discount to face value (to incorporate the impact of the
vesting schedule and the likelihood of turnover during the vesting period)
08952/PH017VF.PPTITOCCT-13578 12/2008
23
Study
ethodology-Proxy Data
Proxy Company Data
m For base salary, annual bonus, and total cash, data was taken from the most
recent proxy
m LTl grant information was also taken from the most recent proxy (generally grants
made in 2007). Awards were valued as follows:
- Stock options: Black-Scholes methodology with adjustments for program
specific features such as vesting schedule and treatment upon termination
----- Restricted stock: Face value at date of grant with adjustments for risk of
forfeiture, treatment upon termination, and dividend policy
·- - · Performance plans: Target face value at date of grant with adjustments for risk
of forfeiture, treatment upon termination, and program leverage
----- One-time, special awards were annualized over a period of 5 years
m Cash compensation aged to 1/1/2009 at 3.0o/o annually
08952/PH017VF.PPTITOCCT-13578 12/2008
24
Study
ethodology-Hewitt TC
Data
Hewitt TCM Data
m Data derived from "Financial Services" companies: selected banking, diversified
financial, and business services companies
m Data size-adjusted to reflect revenue scope of responsibility for Moody's
incumbents
~
Analysis is based on "target" compensation: base salary, annual target bonus, and
most recent actual LTl awards
m LTl valuation methodology consistent with proxy analysis
m Data collected as of 4/1/2008
m Cash compensation aged to 1/1/2009 at 3.0o/o annually
08952/PH017VF.PPTITOCCT-13578 12/2008
25
Study
ethodology-Data Sources
Peer Groups and Data Sources
Element
Peer Group
Proxy Analysis
Proxy Peers:
~
Data Source
Job Matching
Data Analysis/Method of
Presentation
08952/PH017VF.PPTITOCCT-13578 12/2008
Group of 21 competitors approved by
the Compensation Committee
Survey Analysis
Custom Extraction from Hewitt
Total Compensation Measurement™
(TCM ™) Database:
~
Financial services (including banks),
diversified financials, and business
services companies
~
Hewitt TCM database
~
Public disclosures; proxy statements
~
Some peer company non-NEO data
from Hewitt TCM Database, as
indicated
~
CEO, CEO's direct reports, and one
other position (Head of Structured
Finance)
m CEO, CEO's direct reports, and one
!iii'!
Tabular data, by individual, with
percentiles
~
Aggregated tabular data with
percentiles
~
Raw statistics (peer group similar to
Moody's in terms of size on average)
~
Regressed statistics (peer companies
generally larger than Moody's;
regression analysis used to "size
adjust" the data)
26
other position (Head of Structured
Finance), as reference, in the
Appendix
Study
ethodology-Proxy Peer
Name
roup
HQ
(State)
Industry
ALLIANCEBERNSTEIN HOLDING LP
j.\sset tv1Cina9ernent 8, qu~to~y l3(lnks
BLACKROCK INC
Asset Management & Custody Banks
CME GROUP INC ..........................................................................................................
Specialized Finance
CORPORATE EXECUTIVE BRD CO
Diversified Commercial & Professional Services
DUN & BRADSTREET CORP
Diversified Commercial & Professional Services
EATON VANCE CORP ............................................. J.\sset t\f1Cinagernent.8t<~u~to~y l3(lnks .. .
EQUIFAX INC
Diversified Commercial & Professional Services
FACTSET RESEARCH SYSTEMS INC
J.\pplication ~oflvvarE)
Employees
Revenue
(2007)
Mkt Cap
(June 2008)
NY ................. 5,580 ................... ~415 ..................... $4,779 .. .
NY
5,952
$4,845
$20,852
IL
1,970
$1,951
$26,889
VA
2,440
$533
$1,434
NJ .......................................................................................................
4,900
$1 ,599
$4,891
MA
953 . .........................................................................
$1 ,084
$4,589 .
GA .......................................................................................................
7,000
$1,843
$4,354
FAIR ISAAC CORP ...................................................... J.\pplic(ltion.Soflvv(lre .. .
FEDERATED INVESTORS INC .......................... J.\sset tv1Cina9ernent.8t qu~to~y l3(lnks .. .
Asset Management & Custody Banks
FRANKLIN RESOURCES INC
INTERACTIVE DATA CORP
Publishing
Asset Management & Custody Banks
INVESCO LTD ........................................................................................................................................................
MCGRAW-HILL COMPANIES .........................................................
Publishing
MORNINGSTAR INC ............................................................................
Publishing
NASDAQ OMX GROUP INC
Speci(llize~ Finan~e
CT ................. 1,653...
$476 ..................... $2,705 .. .
MN
~,8~4
$822
J1 ,010
PA ................. 1,270 ................. $1,128 ................... $3,509 .. .
CA
8,699
$6,439
$21 ,663
MA
2,304
$690
$2,363
GA
5,475
$3,879
$9,297
NY
21,171
$6,772
$12,891
IL ...................................
1,720
$435 . .......................................
$3,292 .
NY
891 ..........................................................................
$2,437
$5,301
NYSE EURONEXT ...................................................... ~pecialized.Fin(lnce ..
RISKMETRICS GROUP INC ................................. J.\s~ett\f1ana9€lrnE)ntB,.qustody.Banks .. .
Ttl()tv1~()f\J~REL)T~R~.q()RP.(qp[\J) ............... Pu~lishin!:l .. .
UNIONBANCAL CORP .....................................................................................
Regional Banks
VERISK ANALYTICS INC -REDH
NY ................. 3,083 ................. $4,188 .................. $13A25 .. .
NY
1 ,040
$240
J1 ,1~8
NY
ND
$7,296
$~0,~75
CA
9,811
$3,861
$5,578
NJ
3,404
$862
(~[\JJ.\
Median
Average
MOODY'S CORP
NY
Specialized Finance
Count=21
08952/PH017VF.PPTITOCCT-13578 12/2008
27
2,953
4,607
$1,599
$2,464
$4,835
$8,234
3,600
$2,259
$8,427
Study
m
ethodology-Position
atches, Proxy
nalysis
The following matches provided the basis for the proxy analysis:
Executive
Title
Proxy Match
R. McDaniel
Chairman and Chief Executive Officer
CEO (Corporate)
L. Huber
Executive Vice President and Chief Financial
Officer
CFO
M. Madelain
Chief Operating Officer, Moody's Investors Service
CEO (Group)
M. Almeida
President, Moody's Analytics
CEO (Group)
J. Goggins
Senior Vice President-General Counsel
General Counsel
Data was also reviewed from the Hewitt TCM database for all of these Moody's
roles
w The Hewitt TCM position matches for each Moody's executive are found on the
next page
m
08952/PH017VF.PPTITOCCT-13578 12/2008
28
Study
ethodology-Position
Moody's Title
Chairman and CEO
EVP,CFO
COO, MIS
President, MA
SVP, GC
atches, TC
Incumbent Proxy/TCM Database Match
McDaniel
Huber
Madelain
AI media
Goggins
CEO (Corporate)
CFO
CEO (Group)/Sector Head
CEO (Group)/Sector Head
General Counsel
Analysis
Number of Incumbents (n=)
Proxy Peer Group 1
19
21
12
12
8
TCM 2
28
27
48
48
27
~-----------------------------
I
1
All of these roles were also matched to proxy data. Some non-NEO proxy matches were pulled from the
Hewitt TCM Database submissions from the proxy peer group companies (i.e., HR and GC matches
that were not in the "Top 5")
2
All TCM data is regressed to size of the Moody's business for which the incumbent is responsible. Corporate scope
is $2,259 million
08952/PH017VF.PPTITOCCT-13578 12/2008
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