Robert Fauber
MOODYS CORP /DE/About Robert Fauber
Robert Fauber (age 54) is President, CEO and Director of Moody’s Corporation; he has served as CEO since 2021 and joined the Board in October 2020. He holds an MBA from Cornell (1999) and a BA in Economics from the University of Virginia (1992) . In 2024, Moody’s delivered revenue of $7,088 million (+20% YoY), GAAP diluted EPS of $11.26 (+29% YoY), adjusted diluted EPS of $12.47 (+26% YoY), operating income of $2,875 million (+35% YoY), and achieved 73% of its three-year profitability target; Moody’s one-year TSR was 22.16% and ranked 72nd percentile vs peers (three-year 67th percentile) . Governance highlights mitigating CEO dual-role risks include an independent Chairman (Vincent Forlenza), regular executive sessions, and fully independent standing committees; Fauber is the sole non-independent director .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Moody’s Corporation | President & CEO | 2021–present | Led integrated risk assessment strategy; drove 20% revenue growth in 2024 and margin/EPS expansion . |
| Moody’s Corporation | Chief Operating Officer | 2019–2021 | Oversaw operations during product/platform evolution and segment execution . |
| Moody’s/Moody’s Ratings | Senior leadership roles including President of Moody’s Ratings; head of strategy & corp dev | 2005–2019 | Advanced strategy, M&A, and Ratings leadership; expanded analytics/products . |
| Citibank; NationsBank (Bank of America) | Various roles | Prior to 2005 | Banking and corporate finance experience supporting later operating strategy . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| University of Virginia College Foundation | Board member | Since 2023 | Non-profit/academic board role . |
| Public company boards | N/A | — | No current public company directorships disclosed . |
Fixed Compensation
| Metric (CEO) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 975,000 | 1,000,000 | 1,100,000 |
| Target Annual Cash Incentive ($) | 1,628,000 (actual paid; target not disclosed) | 2,000,000 (target; see note) | 2,200,000 (target) |
| Actual Annual Cash Incentive Paid ($) | 1,628,000 | 2,000,000 | 2,950,000 (134% of target) |
| % of Total Target Comp “At Risk” | — | — | 93% |
Notes: 2024 target annual cash incentive increased to $2,200,000 from $2,000,000 in 2023 .
Performance Compensation
Annual Cash Incentive (2024 design and outcome)
- Metrics/weights: 67% financial (MIS Operating Income; MA Operating Income; MA Annual Recurring Revenue) and 33% Strategic & Operational OKRs; max 200% of target .
- Financial goal framework (threshold/target/maximum): MIS OI $1,347M/$1,823M/$2,298M; MA OI $549M/$676M/$804M; MA Sales/ARR $3,012M/$3,312M/$3,462M; actual performance met/exceeded targets (directional disclosure) .
- CEO payout: 134% of target based on Company and individual results (financial and execution factors listed) .
Long-Term Incentives (LTI) – 2024 CEO Grants
| Component | Grant Date | Number/Terms | Vesting | Value/Price |
|---|---|---|---|---|
| Performance Shares (60% of annual LTI) | 2/20/2024 | Target 20,475 sh; max 40,950 sh | Earn over 2024–2026; metrics: 50% MCO EPS (for comp), 25% MIS Ratings Performance, 25% MA Cumulative Revenue | Grant-date value included in $12.7M total; no divs on unvested PS |
| RSUs (20% of annual LTI) | 2/20/2024 | 6,825 units | 25% on 3/1/2025, 3/1/2026, 3/1/2027, 3/1/2028 | Dividend equivalents accrue, paid only on vest |
| Stock Options (20% of annual LTI) | 2/20/2024 | 21,239 options @ $372.16 exercise price | 25% annually over 4 years; 10-year term |
Additional 2024 program notes: Balanced annual LTI mix retained; PS metrics set with adjustments for specified non-recurring items; no dividend equivalents on PS; options valued via Black-Scholes .
Multi-year Performance Share Payouts
| Performance Cycle | Target Shares (CEO) | Earned Payout % | Shares Vested |
|---|---|---|---|
| 2022–2024 | 16,565 | 21.8% | 3,611 (vested Mar 2025) |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (12/31/2024) | 45,565 shares beneficially owned; options exercisable within 60 days: 93,621; RSUs vesting within 60 days: 6,104; <1% of shares outstanding . |
| 2024 Option Exercises / RSU/PS Vesting | Options exercised: 2,671 sh ($875,438 value realized); shares vested from stock awards: 12,965 sh ($4,934,220 value realized) . |
| Outstanding Unvested RSUs (examples) | RSUs from prior grants include 1,156; 2,761; 3,611; 5,587; and 6,825 units with scheduled vesting (generally March 1 each year) . |
| Stock Ownership Guidelines (Executives) | CEO: 6× base salary; other NEOs: 3×; 75% net shares hold-until-met; stock options and unearned PS do not count; all NEOs in compliance as of 12/31/2024 . |
| Hedging/Pledging | Anti-hedging and anti-pledging policy prohibits pledging, short sales, margin buying, and derivative hedges by directors and officers . |
Employment Terms
| Topic | Key Terms |
|---|---|
| Employment agreement | None (U.S. executives are at-will) . |
| Clawback | Comprehensive policy for Section 16 officers; mandatory recoupment on material restatement; discretionary recoupment for unlawful activity, fraud, or willful misconduct causing material financial harm . |
| Severance (Career Transition Plan, non-CIC) | Generally 52 weeks salary continuation (26 weeks for unsatisfactory performance or <1 year service), continued benefits during period, outplacement; potential pro rata target bonus if ≥6 months employed in year (excl. “unsatisfactory performance” terminations) . |
| Change-in-Control (CICP) | Double-trigger; CEO receives 3× (salary + target bonus) lump sum plus 3 years medical/dental; no excise tax gross-ups; others at 2× and 2 years benefits . |
| Equity on CIC | If awards assumed, double-trigger vesting for options/RSUs; if not assumed, vest in full; PS pay at 100% of target on CIC . |
Estimated Payments if Terminated on 12/31/2024 (selected scenarios)
| Scenario | Cash | Health Benefits | Equity | Outplacement | Total |
|---|---|---|---|---|---|
| Reduction in Force/Job Elimination | $3,300,000 | $26,342 | — | $40,000 | $3,366,342 |
| Unsatisfactory Performance | $550,000 | $13,171 | — | $40,000 | $603,171 |
| Change in Control (Double Trigger) | $9,900,000 | $79,027 | $43,604,347 | — | $53,583,374 |
| Death/Disability | — | — | $33,625,234 | — | $33,625,234 |
| Retirement | — | — | $25,008,453 | — | $25,008,453 |
Board Governance (Director service and dual-role considerations)
- Board service: Director since October 2020; current role listed as President and CEO; serves on the Executive Committee .
- Independence: Not independent by virtue of being CEO; eight of nine nominees are independent; Audit, Governance & Nominating, and Compensation & Human Resources Committees are fully independent .
- Board leadership: Independent Chairman (Vincent A. Forlenza); roles of Chair and CEO are separated; regular executive sessions of independent directors .
- Attendance: Board met six times in 2024; all incumbents attended ≥75% of Board/committee meetings .
Implications: CEO sits on the Board but not as Chair, with strong independent structures (independent Chair, exec sessions, independent committees) mitigating dual-role/independence concerns .
Compensation Structure Analysis
| Aspect | Observation |
|---|---|
| Pay mix and leverage | 93% of CEO’s 2024 target total direct compensation is “at risk” via annual incentive and equity (options/RSUs/PSUs) . |
| LTI design | Balanced mix (60% PS/20% RSU/20% options); PS metrics span earnings quality (MCO EPS), Ratings accuracy, and MA growth (cumulative revenue) . |
| Annual plan rigor | Financials weighted 67% with threshold/target/max calibration; peer benchmarking shows payout curve more demanding than typical peers for both upside and downside . |
| Special/retention awards | 2024 special Growth/Strategic awards targeted below-CEO levels; CEO did not receive special growth accelerator or strategic incentive grants . |
| Governance checks | Strong clawback, anti-hedging/pledging, ownership guidelines with 75% holding requirement; say-on-pay support ~93% in 2024 . |
Performance & Track Record
- 2024 financials: Revenue $7,088M (+20% YoY), GAAP diluted EPS $11.26 (+29% YoY), adjusted diluted EPS $12.47 (+26% YoY), operating income $2,875M (+35% YoY), 73% of three-year profitability target achieved .
- TSR: 1-year TSR 22.16% (72nd percentile vs peers); 3-year TSR 24.46% (67th percentile) .
- Annual cash incentive outcome: CEO paid 134% of target reflecting financial and strategic execution (ARR growth, platform/GenAI, M&A/partnerships, customer engagement) .
- 2022–2024 PS cycle: 21.8% payout, indicating design sensitivity to multi-year performance; CEO received 3,611 shares vs 16,565 target .
Director/Executive Compensation Benchmarking & Peer Group
- Peer group (2024): CME Group, Equifax, Fair Isaac, FIS, Fiserv, Gartner, Global Payments, ICE, Marsh & McLennan, MSCI, Nasdaq, S&P Global, Thomson Reuters, Verisk, Workday .
- Moody’s rank/percentile vs peers (as of 12/31/2024): Revenues $7,088 (46th percentile), Market Cap $85,522 (76th), Assets $15,505 (34th), 1-yr TSR 22% (72nd), 3-yr TSR 24% (67th) .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no pledging of Moody’s stock allowed for executives/directors .
- No executive employment agreements; no single-trigger CIC cash; no tax gross-ups on CIC benefits .
- Related-party transactions subject to Audit Committee policy; none highlighted as material in 2024 .
- Delinquent Section 16: none for CEO; minor delays noted for a director (not CEO-related) .
- Say-on-pay strong approval (~93%), lowering governance risk around compensation .
Equity Vesting Schedules and Potential Selling Pressure
- Upcoming RSU vest tranches for 2024 award: 25% each March 1, 2025–2028 (6,825 RSUs total) .
- Options from 2024 annual LTI vest 25% annually over four years; 10-year term at $372.16 strike (economic value depends on future price) .
- 2024 realized liquidity: 2,671 options exercised ($875K value) and 12,965 shares vested from stock awards ($4.93M value), indicating periodic liquidity but within normal program cadence .
Board Service History & Director Governance Snapshot
| Attribute | Detail |
|---|---|
| Board service at Moody’s | Director since Oct 2020 . |
| Committee roles | Executive Committee member . |
| Independence status | Not independent (CEO); eight of nine nominees are independent . |
| Board leadership | Independent Chairman (Forlenza); CEO is not Chair . |
| Executive sessions | Independent directors meet in executive session regularly . |
| Board/committee independence | Audit, Compensation & HR, and Governance & Nominating fully independent . |
Additional Executive Benefits
- Pension (cash-balance style): Present value at 12/31/2024 – Retirement Account $437,889; PBEP $1,785,675; credited service 18.25 years .
- Non-qualified deferred compensation: Year-end balance $433,574; 2024 aggregate earnings $70,485 .
- Perquisites/tax gross-ups: Generally limited; CEO “All Other” comp $25,941 in 2024 (defined contribution plan contributions and dividends on vested awards) .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval ~93%; five-year average >90% .
- Company conducts ongoing investor outreach on compensation and governance topics .
Investment Implications
- Strong pay-for-performance alignment: 93% of CEO pay at risk with explicit multi-year metrics; 2022–2024 PS paid at 21.8%, demonstrating downside sensitivity; 2024 cash payout at 134% aligns with robust results and TSR percentile rank .
- Retention risk appears contained: Large portion of equity is unvested/at risk; anti-hedging/pledging and 6× ownership multiple with 75% hold sustain alignment; no single-trigger CIC mitigates windfall risk .
- Potential near-term selling pressure limited to normal programmatic vesting/option exercises; 2024 exercises/vests show manageable cadence .
- Governance structure mitigates dual-role concerns (independent Chair, independent committees, executive sessions); continued high say-on-pay support reduces activism risk on pay .
- Watchlist: Execution versus 2024–2026 PS metrics (EPS for comp, MIS Ratings Performance, MA cumulative revenue) and ARR/margin targets in the businesses—these are key levers for future payouts and signal forward performance trends .