Kunal Kapoor
About Kunal Kapoor
Kunal Kapoor is Morningstar’s CEO (since 2017) and a director. He joined the company in 1997 and previously served as President (2015–2017), head of global products and client solutions, and in leadership roles in Data and Research. He is 49 years old . Under his tenure, FY 2024 showed 11.8% revenue growth to $2.3B, operating income rose 110.2% to $485M, operating margin reached 21.3%, and operating cash flow was $592M; 1-year TSR through 12/31/2024 was +18% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Morningstar | Chief Executive Officer | 2017–Present | Leads strategy and day-to-day operations; long-tenured operator across multiple business lines . |
| Morningstar | President | 2015–2017 | Oversaw product development/innovation, sales/marketing, and firm-wide strategic prioritization . |
| Morningstar | Head of Global Products & Client Solutions | Pre-2015 | Led product and client solutions; prior leadership roles in Data and Research . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Wealth Enhancement Group (private) | Board Director | N/A | Wealth management governance; external market insights . |
| Council on Chicago Booth | Member | N/A | Academic/industry bridge; talent and network benefits . |
| Several Chicago-based non-profits | Board roles | N/A | Community leadership; stakeholder engagement . |
Fixed Compensation
- The Compensation Committee kept Kapoor’s 2024 base salary flat at $525,000 (unchanged from 2023) .
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $500,000 | $525,000 | $525,000 |
| All Other Compensation ($) | $15,225 (401(k) match) | $16,875 (401(k) match) | $17,251 (401(k) match) |
| Total Compensation ($) | $6,308,977 | $7,277,421 | $8,635,625 |
Performance Compensation
- Program mix and metrics: Annual incentives use Adjusted Revenue (50%) and Adjusted Operating Income (AOI, 50%); long-term equity is primarily MSUs tied to 3-year TSR, and from 2024 a new “stretch PSU” vehicle tied to 3-year AOI outperformance; RSUs provide time-based retention. CEO pay is ~93% variable .
- 2024 results: Financial performance factor funded at 113.2% on Adjusted Revenue $2,278.6M vs target $2,292.5M (99.4% attainment, 98.5% funding) and AOI $677.5M vs target $609.6M (111.1% attainment, 127.8% funding) .
- 2024 CEO annual bonus: Target $1,675,000; individual factor 120%; payout $2,275,320 (cash $1,896,100; RSUs $379,220). Implied target bonus is ~319% of salary ($1,675,000 / $525,000) based on disclosed figures .
- 2021 MSU payouts (vested in 2024): May grant paid 106.0% of target; November grant 82.5% of target, based on 3-year TSR of 19.6% and 13.2% vs 20.0% target, with positive impact from 3-year Adjusted Revenue CAGR 12.0% vs 11.2% target .
2024 Annual Incentive Mechanics and Outcome (Company-wide factors)
| Measure | Target | Actual | Goal Attainment | Unweighted Funding | Weight | Financial Performance Factor |
|---|---|---|---|---|---|---|
| Adjusted Revenue (M) | $2,292.5 | $2,278.6 | 99.4% | 98.5% | 50% | 113.2% total |
| Adjusted Operating Income (M) | $609.6 | $677.5 | 111.1% | 127.8% | 50% | 113.2% total |
2024 CEO Annual Incentive Payout
| Item | Value |
|---|---|
| Target Bonus | $1,675,000 |
| Financial Performance Factor | 113.2% |
| Individual Performance Factor | 120% |
| Payout ($) | $2,275,320 |
| Payout Mix | Cash $1,896,100; RSUs $379,220 |
Long-Term Equity Design and 2021 MSU Vesting Outcomes
| Vehicle | Metric(s) | Grant cadence | Vesting/Measurement | 2024 Outcome/Notes |
|---|---|---|---|---|
| RSUs | Time-based | May (annual) | Typically 4 equal annual installments; older grants may be 5-year | Retention-focused; count/value below. |
| MSUs | 3-year TSR (market condition); prior revenue “kicker” replaced in 2024 | May/Nov (split) | Cliff vest after 3-year performance period | 2021 MSUs: 106.0% (May); 82.5% (Nov); TSR 19.6% and 13.2% vs 20.0% target; 3-yr Adjusted Revenue CAGR 12.0% vs 11.2% target . |
| Stretch PSUs (introduced 2024) | 3-year AOI outperformance | May (annual) | Vest only if AOI exceeds rigorous targets; vest 12/31/2026 | Designed as “only if exceed” outperformance; granted with no GAAP grant-date fair value due to improbability at grant . |
CEO Equity Grant Targets
| Year | Annual Equity Target ($) |
|---|---|
| 2023 | $5,200,000 |
| 2024 | $5,440,000 |
2020–2024 Pay vs. Performance Snapshot (company disclosure)
| Year | CEO SCT Total ($) | CEO Compensation Actually Paid ($) | TSR (Value of $100) | Peer TSR (Value of $100) | Net Income ($M) | Adjusted Revenue ($M) |
|---|---|---|---|---|---|---|
| 2020 | $7,579,731 | $17,483,919 | 155 | 129 | 223.6 | $1,348.7 |
| 2021 | $5,597,592 | $16,983,708 | 229 | 154 | 193.3 | $1,684.5 |
| 2022 | $6,308,977 | ($3,290,220) | 146 | 122 | 70.5 | $1,883.1 |
| 2023 | $7,277,421 | $14,017,163 | 194 | 164 | 141.1 | $2,032.3 |
| 2024 | $8,635,625 | $14,463,577 | 230 | 197 | 369.9 | $2,278.6 |
Equity Ownership & Alignment
- Beneficial ownership as of March 1, 2025: Kunal Kapoor 120,777 shares (<1% of outstanding 42,833,130 shares). Approximate ownership is ~0.28% if computed (120,777 / 42,833,130), though the company discloses “<1%” in the table .
- Executive stock ownership guidelines: Either $5,000,000 in shares or at least 33% of pre-tax vested shares; all continuing NEOs were in compliance as of March 1, 2025 .
- Hedging/pledging: Hedging and short-term speculative transactions are prohibited; pledging capped at 15% of beneficially owned shares. Only Joe Mansueto has a reported pledge; no other pledging arrangements were reported by employees/directors subject to policy as of March 1, 2025 (i.e., none for Kapoor) .
CEO Outstanding and Recently Vested Equity (as of 12/31/2024)
| Grant Date | Award Type | Unvested/Unearned Units | Market Value |
|---|---|---|---|
| 05/15/20 | RSU (5-year vest) | 4,129 | $1,390,482 |
| 05/15/21 | RSU (4-year vest) | 1,021 | $343,832 |
| 05/15/22 | RSU (4-year vest) | 1,801 | $606,505 |
| 05/15/23 | RSU (4-year vest) | 5,133 | $1,728,589 |
| 05/15/24 | RSU (4-year vest) | 4,575 | $1,540,677 |
| 05/15/22 | MSU (3-yr TSR) | 16,264 unearned | $5,477,065 |
| 11/15/22 | MSU (3-yr TSR) | 12,936 unearned | $4,356,327 |
| 05/15/23 | MSU (3-yr TSR) | 19,798 unearned | $6,667,174 |
| 11/15/23 | MSU (3-yr TSR) | 11,912 unearned | $4,011,485 |
| 05/15/24 | MSU (3-yr TSR) | 6,862 unearned | $2,310,847 |
| 11/15/24 | MSU (3-yr TSR) | 5,947 unearned | $2,002,712 |
| 05/15/24 | Stretch PSU (3-yr AOI) | 27,450 unearned | $9,244,062 |
- Vesting schedules: RSUs vest in four equal annual installments (older 2020 grant in five years); MSUs vest after a 3-year performance period; 2024 stretch PSUs vest 12/31/2026 if AOI goals are exceeded .
- 2024 realized vesting: 17,805 shares vested for Kapoor in 2024; value realized $5,419,478; no option exercises reported .
- Options: No outstanding option awards for Kapoor are listed as of 12/31/2024 and none exercised in 2024 .
Employment Terms
- Employment/CoC agreements: Morningstar has no employment or change-in-control agreements with any executive officers; the Board retains discretion to accelerate equity vesting upon a change in control as defined in the 2021 Plan .
- Potential equity vesting upon separation (12/31/2024 scenario):
| Scenario | RSUs (vest value) | MSUs (assume target) | Stretch PSUs |
|---|---|---|---|
| Death/Disability | $5,610,085 | $6,858,117 | — |
| Termination Without Cause | — (forfeited) | $6,858,117 (prorated, actual performance) | — |
| Change in Control (Board discretionary acceleration) | $5,610,085 | $14,569,585 (target) | — |
- Clawback/recoupment: Compensation Committee oversees recoupment policies and broader compensation risk controls; annual review found comp policies unlikely to create material adverse risk .
- Say-on-Pay: 2024 vote approved with ~99.1% support .
- CEO pay ratio (2024): 125:1; median employee $69,270 vs CEO SCT total $8,635,625 .
Board Governance and Service
- Board role: Kapoor has been a director since 2017; he is not independent. He holds no committee memberships; all committees are fully independent .
- Leadership structure: Executive Chairman (founder Joe Mansueto) leads the Board; CEO and Chair roles are separated. No designated permanent lead independent director; independent directors meet in executive session at each regular Board and Committee meeting, and select a lead among themselves as appropriate; the NCGC Chair liaises with the Chair and leads the annual evaluation process .
- Attendance: The Board met five times in 2024; all directors attended at least 75% of their meetings .
- Compensation Committee independence and advisors: All members are independent; Pay Governance served as independent advisor in 2024 with no conflicts .
Compensation Structure Analysis
- Mix shifts: CEO’s 2024 increase was delivered entirely in equity to further align with shareholders; equity target rose 4.6% to $5.44M .
- Metric calibration: 2024 annual incentive profit metric changed from Adjusted EBITDA to AOI; equity “revenue kicker” on MSUs replaced with stand-alone stretch PSUs tied to rigorous 3-year AOI outperformance .
- Payout integrity: Despite Adjusted Revenue slightly below target (99.4%), AOI materially exceeded target (111.1%), yielding an aggregate 113.2% funding; CEO individual factor 120% reflected Company execution on AI initiatives, margin expansion, and portfolio focus as described by the Committee .
- No repricing/modifications for CEO: No option repricing disclosed; CEO equity vehicles and terms consistent with program design; no employment/CoC cash multipliers .
Risk Indicators & Red Flags
- Pledging/hedging: Hedging prohibited; pledging limited. Only the Executive Chairman maintains a pledge (reduced over time; reviewed annually by Audit Committee). No pledging reported for Kapoor .
- Governance structure: CEO is also a director, but not Chair; committees fully independent; no permanent lead independent director, though independent executive sessions occur routinely .
- Section 16 compliance: No reported late Section 16 filings for Kapoor in 2024; isolated administrative delays noted for other individuals .
Investment Implications
- Alignment: High equity mix (equity target $5.44M) and strong ownership policy drive long-term alignment; 2024 increase delivered via equity underscores pay-for-performance orientation .
- Performance linkage: 2024 bonus and long-term MSU outcomes tied to AOI and TSR respectively; stretch PSUs add upside only on multi-year AOI outperformance, limiting windfalls and emphasizing operating leverage and margin discipline .
- Retention/selling pressure: Significant unvested RSUs/MSUs/PSUs with multi-year schedules and no broad-based employment or CoC cash agreements suggest retention relies on equity value realization; 2024 vesting delivered $5.42M in value to Kapoor; no options, and no pledging by Kapoor reduce forced-selling risks; hedging is restricted .
- Governance: Separation of CEO and Chair mitigates dual-role concerns; absence of a permanent lead independent director is partially offset by regular executive sessions and committee leadership roles; Say-on-Pay support (99.1%) indicates strong shareholder endorsement of current design .
- Track record: Revenue growth, margin expansion, and cash flow strength in 2024, plus positive 1-year TSR vs peers, support the current incentive structure; continued outperformance on AOI will be key for stretch PSU value realization and could be a positive signal for future value creation .
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