PAY VERSUS PERFORMANCE

As discussed in the Compensation Discussion and Analysis above, the Compensation & Human Resources Committee has implemented an executive compensation program designed to link a substantial part of each executive’s realized compensation to the achievement of Moody’s financial and operating objectives and to the individual executive’s performance as well as to align executives’ pay with changes in the value of stockholders’ investments. As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation

S-K,

we are providing the following information regarding the compensation of the Company’s named executive officers and the Company’s performance.


Year	Summary Compensation Table Total for Raymond W. McDaniel, Jr.			Compensation Actually Paid to Raymond W. McDaniel, Jr. (1)(2)			Summary Compensation Table Total for Robert Fauber			Compensation Actually Paid to Robert Fauber (1)(2)			Average Summary Compensation Total for Other NEOs (3)			Average Compensation Actually Paid to Other NEOs (1)(3)			Value of Initial Fixed $100 Investment Based On:						Net Income ($millions)			MCO EPS for Compensation Purposes (4)
Year							Summary Compensation Table Total for Robert Fauber			Compensation Actually Paid to Robert Fauber (1)(2)			Average Summary Compensation Total for Other NEOs (3)			Average Compensation Actually Paid to Other NEOs (1)(3)			Moody’s Cumulative TSR			R3000 Financial Services Index Cumulative TSR			Net Income ($millions)			MCO EPS for Compensation Purposes (4)
2022			—			—		$	11,619,773		($ 5,337,103	)		$	3,186,695		($1,853,041	)		$	120		$	121		$	1,374		$	8.57
2021			—			—		$	9,750,157		$21,405,494			$	3,056,066		$7,113,351			$	167		$	143		$	2,214		$	12.29
2020		$	17,270,662		$	22,206,731			—		—			$	3,869,500		$5,493,924			$	123		$	107		$	1,778		$	10.15

(1)

For each year, “Compensation Actually Paid” reflects the Summary Compensation Table (SCT) total, for the relevant named executive officer(s)

less

the values included in the “Stock Awards” and “Option Awards” columns and the aggregate change in the actuarial present value of the named executive officer’s accumulated benefit under all defined benefit and pension plans as included in the “Change in Pension Value and

Non-Qualified

Deferred Compensation Earnings” column, and less the fair value of any equity compensation forfeited in the applicable fiscal year determined based on the value of such awards at the end of the prior fiscal year and

adding to this

:

•

The fair value at the end of the year of equity compensation granted during the year;

•

The change in fair value as of the vesting date, measured from the prior

year-end,

of any equity awards granted in prior years that vested during the year (whether positive or negative);

•

The change in fair value at

year-end,

measured from the prior

year-end,

of any equity awards granted in prior years that remained unvested as of the end of the year (whether positive or negative); and

•

The pension value attributable to service in the year.

As a result, “Compensation Actually Paid” does not reflect the value that was or may actually be realized by the NEOs.

In calculating the year-over-year change in the value of unvested option awards as well as the change in value to

mid-year

vesting dates, the options’ Black-Scholes values were calculated at each measurement date using the following inputs:

•

Stock price:

based on the average of the high and low stock price on the measurement date. If a

mid-year

vesting date was not a trading day, the first trading day following the vesting date was used as the measurement date. If a fiscal

year-end

date was not a trading day (e.g., December 31, 2022), the most recent trading day prior to the fiscal

year-end

date was used.

•

Expected life:

based on the original expected life established at grant date, as used for financial reporting purposes, with adjustments to reflect the amount by which the options are in-the-money / out-of-the-money. For

in-the-money

options, the time elapsed since the grant date was deducted from the original expected life assumption. For

out-of-the-money

options, the expected life was adjusted upward in proportion to the degree to which the options were

out-of-the-money

relative to their exercise price.

•

Stock price volatility:

based on historical volatility for a trailing term to match the updated expected life assumption as of each measurement date.

•

Risk-free rate:

based on an interpolated rate for a Treasury security with a term to match the updated expected life assumption as of each measurement date.

•

Dividend yield:

based on the most recent quarterly dividend, annualized, as of each measurement date.

•

In valuing performance share awards, we calculated the fair value of unearned or earned but unvested awards, based on interim and/or final payout factors, as of the relevant measurement date.

(2)	The amounts deducted and added in calculating the “Compensation Actually Paid” for Messrs. McDaniel and Mr. Fauber are as follows:


	2020 (Mr. McDaniel)			2021 (Mr. Fauber)			2022 (Mr. Fauber)

Reported SCT Total Compensation	$	17,270,662		$	9,750,157		$	11,619,773

Subtract: Equity Award Values Reported in the SCT	($	10,349,742	)	($	6,400,149	)	($	9,000,110	)

Add: Year End Fair Value of Equity Awards Granted in the Year	$	11,771,580		$	12,606,326		$	4,008,083

Add/Subtract: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years	$	6,180,927		$	5,425,142		($	10,362,904	)

Add/Subtract: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year	$	2,673,462		$	41,086		($	1,774,301	)

Subtract: Fair Value of Equity Compensation Forfeited in Current Fiscal Year Determined at End of Prior Fiscal Year	($	2,146,411	)	$	0		$	0

Subtract: Pension Values Reported in the SCT	($	3,444,752	)	($	225,904	)	$	0

Add: Pension Service Cost Attributable to Year	$	251,004		$	208,836		$	172,355

Compensation Actually Paid	$	22,206,731		$	21,405,494		($	5,337,103	)

(3)	For 2022 and 2021, other NEOs includes Messrs. Kaye, Goggins, Tulenko and West. For 2020, other NEOs includes Messrs. Kaye, Fauber (when he served as Chief Operating Officer), Tulenko and West.

The amounts deducted and added in calculating the average “Compensation Actually Paid” for these NEOs are as follows:


	2020			2021			2022

Average Reported SCT Total Compensation	$	3,869,500		$	3,056,066		$	3,186,695

Subtract: Average Equity Award Values Reported in the SCT	($	2,000,125	)	($	1,627,986	)	($	1,902,963	)

Add: Average Year End Fair Value of Equity Awards Granted in the Year	$	2,289,994		$	3,173,272		$	847,453

Add/Subtract: Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years	$	1,174,434		$	2,531,402		($	3,326,295	)

Add/Subtract: Average Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year	$	368,544		($	59,259	)	($	709,889	)

Subtract: Average Fair Value of Equity Compensation Forfeited in Current Fiscal Year Determined at End of Prior Fiscal Year	$	0		$	0		$	0

Subtract: Average Pension Values Reported in the SCT	($	264,415	)	($	19,903	)	$	0

Add: Average Pension Service Cost Attributable to Year	$	55,991		$	59,759		$	51,958

Average Compensation Actually Paid	$	5,493,924		$	7,113,351		($	1,853,041	)

(4)	MCO EPS for Compensation Purposes is the Company’s adjusted diluted earnings per share (EPS). Refer to the Company’s Form 10-K reports filed in respect of the years ended December 31, 2020, December 31, 2021, and December 31, 2022, for a reconciliation of diluted EPS to adjusted diluted EPS.

Named Executive Officers, Footnote [Text Block]

For 2022 and 2021, other NEOs includes Messrs. Kaye, Goggins, Tulenko and West. For 2020, other NEOs includes Messrs. Kaye, Fauber (when he served as Chief Operating Officer), Tulenko and West.

Non-PEO NEO Average Total Compensation Amount

$ 3,186,695

$ 3,056,066

$ 3,869,500

Adjustment to Non-PEO NEO Compensation Footnote [Text Block]

(3)	For 2022 and 2021, other NEOs includes Messrs. Kaye, Goggins, Tulenko and West. For 2020, other NEOs includes Messrs. Kaye, Fauber (when he served as Chief Operating Officer), Tulenko and West.

The amounts deducted and added in calculating the average “Compensation Actually Paid” for these NEOs are as follows:


	2020			2021			2022

Average Reported SCT Total Compensation	$	3,869,500		$	3,056,066		$	3,186,695

Subtract: Average Equity Award Values Reported in the SCT	($	2,000,125	)	($	1,627,986	)	($	1,902,963	)

Add: Average Year End Fair Value of Equity Awards Granted in the Year	$	2,289,994		$	3,173,272		$	847,453

Add/Subtract: Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years	$	1,174,434		$	2,531,402		($	3,326,295	)

Add/Subtract: Average Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year	$	368,544		($	59,259	)	($	709,889	)

Subtract: Average Fair Value of Equity Compensation Forfeited in Current Fiscal Year Determined at End of Prior Fiscal Year	$	0		$	0		$	0

Subtract: Average Pension Values Reported in the SCT	($	264,415	)	($	19,903	)	$	0

Add: Average Pension Service Cost Attributable to Year	$	55,991		$	59,759		$	51,958

Average Compensation Actually Paid	$	5,493,924		$	7,113,351		($	1,853,041	)