April 25, 2011
Governance Resolution at Moody's Wins Majority Support
by Robert Kropp
A resolution calling for the separation of the positions of CEO and Chairman of the Board receives
56% of shareowner votes.
The quality of corporate governance at the credit rating agencies has been questioned ever since
the financial crisis, when their inflated ratings misled investors into believing that securities
consisting of subprime mortgage loans were credit-worthy. Since then, almost all the securities
have been downgraded to junk status.
As James Lardner of Demos stated in a 2010 briefing paper, "In the runup to
the financial crisis, no institution more thoroughly betrayed its mission; and no single failure
had a more devastating impact."
The company—for which Raymond McDaniel has served
as both Chairman and CEO since 2005—called for a vote against the proposal, arguing that its
Corporate Governance Principles "allows the Board the flexibility to determine whether the roles
should be combined or separated based upon the Company's circumstances and needs at any given
The company also argued it "received identical stockholder proposals for its 2010
and 2009 annual meetings which received only approximately 33% and 30% support from Moody's
Noting that Hermes EOS has been engaging with Moody's on the
issue since 2009, Director Jennifer Walmsley stated, "The outcome of the vote demonstrates that the
tide is turning in the US and that shareholders increasingly recognize the value that an
independent chair can bring in providing effective oversight of management."