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A N N U A L
R E P O R T
About MSCI Inc.
MSCI is a leading provider of critical decision support tools
and services for the global investment community. With over
50 years of expertise in research, data and technology, we
power better investment decisions by enabling clients to
understand and analyze key drivers of risk and return and
confidently build more effective portfolios. We create industry-
leading research-enhanced solutions that clients use to gain
insight into and improve transparency across the investment
process.
To learn more, please visit www.msci.com.
Financial highlights
MSCI
3
YEAR ENDED
IN THOUSANDS, EXCEPT PER SHARE DATA
2021
2020
2019
2018
2017
Operating revenues
Operating expenses
Operating income
Net income
Earnings per share:
Earnings per basic common share
Earnings per diluted common share
$2,043,544
$1,695,390
$1,557,796
$1,433,984
$1,274,172
$970,819
$810,626
$802,095
$747,086
$694,402
$1,072,725
$884,764
$755,701
$686,898
$579,770
$725,983
$601,822
$563,648
$507,885
$303,972
$8.80
$8.70
$7.19
$7.12
$6.66
$6.59
$5.83
$5.66
$3.36
$3.31
Cash and cash equivalents
$1,421,449
$1,300,521
$1,506,567
$904,176
$889,502
Long-term debt, net of current maturities, deferred
fees and discounts
$4,161,422
$3,366,777
$3,071,926
$2,575,502
$2,078,093
(cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:87)(cid:76)(cid:69)(cid:86)(cid:73)(cid:76)(cid:83)(cid:80)(cid:72)(cid:73)(cid:86)(cid:87)(cid:365)(cid:4)(cid:73)(cid:85)(cid:89)(cid:77)(cid:88)(cid:93)(cid:4)(cid:12)(cid:72)(cid:73)(cid:420)(cid:71)(cid:77)(cid:88)(cid:13)
(cid:4)(cid:8)(cid:12)(cid:21)(cid:26)(cid:23)(cid:16)(cid:24)(cid:26)(cid:27)(cid:13)
(cid:4)(cid:8)(cid:12)(cid:24)(cid:24)(cid:23)(cid:16)(cid:22)(cid:23)(cid:24)(cid:13)
(cid:4)(cid:8)(cid:12)(cid:27)(cid:26)(cid:16)(cid:27)(cid:21)(cid:24)(cid:13)
(cid:4)(cid:8)(cid:12)(cid:21)(cid:26)(cid:26)(cid:16)(cid:24)(cid:29)(cid:24)(cid:13)
$401,012
4
2021 ANNUAL REPORT
Selected quarterly financial data
(unaudited)
IN THOUSANDS, EXCEPT PER SHARE DATA
Q1
Q2
Q3
Q4
Fiscal year
Operating revenues
FY2021
FY2020
Operating expenses
FY2021
FY2020
Operating income
FY2021
FY2020
Net income
FY2021
FY2020
Earnings per basic common share
FY2021
FY2020
Earnings per diluted common share
FY2021
FY2020
Headcount
FY2021
FY2020
FY2019
$478,423
$416,780
$224,048
$208,896
$254,375
$207,884
$196,819
$148,125
$2.38
$1.75
$2.36
$1.73
$498,180
$409,616
$240,647
$194,441
$257,533
$215,175
$165,423
$115,123
$2.01
$1.38
$1.99
$1.36
$517,099
$425,333
$236,869
$197,713
$280,230
$227,620
$169,876
$182,358
$2.06
$2.18
$2.03
$2.16
$549,842
$443,661
$2,043,544
$1,695,390
$269,255
$209,576
$970,819
$810,626
$280,587
$234,085
$1,072,725
$884,764
$193,865
$156,216
$725,983
$601,822
$2.35
$1.89
$2.32
$1.87
$8.80
$7.19
$8.70
$7.12
4,303
3,633
3,396
Adjusted EBITDA
MSCI
5
YEAR ENDED
Dec. 31 2021
Dec. 31 2020
Dec. 31 2019
Dec. 31 2018
Dec. 31 2017
$2,043,544
$1,695,390
$1,557,796
$1,433,984
$1,274,172
IN THOUSANDS
CONSOLIDATED
Operating revenues
Adjusted EBITDA expenses
Adjusted EBITDA
Adjusted EBIDTA margin %
Operating margin %
INDEX
Operating revenues
Recurring subscriptions
Asset-based fees
Non-recurring
$846,754
$1,196,790
58.6%
52.5%
$650,629
$553,991
$47,144
$723,880
971,510
57.3%
52.2%
$580,393
$399,771
$36,331
Operating revenues total
$1,251,764
$1,016,495
Adjusted EBITDA expenses
Adjusted EBITDA
Adjusted EBIDTA margin %
ANALYTICS
Operating revenues:
Recurring subscriptions
Non-recurring
Operating revenues total
Adjusted EBITDA expenses
Adjusted EBITDA
Adjusted EBIDTA margin %
ESG CLIMATE
Operating revenues:
Recurring subscriptions
Non-recurring
Operating revenues total
Adjusted EBITDA expenses
Adjusted EBITDA
Adjusted EBIDTA margin %
ALL OTHER - PRIVATE ASSETS
Operating revenues:
Recurring subscriptions
Non-recurring
Operating revenues total
Adjusted EBITDA expenses
Adjusted EBITDA
Adjusted EBIDTA margin %
$300,452
$951,312
76.0%
$250,002
$766,493
75.4%
$533,178
$11,121
$544,299
$345,500
$198,799
36.5%
$162,609
$3,583
$166,192
$136,444
$29,748
17.9%
$79,624
$1,665
$81,289
$64,358
$16,931
20.8%
$506,301
$7,507
$513,808
$340,884
$172,924
33.7%
$109,945
$1,419
$111,364
$88,513
$22,851
20.5%
$51,536
$2,187
$53,723
$44,481
$9,242
17.2%
$707,297
850,499
54.6%
48.5%
$530,968
$361,927
$28,042
$920,937
$250,749
$670,188
72.8%
$486,282
$10,643
$496,925
$344,812
152,113
30.6%
$89,563
$1,096
$90,659
$68,846
$21,813
24.1%
$47,227
$2,048
$49,275
$42,890
$6,385
13.0%
$661,551
772,433
53.9%
47.9%
$477,612
$336,565
$21,298
$835,475
$227,622
$607,853
72.8%
$474,334
$5,605
$479,939
$336,294
$143,645
29.9%
$70,291
$1,075
$71,366
$55,347
$16,019
22.4%
$44,299
$2,905
$47,204
$42,288
$4,916
10.4%
$614,415
659,757
51.8%
45.5%
$427,289
$276,092
$15,578
$718,959
$196,718
$522,241
72.6%
$452,253
$6,016
$458,269
$332,645
125,624
27.4%
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
6
2021 ANNUAL REPORT
Henry A. Fernandez
(cid:39)(cid:76)(cid:69)(cid:77)(cid:86)(cid:81)(cid:69)(cid:82)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:41)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
We are all witnessing
one of history’s great
(cid:77)(cid:82)(cid:421)(cid:73)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:84)(cid:83)(cid:77)(cid:82)(cid:88)(cid:87)(cid:18)(cid:4)
MSCI’s business
strategy can help us
navigate and shape
the new landscape.
Dear fellow shareholders,
We live in a here-and-now culture filled with countless distractions. The news cycle
has never been faster, and our collective attention span has never been shorter. From
the moment we wake up, digital devices aggressively compete for our time, interest
and emotions. In such an environment, it can be difficult to maintain a long-term
perspective on current events.
But make no mistake: We are all witnessing one of history’s great inflection points.
Not only because of COVID-19 and the Russian invasion of Ukraine, but also because
of challenges and opportunities that emerged well before the pandemic and the war:
namely, the climate crisis and the ESG and index revolutions. Taken together, they are
transforming the free-enterprise system.
Free enterprise has undergone tectonic shifts before, especially as large numbers
of people moved from farms to factories in the 19th century and from factories to
offices in the 20th century. These earlier shifts brought about fundamental changes
in the nature of work and economic progress. The same thing is happening today.
MSCI’s business strategy can help us navigate and shape this new landscape.
Our mission is to power better investment decisions for a better world: a more
prosperous, more thriving, more sustainable world. This mission informs and inspires
our efforts on climate and ESG.
We see the evolution of free enterprise as a huge opportunity for companies and
investors. But seizing the opportunity will require innovative tools, models and data.
MSCI can provide them.
To understand our strategy, one must first understand the constellation of forces
remaking the global economy.
The Climate Crisis
Many people still think of climate change as a “potential” problem 30 years down the
road, partly because countries and institutions have set 2050 targets for achieving
net-zero carbon emissions. Unfortunately, the problem is far more urgent: Rising
global temperatures pose a clear and present danger to our way of life right now.
Since 1970, the number of climate-, weather- and water-related disasters has
“increased by a factor of five,” according to the World Meteorological Organization. In
2021 alone, we saw extreme weather events everywhere from China, Russia, Turkey
and Algeria to the United States, Canada and Western Europe.
Scientists from the World Weather Attribution initiative studying the heatwave that
affected the U.S. Pacific Northwest and western Canada in June 2021 concluded
that it “was virtually impossible without human-caused climate change,” and that
“the observed temperatures were so extreme that they lie far outside the range of
historically observed temperatures.”
If the world is suffering this many extreme weather events at 1.2 degrees Celsius of
warming, just imagine what might happen at 2 or 3 degrees of warming. We simply
cannot afford to take the risk.
Limiting temperature rise to 1.5 degrees will require the largest reconstruction of the
global economy since the Industrial Revolution. It will mean transitioning from an
energy and power system that relies mostly on fossil fuels to one that relies mostly
on renewables, while also decarbonizing transportation, production, real estate, and
food and agriculture. The challenge is enormous, but so is the opportunity.
Governments around the world have responded with ambitious net-zero
commitments and aggressive policies to curb emissions. At the COP26 climate
summit in Glasgow, close to 200 nations signed a breakthrough agreement on
rules for international carbon markets. All of this will drive a massive reallocation
of investment.
Just look at renewable-energy sources. The International Energy Agency (IEA)
estimates that global spending on clean-energy technologies and efficiency totaled
$750 billion last year. It also projects that renewables will account for nearly 95% of
the growth in power capacity through 2026.
Still, the financial and investment industry must think bigger and act faster to help
stabilize global temperature rise at 1.5 degrees.
The IEA calculates that clean-energy investments would have to increase more than
threefold to give us a realistic chance of hitting the 1.5-degree target. For that matter,
as of August 2021, fewer than 10% of the 9,300-plus public companies in the MSCI
All Country World Investable Market Index had a carbon footprint that aligned with
a 1.5-degree pathway, according to the MSCI Net-Zero Tracker. The United Nations
Intergovernmental Panel on Climate Change warns that we have “a brief and rapidly
closing window of opportunity to secure a liveable and sustainable future for all.”
MSCI
7
Operating Income (in millions)
$1,073
$885
$756
$687
$580
F2017
F2018
F2019
F2020
F2021
In other words, the actions that companies and capital markets take — or fail to
take — over the next few years could make the difference between avoiding or
experiencing the worst climate impacts.
Net Income (in millions)
The ESG and Index Revolutions
Climate change has done more than any other single issue to fuel the global ESG
revolution. In that sense, it is not surprising that some commentators equate ESG
ratings with climate impact. But ESG ratings are not climate-impact ratings. They
synthesize a much wider mix of sustainability factors, of which climate risk is only one.
$726
$602
$564
$508
MSCI’s ESG ratings are investment tools that measure a company’s resilience to
long-term, financially material environmental, social and governance risks. Investors
use our ratings to identify a company’s exposure to ESG risks and gauge the related
impact on their portfolios.
$304
There is certainly a moral case for ESG investing, but its rapid growth also reflects
more pragmatic motivations: Business leaders increasingly believe that integrating
ESG factors into investment management can drive superior financial performance.
F2017
F2018
F2019
F2020
F2021
The numbers speak for themselves: At the start of 2020, sustainable investments
represented nearly 36% of total assets under management in the United States,
Europe, Japan, Canada, Australia and New Zealand, up from less than 28% in 2016,
according to the Global Sustainable Investment Alliance.
Cash and Cash Equivalents and Short-term Investments
(in millions)
$1,507
$1,421
$1,301
“Sustainable investments” cover a broad range of ESG approaches — such as impact
investing, values-based investing, and ESG integration — each of which serves a
unique purpose. But the common theme is that previously neglected risks now
receive much greater attention from investors. As a result, sustainability concerns
have jumped to the forefront of public debate across industries.
$890
$904
ESG and climate indexes exemplify a broader revolution that is transforming the
investment world. Simply put, the use of indexes is exploding.
Building on the foundation of MSCI’s leading market indexes that cover countries,
regions and sectors, there is large investor demand for other types of indexes to
support specific investment objectives. In response, we offer ESG and climate
indexes, fixed-income indexes, factor indexes, thematic indexes, real-estate
indexes and more. A factor index, for example, might represent the performance
of stocks with low volatility or high yield, while a thematic index might represent
the performance of stocks associated with certain trends, such as life sciences,
biotechnology or transformative technology.
The growth in demand for these types of indexes highlights an industrywide trend
toward more personalized portfolio construction, as investors search for highly
specialized outcomes aligned with their unique preferences and needs.
F2017
F2018
F2019
F2020
F2021
8
2021 ANNUAL REPORT
Debt (in millions)
$4,161
$3,367
$3,072
$2,576
$2,078
F2017
F2018
F2019
F2020
F2021
Operating Margin
47.9%
48.5%
45.5%
52.2%
52.5%
F2017
F2018
F2019
F2020
F2021
Diluted EPS
$3.31
$8.70
$7.12
$6.59
$5.66
F2017
F2018
F2019
F2020
F2021
This shift can be seen most clearly in the rise of direct indexing, where investors
customize an index to reflect their particular preferences and desired outcomes,
such as unique ESG or climate goals, a reduced risk profile, or a unique tax
consideration. Direct indexing allows investors to design their own index and then
build a portfolio around it.
Index investors and corporate leaders are embracing ESG considerations for multiple
reasons, including basic self-interest. Take diversity, equity and inclusion (DE&I):
Companies have made DE&I a key pillar of their strategy not only because they
consider it the right thing to do, but also because they know it is good for business.
Indeed, myriad researchers have shown that greater diversity can help produce
faster innovation and higher profits. In 2019, companies with top-quartile ethnic
diversity on their executive team were 36% more likely to achieve above-average
profitability than companies with fourth-quartile ethnic diversity, according to a
McKinsey analysis. For gender diversity, the equivalent gap was 25%. Similarly,
Boston Consulting Group has found that in 2017, innovation accounted for 45%
of total revenue at firms with above-average diversity on their management team,
compared with 26% at firms with below-average diversity.
Demographic trends are making the business case for DE&I even stronger. The
global talent pool is increasingly female, which means any company that fails to
compete for top female talent will eventually be left behind. In the United States,
women represented nearly 60% of all college students at the end of the 2020–21
academic year.
Companies are also tapping into more racially and ethnically diverse talent
pools and, like MSCI, are doubling down on efforts to promote the retention and
advancement of diverse talent.
COVID-19 and the Return of Geopolitics
Of course, long-term trends do not always move in a straight line. Over the past two
years, COVID-19 has undermined gender diversity at businesses across the globe,
with untold numbers of women leaving their jobs due to lockdowns and school
closures. Even as pandemic restrictions have eased, millions of female workers have
not returned.
And yet, somewhat paradoxically, the changes wrought by COVID-19 could ultimately
make it easier for employees to balance family and career. The pandemic has
accelerated many patterns that were already underway before it began, especially
the rise of flexible work arrangements such as telecommuting. More broadly, it has
increased the relative power of workers vis-à-vis their employers. At a time of severe
labor shortages, many employers are offering higher wages, enhanced benefits and
other accommodations in hopes of attracting talent.
These changes could have far-reaching effects. More and more companies now
view innovative work models as a business necessity. They understand that
becoming more flexible can help make them more diverse, equitable and inclusive,
all of which can help make them more productive and successful.
In the short term, however, pandemic-induced labor shortages have also contributed to
(cid:87)(cid:89)(cid:84)(cid:84)(cid:80)(cid:93)(cid:17)(cid:71)(cid:76)(cid:69)(cid:77)(cid:82)(cid:4)(cid:70)(cid:83)(cid:88)(cid:88)(cid:80)(cid:73)(cid:82)(cid:73)(cid:71)(cid:79)(cid:87)(cid:18)(cid:4)(cid:56)(cid:76)(cid:73)(cid:87)(cid:73)(cid:4)(cid:70)(cid:83)(cid:88)(cid:88)(cid:80)(cid:73)(cid:82)(cid:73)(cid:71)(cid:79)(cid:87)(cid:16)(cid:4)(cid:77)(cid:82)(cid:4)(cid:88)(cid:89)(cid:86)(cid:82)(cid:16)(cid:4)(cid:76)(cid:69)(cid:90)(cid:73)(cid:4)(cid:71)(cid:83)(cid:82)(cid:88)(cid:86)(cid:77)(cid:70)(cid:89)(cid:88)(cid:73)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:76)(cid:77)(cid:75)(cid:76)(cid:73)(cid:86)(cid:4)(cid:77)(cid:82)(cid:421)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)
around the world, a problem further exacerbated by rising geopolitical tensions.
As I write this in early March 2022, the world’s attention is focused on Ukraine,
where an unprovoked Russian invasion has already claimed thousands of lives and
triggered a humanitarian crisis. Global policymakers have taken steps to mitigate
the crisis, aid the Ukrainian people and punish Russia for its aggression. The ensuing
sanctions and business exits, along with a heightened threat of cyberattacks, have
created fresh layers of risk and uncertainty for investors.
MSCI
9
Diluted Shares (in millions)
91.9
89.7
85.5
84.5
83.5
F2017
F2018
F2019
F2020
F2021
Outstanding shares (in millions)
90.1
84.2
84.8
82.6
82.4
F2017
F2018
F2019
F2020
F2021
Some analysts believe we are also witnessing a reversal of globalization, particularly
given the strains in U.S. relations with China. Yet in 2021, the United States sent
record levels of goods exports to China and dozens of other countries, while
receiving a surge of imported goods that pushed the U.S. trade deficit to a new
record high. This suggests that globalization has proven resilient to the pandemic,
supply-chain challenges and geopolitical battles.
We must remember that the world’s economic interdependence developed over many
decades, and it cannot easily be unraveled. At the same time, the return of great-
power competition has spawned a host of global investment challenges that require
data-driven solutions.
How MSCI Is Responding
MSCI acted swiftly following the Russian invasion of Ukraine, providing essential support
to our colleagues in the region and donating to key relief organizations. We made
necessary adjustments to our existing products and business ties, while also developing
new products, services and research to help investors navigate the market turmoil.
For example, we consulted with investors and quickly announced that we were
removing Russia from our Emerging Markets indexes and reclassifying it as a
standalone index. We also introduced new stress-test scenarios, specific to the
war, that clients can run through our existing Analytics products. In addition, we are
bolstering our cybersecurity protections to guard against potential attacks.
The Ukraine crisis should not be analyzed in a vacuum, because it has already
changed the global conversation on other high-profile issues, including energy and
climate policy. German Chancellor Olaf Scholz, for example, has pledged to reduce
his country’s dependence on Russian gas while still keeping it on track to achieve
carbon neutrality by 2045. That will require a major economic transformation.
At MSCI, we recognize that every economic transformation in modern history has
been powered by investment: a reallocation of capital from certain companies,
technologies and business models to others, along with a repricing of assets. The
low-carbon transformation will be no different.
Thus, in the race to reach net-zero emissions, finance is just as important as energy.
With that in mind, MSCI is working to become the leading provider of climate
solutions to the financial and investment industry.
We currently offer more than 900 climate metrics and a variety of innovative climate
tools, such as our Climate Value-at Risk model, which illustrates how both the physical
impact of climate change and the government response to it could affect investment
portfolios. We introduced several new climate tools in 2021 alone. For example:
•
•
•
•
Our Net-Zero Tracker highlights the carbon footprint and emissions trajectory
of more than 9,300 publicly listed companies in the MSCI All Country World
Investable Market Index.
Our Implied Temperature Rise model shows how individual companies align — or do
not align — with different climate pathways (such as a 1.5- or 2-degree Celsius rise).
Our Climate Lab application helps investors monitor and manage climate-related
risks at the enterprise level.
Finally, our Carbon Footprinting of Private Equity and Debt Funds tool provides
emissions data for more than 15,000 private companies and nearly 4,000
private-equity and debt funds.
All of these tools are aligned with the guidance framework developed by the Task
Force on Climate-Related Financial Disclosures. MSCI’s 2021 acquisition of Real
Capital Analytics helped us further expand our climate capabilities by adding the
industry’s most extensive commercial real-estate database.
10
2021 ANNUAL REPORT
Dividends per Share
$1.92
$1.32
$3.64
$2.92
$2.52
F2017
F2018
F2019
F2020
F2021
Adjusted EBITDA (in millions)
1,197
972
850
772
660
F2017
F2018
F2019
F2020
F2021
Adjusted EBITDA Margin
51.8%
53.9%
54.6%
57.3%
58.6%
F2017
F2018
F2019
F2020
F2021
Our solutions help clients integrate climate assessments into all aspects of their
investment process. For example, MSCI provides climate-risk analytics on securities
across asset classes, giving clients the information they need to streamline their risk-
management programs. Our data, models and research enable investors to measure
and understand climate risk at the portfolio, sector and company levels.
MSCI has also tried to amplify our climate leadership through external partnerships. In
September, we became a founding member of the Net Zero Financial Service Providers
(cid:37)(cid:80)(cid:80)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:76)(cid:73)(cid:80)(cid:72)(cid:4)(cid:69)(cid:4)(cid:79)(cid:77)(cid:71)(cid:79)(cid:83)(cid:74)(cid:74)(cid:4)(cid:73)(cid:90)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:88)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:50)(cid:73)(cid:91)(cid:4)(cid:61)(cid:83)(cid:86)(cid:79)(cid:4)(cid:83)(cid:74)(cid:420)(cid:71)(cid:73)(cid:87)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:57)(cid:18)(cid:50)(cid:18)(cid:4)(cid:55)(cid:84)(cid:73)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:41)(cid:82)(cid:90)(cid:83)(cid:93)(cid:4)(cid:49)(cid:69)(cid:86)(cid:79)(cid:4)
Carney. Then, in November, we played a prominent role at the COP26 climate summit.
On climate and other ESG issues, MSCI believes in practicing what we preach. In 2021,
we pledged to achieve net-zero emissions across our operations before 2040. To reach
that goal, we are accelerating efforts to reduce emissions within our direct control;
engaging with our suppliers to help them achieve net-zero in their own operations; and
exploring the use of carbon offsets for our residual, unavoidable emissions.
On the broader sustainability front, MSCI remains the largest global provider of
ESG ratings. This year marks the tenth anniversary of our flagship “ESG Trends to
Watch” report. The 2022 report notes that, as ESG disclosures become increasingly
regulated and standardized, a common ESG vocabulary is emerging. This can help
combat “greenwashing” by strengthening transparency, verifying sustainability claims
and clarifying the choices available to investors.
MSCI is proud to be an industry leader in driving ESG transparency, and we continue
doing our part to develop a consistent global taxonomy. In particular, we support
mandatory climate disclosures based on international standards, which would make
it easier to distinguish low-carbon leaders from high-carbon laggards. At a minimum,
we believe companies should have to disclose their total emissions, the location of
their biggest facilities, and their top suppliers. Mandatory disclosures would increase
both the quantity and quality of climate data available to investors.
They would also expand the use of climate indexes, and thus advance the wider index
revolution. MSCI continues advancing that revolution through our products, investments
and partnerships. Right now, we calculate more than 260,000 indexes a day, including a
variety of thematic indexes. We are investing to expand these capabilities exponentially.
In 2021, clients launched more than 200 new exchange-traded funds linked to our indexes,
while MSCI itself launched eight new thematic indexes, along with the MSCI Thematic
(cid:41)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:55)(cid:88)(cid:69)(cid:82)(cid:72)(cid:69)(cid:86)(cid:72)(cid:4)(cid:362)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:77)(cid:82)(cid:72)(cid:89)(cid:87)(cid:88)(cid:86)(cid:93)(cid:365)(cid:87)(cid:4)(cid:420)(cid:86)(cid:87)(cid:88)(cid:4)(cid:71)(cid:83)(cid:81)(cid:84)(cid:86)(cid:73)(cid:76)(cid:73)(cid:82)(cid:87)(cid:77)(cid:90)(cid:73)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:87)(cid:93)(cid:87)(cid:88)(cid:73)(cid:81)(cid:69)(cid:88)(cid:77)(cid:71)(cid:4)(cid:72)(cid:69)(cid:88)(cid:69)(cid:87)(cid:73)(cid:88)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)
analyzing fund and portfolio exposures through a thematic lens. We will further enhance our
thematic-index suite via partnerships with data, technology, biopharma and other companies.
Additionally, in response to client demand for tools that allow them to personalize
their investment strategies, we are launching Index Builder, a new application that
enables investors to create, customize and test their own indexes using MSCI
frameworks and content. In other words, investors will have direct access to our
index-construction capabilities. We believe this will make the entire process far more
efficient and client-centric.
All of these solutions begin with our people. Since 2020, MSCI has combined
pandemic lessons and internal feedback to establish a new work model that provides
(cid:88)(cid:76)(cid:73)(cid:4)(cid:421)(cid:73)(cid:92)(cid:77)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:87)(cid:89)(cid:84)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:73)(cid:81)(cid:84)(cid:80)(cid:83)(cid:93)(cid:73)(cid:73)(cid:87)(cid:4)(cid:82)(cid:73)(cid:73)(cid:72)(cid:18)(cid:4)(cid:54)(cid:69)(cid:88)(cid:76)(cid:73)(cid:86)(cid:4)(cid:88)(cid:76)(cid:69)(cid:82)(cid:4)(cid:88)(cid:86)(cid:93)(cid:4)(cid:88)(cid:83)(cid:4)(cid:86)(cid:73)(cid:71)(cid:86)(cid:73)(cid:69)(cid:88)(cid:73)(cid:4)(cid:69)(cid:4)(cid:91)(cid:83)(cid:86)(cid:80)(cid:72)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)
no longer exists, we are seeking to build something better. We believe the new model
will deliver superior results for our clients, our colleagues and our company as a whole.
To be clear, this initiative is not just about working from home. It is also about
(cid:86)(cid:73)(cid:77)(cid:81)(cid:69)(cid:75)(cid:77)(cid:82)(cid:77)(cid:82)(cid:75)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:87)(cid:73)(cid:88)(cid:89)(cid:84)(cid:4)(cid:83)(cid:74)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:84)(cid:76)(cid:93)(cid:87)(cid:77)(cid:71)(cid:69)(cid:80)(cid:4)(cid:83)(cid:74)(cid:420)(cid:71)(cid:73)(cid:4)(cid:87)(cid:84)(cid:69)(cid:71)(cid:73)(cid:4)(cid:88)(cid:83)(cid:4)(cid:84)(cid:86)(cid:83)(cid:81)(cid:83)(cid:88)(cid:73)(cid:4)(cid:71)(cid:83)(cid:80)(cid:80)(cid:69)(cid:70)(cid:83)(cid:86)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:31)(cid:4)(cid:81)(cid:83)(cid:72)(cid:73)(cid:86)(cid:82)(cid:77)(cid:94)(cid:77)(cid:82)(cid:75)(cid:4)
our products, services and facilities with advanced technology; and deepening our
(cid:71)(cid:89)(cid:80)(cid:88)(cid:89)(cid:86)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)(cid:88)(cid:86)(cid:89)(cid:87)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:69)(cid:71)(cid:71)(cid:83)(cid:89)(cid:82)(cid:88)(cid:69)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:18)(cid:4)(cid:37)(cid:87)(cid:4)(cid:69)(cid:82)(cid:4)(cid:69)(cid:72)(cid:72)(cid:73)(cid:72)(cid:4)(cid:70)(cid:73)(cid:82)(cid:73)(cid:420)(cid:88)(cid:16)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:42)(cid:89)(cid:88)(cid:89)(cid:86)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)(cid:59)(cid:83)(cid:86)(cid:79)(cid:4)(cid:91)(cid:77)(cid:80)(cid:80)(cid:4)(cid:86)(cid:73)(cid:77)(cid:82)(cid:74)(cid:83)(cid:86)(cid:71)(cid:73)(cid:4)
(cid:83)(cid:89)(cid:86)(cid:4)(cid:40)(cid:41)(cid:10)(cid:45)(cid:4)(cid:69)(cid:75)(cid:73)(cid:82)(cid:72)(cid:69)(cid:16)(cid:4)(cid:70)(cid:73)(cid:71)(cid:69)(cid:89)(cid:87)(cid:73)(cid:4)(cid:69)(cid:4)(cid:81)(cid:83)(cid:86)(cid:73)(cid:4)(cid:421)(cid:73)(cid:92)(cid:77)(cid:70)(cid:80)(cid:73)(cid:4)(cid:91)(cid:83)(cid:86)(cid:79)(cid:4)(cid:81)(cid:83)(cid:72)(cid:73)(cid:80)(cid:4)(cid:71)(cid:83)(cid:89)(cid:80)(cid:72)(cid:4)(cid:81)(cid:69)(cid:79)(cid:73)(cid:4)(cid:77)(cid:88)(cid:4)(cid:73)(cid:69)(cid:87)(cid:77)(cid:73)(cid:86)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:89)(cid:87)(cid:4)(cid:88)(cid:83)(cid:4)
recruit, retain and advance diverse employees from the widest possible pool.
MSCI made significant progress with our DE&I agenda in 2021. Among other
milestones, we appointed our first chief diversity officer and introduced DE&I goals
for senior leaders tied to their compensation. More than just an expression of our
values, DE&I is a competitive differentiator in the marketplace, helping us win top
talent, build stronger relationships with clients, and spur innovation. For those
reasons, it is a core pillar of our strategy.
Adjusted EPS
MSCI
11
$9.95
$7.83
$6.44
$5.35
$3.98
F2017
F2018
F2019
F2020
F2021
Operating Revenue (in millions)
$2,044
$1,695
$1,558
$1,434
$1,274
F2017
F2018
F2019
F2020
F2021
Driving Stronger Financial Performance
(cid:49)(cid:55)(cid:39)(cid:45)(cid:365)(cid:87)(cid:4)(cid:86)(cid:73)(cid:71)(cid:73)(cid:82)(cid:88)(cid:4)(cid:70)(cid:89)(cid:87)(cid:77)(cid:82)(cid:73)(cid:87)(cid:87)(cid:4)(cid:84)(cid:73)(cid:86)(cid:74)(cid:83)(cid:86)(cid:81)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:71)(cid:83)(cid:82)(cid:420)(cid:86)(cid:81)(cid:87)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:69)(cid:84)(cid:84)(cid:86)(cid:83)(cid:69)(cid:71)(cid:76)(cid:4)(cid:77)(cid:87)(cid:4)(cid:91)(cid:83)(cid:86)(cid:79)(cid:77)(cid:82)(cid:75)(cid:18)(cid:4)(cid:59)(cid:73)(cid:4)(cid:72)(cid:73)(cid:80)(cid:77)(cid:90)(cid:73)(cid:86)(cid:73)(cid:72)(cid:4)
exceptional results in 2021, demonstrating the strength of our ambitious strategy,
long-term investments and consistent execution. Our performance also reflected
unprecedented demand for MSCI solutions and enormous growth opportunities.
For the full year, we achieved earnings-per-share growth of 22% and adjusted
earnings-per-share growth of 27%, subscription run rate growth of 18%, record new
recurring subscription sales of more than $255 million, and a retention rate of close
to 95%. In addition, we generated cash from operating activities of $936 million and
free cash flow of more than $883 million, which represented a 16% growth rate.
As for our ESG and Climate segment, it posted growth of close to 50% in revenue
and over 44% in run rate. To offer some perspective on how fast that business has
grown: It took almost a decade after MSCI’s acquisition of Risk Metrics for our ESG
and Climate segment to surpass $100 million of run rate — a threshold we crossed in
2019. Since then, our ESG and Climate run rate has nearly doubled, reaching close to
$200 million at the end of 2021.
Our strong financial results reaffirm our strategic progress. MSCI continues to
expand our role as a change agent for the global investment industry while providing
the common language and tools investors use for indexation, risk management,
factors, ESG, climate and other key investment categories.
Across all our business lines, we are making a big impact and gaining recognition.
In October, for example, Hong Kong Futures Exchange launched a futures contract
based on an MSCI China A-share index, the first offshore sector-balanced China
A-share future supported and approved by Chinese regulators. It proved to be the
most successful launch ever of a futures contract based on an MSCI index.
Our intense client-centricity has enabled us to add wallet share organically and
emerge as a go-to partner for clients seeking to differentiate themselves. That
includes asset managers and asset owners, MSCI’s largest installed base of clients.
Last year, our subscription run rate among those two client segments increased by
11%, excluding acquisitions.
We are also rapidly expanding client segments and end markets such as wealth
managers, hedge funds, broker dealers, insurance companies and corporations. We
generated almost $78 million of incremental subscription run rate from those groups
in 2021, for a growth rate of nearly 20%.
Meanwhile, we continue investing in and executing on our data-transformation
strategy. To put this transformation in context: MSCI has traditionally used third-party
data to create indexes, risk models and other products. We will continue to do that
in the future, while creating new pathways for clients to access and interact with our
products. But we will also source and collect much more data from alternate and
direct sources — on areas ranging from private equity and fixed income to real estate
and climate — to generate more meaningful insights for our clients.
In effect, MSCI has always been a data-processing factory. Now we are rapidly becoming
a data-building machine. The value of this transformation cannot be overstated. In a
world that increasingly runs on data, MSCI’s new capabilities will dramatically enhance
our competitive advantages and boost our long-term growth potential.
12
2021 ANNUAL REPORT
Net cash provided by operating activities
(in millions)
$936
$811
$710
$613
$404
F2017
F2018
F2019
F2020
F2021
Free Cash Flow (in millions)
$883
$760
$656
$564
$355
F2017
F2018
F2019
F2020
F2021
Our new data strategy is closely connected to our technology transformation. We
recently launched MSCI Developer Community, a cohesive platform for clients to
access our application programming interfaces and our code. This platform will help
developers and quants customize and improve their offerings and scale various use
cases, such as integrating front- and back-office applications.
We are also pleased with MSCI’s accelerated migration to the cloud. Last year, we
successfully exited one of our on-premises data centers, and we are on track for
another exit this year.
Looking at the bigger picture, our all-weather franchise and mission-critical solutions
position us favorably for every type of operating environment. That includes periods
of sector, factor, geographic and ESG rotation; periods of elevated inflation; and
periods of market volatility.
(cid:59)(cid:77)(cid:88)(cid:76)(cid:4)(cid:87)(cid:88)(cid:86)(cid:83)(cid:82)(cid:75)(cid:4)(cid:81)(cid:83)(cid:81)(cid:73)(cid:82)(cid:88)(cid:89)(cid:81)(cid:16)(cid:4)(cid:49)(cid:55)(cid:39)(cid:45)(cid:4)(cid:71)(cid:83)(cid:82)(cid:88)(cid:77)(cid:82)(cid:89)(cid:73)(cid:87)(cid:4)(cid:81)(cid:69)(cid:79)(cid:77)(cid:82)(cid:75)(cid:4)(cid:77)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:87)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:91)(cid:73)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:71)(cid:83)(cid:82)(cid:420)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)
(cid:91)(cid:77)(cid:80)(cid:80)(cid:4)(cid:72)(cid:73)(cid:80)(cid:77)(cid:90)(cid:73)(cid:86)(cid:4)(cid:88)(cid:69)(cid:82)(cid:75)(cid:77)(cid:70)(cid:80)(cid:73)(cid:4)(cid:82)(cid:73)(cid:69)(cid:86)(cid:17)(cid:88)(cid:73)(cid:86)(cid:81)(cid:4)(cid:70)(cid:73)(cid:82)(cid:73)(cid:420)(cid:88)(cid:87)(cid:18)(cid:4)(cid:56)(cid:76)(cid:73)(cid:87)(cid:73)(cid:4)(cid:77)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:87)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:74)(cid:89)(cid:73)(cid:80)(cid:77)(cid:82)(cid:75)(cid:4)(cid:86)(cid:83)(cid:70)(cid:89)(cid:87)(cid:88)(cid:4)(cid:70)(cid:89)(cid:87)(cid:77)(cid:82)(cid:73)(cid:87)(cid:87)(cid:4)
growth and helping us modernize the client experience. We believe they will help us
build on our historic achievements of 2021 and reach even greater heights in 2022.
A More Sustainable Future
At the start of this letter I mentioned the need for perspective. The Russian invasion
of Ukraine has offered a painful, tragic reminder of the human suffering that can
result from military aggression. We do not know how or when the war will end. But
we do know that support for the Ukrainian people has united governments of all
ideological stripes around the world.
I can only hope that, eventually, global policymakers will forge an equivalent sense of
unity and purpose in their response to the climate crisis.
It is understandable that many people look at climate change with weary resignation.
The task of reconstructing our economies and limiting global temperature rise to 1.5
degrees can seem impossibly large.
Yet such fatalism must be resisted. Climate change already threatens our way of
life, and the danger will only get worse if society fails to decarbonize. We can either
despair about the problem or embrace the opportunity.
Every company, investor and individual has a role to play in shaping a more
sustainable future. After all, climate change is a collective problem that demands
collective solutions. Each of us must contribute. This way, when our children and
grandchildren ask what we did to help solve the world’s greatest challenge, we can
proudly say that we did our part.
Sincerely yours,
Henry A. Fernandez
Chairman, Chief Executive Officer and Shareholder
MSCI
13
Reconciliation of operating revenue
growth to organic operating revenue
growth (unaudited)
Index
Operating revenue growth
Impact of acquisitions and divestitures
(cid:45)(cid:81)(cid:84)(cid:69)(cid:71)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:77)(cid:75)(cid:82)(cid:4)(cid:71)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:73)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:421)(cid:89)(cid:71)(cid:88)(cid:89)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)
Organic operating revenue growth
ESG and Climate
Operating revenue growth
Impact of acquisitions and divestitures
(cid:45)(cid:81)(cid:84)(cid:69)(cid:71)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:77)(cid:75)(cid:82)(cid:4)(cid:71)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:73)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:421)(cid:89)(cid:71)(cid:88)(cid:89)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)
Organic operating revenue growth
Analytics
Operating revenue growth
Impact of acquisitions and divestitures
(cid:45)(cid:81)(cid:84)(cid:69)(cid:71)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:77)(cid:75)(cid:82)(cid:4)(cid:71)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:73)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:421)(cid:89)(cid:71)(cid:88)(cid:89)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)
Organic operating revenue growth
All Other - Private Assets
Operating revenue growth
Impact of acquisitions and divestitures
(cid:45)(cid:81)(cid:84)(cid:69)(cid:71)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:77)(cid:75)(cid:82)(cid:4)(cid:71)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:73)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:421)(cid:89)(cid:71)(cid:88)(cid:89)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)
Organic operating revenue growth
Consolidated
Operating revenue growth
Impact of acquisitions and divestitures
(cid:45)(cid:81)(cid:84)(cid:69)(cid:71)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:77)(cid:75)(cid:82)(cid:4)(cid:71)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:73)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:421)(cid:89)(cid:71)(cid:88)(cid:89)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)
Organic operating revenue growth
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2021 AND 2020
Recurring
Asset-based
Non-recurring
Total
subscription
fees
revenues
Change
Change
Percentage
Percentage
Change
Percentage
Change
Percentage
23.1%
—%
0.1%
23.2%
49.2%
—%
(5.8%)
43.4%
5.9%
—%
0.2%
6.1%
51.3%
(41.3%)
(6.0%)
4.0%
20.5%
(1.3%)
(0.5%)
18.7%
12.1%
—%
0.1%
12.2%
47.9%
—%
(5.9%)
42.0%
5.3%
—%
0.2%
5.5%
54.5%
(43.1%)
(6.0%)
5.4%
14.3%
(1.8%)
(0.7%)
11.8%
38.6%
—%
(0.1%)
38.5%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
38.6%
—%
(0.1%)
38.5%
29.8%
—%
—%
29.8%
152.5%
—%
(1.9%)
150.6%
48.1%
—%
(0.1%)
48.0%
(23.9%)
—%
(3.6%)
(27.5%)
33.9%
—%
(0.3%)
33.6%
14
2021 ANNUAL REPORT
Reconciliation of adjusted
EBITDA to Net income (unaudited)
YEAR ENDED
IN THOUSANDS
Dec. 31
2021
Dec. 31
2020
Dec. 31
2019
Dec. 31
2018
Dec. 31
2017
Consolidated adjusted EBITDA
$1,196,790
$ 971,510
$850,499
$772,433
$659,757
Amortization of intangible assets
$80,592
$56,941
$49,410
$54,189
44,547
Depreciation and amortization of property, equipment
and leasehold improvements
$28,901
$29,805
$29,999
$31,346
$35,440
Impairment related to sublease of leased property
Acquisition-related integration and transaction costs(1)
Multi-year PSU payroll tax expense
$7,702
$6,870
$ -
$ -
$ -
$ -
$ -
$ -
$15,389
$ -
$ -
$ -
$ -
$ -
$ -
Operating income
$1,072,725
$884,764
$755,701
$ 686,898
$579,770
Other expense (income), Net
$214,589
$198,539
$152,383
$57,002
$112,871
Provision for income taxes
$132,153
$84,403
$39,670
$122,011
$162,927
Net income
$725,983
$601,822
$563,648
$507,885
$303,972
Adjusted EBITDA margin %
Operating margin %
58.6%
52.5%
57.3%
52.2%
54.6%
48.5%
53.9%
47.9%
51.8%
45.5%
(1) Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no
later than 12 months after the close of the transaction.
MSCI
15
Reconciliation of Net income and
diluted EPS to adjusted Net income and
adjusted EPS (unaudited)
YEAR ENDED
Less: Gain from changes in ownership interest of equity method investee
($ 6,972)
IN THOUSANDS, EXCEPT PER SHARE DATA
Net income
Plus: Amortization of acquired intangible assets and equity method
investment basis difference
Plus: Multi-year PSU payroll tax expense
(cid:48)(cid:73)(cid:87)(cid:87)(cid:30)(cid:4)(cid:40)(cid:77)(cid:87)(cid:71)(cid:86)(cid:73)(cid:88)(cid:73)(cid:4)(cid:73)(cid:92)(cid:71)(cid:73)(cid:87)(cid:87)(cid:4)(cid:88)(cid:69)(cid:92)(cid:4)(cid:70)(cid:73)(cid:82)(cid:73)(cid:420)(cid:88)(cid:4)(cid:86)(cid:73)(cid:80)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:81)(cid:89)(cid:80)(cid:88)(cid:77)(cid:17)(cid:93)(cid:73)(cid:69)(cid:86)(cid:4)(cid:52)(cid:55)(cid:57)(cid:4)(cid:90)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:75)
Plus: Debt extinguishment costs associated with the 2024 and 2025
senior notes redemptions
Plus: Write-off of internally developed capitalized spftware
Plus: Impairment related to sublease of leased property(1)
Plus: Acquisition-related integration and transaction costs(2)(3)
Less: Gain on sale of Alacra (not tax effected)
Less: Gain on sale of FEA (not tax effected)
Less: Gain on sale of InvestorForce
Less: Valuation Allowance released related to InvestorForce disposition
Less: Tax Reform adjustments
Less: Income tax effect
Adjusted Net income
Diluted EPS
Plus: Amortization of acquired intangible assets and equity method
investment basis difference
(cid:52)(cid:80)(cid:89)(cid:87)(cid:30)(cid:581)(cid:49)(cid:89)(cid:80)(cid:88)(cid:77)(cid:17)(cid:61)(cid:73)(cid:69)(cid:86)(cid:4)(cid:52)(cid:55)(cid:57)(cid:4)(cid:84)(cid:69)(cid:93)(cid:86)(cid:83)(cid:80)(cid:80)(cid:4)(cid:88)(cid:69)(cid:92)(cid:4)(cid:73)(cid:92)(cid:84)(cid:73)(cid:82)(cid:87)(cid:73)
(cid:48)(cid:73)(cid:87)(cid:87)(cid:30)(cid:4)(cid:40)(cid:77)(cid:87)(cid:71)(cid:86)(cid:73)(cid:88)(cid:73)(cid:4)(cid:73)(cid:92)(cid:71)(cid:73)(cid:87)(cid:87)(cid:4)(cid:88)(cid:69)(cid:92)(cid:4)(cid:70)(cid:73)(cid:82)(cid:73)(cid:420)(cid:88)(cid:4)(cid:86)(cid:73)(cid:80)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:49)(cid:89)(cid:80)(cid:88)(cid:77)(cid:17)(cid:61)(cid:73)(cid:69)(cid:86)(cid:4)(cid:52)(cid:55)(cid:57)(cid:4)(cid:90)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:75)
Plus: Debt extinguishment costs associated with the 2024, 2025,
2026 and 2027 Senior Notes Redemptions
Plus: Write-off of internally developed capitalized spftware
Plus: Impairment related to sublease of leased property(1)
Plus: Acquisition-related integration and transaction costs(2)(3)
Less: Gain from changes in ownership interest of equity method
investee
Less: Gain on sale of Alacra (not tax effected)
Less: Gain on sale of FEA (not tax effected)
Less: Gain on sale of InvestorForce
Less: Valuation Allowance released related to InvestorForce disposition
Less: Tax Reform adjustments
Less: Income tax effect
Adjusted EPS
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Dec. 31
2021
2020
2019
2018
2017
$725,983
$601,822
$563,648
$507,885
$303,972
$47,001
$37,413
$34,773
$43,981
$39,157
$-
$-
$-
$-
$15,389
($66,581)
$59,104
$44,930
$16,794
1$16,013
8,$8,702
7,$7,041
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
($ 6,256)
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
($10,646)
($46,595)
($7,758)
$-
$-
$-
$-
$-
$-
$-
($771)
$-
$-
$-
($ 8,272)
$34,500
($ 26,462)
($ 16,490)
($ 13,226)
$ 1,678
($ 10,772)
$830,410
$661,419
$550,797
$480,273
$366,086
$8.70
$0.56
$-
$-
$0.71
$0.19
$0.10
$0.08
($0.08)
$-
$-
$-
$-
$-
($0.31)
$7.12
$0.44
$-
$-
$6.59
$0.41
$0.18
($0.78)
$0.53
$0.20
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
($0.07)
($0.19)
$-
($ 0.16)
$9.95
$7.83
$6.44
$5.66
$0.49
$-
$-
$-
$-
$-
$-
$-
$-
($0.12)
($0.52)
($0.09)
($0.09)
$0.02
$5.35
$3.31
$0.43
$-
$-
$-
$-
$-
$-
$-
($0.01)
$-
$-
$-
$0.38
($0.13)
$3.98
(1) Right-of-use impairment of $7.7 million related to sublease of leased property is presented within “General and administrative” expenses and the write-off of leasehold improvements of
$1.0 million is presented within “Depreciation and amortization of property, equipment and leasehold improvements” expenses.
(2) Acquisition-related integration and transaction costs of $1.4 million are presented within “General and administrative” expenses and $0.2 million are presented within “Depreciation and
amortization of property, equipment and leasehold improvements” expenses.
(3) Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no later
than 12 months after the close of the transaction.
16
2021 ANNUAL REPORT
Reconciliation of Free Cash Flow to Net
Cash Provided by Operating Activities
(unaudited)
YEAR ENDED
IN THOUSANDS
Dec. 31
2021
Dec. 31
2020
Dec. 31
2019
Dec. 31
2018
Dec. 31
2017
Net cash provided by operating activities
$936,069
$811,109
$709,523
$612,762
$404,158
Capital expenditures
Capitalized software development costs
Capex
(cid:42)(cid:86)(cid:73)(cid:73)(cid:4)(cid:71)(cid:69)(cid:87)(cid:76)(cid:4)(cid:421)(cid:83)(cid:91)
Net Income
($13,509)
($39,285)
($52,794)
($21,826)
($29,149)
($50,975)
($29,116)
($24,654)
($53,770)
($30,257)
($18,704)
($48,961)
($33,177)
($15,640)
($48,817)
$883,275
$760,134
$655,753
$563,801
$355,341
$725,983
$601,822
$563,648
$507,885
$303,972
MSCI
17
Corporate information
BOARD OF DIRECTORS
Henry A. Fernandez
Chairman and CEO, MSCI Inc.
Robert G. Ashe(cid:12)(cid:21)(cid:13)(cid:16)(cid:12)(cid:24)(cid:13)(cid:16)(cid:12)(cid:25)(cid:13)
Former General Manager,
Business Analytics, IBM Corp
(Formerly CEO of Cognos Inc.)
Wayne Edmunds(cid:12)(cid:21)(cid:13)(cid:16)(cid:12)(cid:22)(cid:13)
Former Interim Group CEO, BBA Aviation,
and Former CEO, Invensys plc
Catherine R. Kinney(cid:12)(cid:23)(cid:13)
Former President,
New York Stock Exchange
Jacques P. Perold(cid:12)(cid:23)(cid:13)(cid:16)(cid:12)(cid:24)(cid:13)
Former President, Fidelity Management
and Research Company
Sandy C. Rattray(cid:12)(cid:21)(cid:13)(cid:16)(cid:12)(cid:24)(cid:13)
(cid:42)(cid:83)(cid:86)(cid:81)(cid:73)(cid:86)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:45)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:16)(cid:4)(cid:49)(cid:69)(cid:82)(cid:4)(cid:43)(cid:86)(cid:83)(cid:89)(cid:84)
(cid:48)(cid:77)(cid:82)(cid:72)(cid:69)(cid:4)(cid:44)(cid:18)(cid:4)(cid:54)(cid:77)(cid:73)(cid:421)(cid:73)(cid:86)(cid:12)(cid:21)(cid:13)(cid:16)(cid:12)(cid:22)(cid:13)
Former Chairman of Global Research and
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:56)(cid:69)(cid:80)(cid:73)(cid:82)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:16)(cid:4)(cid:49)(cid:83)(cid:86)(cid:75)(cid:69)(cid:82)(cid:4)(cid:55)(cid:88)(cid:69)(cid:82)(cid:80)(cid:73)(cid:93)
Marcus L. Smith(cid:12)(cid:22)(cid:13)(cid:16)(cid:12)(cid:24)(cid:13)
(cid:42)(cid:83)(cid:86)(cid:81)(cid:73)(cid:86)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:45)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:16)(cid:4)
Canada Equity and Portfolio Manager,
International Equities,
MFS Investment Management
Rajat Taneja(cid:12)(cid:21)(cid:13)
President of Technology, Visa Inc.
Paula Volent(cid:12)(cid:23)(cid:13)(cid:16)(cid:12)(cid:24)(cid:13)
(cid:58)(cid:77)(cid:71)(cid:73)(cid:4)(cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:45)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:16)(cid:4)
The Rockefeller University
(1) Member of the Audit and Risk
Committee
(2) Member of the Compensation, Talent
and Culture Committee
(3) Member of the Governance and
Corporate Responsibility Committee
(4) Member of the Strategy and Finance
Committee
(5) Lead Director
EXECUTIVE COMMITTEE
Henry A. Fernandez(cid:12)(cid:69)(cid:13)
Chairman and CEO
C.D. Baer Pettit(cid:12)(cid:69)(cid:13)
(cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:51)(cid:84)(cid:73)(cid:86)(cid:69)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
Andrew C. Wiechmann(cid:12)(cid:69)(cid:13)
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:42)(cid:77)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
Tony Antoun
Head of OneMSCI Platform Engineering
Jeremy Baskin
Head of Buy Side Client Segments
Christine Berg
Head of Client Coverage, Americas
Remy Briand
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:52)(cid:86)(cid:83)(cid:72)(cid:89)(cid:71)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:44)(cid:73)(cid:69)(cid:72)(cid:4)(cid:83)(cid:74)(cid:4)(cid:45)(cid:82)(cid:72)(cid:73)(cid:92)
Scott Colville
Head of Analytics Engineering
Scott A. Crum(cid:12)(cid:69)(cid:13)
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:44)(cid:89)(cid:81)(cid:69)(cid:82)(cid:4)(cid:54)(cid:73)(cid:87)(cid:83)(cid:89)(cid:86)(cid:71)(cid:73)(cid:87)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
Robert J. Gutowski(cid:12)(cid:69)(cid:13)
General Counsel
Axel Kilian
Head of Client Coverage-EMEA
Linda-Eling Lee
Head of ESG and Climate Research
Jorge Mina
Head of Analytics
Eric Moen
Head of ESG and Climate
Alvise Munari
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:39)(cid:80)(cid:77)(cid:73)(cid:82)(cid:88)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
Kazuya Nagasawa
Head of Client Coverage-APAC and
Head of APAC Analytics
Jean-Yves Pelletier
Head of Data and Content Services
Peter Shepard
Head of Analytics Research and Product
Development
Charissa Smith
Head of Private Markets Planning
Jigar Thakkar
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:56)(cid:73)(cid:71)(cid:76)(cid:82)(cid:83)(cid:80)(cid:83)(cid:75)(cid:93)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:44)(cid:73)(cid:69)(cid:72)(cid:4)(cid:83)(cid:74)(cid:4)
Engineering
Diana H. Tidd
(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:54)(cid:73)(cid:87)(cid:84)(cid:83)(cid:82)(cid:87)(cid:77)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)
René Veerman
Head of Real Estate
Peter J. Zangari
Global Head of Research and Product
Development
(a)(cid:4) (cid:40)(cid:73)(cid:87)(cid:77)(cid:75)(cid:82)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:69)(cid:82)(cid:4)(cid:41)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:51)(cid:74)(cid:420)(cid:71)(cid:73)(cid:86)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:55)(cid:41)(cid:39)(cid:4)
reporting purposes
ANNUAL MEETING
The annual meeting of the shareholders
of MSCI Inc. will be held virtually via the
internet at:
www.virtualshareholdermeeting.com/
MSCI2022
on April 26, 2022 at 2:30 PM (EDT)
REGISTRAR AND TRANSFER AGENT
Broadridge Corporate Issuer Solutions
MSCI Inc.
c/o Broadridge Corporate
Issuer Solutions
P.O. Box 1342
Brentwood, NY 11717
T: +1 877 830 4936
(inside the U.S. & Canada)
T: +1 720 378 5591
(outside the U.S. & Canada)
W: www.shareholder.broadridge.com
E: shareholder@broadridge.com
INDEPENDENT AUDITOR
PricewaterhouseCoopers LLP
New York, NY
STOCK SYMBOL
MSCI Inc.’s stock is traded on the New York
Stock Exchange under the symbol MSCI.
FORM 10-K AND OTHER REPORTS
A copy of the MSCI Inc. Form 10-K, as
(cid:420)(cid:80)(cid:73)(cid:72)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:55)(cid:73)(cid:71)(cid:89)(cid:86)(cid:77)(cid:88)(cid:77)(cid:73)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:41)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)
Commission, is included with this Annual
Report and is also available without charge
to shareholders upon written request.
Requests should be directed to Investor
Relations at the corporate address or by
email.
This Annual Report, as well as Forms 10-K,
10-Q and 8-K and earnings and other news
releases, can be viewed and printed at
http://ir.msci.com.
CORPORATE ADDRESS
7 World Trade Center
250 Greenwich Street, 49th FL
New York, NY 10007
T: +1 212 804 3900
F: +1 212 804 2919
W: www.msci.com
E:
investor.relations@msci.com
f-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 001-33812
MSCI INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
13-4038723
(I.R.S. Employer
Identification Number)
7 World Trade Center
250 Greenwich Street, 49th Floor
New York, New York 10007
(Address of Principal Executive Offices, zip code)
(212) 804-3900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
MSCI
Securities registered pursuant to Section 12(g) of the Act: None
Title of each class
Common stock, par value $0.01 per share
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. YES ☒ NO ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. YES ☐ NO ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller Reporting Company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
Emerging growth company
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
The aggregate market value of Common Stock held by non-affiliates of the registrant as of the last business day of the registrant’s
most recently completed second fiscal quarter (based on the closing price of these securities as reported by The New York Stock
Exchange on June 30, 2021) was $43,427,568,686. Shares of Common Stock held by executive officers and directors of the registrant are
not included in the computation. However, the registrant has made no determination that such individuals are “affiliates” within the
meaning of Rule 405 under the Securities Act of 1933.
As of February 4, 2022, there were 81,268,195 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.
Documents incorporated by reference: Portions of the registrant’s proxy statement for its annual meeting of stockholders, to be
held on April 26, 2022, are incorporated herein by reference into Part III of this Form 10-K.
MSCI INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business ..............................................................................................................................................
Risk Factors.........................................................................................................................................
Unresolved Staff Comments ...............................................................................................................
Properties ............................................................................................................................................
Legal Proceedings ...............................................................................................................................
Mine Safety Disclosures .....................................................................................................................
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
PART II
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Equity Securities ............................................................................................................................
Selected Financial Data.......................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations .............
Quantitative and Qualitative Disclosures About Market Risk............................................................
Financial Statements and Supplementary Data...................................................................................
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure............
Controls and Procedures .....................................................................................................................
Other Information ...............................................................................................................................
Disclosure Regarding Foreign Jurisdiction that Prevent Inspections .................................................
Directors, Executive Officers and Corporate Governance..................................................................
Executive Compensation.....................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
PART III
Matters............................................................................................................................................
99
Certain Relationships and Related Transactions, and Director Independence ................................... 100
Principal Accountant Fees and Services ............................................................................................. 100
Item 15.
Item 16.
Exhibit and Financial Statement Schedules ........................................................................................ 101
Form 10-K Summary .......................................................................................................................... 117
PART IV
Except as the context otherwise indicates, the terms “MSCI,” the “Company,” “we,” “our” and “us” refer to
MSCI Inc. together with its subsidiaries.
This Annual Report on Form 10-K contains trademarks, service marks and trade names owned by us, as well
as those owned by others. MSCI, Barra, RiskMetrics, IPD, Real Capitaltt Analytics, Datscha and other MSCI brands
and product names are the trademarks, service marks or registered trademarks of MSCI, its subsidiaries or
licensors in the United States and other jurisdictions.
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FORWARD-LOOKING STATEMENTS
We have included in this Annual Report on Form 10-K, and from time to time may make in our public filff ings,
press releases or other public statements, certain statements t
our management may make forward-looking statements to analysts, investors, representatives of the media and
others. These forward-looking statements are not historical facts and represent only MSCI’s beliefs rff
events, many of which, by their nature, are inherently uncertain and beyond our control.
tt hat constitute forward-looking statements. In addition,
egarding future
In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,”
“expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or
the negative of these terms or other comparable terminology. Statements ctt
business strategy and plans or objectives for future operations are forward-looking statements. You should not place
undue reliance on forward-looking statements btt
other factors that are, in some cases, beyond our control and that could materially affect our actual results,tt
levels of
activity, performance or achievements. Such risks and uncertainties include those set forth under “Risk Factors” in
Part I, Item 1A of this Annual Report on Form 10-K. The forward-looking statements in this report speak only as of
the time they are made and do not necessarily reflect our outlook at any other point in time. We undertake no
obligation to update publicly any forward-looking statements, whether as a result of new information, future events
or for any other reason. Therefore, readers should carefully review the risk factors set forth in other reports or
documents we file from time to time with the Securities and Exchange Commission (the “SEC”).
ecause they involve known and unknown risks, uncertainties and
oncerning our financial position,
1
Item 1.
Business
Mission
PART I
MSCI’s mission is to enable investors to build better portfolios for a better world.
Overview
We are a leading providerr off critical decision supportt tools and solutions forr the global i
nvestment
t
community. Ourr mission-critical offerings help investors address the challenges off a transforming investm tent
landscape and powerr betterr investmentt decisions. Leveraging ourr knowledge off the global investmentt process and
ourr expertise in research, data and technology, we enable ourr clients to understand and an yalyze
krisk
and return and
confidently and efficient yly build more effective pportfolios.
ykey drivers off
y
Investors all overr the world use our research-driven and technology-enabled tools and solutions to gain
insights and improve transparency throughoutt theirr investmentt processes. Ourr tools and solutions help investors
define theirr investmentt universe; inform and analyze theirr assett allocation and portfolio construction decisions;
measure and manage portfolio performance and risk; implementt sustainable, climate-focused and otherr i
strategies; conductt performance attribution; constructt and manage
porting to stakeholders.
indexed financial pproducts; and facilitate rep
exchange traded funds (“ETFs”) and ot
rher
g
g
nvestment
t
Ourr products and services include indexes; portfolio construction and riskk management tools; environmental,
analysis. We
rour
social and gd governance (“ESG”) and climate solutions; and real estate markett and transaction data and
are increasingly focused on open and flexible
clients
pmultiple channels and pplatforms.
technology, and our contentt and
pcapabilities can be accessed yby
through
g
gy
y
g
We aim to anticipate the needs off the investment industry with ourr client-centric focus
g
productt innovation and data
understanding off ourr clients’ workflows,
collection to address the evolving needs off an increasingly complex industry. In order to mostt effectively serve
clients, we are committed to advancing an integrated approach to ourr offerings, achieving service excellence,
enhanci gng ourr differentiated research and content, and
challenges and ggoals. We are focused on product
cutting-edge technol gyogy.
delivering flexible,
g
and ourr deep
g
g
ff
rour
Clients
Our clients comprise a wide spectrum of the global investment industry and include the following
ff
key client
types:
• Asset owners (including pension funds, endowments, foundations, central banks, sovereign wealth funds,
family offices and insurance companies)
• Asset managers (including managers of institutional funds and accounts, mutual funds,
ETFs, insurance products, private banking products and real estate investment trusts)
ff
hedge funds,
•
Financial intermediaries (including banks, broker-dealers, exchanges, custodians, trust companies, fund
administrators and investment consultants)
• Wealth managers (including robo-advisors and self-directed brokerages)
•
Real Estate Professionals (including real estate brokers, agents, developers, lenders and appraisers)
•
Corporates (including public and private companies and their advisors)
As of December 31, 2021, we served over 6,300 clients1 in more than 95 countries. For the year ended
December 31, 2021, our largest client organization by revenue, BlackRock, accounted for 12.7% of our total
revenues, with 93.6% of the revenue from BlackRock coming fromff
that are based on our indexes.
fees based on the assets in BlackRock’s ETFs
1 Represents the aggregate of all related clients under their respective parent entity. As of December 31, 2021, we served over 1,600 clients which
were related to RCA (as defined below).
2
Industry Trends and Competitive Advantages
We believe we are uniquely positioned to benefit from emerging trends and to help our clients adapt to a large and
rapidly expanding and evolving investment industry. Investing has grown in complexity, with more choices across asset
classes, security types and geographies, and more consideration of a wider array of risks, including those relatedaa
to ESG
and climate. In addition, the construction and management of investment portfott
lios areaa becoming increasingly outcome-
oriented, rules-based and technology-driven. As a result, the investment process is transforming,
we have observed, including:
reflected in several trends
ff
•
•
Changing client operating models and business strategies, driven in part by fee compression, changing
demographics, the regulatory environment and shifting economic outlooks;
Increasing use of global, multi-asset-class and other complex investment strategies, including strategies
incorporating private asset investments and factor objectives, as investors seek specific and unique
outcomes;
• Accelerating integration of ESG and climate considerations into investment processes, reporting and
products, as sustainable investing becomes more prominent and investors increasingly focus on
companies with strong sustainability practices as an indicator of long-term resilience, as seen in the
current investment focus on considerations such as the COVID-19 pandemic, extreme weather events and
diversity and inclusion initiatives;
•
•
•
Continuing growth of indexed investing through indexed investment products such as ETFs,
mutual/UCITS funds and annuities, as well as indexed derivatives such as futures, options, structured
products and over-the-counter swaps, and other vehicles that seek to track an index as investors
increasingly seek lower-cost investment strategies;
Increasing allocation of capital to real estate and other private assets and desire for greater transparency
into the performance of private assets, with an increased focus on climate and income risk;
Increasing demand for data and tools that clients can integrate to support their unique portfolio
construction needs and to provide transparency into their investment objectives; and
• Growing use of advanced technologies to enhance investment analytics, streamline operations, create
efficiencies and gain competitive advantages.
We believe the following competitive advantages position us well to meet client demands in light of these
trends:
• Differentiated research-enhanced content provides our clients with insights to better understand and adapt
to a complex and fast-changing marketplace. We are continually developing a wide range of
differentiated content and have amassed an extensive database of historical global market data,
proprietary equity index data, ESG and climate data, factor models, private assets benchmark data and
risk algorithms, all of which can be critical components of our clients’ investment processes. This content
is grounded in our deep knowledge of the global investment process and fueled by experienced research
and product development and data management teams.
•
•
Client-centricitytt allows us to build strong client relationships globally and better understand and service
our clients’ unique needs in the markets in which they operate. Our client coverage team develops and
maintains strong and trusted relationships with senior executives and investment professionals, and we
regularly consult with clients and other market participants to discuss their needs, investment trends and
implications for our research, product development and client servicing goals.
Strong product innovation, supported by flexible, scalable, cutting-edge technology developed by our
global team of sophisticated technology and data professionals, enables clients to use MSCI, third-party
and their proprietary content efficiently and cost-effectively. Our commitment to open and flexible
technology allows us to continually improve our overall products and services by more efficiently
processing data for distribution and ensuring advanced platform flexibility that provides for easy
integration into our clients’ workflows.
3
Strategy
We provide critical tools and solutions that enable investors to manage the transformations taking place in the
investment industry, better understand performance and risk, and build portfolios more effectively and efficiently to
achieve their investment objectives. We are focused on the following key initiatives to deliver actionable and
integrated client solutions:
•
•
•
•
•
•
Extend leadership in research-enhanced content across asset classes. We continue to develop and deliver
innovative solutions that incorporate proprietary and highly differentiated content based on rich insights
from our research and product development teams. In addition to continuing to enhance our position as a
leader with respect to tools and solutions for equity investors globally, our strategic priorities also include
content for ESG and climate, thematics, factors, fixed income, liquidity and private assets, all of which
we believe represent significant growth opportunities. For example, in September 2021, we completed our
acquisition of Real Capital Analytics, Inc. (“RCA”), a provider of data and analytics for the properties
and transactions that drive the global commercial real estate capital markets. This transaction significantly
expanded our data capabilities with respect to private assets.
Lead the enablement of ESG and climate investment integration by delivering the data, information and
applications necessary to identify, assess and incorporate material ESG and climate risks and
opportunities. The global adoption of ESG and climate-focused investment considerations is rapidly
accelerating. As demand from our clients for ESG and climate solutions increases, MSCI’s research, tools
and solutions will aim to provide the transparency our clients need to better integrate ESG and climate
risks and opportunities into their investment processes. Our ESG ratings and climate data and research are
also utilized in our index, analytics and private asset tools and solutions – fromff
ESG and climate indexes
to incorporation of ESG and climate data in risk analysis to climate and emissions assessments specific to
real estate assets and private equity portfolios. We are focused on being an influential thought leader on
these climate-related considerations for the investment industry.
Enhance distribution and content-enabling technology. We are deploying and developing advanced
technology to drive integration and efficiencies, accelerate the pace of innovation and enhance
distribution and the client experience. We increasingly utilize proprietary and third-party technologies,
including artificial intelligence, machine learning and natural language processing tools, to enhance our
ability to gather and analyze data, create content and automate and enhance the efficiency of many of our
data processes. In 2021, in response to evolving client needs and the changing technology landscape, we
launched our new open-architecture Investment Solutions as a Service (“ISaaS”) offerings. These
offerings include Climate Lab Enterprise, a first-in-kind
climate data with our analytical risk and portfolio management capabilities.
visualization dashboard that combines our
ff
Expand solutions that empower client customization. We will further enhance how we support our clients’
investment objectives by embedding our highly differentiated research into solutions that allow clients to
incorporate their custom preferences. For example, we will leverage existing capabilities and applications
to deliver solutions that will allow clients to reflect their unique risk and return, ESG and climate and
thematic preferences, as well as tax optimization strategies in a scalable way.
Strengthen client relationships and grow into strategic partnerships with clients. We aim to serve as a
strategic partner to members of the investment community by anticipating their needs, by promoting the
full breadth of our tools and solutions and by building a seamless experience across our offerings. The
depth of knowledge of our client coverage teams, including dedicated account managers, ensures that we
are engaging with our clients in a holistic and integrated manner. In particular, we are leveraging our
existing offerings to serve new and developing client use cases. Through constant innovation, we enhance
the efficiency and ease of use of our products as we further demonstrate the value of our content,
applications and services.
Execute strategic relationships and acquisitions with complementary content and technology companies.
We regularly evaluate and selectively pursue strategic relationships with, and acquisitions of, providers of
unique and differentiated content, products and technologies that we believe have the potential to
complement, enhance or expand our offerings and client base. In order to drive value, we target
acquisitions and strategic relationships that can be efficiently integrated into our existing operational
structure and global sales network. For example, through our acquisition of RCA, we expanded MSCI’s
robust suite of real estate solutions, by allowing us to provide real estate industry professionals with more
data, analytics and support tools to manage investments and understand performance and risk, including
climate risks, within their portfolios.
4
Financial Model
We have an attractive financial model due to our recurring revenue and strong cash generation. Clients
purchase our products and services primarily through recurring fixed and variable feeff
model which has historically delivered stable revenue and predictable cash flows. Finally, our disciplined capital-
allocation policy provides us with flexibility to balance internal resources and investment needs, acquisitions and
shareholder returns through dividends and opportunistic share repurchases.
arrangements, a business
See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Overview” and Note 1, “Introduction and Basis of Presentation—Significant Accounting Policies—
Revenue Recognition,” of the Notes to the Consolidated Financial Statements included herein for information on
how we generate revenue and our revenue recognition policy.
Segments
For the year ended December 31, 2021, we had the following five operating segments: Index, Analytics, ESG
and Climate, Real Estate and The Burgiss Group, LLC (“Burgiss”), which are presented as the following four
reportable segments: Index, Analytics, ESG and Climate, and All Other – Private Assets. For reporting purposes, the
Real Estate and Burgiss operating segments are combined and presented as All Other – Private Assets, as they did
not meet the thresholds for separate presentation. The Burgiss operating segment represents the Company’s equity
method investment in Burgiss. Financial results related to MSCI’s acquisition of RCA have been included
prospectively as a component of the Real Estate operating segment and presented as a component of the All Other –
Private Assets reportable segment, commencing as of September 13, 2021 (the date we completed the acquisition).
Index
Clients use our indexes in many areas of the investment process, including for indexed product creation (e.g.,
ETFs, mutual funds, annuities, futures, options, structured products, over-the-counter derivatives), performance
benchmarking, portfolio construction and rebalancing, and asset allocation. We currently calculate more than
267,0002 end-of-day indexes daily and more than 15,000 indexes in real time. Clients receive index data directly
from us or from third-party vendors worldwide.
Our index product offerings include:
• MSCI Global Equity Indexes. MSCI Global Equity Indexes are designed to measure returns across a wide
variety of equity markets, size segments, sectors and industries. As of December 31, 2021, we calculated
indexes that covered more than 80 developed, emerging, frontier and standalone equity markets, as well
as various regional indexes built from the component indexes.
•
•
•
•
ESG and Climate Indexes. ESG and Climate Indexes are constructed using data from our ESG and
Climate segment to meet the growing demand for indexes that integrate ESG and climate criteria to
facilitate sustainable investing strategies.
Factor Indexes. Factor Indexes seek to reflect the performance characteristics of a range of investment
styles and strategies, such as momentum or value. These indexes include stocks that demonstrate high
exposure to the target factor. In addition to single factor indexes, we offer multiple-factor indexes, which
aim to support investors with diversified multi-factor strategies.
Thematic Indexes. Thematic Indexes are designed to measure the performance of companies affected by
shifts in macroeconomic, geopolitical and technological trends. These indexes can target areas of interest
under megatrend categories such as the environment, healthcare and lifestyle. Examples of our Thematic
Indexes include digital economy, efficient energy, genomic innovation and smart cities.
Custom Indexes. Custom Indexes are calculated by applying a client’s criteria such as stock exclusion
lists, currency hedging rules, tax rates or special weighting to an existing MSCI index. Investors with
unique index requirements can build an index to meet their specific needs.
2 The number of indexes includes different return versions (e.g., price, net and gross returns) but does not include different currency versions.
5
•
•
Indexes. Fixed Income Indexes include both investment grade and high-yield securities
Fixed Income
II
across a number of currencies that reflect the performance of credit markets generally, or specific
investment strategies, including climate-focused or factor strategies.
Real Estate Indexes. Real Estate Indexes provide transparency and insight to private real estate
investment strategies.
In 2021, we launched a number of new indexes, including the following:
• MSCI China A 50 Connect Index. The MSCI China A 50 Connect Index is designed to reflect the
performance of the 50 largest China A securities across all 11 Global Industry Classification Standard
(GICS) sectors, with at least two securities included for each sector.
• MSCI Circular Economy Indexes. The new suite of MSCI Circular Economy Indexes aims to reflect the
performance of companies associated with facilitating a circular economy to tackle global resource
challenges, including across renewables and energy effiff ciency, the sharing economy, sustainable water
transition, natural resource stewardship and plastics transition.
• MSCI Space Exploration Index. The MSCI Space Exploration Index aims to measure the performance of
a set of companies associated with the development of new products and services such as orbital and sub-
orbital spaceflights, satellite communications and urban air mobility.
Our Index segment also includes revenues fromff
licenses of GICS and GICS Direct, the global industry
classification standard jointly developed and maintained by MSCI and Standard & Poor’s Financial Services, LLC, a
subsidiary of S&P Global Inc. This classification system was developed in response to investors’ need for a
comprehensive and consistent framework for classifying companies into industries. GICS is widely accepted as an
industry analysis framework for investment research, portfolio management and asset allocation. GICS Direct is a
dataset comprised of active companies and securities classified by sector, industry group, industry and sub-industry
in accordance with the proprietary GICS methodology. The MSCI Sector Indexes are comprised of GICS sector,
industry group, and industry indexes across countries and regions in Developed, Emerging and select Frontier
markets.
For the year ended December 31, 2021, 61.3% of our revenues were attributable to our Index segment. A
majority of those revenues were attributable to annual, recurring subscriptions. A portion of our revenues comes
from clients who use our indexes as the basis for indexed investment products. Such fees are primarily based on a
client’s assets under management (“AUM”) or trading volumes and are referred to herein as asset-based fees. Since
market movement and investment trends impact our asset-based fees, our revenues from asset-based fees are subject
to volatility. For the year ended December 31, 2021, asset-based fees accounted for 44.3% of the total revenues for
our Index segment.
Analytics
Our Analytics segment offers risk management, performance attribution and portfolio management content,
applications and services that provide clients with an integrated view of risk and return and tools forff
market, credit, liquidity, counterparty and climate risk across all major asset classes, spanning short-, medium- and
long-term time horizons. Our offerings also support clients’ various regulatory reporting needs.
analyzing
Our Analytics tools and capabilities include the following: models to support factor-based analytics (e.g.,
Barra equity models and fixed income and multi-asset class (“MAC”) models), pricing models and single security
analytics, time series-based analytics, stress testing, performance attribution, portfolio optimization and liquidity risk
analytics, as well as underlying inputs such as interest rate and credit curves. We continue to develop new and
improved tools and capabilities in response to the evolving needs of our clients. In addition, our analytics
capabilities are helping to fuel growth in key areas across our business, such as our factor indexes and many of our
climate risk and reporting offerings.
6
Our clients access our Analytics tools and content through our proprietary applications and application
programming interfaces (“APIs”), third-party applications or directly through their own platforms. Our Analytics
solutions provide clients with tools to construct and manage portfolios, including integrated market data from
multiple third parties as well as content from MSCI’s other segments, which significantly reduces the operational
burden on clients to independently source this information and populate it in our Analytics products. Our key
Analytics products include:
•
•
•
•
•
RiskMetrics RiskManager. RiskMetrics RiskManager provides risk analytics across a broad range of
publicly traded instruments and private assets. Clients use RiskManager for daily analysis, including:
Value-at-Risk (“VaR”) simulation; measuring and monitoring market and liquidity risk at position, fund
and firm levels; sensitivity analysis and stress testing; interactive what-if analysis; counterparty credit
exposure; and regulatory risk reporting.
BarraOne. Powered by our MAC Barra factor model, BarraOne provides clients with MAC risk and
performance analytics. BarraOne allows clients to build equity, fixed income, and MAC portfolios with
specific risk, ESG and climate exposures.
Barra Portfolio Manager. Barra Portfolio Manager is an integrated risk, performance and portfolio-
construction interactive platform with a flexibl
investment strategies and build portfolios, and to share analytics and reports across their organizations. It
is used by equity fund managers and their teams to gain additional portfolio insight and manage their
investment processes more systematically.
e user interface that enables our clients to design
ff
RiskMetrics WealthBench and RiskMetrics CreditManager. RiskMetrics WealthBench is a web-based
platform used by private banks, financial advisers, brokerages and trust companies to help wealth
managers assess portfolio risk, construct asset allocation policies and create comprehensive client
proposals. RiskMetrics CreditManager is a portfolio credit risk management system used primarily by
banks to quantify portfolio credit risk by capturing market exposure, rating changes and default risk.
Climate Lab Enterprise. Powered by MSCI’s climate data integrated with MSCI’s enterprise analytics
infrastructure, Climate Lab Enterprise enables our clients to measure, manage and monitor net-zero
commitments and climate exposure and risks. Climate Lab Enterprise is able to aggregate climate data
across multiple portfolios and asset classes, providing clients the ability to understand alignment with
their climate goals from the enterprise level down through portfolios to individual positions and issuers.
Our Analytics segment also provides various managed services to help clients operate more effiff ciently,
including consolidation of client portfolio data from various sources, review and reconciliation of input data and
results, and customized reporting. In addition, our RiskMetrics HedgePlatform service allows clients such as funds
of funds, pension funds and endowments who invest in hedge funds to measure, evaluate and monitor the risk of
their hedge fund investments across multiple hedge fund strategies.
For the year ended December 31, 2021, 26.6% of our revenues were attributable to our Analytics segment.
ESG and Climate
The ESG and Climate segment3 offers products and services that help institutional investors understand how
ESG and climate considerations can impact the long-term risk and return of their portfolio and individual security-
level investments. We provide data, ratings, research and tools to help investors navigate increasing regulation, meet
new client demands and better integrate ESG and climate elements into their investment processes.
3 Products and services in our ESG and Climate segment are provided by MSCI ESG Research LLC, a wholly owned subsidiary of MSCI Inc.
that is registered with the U.S. Securities and Exchange Commission (SEC) as an Investment Adviser under the Investment Advisers Act of 1940.
MSCI ESG Ratings are used as an input in the construction and calculation of MSCI ESG indexes, which are not subject to our SEC registration.
MSCI indexes are products of MSCI Inc., and MSCI Limited is the benchmark administrator.
7
Our ESG and Climate research team analyzes over 9,8004 entities worldwide, and we will continue to expand
and deepen our coverage to help investors and others in their asset allocation, portfolio construction and risk
management processes. Clients include global asset managers, leading asset owners, consultants, advisers,
corporates and academics.
Our ESG and Climate offerings include:
• MSCI ESG Ratings. Our ESG ratings aim to measure a company’s resilience to long-term ESG risks.
Companies are scored on an industry-relative scale across the most relevant key ESG issues based on a
company's business model. MSCI ESG ratings include ratings of equity issuers and fixed income
securities. The MSCI ESG Industry Materiality Map is a public tool that explores the key ESG issues by
GICS sub-industry or sector and their contribution to companies’ overall ESG ratings. Ratings are
designed to identify and analyze ESG issues, including exposures (e.g., business segment and geographic
risk), management and industry-specific measures that may include the intersection of a company’s major
social and environmental impacts with its core business operations, thereby identifying potential risks and
opportunities for the company and its investors.
• MSCI ESG Business Involvement Screening Research. MSCI ESG Business Involvement Screening
Research is a screening service that enables institutional investors to manage ESG standards and
restrictions reliably and efficiently. Asset managers, investment advisers and asset owners can access
screening research through the online MSCI ESG Manager platform or a data feed to support alignment
with their investment guidelines, implement client mandates or manage potential ESG portfolio risks.
• MSCI Climate Solutions. With MSCI’s Climate Solutions, investors and issuers utilize our climate data
and tools to support their investment decision making. These activities can include measuring and
reporting on climate risk exposure, implementing low carbon fossil-fuel-free strategies, factoring climate
change research into risk management processes and engaging companies and external stakeholders. In
2021, we launched our Climate Lab Enterprise analytics product, which provides a comprehensive view
of climate risk across enterprises, strategies, portfolios and companies (see “—Analytics” above).
MSCI ESG ratings and certain other ESG and climate data provided to our clients are also made available to,
and used in, our other operating segments, such as in the construction of MSCI ESG and climate equity and fixed
income indexes. These Index products are designed to help institutional investors more effectively benchmark ESG
investment performance, issue indexed investment products, as well as manage, measure and report on ESG
mandates.
For a description of regulation applicable to MSCI ESG Research LLC, see “—Government Regulation”
below.
For the year ended December 31, 2021, 8.1% of our revenues were attributable to our ESG and Climate
segment.
All Other – Private
PP
Assets
For reporting purposes, our Real Estate and Burgiss operating segments are combined and presented as All
Other – Private Assets.
Our Real Estate offerings include real estate market and transaction data, benchmarks, return-analytics,
climate assessments and market insights for funds, investors, managers and other real estate market participants. In
September 2021, we completed our acquisition of RCA to meaningfully accelerate our Private Asset strategy.
RCA’s rich transaction and pricing data enhances our offering to clients and allows us to integrate this information
in other MSCI products including indexes, climate risk models and other MSCI solutions.
Our Real Estate performance and risk analytics range from enterprise-wide to property-specific analytics. We
also provide business intelligence products to real estate owners, managers, developers and brokers worldwide.
Some of the risk analytics generated as part of our Real Estate offerings are also used in the products offered by our
other operating segments.
4 Does not include subsidiary-level companies.
8
Our Real Estate offerings include:
• MSCI Global Intel. Our Global Intel offering is an industry-leading private real estate database that is
used by institutional investors, asset managers, banks, custodians and investment consultants to drive
allocation decisions, research and strategy developments, and portfolio and risk management. This tool
comprises a consolidated set of global, regional, national, city and submarket indexes with segmentation
by property type.
• MSCI Real Estate Enterprise Analytics.
l
Our Real Estate Enterprise Analytics application offers an
interactive, integrated view to private real estate investors and managers, providing them with the ability
to evaluate and analyze the drivers of portfolio performance across an organization’s investments, as well
as review exposures and concentrations across markets, asset types and increasingly diverse portfolios.
• MSCI Real Estate Climate Value-at-Risk (“RE Climate VaR”). Our RE Climate VaR solution provides
real estate
forward-looking and return-based valuation assessments to measure climate-related risks forff
assets in an investment portfolio. By calculating transition risk from changing legislation, regulation and
sustainability strategies as well as physical risk from extreme weather impacts, RE Climate VaR offers a
framework for investors to improve portfolio performance, risk management, regulatory reporting and
progress towards broader sustainability goals.
•
Real Capital Analytics. RCA aggregates timely and reliable transaction data and provides valuable
intelligence on market pricing, capital flows and investment trends in more than 170 countries. Our
clients use this unique insight to formulate strategies, source new opportunities and execute deals.
• Datscha. Datscha provides web-based services for the analysis of commercial real estate and offers
comprehensive information on real estate, rental levels, property holdings, transactions, ownership,
occupiers, footfall, lease data and the ability to simulate market values.
For the year ended December 31, 2021, 4.0% of our revenues were attributable to our Real Estate offerings.
Research and Product Development
We apply an integrated team approach to developing content across our operating segments. Our product
management, research and product development, data operations and technology, and application development
departments are at the center of this process. Our content is developed by a research and product development team
comprised of mathematicians, economists, statisticians, financial engineers and investment industry experts.
Content created in one segment can often be used for the creation of products in another segment. For example, the
MAC models created in our Analytics segment offer a view of risk across market and asset classes, including private
real estate, by incorporating content generated in the Real Estate segment, and MSCI ESG indexes and our new
Climate Lab Enterprise analytics product are constructed using data from our ESG and Climate segment.
Through our relationships with the world’s largest investment institutions, we monitor investment trends and
their drivers globally and support instrument valuation, risk modeling, portfolio construction, portfolio attribution,
asset allocation and VaR simulation. An important way we monitor global investment trends and their implications
for our business is through direct public consultations and client advisory panels and through the forum provided by
our Advisory Council. Our Advisory Council typically meets twice during the year to discuss current and emerging
investment industry trends and is comprised of senior investment professionals from around the world and senior
members of our research and product development team.
Technology
Technology plays a pivotal role in our operations and our ability to innovate and launch products and services.
Current areas of focus include:
• Migrating products, data and services onto a cloud platform to accelerate the delivery of new capabilities
that will help investors more swiftlyff
performance, drive automation across our corporate processes and minimize data center risks.
and efficiently manage data and understand the drivers of risk and
9
•
•
Improving the client experience by enhancing the way clients access, interact with and use our data,
applications and other tools, including by developing and launching our new open-architecture ISaaS
services, many of which can integrate with our clients’ existing ecosystems via APIs.
Enhancing data processing by expanding our use of data science and machine learning in our data
collection processes to enable us to more efficiently build scale and facilitate faster product enhancements
and releases while also maintaining the highest quality standards.
• Modernizing our workplace to better support a remote and hybrid workforce that can collaborate and
productively work from anywhere.
•
Enhancing information security by further strengthening our technology infrastructure and software
security processes. We implement changes and upgrades to technology regularly and maintain processes
to minimize risk on an ongoing basis, and we seek to improve employee awareness of cyber and
information security issues through training.
Competition
Index. Many industry participants compete with us by offering one or more indexes in similar categories. Such
indexes vary widely in scope, including by geographic region, business sector and weighting methodology, and may
be used by clients in a variety of ways in many different markets around the world. Among our Index competitors
are S&P Dow Jones Indices LLC (a joint venture of S&P Global Inc. and CME Group Inc.); FTSE Russell,
a subsidiary of the London Stock Exchange Group PLC; and Solactive AG.
Competition also exists from industry participants, including asset managers and investment banks, that create
their own indexes, often in cooperation with index providers, which may, among other things, provide some form of
calculation agent service. Some asset managers also manage funds, including ETFs, based on their proprietary
indexes, and some investment banks launch structured products or create over-the-counter derivatives based on their
proprietary indexes. This is often referred to as self-indexing.
Analytics. Our Analytics offerings compete with those from a range of competitors, including Qontigo
(formerly Axioma Inc.), BlackRock Solutions, Bloomberg Finance L.P., and FactSet Research Systems
Inc. Additionally, some of the larger broker-dealers have developed proprietary analytics tools for their clients.
Similarly, some of the large global investment organizations, such as custodians, have developed internal risk
management and performance analytics tools that they offer to their clients.
ESG and Climate. Our ESG and Climate offerings compete with a growing number of companies that issue
ESG data, ratings or research. For example, our ESG and Climate offerings compete with those from a range of
competitors, including Sustainalytics Holding B.V. (a part of Morningstar, Inc.), Institutional Shareholder Services
Inc. (majority owned by Deutsche Börse AG), Trucost (an S&P Global Inc. business) and Refinitiv (a London Stock
Exchange Group business).
All Other – Private Assets. We also have a variety of competitors for our other offerings that comprise a
smaller portion of our revenues, including a growing number of companies that provide data, market intelligence,
indexes, and performance and risk attribution services relating to real estate and other private assets.
Intellectual Property, Other Proprietary Rights and Sources of Data
We consider many aspects of our offerings, processes and services to be proprietary. We have registered
“MSCI” and other marks as trademarks or service marks in the United States and in certain other countries. We will
continue to evaluate the registration of additional trademarks and service marks as appropriate. From time to time,
we have also filed patent applications to protect our proprietary rights. Additionally, many of our offerings,
processes and services require the use of intellectual property that we license for use from third parties. It may be
necessary in the future to seek or renew licenses relating to various aspects of our offerings and services. Our
ownership and protection of intellectual property and other proprietary rights and our ability to obtain the rights to
use third-party intellectual property are important to our business and contribute in part to our overall success.
In addition to our intellectual property, we rely on third-party data to create and deliver our products and
services. For example, we require certain stock exchange data to construct equity indexes. Termination of or
10
disputes regarding our rights to receive or use such data could limit the information available forff
distribute in connection with our products and services.
us to use or
Corporate Responsibility
As a leader in providing ESG and climate solutions to investors, we also aim to demonstrate leading
corporate responsibility practices and policies that are meaningful to our various stakeholders, including our clients,
employees, shareholders and local communities. The Governance and Corporate Responsibility Committee of our
Board of Directors provides oversight of our corporate responsibility strategy and activities.
Recently we have implemented initiatives to reduce our impact on the environment and promote
sustainability. We are committed to continuing to develop and enhance our climate-focused strategies. As part of our
corporate responsibility efforts, in 2021 we published our first United Nations Sustainable Development Goals
(SDG) report and our first Sustainable Finance Disclosure Regulations (SFDR) report. We have also published a
Task Force on Climate-related Financial Disclosures (TCFD) report, a Sustainability Accounting Standard Board
(SASB) report and a Climate Disclosure Project (CDP) report.
Additional information on our corporate responsibility efforts, including our net-zero commitment and
carbon-reduction initiatives, can be found on our website at https://www.msci.com/who-we-are/corporate-
responsibility. Information contained on our website is not deemed part of or incorporated by reference into this
Annual Report on Form 10-K or any other report filed with the SEC.
Human Capital Management
MSCI is committed to creating a performance culture with high employee engagement. Our talent and
leadership development programs are designed to ensure we have the people and skills in place to deliver on
MSCI’s strategy, including a workplace that values and promotes diversity, equity and inclusion.
The Compensation, Talent and Culture Committee of our Board of Directors has oversight over talent
management matters, including efforts relating to our corporate culture, progression planning, career progression
and retention strategies, and learning and leadership development programs. In addition, our Chief Human
Resources Officer and our Chief Diversity Officer report to our Board on our initiatives on diversity, equity and
inclusion. We also engage with our shareholders around our talent initiatives, including our efforts to strengthen and
promote a culture of inclusion and diversity.
The Board periodically reviews our executive talent including our leadership bench and succession planning.
Our CEO and President also meet regularly with our functions to review talent plans with an aim to identify top
talent who have the most potential to progress to the senior-most roles at MSCI.
In January 2022, following an extensive organizational design assessment conducted in 2021, we announced a
number of organization and senior leadership changes, as well as expanded our Executive Committee to reflect
MSCI’s ambition to serve as an indispensable partner to clients and the investment community. This expansion
brings together and elevates more of the senior leaders who drive MSCI’s strategy and operations into MSCI’s
primary leadership committee. The new members of the Executive Committee increase the representation from
operating functions, in particular, Research, Technology and Data, and Private Assets. Additional information on
our Executive Committee can be found be found at https://www.msci.com/who-we-are/our-leadership. Information
contained on our website is not deemed part of or incorporated by reference into this Annual Report on Form 10-K
or any other report filed with the SEC.
MSCI is a global company with a highly diverse footprint. As of December 31, 2021, we employed 4,303
people, of which 47.4% of MSCI employees were located in the Asia Pacific region, 23.3% in Europe, Middle East
and Africa, 20.6% in the U.S. and Canada, and 8.7% in Mexico and Brazil. For the one-year period ended
December 31, 2021, voluntary turnover was 12.5% and involuntary turnover was 2.3%.
Diversity, Equity and Inclusion
At MSCI, diversity, equity and inclusion are core values of our culture. We strive to empower our people to
maximize their potential in an environment where all individuals are respected and encouraged to bring their
authentic selves to work. This culture embraces diverse experiences and perspectives, which we believe foster
creativity ay nd innovation. As of December 31, 2021, women represented 35.2% of our global employees, and people
of color (defined as those who identify as Asian, Black or African American, Hispanic or Latino, American Indian
11
or Alaska Native, Native Hawaiian or Other Pacific Islander or two or more races) represented 46.1% of our U.S.
employees and 41.6% of our U.S. employees in management roles5. The U.S. represents 19.9% of our global
workforce.
In 2021, we appointed our first Chief Diversity Officer, who is responsible for operating across MSCI to
align our diversity, equity and inclusion goals with business outcomes. Our Executive Diversity Council (the
“EDC”) champions a diverse and inclusive culture by advising on corporate initiatives and facilitating collaboration
across MSCI. Members of the EDC partner with our employee resource groups (the Women’s Leadership Forum,
Women in Tech, MSCI Pride, the Black Leadership Network, Asian Support Network (formed in 2021), All
Abilities Network (formed in 2021) and Hola! MSCI (formed in 2021)) to raise awareness, conduct events around
the globe and serve as sponsors in their respective locations.
•
•
•
•
•
Our Employer Brand Council and the Diversity Engagement and Sourcing team focus on:
building and communicating the MSCI employer brand with the aim of bringing to life and showcasing our
culture;
attracting and developing diverse talent for current and future roles;
building early career and internal pipeline programs that focus on diversity and inclusion across a range of
factors, including gender, race, ethnicity, LGBTQ+ and socio-economic considerations;
forging relationships at institutions worldwide that promote diversity; and
building relationships with external partners and increasing our visibility (including through the use of
social media) to better position MSCI’s programs and opportunities with new networks.
The team not only aims to create a pipeline of diverse talent for MSCI but also works to position MSCI more
broadly as a leading organization that puts diversity, equity and inclusion at the center of its strategy. We believe
that a diverse team is a stronger team and an important part of our success.
Additional information on our diversity metrics and programs can be found on our website at
https://www.msci.com/who-we-are/corporate-responsibility/social-responsibility/diversity-equity-and-inclusion.
Information contained on our website is not deemed part of or incorporated by reference into this Annual Report on
Form 10-K or any other report filed with the SEC.
Compensation, Benefits and Well-being
We offer a broad range of highly competitive compensation and benefits programs to our employees and their
families, including same-sex domestic partners. These programs include health and welfare benefits, including an
Employee Assistance Program; enhanced maternity and paternity leave policies, including a Global Minimum
Standard applicable to all offices worldwide; contributions to defined contribution and defined benefit pensions
plans globally and Health Savings Accounts in the U.S.; life insurance; a global wellness initiative that can help
employees improve their health and well-being; presentations on well-being topics, including retirement planning,
parenting, meditation, stress management and nutrition; ergonomic equipment and desk assessments; and wellness
rooms in all MSCI office locations.
Compensation at MSCI supports a culture of high performance and accountability. Our goal is to provide
competitive compensation in the markets where we compete for talent. We believe in linking all employee
compensation to Company, Product/Function and individual performance by making 100% of our employees
eligible for annual cash bonuses. We strongly differentiate cash bonus payouts based on actual results against goals
and for managers, how effectively they demonstrate behaviors consistent with our values and culture.
Senior employees of the Company and select other employees are eligible to participate in the MSCI Long-
Term Incentive Program with awards of MSCI stock that vest over a multi-year period. The goal of the Long-Term
Incentive Program is to: (i) align the interests of eligible employees with those of our shareholders, (ii) enhance our
“owner-operator” philosophy, (iii) recognize and reward potential long-term contributions, (iv) retain key leaders
and top performers.
5 Management roles are employees in Managing Director, Executive Director or Vice President roles.
12
In June 2020, MSCI announced an innovation initiative called the Future of Work at MSCI, and we began
implementing this initiative in January 2022. For most of our employees, the Future of Work introduced a hybrid
work environment allowing employees to work at times at the office and other times remotely, depending on the
requirements of a specific role. As we continue to adapt and iterate how we work, employee feedback will remain
central to this initiative.
Cultivating Talent and Employee Engagement
MSCI is committed to investing in employee learning and development. Throughout the year, we offer tools
and workshops to help employees better understand how their work aligns with MSCI’s overall strategy, seek and
receive real-time and transparent feedback and coaching, successfully deliver on their goals, and more effectively
plan and develop their careers.
MSCI conducts an employee engagement survey at least annually that measures whether our approaches to
performance, growth and career development are driving employee engagement. Managers receive anonymous
feedback and are accountable for improving and enhancing the work environment to drive higher engagement. In
our December 2021 employee engagement survey, we achieved a 79% response rate and the percentage of
respondents characterized as fully engaged equaled the highest since we implemented the engagement survey (not
including employees from RCA, a newly acquired business).
Additional information on our training programs and engagement metrics can be found on our website at
https://www.msci.com/who-we-are/corporate-responsibility/social-responsibility/cultivating-talent. Information
contained on our website is not deemed part of or incorporated by reference into this Annual Report on Form 10-K
or any other report filed with the SEC.
Supporting our Employees Through COVID-19
The COVID-19 pandemic has underscored for us the importance of keeping our employees safe and healthy.
In response to the pandemic, we immediately implemented an employee communication strategy that was direct,
transparent and inclusive. Through townhalls, firmwide e-mail communications and broad cross-functional
meetings, management delivered key messages around employee safety and well-being, leadership, remaining
productive, engaging with clients, promoting community and having empathy for others. We also increased
communications around employee assistance programs that provide mental health and emotional well-being support,
and resources to help manage stress and care for individuals and their families. Finally, we paid for or reimbursed
employees for the cost of COVID-19 testing and enhanced our sick leave policies.
At the outset of the COVID-19 pandemic our technology infrastructure allowed us to seamlessly transition to
a remote work environment. We increased technology effectiveness to allow our employees to remain fully engaged,
productive and well. We also provided individualized support and equipment to our employees as needed to
facilitate productivity. We continue to closely monitor and manage the situation regarding the COVID-19 pandemic
and follow the recommended practices and guidelines from the World Health Organization as well as local
requirements where our offices are located globally.
As noted above, in January 2022, we transitioned to our Future of Work at MSCI, which introduced increased
flexibility to how and where employees work, reimagined our use of our offices and modernized technology to
enhance MSCI’s interactions with clients and employees. For most of our employees, the Future of Work introduced
a hybrid work environment allowing employees to work flexibly, sometimes at the office and other times remotely,
based on the requirements of their specific roles. The Future of Work at MSCI unites our inclusive culture with
modern ways of working to give employees the accountability, responsibility and empowerment to perform at their
very best, while keeping our clients at the center of all we do. We believe these efforts will be iterative and
adaptable, and feedback from our employees will be critical to ensure this initiative remains relevant and positions
MSCI and its employees for success.
13
Government Regulation
The Company is subject to reporting, disclosure and recordkeeping obligations pursuant to SEC requirements
applicable to U.S. public companies.
Pursuant to the European Union’s benchmark regulation, the United Kingdom’s Financial Conduct Authority
(“UK FCA”) authorized MSCI Limited (a subsidiary of MSCI Inc.) to be the benchmark administrator for applicable
MSCI indexes. Information aboutt index
https://www.msci.com/index-regulation. The contents of our website, including this webpage, are not, however, a
part of or incorporated by reference in this Annual Report on Form 10-K.
periodically pupdated on ourr website att
gregulation is p
y
g
g
p
p
MSCI ESG Research LLC is a registered investment adviser and must comply with the requirements of the
Investment Advisers Act of 1940 (the “Advisers Act”) and related SEC regulations. Such requirements relate to,
among other things, disclosure obligations, recordkeeping and reporting requirements, marketing restrictions and
general anti-fraud prohibitions. It is possible that in addition to MSCI ESG Research LLC, other entities in our
corporate family may be required to register as an investment adviser under the Advisers Act or comply with similar
laws or requirements in states or foreign jurisdictions.
A subsidiary of the Company is registered with the State Council Information Office of the Ministry of
Commerce and the State Administration for Industry and Commerce in China as a foreign
financial information services in China. This license is currently administered by the Cyberspace Administration of
China.
institution supplying
ff
Information About Our Executive Officers
Age
Name
Henry A. Fernandez ........... 63 Chairman and Chief Executive Officer
C.D. Baer Pettit .................. 57
President and Chief Operating Officer
Andrew C. Wiechmann ...... 42 Chief Financial Officer and Treasurer
Robert J. Gutowski ............. 54 General Counsel
Scott A. Crum..................... 65 Chief Human Resources Officer
Position
There are no family relationships between any of our executive officers and any director or other executive
officer of the Company.
Henry A. Fernandez
ff
independent, standalone public company in 2007, he was a
Mr. Fernandez has served as Chairman since October 2007 and as Chief Executive Officer and a director since
1998. He also served as head of the MSCI business from 1996 to 1998 and as President from 1998 to October 2017.
Before leading MSCI’s transition to becoming a fully
Managing Director at Morgan Stanley, where he worked in emerging markets business strategy, equity derivatives
sales and trading, mergers and acquisitions, and corporate and mortgage finance. Mr. Fernandez worked for Morgan
Stanley from 1983 to 1991 and from 1994 to 2007. Mr. Fernandez also serves on boards of directors/trustees at
Royalty Pharma plc, Stanford University, King Abdullah University of Science and Technology and its affiliate,
KIMC, the Hoover Institution, Memorial Sloan-Kettering Cancer Center, the Foreign Policy Association, and
Catholic Charities of the Archdiocese of New York. Mr. Fernandez previously served on the boards of trustees at
Georgetown University, the Trinity School, The Browning School and MexDer (Mexican Derivatives Exchange)
and was the Chair of the Advisory Council at the Stanford University Graduate School of Business. He holds a
Bachelor of Arts in economics from Georgetown University, an M.B.A. from the Stanford University Graduate
School of Business and pursued doctoral studies in economics at Princeton University.
C.D. Baer Pettit
Mr. Pettit has served as the Company's President since October 2017 and the Company’s Chief Operating
Officer since January 2020. As President and Chief Operating Officer, Mr. Pettit oversees the Company's business
functions, including client coverage, marketing, product management, research and product development,
technology and operations. He previously served as Chief Operating Officer from 2015 to 2017, Head of the Product
Group from February 2015 to September 2015, Head of Index Products from 2011 to 2015, Head of Marketing from
2005 to 2012 and Head of Client Coverage from 2001 to 2012. Prior to joining the Company, Mr. Pettit worked for
14
Bloomberg L.P. from 1992 to 1999. Mr. Pettit holds a Master of Arts degree in history from Cambridge University
and a Master of Science degree from the School of Foreign Service at Georgetown University.
Andrew C. Wiechmann
Mr. Wiechmann has served as the Company’s Chief Financial Officer since September 2020 and our
Treasurer since November 2021. Mr. Wiechmann previously served as Chief Strategy Officer from May 2019 to
September 2020, Interim Chief Financial Officer from March 2019 to May 2019, Head of Strategy and Corporate
Development from July 2012 to March 2019, Head of Investor Relations from December 2017 to March 2019 and
Head of Financial Planning & Analysis from July 2015 to December 2017. Prior to joining MSCI in 2012, Mr.
Wiechmann was an investment banker at Morgan Stanley where he executed M&A and capital markets transactions
for financial technology and specialty finance companies, including advising MSCI on its IPO and various
acquisitions. Mr. Wiechmann holds Bachelor of Arts degrees in Physics and Economics from Hamilton College.
Robert J. Gutowski
Mr. Gutowski has served as the Company’s General Counsel since January 2020. Mr. Gutowski previously
served as the Company’s Deputy General Counsel and the Head of Compliance from 2010 to 2019 and the Head of
Internal Audit from 2012 to 2019. He joined MSCI in 2002. Prior to joining MSCI, he was an attorney in private
practice at Rogers & Wells LLP and Clifford Chance LLP. He received his B.A. from Georgetown University and
his J.D. from the State University of New York at Buffalo Law School.
Scott A. Crum
Mr. Crum has served as the Company’s Chief Human Resources Officer since April 2014. Prior to joining
MSCI, Mr. Crum served as global head of human resources for four publicly traded companies. Mr. Crum worked
for Avon Products, Inc. as Senior Vice President of Human Resources and Chief People Officer from 2012 to 2013.
From 2010 to 2012, Mr. Crum served as Senior Vice President and Chief People Officer of Motorola Mobility
Holdings, Inc., one of two publicly traded companies formally created when Motorola Inc. split in January 2011
until it was acquired by Google. Prior to that, he served as the Senior Vice President and Director of Human
Resources of ITT Corporation from 2002 to 2010 and Senior Vice President of Administration and Employee
Resources at General Instruments Corp. from 1997 to 2000. Mr. Crum holds a Bachelor of Business Administration
with a concentration in industrial relations from Southern Methodist University.
Available Information
Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York,
New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at
www.msci.com. The contents of our website are not a part of or incorporated by reference in this Annual Report on
Form 10-K.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC
maintains a website that contains reports, proxy and information statements and other information that we fileff
electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website,
these reports, proxy statements and other information as soon as reasonably practicable following the time they are
electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link under the
“Financial Information” tab found on our Investor Relations homepage (http://ir.msci.com).
We also use our Investor Relations homepage, Corporate Responsibility homepage and corporate Twitter
account (@MSCI_Inc) as channels of distribution of Company information. The information we post through these
channels may be deemed material.
Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings
and public conference calls and webcasts. In addition, you may automatically receive email alerts and other
information about us when you enroll your email address by visiting the “Email Alert Subscription” section of our
Investor Relations homepage at http://ir.msci.com/alerts.cfm. The contents of our website, including our Investor
Relations homepage, Corporate Responsibility homepage and social media channels are not, however, a part of or
incorporated by reference in this Annual Report on Form 10-K.
15
Item 1A. Risk Factors
You should carefully consider the following risks and all of the other information set forth in this Annual
Report on Form 10-K. If any of the following risks actually occurs, our business, financial condition or results of
operations could be materially and adversely affected. You should read the section titled “Forward-Looking
Statements” on page 1 forff
of statements that are considered forward-looking statements,
as well as the significance of such statements in the context of this Annual Report on Form 10-K. This information
should be read in conjunction with "tt Management’s Discussion and Analysis of Financial Condition and Result of
Operations" and the consolidated financial statements and related notes. These factors could cause our future
results t
tt o differ materially from our historical results att
nd from expectations reflected in forward-looking statements.
a description of the types
yy
Summary of Risk Factors
y
Our business is subject to numerous risks and uncertainties, discussed in more detail in the following section.
These risks include, among others, the following key risks:
• Our dependence on third parties to supply data, applications and services for our products and services and
on certain vendors to distribute our products;
• Undetected errors, defects, malfunctions or similar problems in our products leading to increased costs or
liability;
The impact of the COVID-19 pandemic or other widespread health crises;
•
• Our exposure to potential reputational and credibility concerns;
•
The possibility that our clients seek to negotiate lower asset-based fees or cease using our indexes as the
basis for indexed investment products;
Cancellations or reductions by any of our largest clients and/or reduced demand for our products or
services;
The impact of failures, disruptions, instability or vulnerabilities in our information technology systems or
applications;
•
•
• Our inability to ensure and protect the confidentiality of data;
• Our exposure to cyber-attacks or failures of our cyber-security plans, systems or procedures;
• Unanticipated failures, interruptions or delays in the performance or delivery of our products as a result of
the adoption of new technologies;
Security vulnerabilities resulting from our use of open source code;
The impact of changes in the global capital markets;
The effects on us from competition and financial and budgetary pressures affecting our clients;
•
•
•
• Our need to successfully develop new and enhanced products and services in order to remain competitive;
•
The impact of our global operations and any future expansion on management and our exposure to
additional issues from our increased global footprint;
• New regulations or changes to current regulations;
• Our inability to protect our intellectual property rights;
•
The impact of foreign currency exchange rate fluctuation;
•
The impact of our indebtedness on our financial flexibility;
•
The impact of changes in our credit ratings; and
• Our exposure to tax liabilities in various jurisdictions.
16
Operational Risks
p
We are dependent on third parties to supply data, applications and services for our products and services and are
dependent on certain vendors to distribute our products. A refusal or failure by a key vendor to distribute our
or services or a reduction in the accuracy or
products or any loss of key outside suppliers of data, applications
quality of such data, applications or services or any failure by us to comply wll
ith our suppliers’ or distributors’
licensing requirements could impair our ability to provide our clients with our products and services, which could
have a material adverse effect on our business, financial condition or results of operations.
tt
We rely on third-party suppliers of data, applications and services, including data from stock exchanges
(“Vendor Products”), and depend on the accuracy and quality of Vendor Products and the ability and willingness of
such suppliers to deliver, support, enhance and develop new Vendor Products on a timely and cost-effective basis,
and respond to emerging industry needs and other changes in order to produce, deliver and develop our products and
services. Additionally, we depend on clients to supply certain data in order to provide our services to them. Any
failure to supply, errors or reduction in the amount, accuracy or quality of such data supplied from clients impairs
our ability to provide them with our products and services.
If Vendor Products include errors, design defects, are delayed, become incompatible with future versions of
our products, are unavailable on acceptable terms or are not available at all, we may not be able to deliver our
products and services. In addition, in the ordinary course suppliers of Vendor Products are subject to various forms
of cyber-attacks. Breaches of our suppliers’ systems and networks may cause material interruptions or malfunctions
in our or such suppliers’ websites, applications or data processing, or may compromise the confidentiality and
integrity of affected information.
Some of our agreements with third-party suppliers allow them to cancel on short notice and from time to time
we receive notices from third-party suppliers threatening to terminate the provision of their products or services to
us, and some data suppliers have terminated the provision of their data to us. Termination of the provision of Vendor
Products by one or more of our significant suppliers or exclusion from, or restricted use of, or litigation in
connection with Vendor Products could decrease the data and materials available for us to use and deliver to our
clients. In addition, some of our competitors could enter into exclusive contracts with our data suppliers, including
with certain stock exchanges. If our competitors enter into such exclusive contracts, we may be precluded fromff
receiving certain data or other materials fromff
which would give our competitors a competitive advantage. Such exclusive contracts could hinder our ability to
create our products and services or to provide our clients with the data or other products or services they prefer,
which could lead to a decrease in our client base.
these suppliers or restricted in our use of such data or other materials,
Despite our efforts to comply with the licensing requirements of Vendor Products, our use of certain Vendor
Products has been challenged in the past and there can be no assurance that third parties may not challenge our use
in the future, resulting in increased acquisition or licensing costs, loss of rights and/or costly legal actions. Our
business could be materially adversely affected if we are unable to timely or effectively replace the data or
functionality provided by Vendor Products that become unavailable or fail to operate effectively for any reason. Our
operating costs could increase if additional license fees are imposed or current license fees increase or the efforts to
incorporate enhancements to Vendor Products are substantial and we are unable to negotiate acceptable licensing
arrangements with these suppliers or find alternative sources of equivalent products or services. If any of these risks
materialize, they could have a material adverse effect on our business, financial condition or results of operations.
We also rely on certain third-party vendors to distribute our data to clients. While some of our vendors
generate revenue in connection with distributing our data, others do not derive a direct financial benefit. Should any
of our key vendors refuse to distribute our data forff
any reason or require that we pay them new or additional fees in
connection with the distribution of our data, we would need to find alternative ways to distribute our data or lose
revenue or profitability forff
certain products, which may have a material adverse effect on our business, financial
condition or results of operations.
If our products contain undetected errors or fail to perform properly due to defects, malfunctions or similar
problems, we may, among other things, become subject to increased costs or liability based on the use of our
products or services to support our clients’ investment processes, which could have a material adverse effect on
our business, financial condition or results of operations.
Our products and services support the investment processes of our clients, which relate to, in the aggregate,
trillions of dollars in assets. Products or services we develop or license may contain undetected errors or defects
despite testing or other quality assurance practices. Use of our products or services as part of the investment process
17
creates the risk that our clients, the parties whose assets are managed by our clients, investors in investment products
linked to our indexes, the companies that we rate or assess in our ESG solutions or the shareholders of those
companies, may pursue claims against us based on even a small error in our data, calculations, methodologies or
analysis or a malfunction or failure in our systems, products or services.
ff
Errors or defects can exist at any point in a product’s lifecycle, but are frequently found
after introduction of
new products or services or enhancements to existing products. We continually introduce new methodologies and
products, and new versions of and updates to our existing products or services. Despite internal testing and in some
cases testing or use by clients, our products or services may contain errors in our data, calculations, methodologies
or analysis, including serious defects or malfunctions. If we detect any errors before we release or deliver a product
or service or publish a methodology or analysis, we might have to suspend or delay the product or service release or
delivery for an extended period of time while we address the problem. We may not discover errors that affect our
products or services or enhancements until after they are deployed, and we may need to provide enhancements or
corrections to address such errors, and in certain cases it may be impracticable to do so. If undetected errors exist in
our products or services, or if our products or services fail to perform properly due to defects, malfunctions or
similar problems, it could result in harm to our brand or reputation, significantly increased costs, lost sales, delays in
commercial release, third-party claims, contractual disputes, negative publicity, delays in or loss of market
acceptance of our products or services, license terminations or renegotiations and/or unexpected expenses and
diversion of resources to remedy or mitigate such errors, defects or malfunctions. The realization of any of these
events could materially adversely affect our business, financial condition or results of operations.
While we have provisions in our client contracts that are designed to limit our liability from claims brought by
our clients or third parties relating to our products or services, these provisions could be invalidated or fail to
adequately limit our liability. In addition, clients also increasingly require us to provide contractual assurances
regarding our risk management and security practices or policies, and many of our clients in the financial services
sector are subject to regulations and requirements to adopt risk management processes to oversee their third-party
relationships. Contractual disputes could result in the provision of credits, adverse monetary judgments and other
penalties and damages. Any such claims brought against us, even if the outcome were to be ultimately favorable to
us, would require attention of our management, personnel, financial and other resources and could have a negative
impact on our reputation or pose a significant disruption to our normal business operations. In addition, the duration
or outcome of such claims and lawsuits is difficult to predict, which could further exacerbate the adverse effect they
may have on our business, financial condition or results of operations.
The COVID-19 pandemic, or other widespread health crises, could have a material adverse effect on our
business, financial condition or results of operations.
The COVID-19 pandemic has caused significant economic disruption, including volatility in the global equity
markets. Our operations have been affected by a range of external factors related to the COVID-19 pandemic that
are not within our control, including the imposition in many jurisdictions of a wide range of restrictions on the
physical movement of our employees and vendors to limit the spread of COVID-19. Even though some initial
measures have been relaxed, certain restrictions have been reinstated as new variants of COVID-19 have emerged,
and other measures may be put back into place or increased if the spread of the COVID-19 pandemic continues or
increases in the futff ure. While we were not materially impacted in 2021, due to ongoing uncertainty related to the
duration, magnitude and impact of the COVID-19 pandemic, and the volatile regional and global economic
conditions stemming from the pandemic, its potential effects on our business are uncertain and difficult to predict,
but may include:
•
•
•
significant failures, errors, delays, disruptions or instability affecting our key products or services, vendors,
suppliers, distributors, information technology platforms, data centers, production and delivery systems,
applications or processes, including those that negatively affect
our products or service our clients effecff
adverse equity market conditions, volatility in the financial markets and unforeseen investment trends
resulting in a reduction in our asset-based fees, increased cancellations and reduced demand for our
products and services;
prolonged selling cycles and increased pressures to reduce our feeff
budgetary pressures affecting our clients (for example, in response to the COVID-19 pandemic, we
selectively gave clients access to services licensed under a subscription agreement prior to the beginning of
the fee period at no cost to help drive business in key areas);
s on account of heightened financial and
our ability to calculate, process or distribute
tively;
ff
18
•
•
•
•
•
an inability to sustain revenue growth through obtaining new clients and achieving and maintaining a high
level of renewal rates with respect to our existing clients;
delays in our ability to collect on our accounts receivables;
increasing tax costs as the jurisdictions in which we do business globally may seek to generate additional
revenues to offset revenue shortfalls created by the challenging operating environment and stimulus
packages;
a deterioration of worldwide credit and financial markets that could limit our ability to obtain necessary
external financing to fund our operations and capital expenditures; and
increased strain on our workforce, management and other resources, including employee absenteeism,
complications from working remotely and illness of key personnel.
These effects, alone or taken together, could have a material adverse effect on our business, financial
condition or results of operations. If the COVID-19 pandemic is sustained or prolonged, these effects could be
exacerbated. Additionally, many of the other risk factors described in this Item may be exacerbated or the likelihood
of such risks materializing may be increased by global widespread health crises such as the COVID-19 pandemic
and the volatile regional and global economic conditions stemming from the pandemic and responses to the
pandemic.
We cannot assure you that we will be successful in our attempts to mitigate any negative effects of this global
pandemic on our business, including implementing our business continuity plans and processes, transitioning to
remote and flexible-work models globally, proactively reducing costs intended to allow us to protect against further
downside revenue risk, and investing in additional initiatives to support our long-term growth, while also focusing
on maintaining liquidity and capital structure flexibility.
We closely monitor the impact of the COVID-19 pandemic and continually assess its potential effects on our
business and take appropriate actions in accordance with the recommendations and requirements of relevant
authorities. The extent to which the COVID-19 pandemic may impact our operational and financial performance
remains uncertain and will depend on many factors outside of our control, including the timing, extent, trajectory
and duration of the pandemic; the emergence, spread and severity of new variants of COVID-19; the development,
availability, distribution and effectiveness of vaccines and treatments; the imposition of protective public safety
measures, including vaccine and testing mandates; and the impact of the pandemic on the global economy, including
financial markets.
This situation is changing rapidly, and additional effects may arise that we are not presently aware of or that
we currently do not consider significant risks to our operations. If we are not able to respond to and manage the
impact of such events effectively, our business, financial condition or results of operations may be negatively
impacted.
MSCI is exposed to potential reputational and credibility concerns.
To the extent that any of MSCI’s operating segments or product lines or MSCI as a whole suffers a
reputational or other loss in credibility, it could have a material adverse impact on MSCI’s business. Real or
perceived factors that may have already affected credibility, or which could potentially have an impact in this
regard, include: the appearance of a conflict of interest; the editorial independence of our index composition and
ESG rating and assessment processes and decisions; the influence of third parties, including governments and large
investors or asset owners, on our editorial decisions; the performance of companies relative to their ESG ratings,
index inclusion, risk characteristics or other MSCI content or analytics; the timing and nature of changes to our
indexes or ESG ratings and assessments; disagreement with our methodologies or models, including for calculating
indexes, value-at-risk and other risk measures, ESG ratings and assessments, data, information and analysis; the
accuracy and completeness of our data; views expressed by the media, politicians, other government officials or
representatives, regulators or other third parties regarding our company or our industry or our role in the investment
process; our own sustainability and corporate responsibility policies or practices, including as a result of (i) failure to
meet publicly disclosed ESG and climate-related targets or goals, or (ii) misalignment with evolving market
standards or the methodologies and standards used in our products and ESG ratings; and the impact of political
tensions relating to countries, industries, companies or issues relevant to our products and services, such as the
inclusion of certain Chinese companies in our indexes or the focus on sustainable investing and climate
considerations in our offerings. In some cases, our ESG and Climate offerings, such as our company ESG ratings
and our Net-Zero Tracker, may insert MSCI into a public spotlight or debate regarding the environment, social
concerns or corporate responsibility. In addition, our position as a leading source of ESG research, ratings, data and
19
assessments may at times become contentious or controversial and lead to disputes with companies or investors or
other interested stakeholders and create negative media or regulatory attention. Errors and other actions by MSCI
competitors could also damage the reputation of the industries that we operate in and, therefore, harm the reputation
of the Company or certain of our products. In addition, we believe that MSCI’s corporate culture and reputation
contribute to our ability to attract and retain talent, and reputational damage could negatively affect both our hiring
and employee retention. Damage to our reputation, brand or credibility could have a material adverse impact on
MSCI’s business, financial condition or results of operations.
Client Risks
Our clients that pay us a feeff
investment product may seek to negotiateii
such products or may ca
asset-based fees.
based on the assets under management or totaltt
expense ratio of an indexed
asset-based fee percentage or lower the total expense ratio of
ease using our indexes, which could limit the growth of or decrease our revenues from
a lower
ll
A portion of our revenues are from asset-based fees and these revenue streams are concentrated in some of our
largest clients, including BlackRock, and in our largest market, the U.S. Our clients, including our largest clients,
may seek for a variety of reasons to negotiate to pay us lower asset-based fee percentages, which are sometimes
calculated as a percentage of the relevant product’s total expense ratio (“TER”). Additionally, competition is intense
among our clients that offer or manage indexed investment products, including ETFs, and low fees are one of the
competitive differentiators. Where an investment product’s TER determines our fees, a reduction in the TER may
negatively impact our revenues. Additionally, our clients, including our largest clients, may seek to renegotiate
existing asset-based fee models with the objb ective of achieving lower fees, either on a rate basis or in aggregate,
which may have a negative impact on our operating revenues.
Moreover, clients that have licensed our indexes to serve as the basis of indexed investment products are
generally not required to continue to use our indexes and could elect at any time to cease offering the investment
product or switch to using a non-MSCI index. Clients that license our indexes to serve as the basis for listed futures
and options contracts might also discontinue such contracts. Additionally, we have a differentiated licensing strategy
for our indexes and from time to time experience faster growth from lower fee products, resulting in a lower average
asset-based fee percentage from indexed investment products. While we aim to maximize the price and volume
trade-off over the long-term, there can be no assurance that we will be able to do so. Results for any given quarter
could be materially adversely affected by stronger growth in assets in indexed investment products with lower-than-
average fees not sufficiently offset by growth in assets in indexed investment products with higher-than-average
fees. Our asset-based fees could dramatically decrease, which could have a material adverse effect on our business,
financial condition or results of operations. Finally, to the extent that multiple investment products are based on the
same index, (i) assets under management in one product could shift to products that pay MSCI lower fee levels, (ii)
the products could compete for the same assets such that none of the products becomes large enough to be
successful or sustained, or (iii) the failure or discontinuance of one product (e.g., derivatives used for hedging) could
have a detrimental effect on the use of the other products (e.g., ETFs).
Cancellations or reductions by any of our largest clients could have a material adverse effect on our business,
financial condition or results of operations.
A material portion of our revenues is concentrated in some of our largest customers. For the fiscal year ended
December 31, 2021, our largest client organization by revenue, BlackRock, accounted for 12.7% of our total
revenues. For the fiscal year ended December 31, 2020, BlackRock accounted forff
11.0% of our total revenues. Our
revenue growth depends on our ability to obtain new clients, sell additional services to existing clients and achieve
and sustain a high level of renewal rates with respect to our existing licenses. Failure to achieve one or more of these
objectives could have a material adverse effect on our business, financial condition and results of operations. If one
or more of our largest clients cancels or reduces its licenses and we are unsuccessful in replacing those licenses, our
business, financial condition or results of operations could be materially adversely affected.
Our clients may become more self-sufficient, which may reduce demand for our products or services and
materially adversely affect our business, financial condition or results of operations.
Our clients may internally develop certain functionality contained in the products or services they currently
license from us. For example, a number of our clients have obtained regulatory clearance to create indexes for use as
the basis of ETFs that they manage and others have invested in direct indexing strategies, allowing investors to
purchase individual stocks making up an index rather than investing in a fund
or ETF. Similarly, some of our clients
who currently license our risk or ESG and climate data to analyze their portfolio risk may develop their own tools to
collect data and assess risk or embed ESG and climate considerations into their investment processes, making our
products or services unnecessary for them. A growing number of asset managers and investment banks, in
partnership with index providers that offer calculation agent services, or acting together with an industry group or
ff
20
association, have created or may create their own range of proprietary indexes, which they use to manage funds or as
the basis of ETFs, structured products or over-the-counter derivatives. To the extent that our clients become more
self-sufficie
nt, demand for our products or services may be reduced, which could have a material adverse effect on
our business, financial condition or results of operations.
ff
Technology Risks
gy
Any failures, disruptions, instability or vulnerabilities
vendors and service providers, production and delivery systems, software, code, internal network, the Internet or
other systems or applications may disrupt our operations, cause our products to be unavailable oll
delays or additional costs in deploying our products, os
commercialize our products or keep them confidential and result in reputational and other harm and have a
material adverse effect on our business, financial condition or results of operations.
in our information technology architecture, platforms,
r impose conditions or restrictions on our ability to
ff
r fail
and impose
ll
We depend heavily on the capacity, reliability and security of our information technology systems and
platforms and their components, including our data centers, cloud providers and other vendors and service providers,
production and delivery systems as well the Internet, to create and deliver our products and service our clients. Our
employees also depend on these systems, platforms and providers for internal use. Heavy use of our electronic
delivery systems and other factors such as loss of service from third parties, operational failures, human error,
terrorist or other attacks affecting systems or sites where we are located, climate or weather related events (e.g.,
hurricanes, floods or other natural disasters), another outbreak of pandemic or contagious disease, power loss,
telecommunications failures, technical breakdowns, Internet failures or malicious software could impair our
systems’ operations or interrupt their availability for extended periods of time or impact the availability of
personnel. Our ability to effectively use the Internet, including our remote work force’s ability to access the Internet,
may also be impaired due to infrastructure failures, service outages at third-party Internet providers or increased
government regulation.
Disruptions, failures or slowdowns that could occur with respect to our operations, including to our
information technology systems and platforms, our electronic delivery systems or the Internet, could damage our
brand and reputation, result in litigation and negatively affect our ability to distribute our products effectively and to
service our clients, including delivering managed services or delivering real-time index data. To the extent we grow
through acquisitions, newly acquired businesses may not have invested in technological infrastructure and disaster
recovery to the same extent as we have. As their systems are integrated into ours, a vulnerability could be
introduced, which could impact our platforms across the Company.
There is no assurance that we will be able to successfully defend against such disruptions or that our disaster
recovery or business continuity plans, or those of our third-party service providers (including cloud providers), will
be effective in mitigating the risks and associated costs, which could be exacerbated by our shift to an increasingly
remote working environment, and which could have a material impact on our business, financial condition or results
of operations.
Any failure to ensure and protect the confidentiality ot
financial condition or results of operations.
f do
atadd
could have a material adverse effect on our business,
Many of our products, as well as our internal systems and processes, involve the collection, retrieval,
processing, storage and transmission of proprietary, third party and client confidential information. We also handle
personal information of our employees in connection with their employment. We rely on a complex system of
internal processes and IT controls along with policies, procedures and training to protect this information, including
sensitive client data such as material non-public information and client portfolio data that may be provided to us or
hosted on our systems, against unauthorized access or disclosure. In addition, we believe that when we change the
composition of our indexes, in some cases the changes can have an indirect effect on the prices of constituent
securities and on certain indexed investment products as a result of trading activity related to tracking our indexes.
As the usage and types of uses of our ESG ratings increase, the ratings and changes to the ratings in some cases
could also potentially have an impact on the companies that we rate, the price of their securities and the price of
other securities that reference their securities.
If our internal processes, confidentiality policies, conflict of interest policies or information barrier procedures
fail or are insufficient, including as a result of human error or manual processes, system error or other failure, or if
an employee purposely circumvents or violates our internal controls, policies or procedures, then unauthorized
access to, or disclosure or misappropriation of, data, including material non-public or other confidential information
(e.g., certain index composition data or ESG rating data), our brand and reputation may suffer and we may become
subject to litigation, regulatory actions, sanctions or other penalties, leading to a loss of client confidence, which
could have a material adverse effect on our business, financial condition or results of operations.
21
Successful cyber-attacks and the failure of cyber-security plans, systems and procedures could have a material
adverse effect on our business, financial condition or results of operations.
The Company’s operations rely on the secure processing, storage and transmission of confidential, sensitive,
proprietary and other types of data and information, and on those of our third-party vendors. We and our vendors are
subject to cyber risks, including cyber-attacks, such as phishing scams, hacking, tampering, intrusions, viruses,
ransomware, malware and denial-of-service attacks. In some cases, these risks are heightened when employees are
working remotely. Our and our vendors’ use of mobile and cloud technologies may also increase our risk for such
threats. The Company may be exposed to more targeted and more sophisticated cyber-attacks aimed at accessing
certain information on our systems because of our role or prominence in the global marketplace, including client
portfolio data, the composition of our indexes and MSCI ESG Research ratings of corporate issuers. Any such
threats may cause material interruptions or malfunctions in our or our vendors’ products or services, networks,
systems, websites, applications, data or data processing, or may otherwise compromise the availability,
confidentiality or integrity of data or information in our possession. While the Company has not experienced cyber
incidents that are individually, or in the aggregate, material, the Company has experienced cyber-attacks of varying
degrees in the past, including denial-of-service attacks, and there can be no assurance that there will not be a
material adverse effect
in the future.
ff
Our security measures or those of our third-party providers, including any cloud-based technologies, may
prove insufficient depending upon the attack or threat posed. Cyber-attacks, security breaches or third-party reports
of perceived security vulnerability to the Company’s systems, even if no breach has occurred, could damage our
brand and reputation, result in litigation, regulatory actions, sanctions or other penalties, lead to loss of client
confidence, which would harm our ability to retain clients and gain new ones, and lead to financial losses. Any of
the foregoing could lead to unexpected or higher than estimated costs. We may also incur additional costs as a result
of increasing and refining our internal processes and IT controls and policies and procedures related to security,
processing integrity and confidentiality or privacy.
Migration of our applications, systems, processes and infrastructure to new technologies, cloud providers, data
centers, processes, platforms or applications could result in unanticipated failures, interruptions or delays in the
performance and delivery of our products, services and client support. Such incidents could have a materialii
adverse effect on our business, financial condition or results of operations.
In the past, we have experienced unanticipated interruption and delay in the performance and delivery of
certain products after we migrated applications and infrastructure to new data centers. While we have taken steps to
mitigate such interruptions and delays, we cannot provide assurance that they will not occur again in the future as
part of migration efforts to new technologies, applications or processes (e.g., cloud migration), even after extensive
testing of new systems, processes, applications and hardware, or if we experience significant growth of our customer
base or increases in the number of products or services or in the speed at which we are required to provide products
and services. Such disruptions may result in cancellations and reduced demand for our products and services,
resulting in decreased revenues, or in cost increases relating to our use of power and data storage. After adopting
new technologies, applications and processes, such as cloud computing, virtualization and agile software
development, we may experience unanticipated interruption and delay in the performance and delivery of certain of
our products, services and client support. We may also incur increased operating expenses to recover data, repair,
replace or remediate systems, equipment or facilities, and to protect ourselves from such disruptions. Accordingly,
any significant failures, disruptions or instability affecting our information technology platform, cloud providers,
data centers, production and delivery systems, applications, processes or the Internet could negatively affect our
ability to distribute our products effectively and to service our clients, damage our brand and reputation and result in
litigation, which may have a material adverse effect on our business, financial condition or results of operations.
Our use of open source code could introduce security vulnerabilities, impose unanticipated delays or costs in
deploying our products or services, or impose conditions or restrictions on our ability to commercialize our
products or services or keep them confidential.
We rely on open source code to develop software and to incorporate it in our products and internal systems.
The use of open source code may entail greater risks than the use of third-party commercial software, as open source
licensors generally do not provide warranties or other contractual protections regarding infringement claims, the
quality of the code or the security of the code. Some open source licenses provide that if we combine our proprietary
code with open source code and distribute it in a certain manner, we could be required to release the source code of
our proprietary applications to the public. This would allow our competitors to create similar products with less
development effort and time and ultimately put us at a competitive disadvantage. Additionally, the terms of many
open source code licenses are ambiguous and have not been interpreted by U.S. courts. Therefore, we could be
required to seek licenses from third parties on terms that are not commercially feasible, to make generally available
portions of our proprietary code, to re-engineer our products or systems, to discontinue the licensing of our products
if re-engineering could not be accomplished on a timely or cost-effective basis, or to take other remedial action that
22
could divert resources away from our development efforts. Any of these requirements could materially adversely
affect our business, financial condition or results of operations.
Strategy and Growth Risks
gy
Our business may be affected by changes in the global capital markets,tt
conditions, volatility in the finff ancial markets and evolving investment trends. Such changes could decrease the
use of our products and services which could have a material adverse effect on our business, financial condition
or results of operations.
including adverse equity market
Our business is impacted by economic conditions and volatility in the global capital markets. Our clients use
our products for a variety of purposes, including benchmarking, performance attribution, portfolio construction and
risk management, and to support investment strategies including ESG, climate, factor,
MAC investing. Volatile capital markets may impact whether, how, where and when investors choose to invest, for
example between developed or emerging markets, U.S. or non-U.S. markets, as well as whether to adopt different
investment strategies.
thematic, private asset and
ff
A portion of our revenues comes from clients who use our indexes as the basis for indexed investment
products. These fees are primarily based on a client’s assets under management or trading volumes. The value of an
investment product’s assets may increase or decrease in response to changes in market performance and cash
inflows and outflows, which could impact our revenues.
Additionally, an increasing portion of our revenues comes from products and services that relate to certain
investment trends, such as ESG and climate, factor, thematic, private asset and MAC investing. A decline in the
equity markets or movement away from such investment trends could decrease demand for our related products and
services, which could have a material adverse effect on our business, financial condition or results of operations.
Competition and financial and budgetary pressures affecting clients in our industry may cause price reductions
or loss of market share, which may materially adversely affect our business, financial condition or results of
operations.
Competition exists across all markets for our products and services. Our competitors range in size from large
companies with substantial resources to small, single-product businesses that are highly specialized. Our larger
competitors may have access to more resources and may be able to achieve greater economies of scale, and our
specialized competitors may be more effective in devoting technical, marketing and financial resources to compete
with us with respect to a particular product or service. Some competitors may offer price incentives or different
pricing structures that are more attractive to clients. The competitive landscape may also experience consolidation in
the form of mergers and acquisitions, joint ventures or strategic partnerships, which result in a narrower pool of
competitors that are better capitalized or that are able to gain a competitive advantage through synergies.
Barriers to entry may be low or declining in many of the markets forff
our products and services, including for
single-purpose product companies, which could lead to the emergence of new competitors. For example, more
broker-dealers, data suppliers, credit rating agencies or other market participants or vendors could begin developing
their own content such as proprietary risk analytics, ESG and climate data or indexes. Recent developments,
including increases in the availability of free or relatively inexpensive information through Internet sources or other
low-cost delivery systems, advances in cloud computing, increased use of open source code, the ability of machine
learning and other artificial intelligence systems to process and organize large data sets, as well as client
development of proprietary applications in specific areas, have further reduced barriers to entry in some cases.
We may experience pressures to reduce our fees on account of financial and budgetary pressures affecting our
clients, including those resulting from weak or volatile economic or market conditions, including uncertainty
regarding the duration and long-term economic and societal consequences of the COVID-19 pandemic, which may
lead certain clients to reduce their overall spending on our products or services, including by seeking similar
products or services at a lower cost than what we are able to provide, by consolidating their spending with fewer
providers, by consolidating with other clients or by self-sourcing certain of their information and analytical needs.
Accordingly, competitive and market pressures may result in fewer clients or reduced sales, including as a result of
client closures and consolidations, price reductions, prolonged selling and renewal cycles and increased operating
costs, such as for marketing and product development, which could, individually or in the aggregate, result in a
material adverse effect
on our business, financial condition or results of operations.
ff
23
To remain competitive, we must successfully develop new and enhanced products and services and effectivelyll
manage product transitions and integrations.
To remain competitive, we must continually introduce new products and services, enhance existing products
and services, including through integration of products and services within MSCI and with third-party platforms,
and effectively generate customer demand for new and enhanced products and services. We may not be successful
in developing, introducing, implementing, marketing, pricing, launching or licensing new products or enhancements
on a timely or cost-effective basis or without impacting the stability and efficiency of existing products and systems.
Any new products and enhancements may not adequately meet the requirements of the marketplace or industry
standards or achieve market acceptance.
ff
ff
The process of developing and enhancing our products and services is complex and may become increasingly
due to the introduction of new platforms, operating systems, technologies and
complex and expensive in the future
customer expectations. In addition, our reputation could be harmed if we are perceived as not innovating rapidly
enough to meet the changing needs of investors or their advisors. We must make long-term investments and commit
significant resources before knowing whether these investments will eventually result in new or enhanced products
and services that satisfy our clients’ needs and generate adequate revenues. From time to time, we also incur costs to
integrate existing products and services and transition clients to enhanced products and services, which also present
execution risks and challenges and could lead to price reductions or other concessions. If we are unable to
effectively manage the development of new or enhanced products and services, we may not be able to remain
competitive and our business, financial condition or results of operations could be materially adversely affected.
Our global operations and any future expansions may continue to place significant strain on our management
and other resources, as well as subject us to additional, and in some cases unanticipated, risks and costs in
connection with political, economic, legal, operational and other issues resulting from our increased global
footprint, which could materially adversely impact our businesses.
Our global operations and any future expansion are expected to continue to place significant demands on our
personnel, management and other resources. Whether we expand organically or by way of acquisition, there can be
no assurance that we will effectively attract, engage and retain additional qualified personnel, including additional
managers or key employees, develop effective leadership in all our locations; expand our physical facilities and
information technology, legal and compliance infrastructure; integrate acquired businesses; or otherwise adequately
manage expansion. Additionally, new hires require significant training and may, in some cases, take a significant
amount of time before becoming fully productive.
Our global operations also expose us to political, economic, legal, operational, franchise and other risks that
are inherent in operating in many countries, including risks of possible capital controls, exchange controls, customs
duties, sanctions compliance, tax penalties, levies or assessments, legal uncertainty, broad regulatory discretion and
other restrictive governmental actions, as well as the outbreak of hostilities or political and governmental instability
in certain of the countries or regions in which we conduct operations. The majority of our employees are located in
offices outside of the U.S. and a number of those employees are located in emerging market locations. The cost of
establishing and maintaining these offices, including costs related to information technology infrastructure, as well
as the costs of attracting, training and retaining employees in these locations may be higher, or may increase at a
faff ster rate, than we anticipate. Additionally, public health epidemics impacting the global economy and our
employees, such as the worldwide COVID-19 pandemic, may have a material adverse effect
financial condition or results of operations.
on our business,
ff
The laws and regulations in many countries applicable to our business are uncertain and evolving, and it may
be difficult or costly for us to determine and remain compliant with the exact requirements of local laws in every
market. Our inability to maintain consistent internal policies and procedures across our offices and remain in
compliance with local laws in a particular market could have a significant and negative effect not only on our
businesses in that market but also on our reputation generally.
Demand for our products and services is still nascent in many parts of the world, particularly in emerging
market locations where risk management and ESG and climate integration practices are often not fully developed.
In addition, the data required to model local securities in some emerging markets might be difficult to source and
local investment product nuances may be difficult or costly to model. If we do not appropriately tailor our products
and services to fit the needs of the local market, we may be unable to effectively grow sales of our products and
24
services in some locations outside of the U.S. There can be no assurances that demand for our products and services
will develop in these countries.
Any failure to effeff ctively manage expansion or to effectively manage the business globally could damage our
brand and reputation, result in increased costs and litigation and have a material adverse effect on our business,
financial condition or results of operations.
g
Legal and Regulatory Risks
y
g
Failure to comply with regulations, or the introduction of new regulations
could materially adversely affect our business, financial condition or results of operations.
tt
or changes to existing regulations
Failure to comply with any applicable laws, rules, orders, regulations or other requirements could subject us to
litigation, regulatory actions, sanctions, fines or other penalties, as well as damage our brand and reputation. The
financial services industry, within which we and many of our clients operate, is subject to extensive laws, rules and
regulations at the federal and state levels, as well as by foreign governments, with some jurisdictions regulating
indexes directly. These laws, rules and regulations are complex, evolve frequently and sometimes quickly and
unexpectedly, and are subject to administrative interpretation and judicial construction in ways that are difficult to
predict, and could materially adversely affect our business and our clients’ businesses. Uncertainty caused by
political change globally heightens regulatory uncertainty. Additionally, we may be required to comply with
multiple and potentially conflicting laws, rules or regulations in various jurisdictions, which could, individually or in
the aggregate, result in materially higher compliance costs to us. It is possible that laws, rules or regulations could
cause us to restrict or change the way we license and price our products and services or could impose additional
costs on us. Changes to the laws, rules and regulations applicable to our clients could limit our clients’ ability to use
our products and services or could otherwise impact our clients’ demand for our products and services. As such, to
the extent that our clients become subject to certain laws, rules or regulations, we may incur higher costs in
connection with modifying our products or services. To the extent that we rely on our clients and vendors to provide
data for our products and services and certain laws, rules or regulations impact our clients’ and vendors’ ability or
willingness to provide that data to us or regulate the fees for which such data can be provided, our ability to continue
to produce our products and services or the related costs could be negatively impacted. The regulations and
regulatory developments that most significantly impact us are described below:
•
•
Brexit. The United Kingdom (“UK”) exited the European Union (“EU”) on January 31, 2020 (commonly
referred to as “Brexit”) and the UK’s membership in the EU single market ended on December 31, 2020.
On December 24, 2020, the UK and the EU announced that they had struck a new bilateral trade and
cooperation deal governing the future relationship between the UK and the EU (the “EU-UK Trade and
Cooperation Agreement”) which was formally approved by the 27 member states of the EU on December
29, 2020. In March 2021, the UK and EU agreed on a framework
for voluntary regulatory cooperation and
dialogue on financial services issues between them in a Memorandum of Understanding (the “MOU”),
which is expected to be signed after formal steps are completed, although this has not yet occurred.
ff
The EU-UK Trade and Cooperation Agreement and the MOU provide some clarity regarding the future
relationship between the UK and the EU including some detailed matters of trade and cooperation, but
there remain uncertainties related to Brexit and the new relationship between the UK and EU that will
continue to be developed and defined, as well as uncertainties related to the wider trading, legal, regulatory,
tax and labor environments, and the resulting impact on our business and that of our clients. Because we
have significant operations in the EU and certain members of our senior management team are based in the
UK, any of these uncertainties could increase our costs of doing business, or in some cases, affect our
ability to do business, which could have a material adverse effect on our business, financial condition or
results of operations.
Regulation Affecting Benchmarks. Compliance efforts associated with regulations affecting benchmarks or
their uses and any related technical standards and guidance could have a negative impact on our business
and results of operations. In particular, compliance requirements could lead to a change in our business
practices, product offerings and/or our ability to offer indexes in certain jurisdictions, including the EU,
including without limitation, by increasing our costs of doing business, including direct costs paid to
regulators, diminishing our intellectual property rights, impacting the fees we can charge for our indexes,
imposing constraints on our ability to meet contractual commitments to our data providers, imposing
constraints on how we offer our products or causing our data providers to refuse to provide data to us, any
of which could have a material adverse effect on our index products.
25
For example, the benchmark industry is subject to regulations in the EU, such as Regulation (EU)
2016/1011 (as amended), which is also applicable in the UK as it forms part of UK domestic law by virtue
of the European Union (Withdrawal) Act 2018 (as amended), as well as increased scrutiny and potential
new or increased regulation in various other jurisdictions. Additionally, the European Securities and
Markets Authority (“ESMA”) issues guidance from time to time regarding interpretations of the EU
benchmark regulation (such as Regulation (EU) 2016/1011 (as amended) and Regulation (EU) No
600/2014). The ESMA Guidelines on ETFs and other UCITS Issues limit the types of indexes that can be
used as the basis of Undertakings for Collective Investment in Transferable Securities (“UCITS”) funds
and require, among other things, index constituents, together with their respective weightings, to be made
easily accessible free of charge, such as via the internet, to investors and prospective investors on a delayed
and periodic basis. The International Organization of Securities Commissions (“IOSCO”) recommends that
benchmark administrators, on a voluntary basis, publicly disclose whether they comply with the principles
for financial benchmarks published by IOSCO. Other jurisdictions have also indicated they may consider
potential benchmark regulation or conduct reviews of the benchmark industry. For instance, the UK FCA
has announced that it will conduct a market study into how competition is working in the markets for
benchmarks and indices. The heightened attention and scrutiny on benchmarks and index providers by
regulators, policymakers and the media in the EU, the U.S. and other jurisdictions around the world could
result in negative publicity or comments about the role or influence of our company or the index industry
generally, which could harm our reputation and credibility.
Further, laws, rules, regulations and orders affecting users of our indexes can have an indirect impact on
our indexes, including their construction and composition, such as sanctions that prohibit users of our
indexes from investing or transacting in securities included in our indexes.
• Data Privacy Legislation. Changes in laws, rules or regulations, or consumer environments relating to
privacy or information collection and use may affect our ability to collect, manage, aggregate, store,
transfer and use personal data. There could be a material adverse impact on our direct marketing due to the
enactment of legislation or industry regulations, or simply a change in practices, arising from public
concern over privacy issues. Restrictions or bans could be placed upon the collection, management,
aggregation, storage, transfer and use of information that is currently legally available, in which case our
costs related to handling information could increase materially. For example, California passed the
California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020, and the California
Privacy Rights Act (“CPRA”), which will take effect on January 1, 2023 and significantly amends and
expands the CCPA. The CCPA and CPRA regulate the processing of personal data of all Californians and
imposes significant penalties for non-compliance. The European General Data Protection Regulation
imposes enhanced operational requirements for companies that receive or process personal data of residents
of the EU and includes significant penalties for non-compliance. In Japan, the Act on the Protection of
Personal Information regulates the use of personal information and personal data of “data subjects” for
business purposes without regard to whether such use is within Japan. In addition, other jurisdictions,
including China and India, are considering imposing or have already imposed additional restrictions.
•
Investment Advisers Act. Except with respect to certain products provided by MSCI ESG Research LLC
and certain of its designated foreign affiliates, we believe that our products and services do not constitute or
provide investment advice as contemplated by the Advisers Act. See Part I, Item 1. “Business—
Government Regulation” above. The Advisers Act imposes fiduciary duties, recordkeeping and reporting
requirements, disclosure requirements, limitations on agency and principal transactions between an adviser
and advisory clients, as well as general anti-fraud prohibitions. Future developments in our product lines or
changes to current laws, rules, regulations or interpretations could cause this status to change, requiring
other entities in our corporate family to register as investment advisers under the Advisers Act or comply
with similar laws or requirements in states or foreign jurisdictions. In the U.S., the SEC has indicated that it
may seek public comment on the role of certain third-party service providers to the asset management
industry, including index providers and model providers, which could lead to regulation pursuant to the
Advisers Act or other framework.
In some instances, in connection with the provision of data and services, we have incurred additional costs to
implement processes and systems at the request of our clients to ensure that the products and services that they in
turn provide to their clients using our data are compliant with the financial regulations to which our clients may be
subject. For example, a U.S. Executive Order prohibiting many of our clients from transacting in the securities of
certain Chinese companies resulted in our decision to remove these companies from relevant indexes in order to
support our clients’ needs that our indexes meet their objective to be replicable in investment portfolios. To the
26
extent that our clients are subject to increased regulation, we may be indirectly impacted and could incur increased
costs that could have a negative impact on the profitability of certain products.
Additionally, there has been increased attention on and scrutiny of index and ESG rating providers by
politicians, regulators, policymakers and the media, which could create negative publicity that could harm our
reputation or credibility as well as result in new or additional regulation that could increase our costs and have a
negative impact on our business, financial condition or results of operations. For example, IOSCO has asked
regulators to consider focusing more attention on the use of ESG ratings and data products and ESG ratings and data
products providers that may be subject to their jurisdiction, and ESMA has called for entities issuing ESG ratings
and assessments to be registered and supervised. These or similar regulatory regimes could impose significant
compliance burdens and costs on our ESG and Climate products and services. Furthermore, regulation in multiple
jurisdictions may be inconsistent, which could create implementation challenges and result in inadvertent
noncompliance.
Legal protections for our intellectual property rights and other rights may not be sufficient or available to protect
our competitive advantages. Third parties may infringe on our intellectual property rights or we may infringe
upon their intellectual property rights, which, in each case, could have a material adverse effect on our business,
financial condition or results of operations.
We consider many aspects of our products and services to be proprietary. We rely primarily on a combination
of trade secrets, patents, copyrights and trademark rights, laws regarding unfair competition and the
misappropriation of intellectual property, as well as technical measures and contractual protections, such as non-
disclosure obligations, to protect our products and services. Despite our best efforts, we cannot be certain that the
steps we have taken to protect our intellectual property rights, and the rights of those from whom we license
intellectual property, are adequate to prevent unauthorized use, misappropriation, distribution or theft of our
intellectual property.
Intellectual property laws in various jurisdictions in which we operate are subject to change or varying
interpretations at any time and could further restrict our ability to protect our intellectual property rights. The
enforceability of intellectual property rights and obligations under our agreements, as well as the availability of
remedies in the event of a breach, may vary due to the different jurisdictions in which our clients and employees are
located. Failure to protect our intellectual property adequately could harm us, our brand or reputation and affect
our
ability to compete effectively.
ff
There is no guarantee that any intellectual property rights that we may obtain will protect our competitive
advantages, nor is there any assurance that our competitors will not infringe upon our rights. Furthermore, our
competitors may independently develop and protect products and services that are the same or similar to ours. We
may be unable to detect the unauthorized use or disclosure of our intellectual property or confidential information,
or to take the necessary steps to enforce our rights. In addition, our products and services, or third-party products
that we provide to our clients, could infringe upon the intellectual property rights of others.
Pursuing intellectual property claims to preserve our intellectual property rights or responding to intellectual
property claims, regardless of merit, can consume valuable time, and result in costly litigation or delays, and there is
no guarantee that we will be successful. From time to time, we receive claims or notices fromff
infringement or potential infringement of their intellectual property rights; and the number of these claims may
grow. These intellectual property claims would likely be costly to defend and could require us to pay damages, limit
our future use of certain technologies, harm our brand and reputation, significantly increase our costs and prevent us
from offering some services or products. We may need to settle such claims on unfavorable terms, pay damages,
stop providing or using the affected products or services or enter into royalty or licensing agreements, which may
include terms that are not commercially acceptable to us. From time to time, we receive notices calling upon us to
defend partners, clients, suppliers or distributors against third-party claims under indemnification clauses in our
contracts. If any of these risks materialize, they could have a material adverse effect on our business, financial
condition or results of operations.
third parties alleging
There have been a number of lawsuits in multiple jurisdictions, including in the U.S. and Germany, regarding
whether issuers of indexed investment products are required to obtain a license from the index owner or whether
issuers may issue investment products based on publicly available index-level data without obtaining permission
from (or making payment to) the index owner. The outcome of these cases depends on a number of factors,
including the governing law, the amount of information about the index available without a license and the other
27
particular facts and circumstances of the cases. In some instances, the results have been unfavorable to the index
owner. If courts or regulators or other governmental bodies in relevant jurisdictions determine that a license is not
required to issue investment products linked to indexes, this could have a material adverse effect on our business,
financial condition or results of operations. It might also lead to changes in current industry practices such that we
would no longer make our index level data publicly available, such as via our website or news media, on a timely
basis.
Some of our products and services help our clients to meet their regulatory requirements. Changes to
regulatory requirements may obviate the need for these products or services or may cause us to invest in enhancing
the products or services to help our clients meet the new regulatory requirements.
Financial Risks
Our revenues, expenses, assets and liabilities are subject to foreign currency exchange rate fluctuation risii k.
We are subject to foreign currency exchange rate fluctuation risk. Exchange rate movements can impact the
U.S. dollar reported value of our revenues, expenses, assets and liabilities denominated in non-U.S. dollar currencies
or where the currency of such items is different than the functional currency of the entity where these items were
recorded. Additionally, the value of assets in indexed investment products can fluctuate significantly over short
periods of time and such volatility may be further impacted by fluctuations in foreign currency exchange rates.
We manage certain portions of our foreign currency exchange rate risk, in part, through the use of derivative
financial instruments comprised principally of forward contracts on foreign currency which are not designated as
hedging instruments for accounting purposes. Any derivative financial instruments that we are currently party to or
may enter into in the future may not be successful, resulting in an adverse impact on our results of operations.
In addition, Brexit has caused, and may continue to cause, significant volatility in currency exchange rates,
especially between the U.S. dollar and the British pound sterling. To the extent that our international activities
recorded in local currencies increase or decrease in the future, our exposure to fluctuations in foreign currency
exchange rates may correspondingly increase or decrease and could have a material adverse effect on our business,
financial condition or results of operations.
Our indebtedness could materially adversely affect our cash flows and financial flexibility.
For an overview of our current outstanding indebtedness and history of our debt offerings, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” below. Although we believe that our
cash flows will be sufficient to service our outstanding indebtedness, we cannot provide assurance that we will
generate and maintain cash flows sufficient to permit us to pay the principal, premium, if any, and interest on our
indebtedness. Our ability to make payments on indebtedness and to fund planned capital expenditures depends on
our ability to generate and access cash in the future, which, in turn, is subject to general economic, financial,
competitive, regulatory and other factors, many of which are beyond our control. If we are unable to pay our
obligations as they mature, we may need to refinance all or a portion of our indebtedness on or before maturity. If
we are unable to secure additional financing on terms favorable or acceptable to us or at all, we could also be forced
to sell assets to make up for any shortfall in our payment obligations. The restrictive covenants in our debt
agreements, however, limit our and our subsidiaries’ ability to sell assets and also restrict the use of proceeds from
such a sale. If we cannot refinance or otherwise pay our obligations as they mature and fund our liquidity needs, our
business, financial condition, results of operations, cash flows, liquidity, ability to obtain financing and ability to
compete in our industry could be materially adversely affected.
We may need or want to refinance our existing debt or incur additional debt from time to time to finance
working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, we may be
subject to less favorable terms. The risks related to our level of indebtedness could also intensify, including by
making it difficult for us to optimally capitalize and manage the cash flow for our business or placing us at a
competitive disadvantage compared to our competitors that have less indebtedness.
Furthermore, the terms of our debt agreements include restrictive covenants that limit, among other things, our
and our existing and future subsidiaries’ financial flexibility. If we are unable to comply with the restrictions and
covenants in our debt agreements, there could be a default that, in some cases, if continuing, could result in the
accelerated payment of our debt obligations or the termination of borrowing commitments on the part of the lenders
under the Credit Agreement, dated as of November 20, 2014, by and among the Company, the guarantors party
28
thereto, JPMorgan Chase Bank, N.A., as administrative agent and the lenders from time to time party thereto, as
amended, supplemented, modified or amended and restated from time to time (as amended, the “Revolving Credit
Facility”).
In 2017, the UK Financial Conduct Authority (the “FCA”), which regulates London Interbank Offered Rate
(“LIBOR”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of
the LIBOR benchmark after 2021. The administrator for LIBOR announced on March 5, 2021 that it will
permanently cease to publish most LIBOR settings beginning on January 1, 2022 and cease to publish the overnight,
one-month, three-month, six-month and 12-month USD LIBOR settings on July 1, 2023. Accordingly, the FCA has
stated that is does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such
time, however, FCA panel banks have agreed to continue to support LIBOR. The U.S. Federal Reserve, in
conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial
institutions, is recommending replacing USD LIBOR with the Secured Overnight Financing Rate (“SOFR”), a new
index calculated by short-term repurchase agreements, backed by Treasury securities. It is unknown whether SOFR
will attain market acceptance as replacement for LIBOR and, because SOFR differs fundamentally froff m LIBOR,
there is no assurance that SOFR will perform in the same way as LIBOR would have performed at any time, and
there is no guarantee that it is a comparable substitute forff LIBOR. At this time, it is not possible to predict the effect
ff
that these developments may have on any floating rate debt instruments, including borrowings under our Revolving
Credit Facility. As of December 31, 2021, there were no amounts outstanding under our Revolving Credit Facility.
Pursuant to the Credit Agreement Amendment that became effective on March 29, 2021, we updated the LIBOR
succession provisions in our Revolving Credit Facility to contemplate a mechanism for replacing LIBOR with a new
benchmark rate without an amendment to the terms of the Credit Agreement governing the Revolving Credit
Facility. Since the conditions for the implementation of this mechanism have not yet been triggered, we cannot
determine with certainty what such replacement rate would be. As a result, we cannot reasonably predict the
potential effect of a discontinuation or replacement of LIBOR, other reforms or the establishment of alternative
reference rates on our business, financial condition or results of operations. In addition, if we were to incur any
variable rate indebtedness under our Revolving Credit Facility, we would be subject to interest rate risk generally,
which could cause our debt service obligations to increase significantly.
A change in our credit ratings could materially adversely affect our financial condition.
Our credit ratings are not recommendations to buy, sell or hold any of our common stock or outstanding debt.
Our outstanding debt under the Senior Notes currently has non-investment grade ratings. Any rating assigned to
such debt is subject to ongoing evaluation by the credit rating agencies and could be lowered or withdrawn entirely
at any time by any of the agencies if, in the agency’s judgment, future circumstances relating to the basis of the
rating so warrant. Such future circumstances include, but are not limited to, adverse changes to our results of
operations, financial condition or cash flows, or revisions to our corporate strategy pertaining to capitalization or
leverage. Any such downgrade or withdrawal could adversely affect the amount of capital we can access, as well as
the terms of any financing we obtain.
In addition, our debt covenants contain certain obligations that are triggered by a change in our credit rating,
including obligations to make repurchase offers to the noteholders of our Senior Notes if we experience one of the
specified kinds of changes in control and related lowering of our credit ratings, as detailed in the indentures
governing our Senior Notes.
Any adverse change in our credit rating could have a negative effect on our liquidity and future growth
through transactions in which we rely on the ability to receive debt capital at an advantageous cost and on favorable
terms. Accordingly, actual or anticipated changes or downgrades to or withdrawal of our credit ratings, including
any announcement that our ratings are under review or have been assigned a negative outlook, could result in
damage to our brand and reputation and have a material adverse effect on our business, financial condition, results
of operations and cash flows and on the market value of our common stock and outstanding debt.
We may have exposure to tax liabilities in various jurisdictions. Future changes in tax law could materially affect
our tax obligations and effective tax rate.
We are subject to income taxes, as well as non-income or indirect taxes, in the U.S. and various foreign
jurisdictions. Significant judgment is required in determining our global provision for income taxes and other tax
liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations
29
where the ultimate tax determination is uncertain. Changes in domestic and international tax laws could negatively
impact our overall effective
tax rate.
ff
We are regularly under audit by tax authorities. We may be subject to additional tax liabilities as the
jurisdictions in which we do business globally are increasingly focused on digital taxes and the treatment of remote
workforces. Although we believe that our tax provisions are reasonable, there can be no assurance that the final
determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax
provisions and accruals. To the extent we are required to pay amounts in excess of our reserves, such differences
could have a material adverse effect on our Consolidated Statement of Income for a particular future period. In
addition, an unfavorable tax settlement could require use of our cash and result in an increase in our effective tax
rate in the period in which such resolution occurs.
General Risks
Our business performance might not be sufficient
targets that we provide publicly.
ff
for us to meet thett
full-year financial guidance or long-term
We provide certain full-year financial guidance and long-term targets to the public based upon our
assumptions regarding our expected financial performance that may not always prove to be accurate and may vary
from actual results. If we fail to meet the full-year financial guidance or achieve the long-term targets that we
provide, or if we find it necessary to revise such guidance or targets, the market value of our common stock or other
securities could be adversely affected.
Our growth and profitability may not continue at the same rate as we have experienced in the past for several
reasons, including if our operating costs are higher than expected, which could have a material adverse effect on
our business, financial condition or results of operations.
We have experienced significant revenue and earnings growth since we began operations. There can be no
assurance that we will be able to maintain the levels of growth and profitability that we have experienced in the past.
If we experience higher than expected operating costs, including increased compensation costs, regulatory
compliance costs, occupancy costs, selling and marketing costs, investments in geographic expansion, market data
costs, software license costs, communication costs, travel costs, application development costs, professional fees,
costs related to information technology infrastructure, cloud usage and other IT costs, and we cannot adjust to these
costs, our operating results may fluctuate significantly or our anticipated profitability may be reduced and our
anticipated results of operations and financial position may be materially adversely affected. Additionally, there can
be no assurance that we will be as successful in our product development, selling and marketing efforts, or capital
return or allocation strategies as we have been in the past, or that such efforts will result in growth or profit margins
comparable to those we have experienced in the past.
We may be exposed to liabilities as a result of failure
operations, including anti-corruption laws, and any determination that we violated these laws could have a
material adverse effect on our business.
to comply with laws and regulations relating to our global
ff
We are subject to complex laws and regulations that are applicable to our global operations, such as laws and
regulations governing economic and trade sanctions, tariffs, embargoes, anti-boycott restrictions and anti-corruption
and other similar laws and regulations. Any determination that we have violated these laws or regulations could
have a material adverse effect on our business, financial condition or results of operations.
In particular, we are subject to various anti-corruption laws that prohibit improper payments or benefits or
offers of payments or benefits to foreign governments and their officials and, in some cases, to employees of a
business for the purpose of directing, obtaining or retaining business. We conduct business in countries and regions
that are less developed than the U.S. and in some cases are generally recognized as potentially more corrupt business
environments. Our activities in these countries create the risk of unauthorized payments or offers of payments by
one of our employees or agents that could be in violation of various anti-corruption laws including the Foreign
Corrupt Practices Act of 1977, as amended (the “FCPA”) and the UK Bribery Act 2010.
We have implemented safeguards and policies to discourage these types of practices by our employees and
agents. However, our existing safeguards and any future improvements may prove to be less than fully effective, and
30
our employees or agents may engage in conduct for which we might be held responsible. If employees violate our
policies or we fail to maintain adequate record-keeping and internal accounting practices to accurately record our
transactions we may be subject to regulatory fines, sanctions, damages or other penalties or costs. Violations of any
of these laws, including the FCPA or other anti-corruption laws, may result in severe criminal or civil sanctions and
penalties, damage our brand and reputation and subject us to other liabilities which could have a material adverse
effect on our business, financial condition or results of operations.
If we are unable to successfully identify, execute and realize expected returnsrr
acquisitions or
strategic partnerships or investments, or if we experience integration, financing, or other risks resulting from our
acquisitions or strategic partnerships or investments, our financial results may be materially all
and synergies fromff
dversely affected.
An element of our growth strategy is growth through acquisitions, strategic partnerships and investments.
Despite our best efforts to continue pursuing such transactions, there can be no assurance that we will be able to
identify suitable strategic partners, investment opportunities or attractive acquisition candidates at acceptable terms.
In addition, we may require additional debt or equity financing for future acquisitions and doing so may be made
more difficult by the terms of our existing indebtedness.
Our ability to achieve the expected returns and synergies from our past and future acquisitions, including our
recent acquisition of RCA, strategic partnerships and investments depends, in part, upon our ability to effectively
leverage or integrate the offerings, technology, sales, administrative functions and personnel of these businesses. We
cannot provide assurance that we will be successful in integrating acquired businesses, that our acquired businesses
will perform at the levels we anticipate or that our strategic partnerships and investments will advance the long-term
growth strategy of our company. Our past and future acquisitions, strategic partnerships and investments may
subject us to unanticipated risks or liabilities, including the potential to disrupt our operations. Additionally,
strategic partnerships may increase our reliance on third parties, which may result in future disruptions if those
partnerships are unsuccessful or discontinued or the content or level of support provided by strategic partners is
diminished.
If we experience a high level of acquisition, strategic partnership or investment-related activity within a
limited period of time, the probability that certain of these risks would occur would likely increase. In addition, if we
are unsuccessful in completing acquisitions of other businesses or assets, executing strategic partnerships or
investments, or if such opportunities for expansion do not arise, our brand or reputation could suffer, and our future
growth, business, financial condition or results of operations could be materially adversely affected.
Our goodwill and other intangible assets resulting from our acquisitions could be impaired as a result of fff uff ture
business conditions, requiring us to record substantial write-downs that would reduce our operating income.
We evaluate the recoverability of recorded goodwill amounts annually or when evidence of potential
impairment exists. Intangible assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable. These impairment tests are based on several
factors requiring management’s judgment. Changes in fair market valuations and our operating performance or
business conditions, in general, could result in future impairments of goodwill or intangible assets which could
materially adversely affect our results of operations. In addition, if we are not successful in achieving anticipated
operating efficiencies associated with acquisitions, our goodwill and intangible assets may become impaired.
If we fail to attract or retain the necessary qualified personnel, including through our compensation programs,
our business, financial condition or results of operations could be materially adversely affeff cted.dd
The development, maintenance and support of our products and services are dependent upon the knowledge,
skills, experience and abilities of our employees. Accordingly, we believe the success of our business depends to a
significant extent upon the continued service of our executives and other key employees. Although we do not
believe that we are overly dependent upon any individual employee, our management and other employees may
terminate employment at any time, and the loss of any of our key employees and our inability to replace them with
suitable candidates quickly or at all, as well as any negative market perception resulting from such loss, could have a
on our business, financial condition or results of operations. We compete for key employees
material adverse effect
not only with other companies in our industry but also with companies in other industries, such as software services,
engineering services and financial services companies, and there is a limited pool of employees who have the skills
and training needed to do our work. If our compensation programs do not adequately engage our key employees or
are not competitive, or if we fail to attract, engage and retain the necessary qualified personnel, the quality of our
ff
31
products and services as well as our ability to support and retain our clients and achieve business objectives may
suffer.
We cannot provide any guaranty that we will continue to repurchase shares of our common stock pursuant to our
share repurchase program.
The timing, price and volume of repurchases of shares of our common stock will be based on market
conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time,
through one or more open market repurchases or privately negotiated transactions, including, without limitation,
accelerated share repurchase transactions, trading plans or derivative transactions, or otherwise.
Share repurchases under our share repurchase program constitute components of our capital return strategy,
which we fund with free operating cash flow and borrowings. However, we are not required to make any share
repurchases under our share repurchase program. The share repurchase program does not obligate us to repurchase
any set dollar amount or number of shares and may be modified, suspended, or terminated at any time without prior
notice. The reduction or elimination of our share repurchase program could adversely affect the market price of our
common stock. Additionally, the existence of a share repurchase program could cause the market price of our
common stock to be higher than it would be in the absence of such a program and could potentially reduce the
market liquidity for our shares. As a result, any repurchase program may not ultimately result in enhanced value to
our shareholders and may not prove to be the best use of our cash resources.
Item 1B. Unresolved Staff Comments
Nothing required to be disclosed.
Item 2.
Properties
As of December 31, 2021, our principal offices consisted of the following leased properties:
Location
Mumbai, India .....................................................
New York, New York .........................................
Budapest, Hungary..............................................
Monterrey, Mexico..............................................
Manila, Philippines .............................................
London, England .................................................
Pune, India ..........................................................
Berkeley, California ............................................
Square Feet
126,286
125,811(1)
70,833
56,213
31,544
30,519
24,434
19,808
Expiration Date
August 31, 2023
February 28, 2033
February 28, 2029
October 31, 2028
February 28, 2027
December 25, 2026
January 19, 2026
February 28, 2030
(1)
As of December 31, 2021, 20,325 square feet of this location have been subleased, which will increase to 41,759 square feet in May 2022.
As of December 31, 2021, we had more than 30 leased and occupied locations of which the principal offices
are listed above. We believe that our properties are in good operating condition and adequately serve our current
business operations. We also anticipate that suitable additional or alternative space, including those under lease
options, will be available at commercially reasonable terms forff
future expansion.
Item 3.
Legal Proceedings
Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company in
the ordinary course of business. While the amounts claimed could be substantial, the ultimate liability cannot now be
determined because of the considerable uncertainties that exist. Therefore, it is possible that MSCI’s business,
operating results, financial condition or cash flows in a particular period could be materially affected by certain
contingencies. However, based on facts currently available, management believes that the disposition of matters that
are currently pending or asserted will not, individually or in the aggregate, have a material effect on MSCI’s
business, operating results, financial condition or cash flows.
Item 4.
Mine Safety Disclosures
Not applicable.
32
PART II
Item 5.
Market for Registrant’s Common Equity, Related
Equity Securities
ll
Stockholder Matters and Issuer Purchases of
Stock Price and Dividends
Our common stock is traded on the New York Stock Exchange under the symbol “MSCI.” As of February 4,
2022, there were 112 shareholders of record of our common stock.
Dividend Policy
The payment amounts of future dividends will be determined by the Board of Directors in light of conditions
then existing, including our earnings, financial condition and capital requirements, business conditions, corporate
law requirements and other factors.
Condition and Results of Operations—Liquidity and Capital Resources” for additional information on our dividend
policy.
See Part II, Item 7. “Management’s Discussion and Analysis of Financial
ff
Stock Repurchases
Our Board of Directors has approved a stock repurchase program forff
the purchase of the Company’s common
stock in the open market. See Note 11, “Shareholders’ Equity (Deficit),” of the Notes to Consolidated Financial
Statements included herein for additional information on our stock repurchase program.
The following table provides information with respect to purchases made by or on behalf of the Company of
its shares of common stock during the quarter ended December 31, 2021.
Issuer Purchases of Equity Securities
Total
Number
of Shares
Purchased
As Part of
Publicly
Announced
Plans or
Programs
Approximate
Dollar
Value of Shares
that May Yet Be
Purchased Under
the Plans or
Programs (2)
- $1,594,416,000
- $1,594,416,000
9,069 $1,589,177,000
9,069 $1,589,177,000
Total
Number of
Shares
Purchased (1)
Average
Price
Paid Per
Share
- $
- $
-
-
9,181 $ 578.77
9,181 $ 578.77
Period
October 1, 2021-October 31, 2021 ..........................
November 1, 2021-November 30, 2021 ..................
December 1, 2021-December 31, 2021 ...................
Total....................................................................
(1)
(2)
Includes (i) shares purchased by the Company on the open market under the stock repurchase program; (ii) shares withheld to satisfy tax
withholding obligations on behalf of employees that occur upon vesting and delivery of outstanding shares underlying restricted stock
units; and (iii) shares held in treasury under the MSCI Inc. Non-Employee Directors Deferral Plan. The value of shares withheld to satisfy
tax withholding obligations was determined using the fair market value of the Company’s common stock on the date of withholding,
using a valuation methodology established by the Company.
See Note 11, “Shareholders’ Equity (Deficit),” of the Notes to the Consolidated Financial Statements included herein for further
information regarding our stock repurchase program.
Recent Sales of Unregistered Securities
There were no unregistered sales of equity securities in the year ended December 31, 2021.
Use of Proceeds from Sale of Registered Securities
None.
33
FIVE-YEAR STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholders’ return on our common stock, the Standard &
Poor’s 500 Stock Index and the NYSE Composite Index since December 31, 2016 assuming an investment of $100
at the closing price on December 31, 2016. In calculating total annual shareholders’ return, reinvestment of
dividends, if any, is assumed. The indexes are included for comparative purposes only. They do not necessarily
reflect management’s opinion that such indexes are an appropriate measure of the relative performance of the
common stock. This graph is not “soliciting material,” is not to be deemed filed with the SEC and is not to be
incorporated by reference in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”)
or the Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective
of any general incorporation language in any such filing.
ff
n
r
u
t
e
R
'
s
r
e
d
l
o
h
e
r
a
h
S
l
a
t
o
T
e
v
i
t
a
l
u
m
u
C
$900.00
$800.00
$700.00
$600.00
$500.00
$400.00
$300.00
$200.00
$100.00
$0.00
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
MSCI Inc.
S&P 500
NYSE Composite Index
Total Investment Value
Years Ended
December 31, December 31, December 31, December 31, December 31, December 31,
2016
2017
2018
2019
2020
2021
MSCI Inc. ................................................. $
S&P 500.................................................... $
NYSE Composite Index ........................... $
100 $
100 $
100 $
163 $
122 $
119 $
192 $
116 $
108 $
340 $
153 $
136 $
593 $
181 $
145 $
819
233
175
Source: S&P Global
34
Item 6.
Selected Financial Data
Our selected consolidated financial data for the periods presented should be read in conjunction with “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated
financial statements and notes thereto provided under Part II, Item 8. “Financial Statements and Supplementary
Data” of this Annual Report on Form 10-K.
For the Years Ended
December 31, December 31, December 31, December 31, December 31,
2019
(in thousands, except operating margin and per share data)
2018 (1)
2020
2017
2021
Operating revenues ...................................... $ 2,043,544
970,819
Total operating expenses..............................
1,072,725
Operating income .........................................
214,589
Other expense (income), net ........................
Provision for income taxes...........................
132,153
Net income ................................................... $ 725,983
Operating margin .........................................
Earnings per basic common share................ $
Earnings per diluted common share............. $
Weighted average shares outstanding:
52.5%
8.80
8.70
Basic .......................................................
Diluted ....................................................
Dividends declared per common share ........ $
82,508
83,479
3.64
$ 1,695,390
810,626
884,764
198,539
84,403
$ 601,822
$ 1,557,796
802,095
755,701
152,383
39,670
$ 563,648
$ 1,433,984
747,086
686,898
57,002
122,011
$ 507,885
$ 1,274,172
694,402
579,770
112,871
162,927
$ 303,972
$
$
$
52.2%
7.19
7.12
$
$
48.5%
6.66
6.59
$
$
47.9%
5.83
5.66
$
$
45.5%
3.36
3.31
83,716
84,517
2.92
$
84,644
85,536
2.52
As of
87,179
89,701
1.92
$
90,336
91,914
1.32
$
December 31, December 31, December 31, December 31, December 31,
2021 (3)
2020
2019 (2)
(in thousands)
2018 (1)
2017
Cash and cash equivalents...................................... $ 1,421,449 $ 1,300,521 $ 1,506,567 $ 904,176 $ 889,502
Accounts receivable, net of allowances ................. $ 664,511 $ 558,569 $ 499,268 $ 473,433 $ 327,597
Goodwill and intangibles, net of
accumulated amortization ................................... $ 2,829,727 $ 1,800,770 $ 1,824,355 $ 1,826,564 $ 1,882,457
Total assets ............................................................. $ 5,506,703 $ 4,198,647 $ 4,204,439 $ 3,387,952 $ 3,275,668
Deferred revenue .................................................... $ 824,912 $ 675,870 $ 574,656 $ 537,977 $ 374,365
Long-term debt, net of current maturities .............. $ 4,161,422 $ 3,366,777 $ 3,071,926 $ 2,575,502 $ 2,078,093
Total shareholders' equity (deficit)......................... $ (163,467) $ (443,234) $
(76,714) $ (166,494) $ 401,012
(1)
(2)
(3)
Includes the impact of the Financial Engineering Associates, Inc. and Investor Force Holdings, Inc. divestitures.
Reflects the impact of the adoption on January 1, 2019 of Accounting Standards Update 2016-02, "Lease (Topic 842)," the impact of
which was the inclusion of $166.4 million of right of use assets on the Company's Consolidated Statement of Financial Condition as of
December 31, 2019.
Includes the impact from the acquisition of RCA commencing as of September 13, 2021 (the date we completed the acquisition).
35
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is a
discussion and analysis of the financial condition and results of the operations
subsidiaries for the year ended December 31, 2021. This discussion should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. As a
result of changes to the presentation of our reportable segments effective January 1, 2021, we have included herein
certain discussions summarizing the significant factors affecting the results of operations and financial condition of
MSCI for the year ended December 31, 2020. The remaining discussions may be found in Part II, “IteII m 7.77
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on
Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), which was filed with the Securities
and Exchange Commission on February 12, 2021.
of MSCI Inc. and its consolidated
o
dd
Overview
We are a leading providerr off critical decision supportt tools and solutions forr the global i
nvestment
t
community. Ourr mission-critical offerings help investors address the challenges off a transforming investm tent
landscape and powerr betterr investmentt decisions. Leveraging ourr knowledge off the global investmentt process and
ourr expertise in research, data and technology, we enable ourr clients to understand and analyze key drivers off
krisk
and return and confidently and efficiently build more effective portfolios. We poperate in fourr
yAnalytics, ESG and Climate, and All Otherr –– Private Assets.
follows: Index,
preportable
gsegments as
Certain priorr period amounts have been reclassified to conform to the currentt period presentation. Effective
January 1, 2021, the ESG and Climate operating segmentt is being presented as a separate reportable segment. The
operating segments off Real Estate and The Burgiss Group, LLC (“Burgiss”) do not individually meett the
segment
ent
reporting thresholds and have been combined and ppresented as partpart off the All Otherr –– Private Assets
g
gsegment.
preportable
ff
Our growth strategy includes: (a) extending leadership in research-enhanced content across asset classes, (b)
leading the enablement of ESG and climate investment integration, (c) enhancing distribution and content-enabling
technology, (d) expanding solutions that empower client customization, (e) strengthening client relationships and
growing into strategic partnerships with clients and (f) executing strategic relationships and acquisitions with
complementary content and technology companies. For more information about our Company’s operations, see
“Item 1: Business”.
Key Financial and Operating Metrics and Drivers
In evaluating our financial performance, we focus on revenue and profit growth, including results accounted
for under generally accepted accounting principles in the United States (“GAAP”) as well as non-GAAP measures,
for the Company as a whole and by operating segment.
We present revenues disaggregated by types and by segments, which represent our major product lines. We
also review expenses by activity, which provides more transparency into how resources are being deployed. In
addition, we utilize operating metrics including Run Rate, subscription sales and Retention Rate to manage and
assess performance and to provide deeper insights into the recurring portion of our business.
In the discussion that follows, we provide certain variances excluding the impact of foreign currency exchange
rate fluctuations and acquisitions. Foreign currency exchange rate fluctuations reflect the difference between the
current period results as reported compared to the current period results recalculated using the foreign currency
exchange rates in effect forff
currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency
fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign
currency fluctuations. Approximately three-fifths of the AUM is invested in securities denominated in currencies
other than the U.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-
adjusted variances.
the comparable prior period. While operating revenues adjusted for the impact of foreign
Revenues
Our revenues are presented by type and by reportable segment. For each reportable segment, we present
revenues disaggregated by the nature of the revenues, which are recurring subscriptions, asset-based fees and non-
recurring revenues.
36
Recurring subscription revenues represent fees earned from clients primarily under renewable contracts and
are generally recognized ratably over the term of the license or service pursuant to the contract terms. The fees are
recognized as we provide the product and service to the client over the license period and are generally billed in
advance, prior to the license start date.
Asset-based fees represent fees earned that are variable in nature, as they are calculated based on the AUM
linked to our indexes. Asset-based fees also include revenues related to futures and options contracts linked to our
indexes, which are primarily based on trading volumes.
Non-recurring revenues primarily represent fees earned on products and services where we do not have
renewal contracts. Non-recurring revenues primarily include revenues from licenses of historical data, indexed
derivative financial products, certain implementation services and other special client requests, which are generally
recognized at a point in time, but may also be recognized over the license period.
Operating
rr
Expenses
We group our operating expenses into the following activity categories:
•
•
Cost of revenues;
Selling and marketing;
•
Research and development (“R&D”);
• General and administrative (“G&A”);
• Amortization of intangible assets; and
• Depreciation and amortization of property, equipment and leasehold improvements.
Costs are assigned to these activity categories based on the nature of the expense or, when not directly
attributable, an estimated allocation based on the type of effort involved. Cost of revenues, selling and marketing,
R&D and G&A all include both compensation as well as non-compensation related expenses
Cost of Revenues
Cost of revenues expenses consist of costs related to the production and servicing of our products and services
and primarily includes related information technology costs, including data center, cloud service, platform and
infrastructure costs; costs to acquire, produce and maintain market data information; costs of research to support and
maintain existing products; costs of product management teams; costs of client service and consultant teams to
support customer needs; as well as other support costs directly attributable to the cost of revenues including certain
human resources, finance and legal costs.
Selling and Marketing
Selling and marketing expenses consist of costs associated with acquiring new clients or selling new products
or product renewals to existing clients and primarily includes the costs of our sales and marketing teams, as well as
costs incurred in other departments associated with acquiring new business, including product management,
research, technology and sales operations.
Research and Development
R&D expenses consist of costs to develop new or enhance existing products and the costs to develop new or
enhanced technologies and service platforms for the delivery of our products and services and primarily include the
costs of development, research, product management, project management and the technology support directly
associated with these activities.
General and Administrative
G&A expenses consist of costs primarily related to finance operations, human resources, office of the CEO,
legal, corporate technology, corporate development, impairment charges associated with right of use assets and
certain other administrative costs that are not directly attributed, but are instead allocated, to a product or service.
37
Amortization of Intangible Assets
Amortization of intangible assets expense relates to definite-lived intangible assets arising from past
acquisitions and capitalization of internally developed software projects. Intangibles arising from past acquisitions
consist of customer relationships, proprietary data, trademarks and trade names and technology and softwff
are. We
amortize definite-lived intangible assets over their estimated useful lives. We have no indefinite-lived intangible
assets.
Depreciation and Amortization of Property, Equipment and Leasehold Improvements
Depreciation and amortization of property, equipment and leasehold improvements consists of expenses
related to depreciating or amortizing the cost of computer and related equipment, leasehold improvements, software
and furniture and fixtures over the estimated useful life of the assets.
Other Expense (Income), Net
Other expense (income), net consists primarily of interest we pay on our outstanding indebtedness, including
losses on early extinguishment of debt, income and losses associated with our equity method investment, foreign
currency exchange rate gains and losses, interest we collect on cash and short-term investments, as well as other
non-operating income and expense items that may arise from time to time.
Non-GAAP Financial Measures
Adjusted EBITDA
“Adjusted EBITDA,” a non-GAAP measure used by management to assess operating performance, is defined
as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and
amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times,
(5) certain other transactions or adjustments, including impairment related to sublease of leased property, certain
non-recurring acquisition-related integration and transaction costs and the impact related to the vesting of multi-year
restricted stock units granted in 2016 to certain senior executives that are subject to the achievement of multi-year
total shareholder return targets, which are performance targets with a market condition (the “2016 Multi-Year
PSUs”).
“Adjusted EBITDA expenses,” a non-GAAP measure used by management to assess operating performance,
is defined as operating expenses less depreciation and amortization of property, equipment and leasehold
improvements and amortization of intangible assets and, at times, certain other transactions or adjustments,
including impairment related to sublease of leased property, certain non-recurring acquisition-related integration and
transaction costs and the impact related to the vesting of the 2016 Multi-Year PSUs.
Adjusted EBITDA and Adjusted EBITDA expenses are believed to be meaningful measures for management
to assess the operating performance of the Company because they adjust for significant one-time, unusual or non-
recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not
directly affect what management considers to be the Company’s ongoing operating performance in the period. All
companies do not calculate adjusted EBITDA and adjusted EBITDA expenses in the same way. These measures can
differ significantly from company to company depending on, among other things, long-term strategic decisions
regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly,
the Company’s computation of the Adjusted EBITDA and Adjusted EBITDA expenses measures may not be
comparable to similarly titled measures computed by other companies.
Run Rate
Run Rate is a key operating metric and is important because an increase or decrease in our Run Rate
ultimately impacts our future operating revenues over time. At the end of any period, we generally have subscription
and investment product license agreements in place for a large portion of total revenues for the following 12 months.
We measure the fees related to these agreements and refer to this as “Run Rate.” See “—Operating
Rate” below for additional information on the calculation of this metric.
Metrics—Run—
rr
38
Subscription Sales
Subscription sales is a key operating metric and is important to management because new subscription sales
increase our Run Rate and represent future operating revenues that will be recognized over time. See “—Operating
Metrics— Sales” below for additional information.
Retention Rate
Retention Rate is a key operating metric and is important to management because subscription cancellations
decrease our Run Rate and ultimately our future operating revenues over time. See “—Operating Metrics—
Retention Rate” below for additional information on the calculation of this metric.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. These accounting principles
require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of
the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during
the periods presented. Significant estimates and judgments made by management include such examples as
assessment of impairment of goodwill and intangible assets and income taxes. We believe the estimates and
judgments upon which we rely are reasonable based upon information available to us at the time these estimates and
judgments are made. To the extent there are material differences between these estimates and actual results, our
consolidated financial statements will be affected.
Goodwill
Goodwill is recorded as a result of business combinations undertaken by the Company when the purchase
price exceeds the fair value of the net tangible assets and separately identifiable intangible assets acquired. The
Company tests goodwill for impairment on an annual basis on July 1st and on an interim basis when certain events
and circumstances exist. The test for impairment is performed at the reporting unit level. In testing goodwill for
impairment, the company used the income approach to estimate the fair value of each reporting unit. Under the
income approach, we estimate the fair value of each reporting unit based on the present value of estimated future
cash flows. Estimating discounted future cash flows requires significant management judgment including in
estimating forecasted future
cash flows and determining both discount rates and terminal growth rates. Forecasted
future cash flows are estimated based on a combination of historical experience and assumptions regarding future
growth and profitability of each reporting unit. Discount rates are selected based on discount rates of similar public
companies to the reporting unit being valued and terminal growth rates are selected based on consideration of
growth rates used during the reporting unit’s forecast period in combination with economic conditions. These
assumptions require management’s judgment and changes to these estimates or assumptions could materially affect
the determination of the reporting unit’s fair value. Any impairment is measured as the difference between the
carrying amount and its faiff
r value. Based on our quantitative assessment as of July 1, 2021, we determined that the
estimated fair value of the Company’s reporting units substantially exceeded their respective carrying values, so no
impairment of goodwill was recorded.
ff
Definite Lived Intangible Assets
Definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable. These events or circumstances include adverse
changes in the manner in which the asset will be used, adverse changes in legal factors related to the asset or
negative changes in expected financial performance of the asset, including accumulation of costs and operating
losses. Determining whether an event or changes in circumstances warrant an impairment review involves
management judgment.
Once it is determined that an impairment review is necessary, determination of recoverability is determined
based on comparing the carrying amount of the asset group to the estimated future undiscounted cash flows. If the
carrying amount exceeds the estimated future undiscounted cash flows, the asset grouping is considered to be
impaired. Measurement of impairment for intangible assets is based on the amount the carrying value exceeds the
fair value of the asset, which is based on estimated discounted future cash flows. Estimated undiscounted and
discounted cash flows used in the determination and calculation of impairments represent management forecasts and
require significant management judgment. While management believes that its forecasts are reasonable, differences
between forecasts and actual experience could materially affect the valuations. There were no events or changes in
39
circumstances that would indicate that the carrying value of the definite-lived intangible assets may not be
recoverable during the years presented.
With respect to our acquisition of RCA on September 13, 2021, the initial valuation of intangible assets, as
part of the acquisition method of accounting, is subjective and based, in part, on inputs that are unobservable. The
significant assumptions used to estimate the fair value of the acquired intangible assets included, forecasted cash
flows which were determined based on certain assumptions which included, among others, projected future
revenues, and expected market royalty rate, technology obsolescence rates and discount rates. These estimates are
inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition
could be allocated to the acquired assets and assumed liabilities differently from the allocation that we have made.
The Company amortizes its intangible assets over the estimated period of economic benefit. If the estimated
period of economic benefit is changed, the prospective amortization of the intangible asset could materially change.
Income Taxes
The Company is subject to income taxes in the U.S. and other foreign jurisdictions. Our tax provision is an
estimate based on our understanding of laws in federal, state and foreign tax jurisdictions. These laws can be
complicated and are difficult to apply to any business. The tax laws also require us to allocate our taxable income to
many jurisdictions based on subjective allocation methodologies and information collection processes.
Provision for income taxes is provided for using the asset and liability method, under which deferred tax
assets and deferred tax liabilities are determined based on the temporary differences between the financial statement
and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are reduced by a
valuation allowance when, in our opinion, it is more likely than not that all or some portion of the deferred tax assets
will not be realized. In assessing the need for a valuation allowance, management is required to estimate future
taxable income which requires judgment.
The Company must regularly assess the likelihood of additional assessments in each of the taxing jurisdictions
in which it files income tax returns and adjust unrecognized tax benefits when additional information is available or
when an event occurs. This assessment requires significant judgment in assessment of tax laws, frequency of tax
examinations, and the nature of intercompany transactions and tax positions.
Factors Affecting the Comparability of Results
Acquisition of RCA
On September 13, 2021, MSCI completed the acquisition of RCA for an aggregate cash purchase price of
$949.0 million, subject to working capital adjustments. See Note 5, “Acquisitions,” of the Notes to the Consolidated
Financial Statements included herein for additional information on the acquisition of RCA.
Results of Operations
Operating Revenues
Our operating revenues are grouped by the following types: recurring subscriptions, asset-based fees and non-
recurring. We also group operating revenues by major product or reportable segment as follows: Index, Analytics,
ESG and Climate and All Other – Private Assets, which includes the Real Estate product line and our equity method
investment in Burgiss.
The following table presents operating revenues by type for the years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2021
2019
December 31,
2020 to 2019
Recurring subscriptions ............................. $ 1,426,040
553,991
Asset-based fees.........................................
Non-recurring.............................................
63,513
Total operating revenues............................ $ 2,043,544
$ 1,154,040
361,927
41,829
$ 1,557,796
14.3%
38.6%
33.9%
20.5%
8.2%
10.5%
13.4%
8.8%
2020
(in thousands)
$ 1,248,175
399,771
47,444
$ 1,695,390
40
Total operating revenues increased 20.5% for the year ended December 31, 2021 compared to the year ended
December 31, 2020. Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, total
operating revenues would have increased 18.7%.
Operating revenues from recurring subscriptions increased 14.3% for the year ended December 31, 2021
compared to the year ended December 31, 2020, primarily driven by strong growth in Index products, which
increased $70.2 million, or 12.1%, strong growth in ESG and Climate products, which increased $52.7 million, or
47.9%, strong growth in All Other - Private Assets products, which increased $28.1 million, or 54.5%, and growth in
Analytics products, which increased $26.9 million, or 5.3%. Adjusting for the impact of acquisitions and foreign
currency exchange rate fluctuations, operating revenues from recurring subscriptions would have increased 11.8%.
Operating revenues from asset-based fees increased 38.6% for the year ended December 31, 2021 compared to
the year ended December 31, 2020, driven by growth in operating revenues from all index-linked investment
product categories. Operating revenues from ETFs linked to MSCI equity indexes increased by 41.9%, primarily
driven by an increase in average AUM, partially offset by a decrease in average basis point fees. The increase in
asset-based fees operating revenues was also driven by revenues from non-ETF indexed funds linked to MSCI
indexes which increased by 39.4%, primarily driven by an increase in average AUM.
Total operating revenues grew 8.8% for the year ended December 31, 2020 compared to the year ended
December 31, 2019. Adjusting for the impact of foreign currency exchange rate fluctuations,
revenues would have increased 8.7%.
ff
total operating
Operating revenues from recurring subscriptions increased 8.2% for the year ended December 31, 2020
compared to the year ended December 31, 2019, primarily driven by growth in Index products, which increased
$49.4 million, or 9.3%, growth in ESG and Climate products, which increased $20.4 million, or 22.8%, and growth
in Analytics products, which increased $20.0 million, or 4.1%. Adjusting for the impact of foreign
exchange rate fluctuations, operating revenues from recurring subscriptions would have increased 8.1%.
currency
ff
Operating revenues from asset-based fees increased 10.5% for the year ended December 31, 2020 compared to
the year ended December 31, 2019. The increase in asset-based fees was driven by growth in revenues from all of
our indexed investment product categories, including an increase in revenues from exchange traded futures and
options contracts linked to MSCI indexes that were primarily driven by price increases. The increase in operating
revenues from asset-based fees was also driven by higher revenues from non-ETF indexed funds linked to MSCI
indexes, which was driven by price increases and an increase in average AUM. Revenues from ETFs linked to
MSCI indexes also increased, driven by an 8.9% increase in average AUM in equity ETFs linked to MSCI indexes,
partially offset by lower fees resulting from the impact of a change in product mix. The impact of foreign
currency
exchange rate fluctuations on operating revenues from asset-based fees was negligible.
ff
The following table presents the value of AUM in ETFs linked to MSCI equity indexes and the sequential
change of such assets as of the end of each of the periods indicated:
2020
Period Ended
March 31, June 30, September 30, December 31, March 31,
2021
June 30, September 30, December 31,
(in billions)
)
(
AUM in ETFs linked to
MSCI equity indexes(1), (2) ....... $ 709.5 $825.4 $
q
Sequential Change in Value
Market
Appreciation/(Depreciation) ... $ (216.5) $117.4 $
Cash Inflows ...........................
Total Change........................... $ (224.9) $115.9 $
(8.4)
(1.5)
g
908.9 $ 1,103.6 $1,209.6 $1,336.2 $
1,336.6 $ 1,451.6
57.0 $
26.5
83.5 $
43.2 $
135.7 $
59.0
62.8
194.7 $ 106.0 $ 126.6 $
73.7 $
52.9
(30.7) $
31.1
0.4 $
56.5
58.5
115.0
41
The following table presents the average value of AUM in ETFs linked to MSCI equity indexes for the
periods indicated:
Year-to-Date Average
2020
2021
AUM in ETFs linked to MSCI
equity indexes(1), (2)................... $ 877.1 $ 827.0 $
849.1 $ 886.7 $1,169.2 $1,230.8 $ 1,274.5 $1,309.6
March
June
September December March
June
September December
(1)
(2)
The historical values of the AUM in ETFs linked to our equity indexes as of the last day of the month and the monthly average balance
can be found under the link “AUM in ETFs Linked to MSCI Equity Indexes” on our Investor Relations homepage at http://ir.msci.com
.
This information is updated mid-month each month. Information contained on our website is not incorporated by reference into this
Annual Report on Form 10-K or any other report filed with the SEC. The AUM in ETFs also includes AUM in Exchange Traded Notes,
the value of which is less than 1.0% of the AUM amounts presented.
The value of AUM in ETFs linked to MSCI equity indexes is calculated by multiplying the equity ETF net asset value by the number of
shares outstanding.
//
For the year ended December 31, 2021, the average value of AUM in ETFs linked to MSCI equity indexes
was up $422.9 billion, or 47.7%, compared to the year ended December 31, 2020.
The following table presents operating revenues by reportable segment and revenue type for the years
indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2020
2021
2019
December 31,
2020 to 2019
Operating revenues:
Index
(in thousands)
Recurring subscriptions............... $
Asset-based fees ..........................
Non-recurring ..............................
Index total .........................................
Analytics
Recurring subscriptions...............
Non-recurring ..............................
Analytics total ...................................
ESG and Climate
Recurring subscriptions...............
Non-recurring ..............................
ESG and Climate total ......................
All Other - Private Assets
650,629 $
553,991
47,144
1,251,764
580,393 $
399,771
36,331
1,016,495
530,968
361,927
28,042
920,937
533,178
11,121
544,299
162,609
3,583
166,192
506,301
7,507
513,808
109,945
1,419
111,364
486,282
10,643
496,925
89,563
1,096
90,659
Recurring subscriptions...............
Non-recurring ..............................
All Other - Private Assets total .........
47,227
2,048
49,275
Total operating revenues ........................ $ 2,043,544 $ 1,695,390 $ 1,557,796
51,536
2,187
53,723
79,624
1,665
81,289
12.1%
38.6%
29.8%
23.1%
5.3%
48.1%
5.9%
47.9%
152.5%
49.2%
54.5%
(23.9%)
51.3%
20.5%
9.3%
10.5%
29.6%
10.4%
4.1%
(29.5%)
3.4%
22.8%
29.5%
22.8%
9.1%
6.8%
9.0%
8.8%
Refer to the section titled “Segment Results” that follows
ff
forff
further discussion of segment revenues.
Operating Expenses
Total operating expenses increased 19.8% for the year ended December 31, 2021 compared to the year ended
December 31, 2020. Adjusting for the impact of foreign currency exchange rate fluctuations,
have been 18.2%.
ff
the increase would
Total operating expenses increased 1.1% for the year ended December 31, 2020 compared to the year ended
December 31, 2019. Adjusting for the impact of foreign currency exchange rate fluctuations,
have been 1.6%.
ff
the increase would
42
The following table presents operating expenses by activity category for the years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2019
2021
2020
(in thousands)
Operating expenses:
Cost of revenues................................ $
Selling and marketing .......................
Research and development ...............
General and administrative ...............
Amortization of intangible assets .....
Depreciation and amortization of
property, equipment and leasehold
358,684 $
243,185
111,564
147,893
80,592
291,704 $
216,496
101,053
114,627
56,941
294,961
219,298
98,334
110,093
49,410
23.0%
12.3%
10.4%
29.0%
41.5%
improvements.................................
Total operating expenses ........................ $
28,901
970,819 $
29,805
810,626 $
29,999
802,095
(3.0%)
19.8%
December 31,
2020 to 2019
(1.1%)
(1.3%)
2.8%
4.1%
15.2%
(0.6%)
1.1%
Cost of Revenues
Cost of revenues increased 23.0% for the year ended December 31, 2021 compared to the year ended
December 31, 2020, reflecting increases across all segments. The change was driven by increases in compensation
and benefits costs, primarily relating to higher wages and salaries and incentive compensation and benefits costs, as
well as higher non-compensation costs, primarily reflecting higher professional fees,
information technology costs
and market data costs.
ff
Cost of revenues decreased 1.1% for the year ended December 31, 2020 compared to the year ended
December 31, 2019. The change was driven by the absence of $7.0 million of payroll tax expense associated with
the vesting of the 2016 Multi-Year PSUs recognized during the year ended December 31, 2019, partially offset by
increases in other compensation and benefits costs, primarily relating to higher wages and salaries, as well as higher
non-compensation costs, reflecting higher information technology costs, partially offset by lower travel and
entertainment costs. Cost of revenues reflects increases across the ESG and Climate and Index reportable segments,
partially offset by decreases in the Analytics and All Other – Private Assets reportable segments.
Selling and Marketing
Selling and marketing expenses increased 12.3% for the year ended December 31, 2021 compared to the year
ended December 31, 2020, reflecting increases across all segments. The change was primarily driven by increases in
compensation and benefits costs, including higher incentive compensation, wages and salaries and benefits costs,
partially offset by a decline in severance costs.
Selling and marketing expenses decreased 1.3% for the year ended December 31, 2020 compared to the year
ended December 31, 2019. The change was driven by lower non-compensation costs, including travel and
entertainment costs, and the absence of $4.5 million of payroll tax expense associated with the vesting of the 2016
Multi-Year PSUs recognized during the year ended December 31, 2019, partially offset by increases in
compensation and benefits costs, primarily relating to higher wages and salaries. Selling and marketing expenses
reflect increases across the ESG and Climate, Analytics and All Other – Private Assets reportable segments,
partially offset by a decrease in the Index reportable segment.
Research and Development
R&D expenses increased 10.4% for the year ended December 31, 2021 compared to the year ended December
31, 2020, primarily reflecting higher investment in the Index and ESG and Climate reportable segments, partially
offset by lower investment in the Analytics reportable segment. The change was driven by increases in
compensation and benefits costs, primarily relating to higher incentive compensation, as well as higher non-
compensation costs, reflecting higher information technology costs.
R&D expenses increased 2.8% for the year ended December 31, 2020 compared to the year ended December
31, 2019. The change was driven by increases in compensation and benefits costs, including wages and salaries and
benefits costs. R&D expenses reflect higher investments in the All Other – Private Assets, Index and ESG and
Climate reportable segments, partially offset by lower investment in the Analytics reportable segment.
43
General and Administrative
G&A expenses increased 29.0% for the year ended December 31, 2021 compared to the year ended December
31, 2020, reflecting increases across all segments. The change was driven by increases in non-compensation costs,
primarily relating to impairment charges associated with right of use assets, non-recurring transaction and
integration costs related to the acquisition of RCA and higher information technology costs and professional fees.
The change was also driven by higher compensation and benefits costs, primarily relating to higher wages and
salaries and incentive compensation.
G&A expenses increased 4.1% for the year ended December 31, 2020 compared to the year ended December
31, 2019. The change was driven by increases in compensation and benefits costs, primarily relating to higher
incentive compensation and wages and salaries, partially offset by the absence of $3.5 million of payroll tax expense
associated with the vesting of the 2016 Multi-Year PSUs recognized during the year ended December 31, 2019 and
lower non-compensation costs. G&A expenses reflect increases across the ESG and Climate, Analytics and Index
reportable segments, partially offset by a decrease in the All Other – Private Assets reportable segment.
The following table presents operating expenses using compensation and non-compensation categories, rather
than using activity categories, for the years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2019
2021
2020
(in thousands)
December 31,
2020 to 2019
Compensation and benefits ........................ $
Non-compensation expenses......................
Amortization of intangible assets...............
Depreciation and amortization of
property, equipment and leasehold
614,950 $
246,376
80,592
527,641 $
196,239
56,941
518,730
203,956
49,410
improvements..........................................
Total operating expenses............................ $
28,901
970,819 $
29,805
810,626 $
29,999
802,095
16.5%
25.5%
41.5%
(3.0%)
19.8%
1.7%
(3.8%)
15.2%
(0.6%)
1.1%
A significant portion of the incentive compensation component of operating expenses is based on the
achievement of a number of financial and operating metrics. In a scenario where operating revenue growth and
profitability moderate, incentive compensation would be expected to decrease accordingly.
Fixed costs constitute a significant portion of the non-compensation component of operating expenses. The
discretionary non-compensation component of operating expenses could, however, be reduced in the near-term in a
scenario where operating revenue growth moderates.
We had 4,303 employees as of December 31, 2021, compared to 3,633 employees as of December 31, 2020,
reflecting a 18.4% growth in the number of employees. Continued growth of our emerging market centers around
the world is an important factor in our ability to manage and control the growth of our compensation and benefits
costs. As of December 31, 2021, 63.2% of our employees were located in emerging market centers compared to
64.6% as of December 31, 2020.
Compensation and benefits costs increased 16.5% for the year ended December 31, 2021 compared to the year
ended December 31, 2020, primarily driven by headcount growth and higher incentive compensation.
Non-compensation expenses increased 25.5% for the year ended December 31, 2021 compared to the year
ended December 31, 2020, primarily driven by higher information technology costs, professional fees, impairment
charges associated with right of use assets, non-recurring transaction and integration costs related to the acquisition
of RCA and market data costs.
We had 3,633 employees as of December 31, 2020 compared to 3,396 employees as of December 31, 2019,
reflecting a 7.0% growth in the number of employees. Continued growth of our emerging market centers around the
world is an important factor in our ability to manage and control the growth of our compensation and benefits costs.
As of December 31, 2020, 64.6% of our employees were located in emerging market centers compared to 62.9% as
of December 31, 2019.
44
Compensation and benefits costs increased 1.7% for the year ended December 31, 2020 compared to the year
ended December 31, 2019, driven by higher wages and salaries, incentive compensation and benefits costs, partially
offset by the absence of $15.4 million of payroll tax expense associated with the vesting of the 2016 Multi-Year
PSUs recognized during the year ended December 31, 2019.
Non-compensation expenses decreased 3.8% for the year ended December 31, 2020 compared to the year
ended December 31, 2019, primarily driven by lower travel and entertainment and marketing costs, partially offset
by higher information technology costs.
Amortization of Intangible Assets
Amortization of intangible assets expense increased 41.5% for the year ended December 31, 2021 compared
to the year ended December 31, 2020, primarily driven by a write-off of $16.0 million of certain internally
developed capitalized software intangible assets following management’s decision to discontinue development and
cease related sales activities of certain Analytics segment products and transition existing customers to other product
offerings, as well as additional amortization recognized on acquired intangible assets following the acquisition of
RCA.
Amortization of intangible assets expense increased 15.2% for the year ended December 31, 2020 compared
to the year ended December 31, 2019, primarily driven by higher amortization of internally-developed capitalized
software.
Depreciation and Amortization of Property, Equipment and Leasehold Improvements
Depreciation and amortization of property, equipment and leasehold improvements decreased 3.0% for the
year ended December 31, 2021 compared to the year ended December 31, 2020. The decrease was primarily the
result of lower amortization on software and depreciation on computer and related equipment, partially offset by
impairment charges on leasehold improvements.
Depreciation and amortization of property, equipment and leasehold improvements for the year ended
December 31, 2020 and 2019 was $29.8 million and $30.0 million, respectively.
Other Expense (Income), Net
The following table shows our other expense (income), net for the years indicated:
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
Interest income ....................................... $
Interest expense ......................................
Other expense (income) .........................
Total other expense (income), net .......... $
(1,497) $
(5,030) $
159,614
56,472
214,589
156,324
47,245
198,539
$
$
(16,403)
148,041
20,745
152,383
70.2%
2.1%
19.5%
8.1%
69.3%
5.6%
127.7%
30.3%
Other expense (income), net increased 8.1% for the year ended December 31, 2021 compared to the year
ended December 31, 2020. The increase in net expenses was primarily driven by the approximately $37.3 million
loss on debt extinguishment associated with the redemption of all of the $500.0 million aggregate principal amount
of the 2027 Senior Notes (the “2027 Senior Notes Redemption”) and $21.8 million expense from the redemption of
all of the $500.0 million aggregate principal amount of the 2026 Senior Notes (the “2026 Senior Notes
Redemption”) during the year ended December 31, 2021.
The loss on debt extinguishment associated with the 2027 Senior Notes Redemption included an applicable
premium of approximately $33.6 million (as set forth in the indenture governing the terms of the 2027 Senior Notes)
and the write-off of approximately $3.7 million of unamortized debt issuance costs associated with the 2027 Senior
Notes. The loss on debt extinguishment associated with the 2026 Senior Notes Redemption included an applicable
premium of approximately $18.2 million (as set forth in the indenture governing the terms of the 2026 Senior Notes)
and the write-off of approximately $3.6 million of unamortized debt issuance costs associated with the 2026 Senior
Notes.
45
The increase in net expenses was partially offset by the absence of the $35.0 million and $10.0 million loss on
debt extinguishment associated with the redemption of all of the outstanding $800.0 million aggregate principal
amount of the 2025 Senior Notes and the redemption of all of the remaining $300.0 million of the 5.250% Senior
Notes due 2024 during the year ended December 31, 2020, respectively, and by a one-time gain of $7.0 million
related to the gain resulting from changes in our ownership interest of Burgiss.
Other expense (income), net increased 30.3% for the year ended December 31, 2020 compared to the year
ended December 31, 2019. The increase in net expenses was primarily driven by the $35.0 million and $10.0 million
loss on debt extinguishment associated with the redemption of all of the outstanding $800.0 million aggregate
principal amount of the 2025 Senior Notes (“2025 Senior Notes Redemption”) and the redemption of all of the
remaining $300.0 million of the 2024 Senior Notes (“2024 Senior Notes Redemption”), respectively.
The loss on debt extinguishment associated with the 2025 Senior Notes Redemption included an applicable
premium of approximately $29.5 million (as defined in the indenture governing the terms of the 2025 Senior Notes)
and the write-off of approximately $5.5 million of unamortized debt issuance costs. The loss on debt extinguishment
associated with the 2024 Senior Notes Redemption included a redemption price of approximately $7.9 million (as
set forth in the indenture governing the terms of the 2024 Senior Notes) and the write-off of approximately $2.1
million of unamortized debt issuance costs.
In addition, the increase in net expenses reflects higher interest expense associated with the higher outstanding
debt and lower interest income due to lower rates earned on cash balances, offset by the absence of the $16.8 million
loss on extinguishment associated with the partial pre-maturity redemption of the 2024 Senior Notes recognized
during the year ended December 31, 2019.
Income Taxes
The following table shows our income tax provision and effective tax rate forff
the years indicated:
Provision for income taxes ........................ $
ETR............................................................
132,153
15.4%
12.3%
6.6%
$
39,670
56.6%
25.2%
112.8%
87.1%
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
84,403
$
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
The effective tax rate of 15.4% for the year ended December 31, 2021, reflects the impact of certain favorable
discrete items totaling $28.3 million, in relation to pretax income, primarily related to $22.7 million of excess tax
benefits recognized on share-based compensation vested during the period, a $5.1 million benefit related to prior
year settlements, a $2.3 million benefit related to the revaluation of deferred taxes as a result of the enactment of an
increase in the UK corporate tax rate and a $2.0 million benefit related to the filing of prior year refund claims,
partially offset by a $3.8 million expense related to other prior year items. In addition, the effective tax rate was
impacted by the level of earnings.
The effective tax rate of 12.3% for the year ended December 31, 2020, reflects the impact of certain discrete
items totaling $47.9 million. These discrete items primarily relate to $22.2 million of excess tax benefits recognized
on the vesting of equity awards during the period and $20.8 million released during the year related to the favorable
impact on prior years from final regulations clarifying certain provisions of the Tax Cuts and Jobs Act that was
enacted on December 22, 2017 (“Tax Reform”). Also included in the discrete items is a $6.3 million benefit related
to the revaluation of the cost of deemed repatriation of foreign earnings.
The effective tax rate of 6.6% for the year ended December 31, 2019, reflects the impact of certain favorable
discrete items totaling $85.7 million. These discrete items primarily relate to $66.6 million of excess tax benefits
recognized upon vesting of the 2016 Multi-Year PSUs and $16.1 million of excess tax benefits on other share-based
compensation recognized during the period. In addition, the effective
geographic mix of earnings.
tax rate was impacted by a beneficial
ff
46
Net Income
The following table shows our net income for the years indicated:
Net income ............................................. $
725,983
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
601,822
$
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
$
563,648
20.6%
6.8%
As a result of the factors described above, net income increased 20.6% for the year ended December 31, 2021
compared to the year ended December 31, 2020.
As a result of the factors described above, net income increased 6.8% for the year ended December 31, 2020
compared to the year ended December 31, 2019.
Weighted Average Shares and Common Shares Outstanding
The following table shows our weighted average shares and common shares outstanding for the years
indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2019
2021
2020
(in thousands)
December 31,
2020 to 2019
Weighted average shares outstanding:
Basic........................................................
Diluted.....................................................
82,508
83,479
83,716
84,517
84,644
85,536
(1.4%)
(1.2%)
(1.1%)
(1.2%)
Common shares outstanding ......................
82,439
82,573
84,795
(0.2%)
(2.6%)
The decrease in weighted average shares and common shares outstanding primarily reflects the impact of
share repurchases made pursuant to the stock repurchase program.
Adjusted EBITDA
The following table presents the calculation of the non-GAAP Adjusted EBITDA measure for the years
indicated:
December 31,
2021
Operating revenues:................................... $ 2,043,544
846,754
Adjusted EBITDA expenses.....................
Adjusted EBITDA .................................... $ 1,196,790
Adjusted EBITDA margin % ...................
Operating margin %..................................
58.6%
52.5%
Years Ended
December 31,
2020
(in thousands)
$ 1,695,390
723,880
971,510
$
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
$ 1,557,796
707,297
850,499
$
20.5%
17.0%
23.2%
8.8%
2.3%
14.2%
57.3%
52.2%
54.6%
48.5%
The increase in Adjusted EBITDA and Adjusted EBITDA margin reflects a higher rate of growth in operating
revenues as compared to the rate of growth of Adjusted EBITDA expenses, driven by the factors previously
described.
47
Reconciliation of Adjusted EBITDA to Net Income and Adjusted EBITDA Expenses to Operating Expenses
The following table presents the reconciliation of Adjusted EBITDA to net income for the years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2019
2021
2020
(in thousands)
Index Adjusted EBITDA............................................. $
Analytics Adjusted EBITDA.......................................
ESG and Climate Adjusted EBITDA..........................
All Other - Private Assets Adjusted EBITDA.............
Consolidated Adjusted EBITDA..............................
Amortization of intangible assets ................................
Depreciation and amortization of property,
equipment and leasehold
improvements ...........................................................
Impairment related to sublease of leased property ......
Acquisition-related integration and
transaction costs (1).....................................................
2016 Multi-Year PSUs grant payroll tax expense.......
Operating income ......................................................
Other expense (income), net........................................
Provision for income taxes ..........................................
Net income.................................................................. $
951,312 $
198,799
29,748
16,931
1,196,790
80,592
766,493 $
172,924
22,851
9,242
971,510
56,941
28,901
7,702
29,805
—
6,870
—
1,072,725
214,589
132,153
725,983 $
—
—
884,764
198,539
84,403
601,822 $
670,188
152,113
21,813
6,385
850,499
49,410
29,999
—
—
15,389
755,701
152,383
39,670
563,648
24.1%
15.0%
30.2%
83.2%
23.2%
41.5%
(3.0%)
n/a
n/a
n/a
21.2%
8.1%
56.6%
20.6%
December 31,
2020 to 2019
14.4%
13.7%
4.8%
44.7%
14.2%
15.2%
(0.6%)
n/a
n/a
(100.0%)
17.1%
30.3%
112.8%
6.8%
(1)
Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the
acquired business that have occurred no later than 12 months after the close of the transaction.
The following table presents the reconciliation of Adjusted EBITDA expenses to operating expenses forff
the
years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2021
2019
2020
(in thousands)
Index Adjusted EBITDA expenses ............................. $
Analytics Adjusted EBITDA expenses .......................
ESG and Climate Adjusted EBITDA expenses ..........
All Other - Private Assets Adjusted EBITDA
expenses.......................................................................
Consolidated Adjusted EBITDA expenses..............
Amortization of intangible assets ................................
Depreciation and amortization of property,
equipment and leasehold
improvements ...........................................................
Impairment related to sublease of leased property ......
Acquisition-related integration and
transaction costs (1).....................................................
2016 Multi-Year PSUs grant payroll tax expense.......
Total operating expenses........................................... $
300,452 $
345,500
136,444
250,002 $
340,884
88,513
64,358
846,754
80,592
44,481
723,880
56,941
28,901
7,702
29,805
—
6,870
—
970,819 $
—
—
810,626 $
250,749
344,812
68,846
42,890
707,297
49,410
29,999
—
—
15,389
802,095
20.2%
1.4%
54.2%
44.7%
17.0%
41.5%
(3.0%)
n/a
n/a
n/a
19.8%
December 31,
2020 to 2019
(0.3%)
(1.1%)
28.6%
3.7%
2.3%
15.2%
(0.6%)
n/a
n/a
(100.0%)
1.1%
(1)
Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the
acquired business that have occurred no later than 12 months after the close of the transaction.
Segment Results
The results for each of our four reportable segments for the years ended December 31, 2021, 2020 and 2019
are presented below:
48
Index Segment
The following table presents the results for the Index segment for the years indicated:
December 31,
2021
Operating revenues:
Recurring subscriptions ...................... $
Asset-based fees..................................
Non-recurring......................................
Operating revenues total...........................
Adjusted EBITDA expenses ....................
Adjusted EBITDA.................................... $
Adjusted EBITDA margin % ...................
650,629
553,991
47,144
1,251,764
300,452
951,312
Years Ended
December 31,
2020
(in thousands)
$
$
580,393
399,771
36,331
1,016,495
250,002
766,493
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
$
$
530,968
361,927
28,042
920,937
250,749
670,188
12.1%
38.6%
29.8%
23.1%
20.2%
24.1%
9.3%
10.5%
29.6%
10.4%
(0.3%)
14.4%
76.0%
75.4%
72.8%
Index operating revenues increased 23.1% for the year ended December 31, 2021 compared to the year ended
December 31, 2020, primarily driven by growth from asset-based fees and recurring subscriptions. Revenues froff m
recurring subscriptions increased 12.1%, primarily driven by growth from market cap-weighted index products and
factor, ESG and climate index products. The impact of foreign currency exchange rate fluctuations on Index
operating revenues was negligible.
Operating revenues from asset-based fees increased 38.6% for the year ended December 31, 2021 compared to
the year ended December 31, 2020, driven by growth in operating revenues from all index-linked investment
product categories. Operating revenues from ETFs linked to MSCI equity indexes increased by 41.9%, primarily
driven by an increase in average AUM, partially offset by a decrease in average basis point fees. The increase in
asset-based fees operating revenues was also driven by revenues from non-ETF indexed funds linked to MSCI
indexes which increased by 39.4%, primarily driven by an increase in average AUM.
Non-recurring operating revenues increased 29.8% for the year ended December 31, 2021 compared to the
year ended December 31, 2020, primarily driven by client license and usage fees related to prior periods, as well as
licenses to derivatives products.
Index segment Adjusted EBITDA expenses increased 20.2% for the year ended December 31, 2021 compared
to the year ended December 31, 2020, reflecting higher compensation expenses to support growth across all expense
activity categories. Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted
EBITDA expenses would have increased 18.3%.
Index operating revenues increased 10.4% for the year ended December 31, 2020 compared to the year ended
December 31, 2019. Revenues from recurring subscriptions were up 9.3%. The increase was primarily driven by
growth in market cap-weighted index products, strong growth in factor, ESG and climate and in custom index
products. The impact of foreign currency exchange rate fluctuations on revenues from recurring subscriptions was
negligible.
Operating revenues from asset-based fees increased 10.5% for the year ended December 31, 2020 compared to
the year ended December 31, 2019. The increase in asset-based fees was driven by growth in revenues from all of
our indexed investment product categories, including an increase in revenues from exchange traded futures and
options contracts linked to MSCI indexes that were primarily driven by price increases. The increase in revenues
from asset-based fees was also driven by higher revenues fromff
non-ETF indexed funds linked to MSCI indexes,
which was driven by price increases and an increase in average AUM. Revenues from ETFs linked to MSCI indexes
also increased, driven by an 8.9% increase in average AUM in equity ETFs linked to MSCI indexes, partially offset
by a change in fee levels of certain products as well as change in product mix. The impact of foreign currency
exchange rate fluctuations on operating revenues from asset-based fees was negligible.
Index segment Adjusted EBITDA expenses decreased 0.3% for the year ended December 31, 2020 compared
to the year ended December 31, 2019, reflecting lower expenses across selling and marketing expense activity
category, partially offset by higher expenses across the G&A, cost of revenues and R&D expense activity categories.
49
Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses
would have increased 0.2%.
Analytics Segment
The following table presents the results for the Analytics segment for the years indicated:
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
Operating revenues:
Recurring subscriptions...................... $
Non-recurring .....................................
Operating revenues total ..........................
Adjusted EBITDA expenses ....................
Adjusted EBITDA ................................... $
Adjusted EBITDA margin %...................
533,178
11,121
544,299
345,500
198,799
$
$
506,301
7,507
513,808
340,884
172,924
$
$
486,282
10,643
496,925
344,812
152,113
36.5%
33.7%
30.6%
5.3%
48.1%
5.9%
1.4%
15.0%
4.1%
(29.5%)
3.4%
(1.1%)
13.7%
Analytics operating revenues increased 5.9% for the year ended December 31, 2021 compared to the year
ended December 31, 2020, primarily driven by growth from recurring subscriptions related to Multi-Asset Class and
Equity Analytics products. The impact of foreign currency exchange rate fluctuations on Analytics operating
revenues was negligible.
Analytics segment Adjusted EBITDA expenses increased 1.4% for the year ended December 31, 2021
compared to the year ended December 31, 2020, reflecting higher compensation expenses primarily driven by the
impact of foreign currency exchange rate fluctuations on compensation expenses and higher market data costs,
partially offset by lower R&D expenses. Adjusting for the impact of foreign currency exchange rate fluctuations,
Analytics segment Adjusted EBITDA expenses would have increased 0.1%.
Analytics operating revenues increased 3.4% for the year ended December 31, 2020 compared to the year
ended December 31, 2019, primarily driven by growth in Multi-Asset Class Analytics products. Adjusting for the
impact of foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 3.3%.
Analytics segment Adjusted EBITDA expenses decreased 1.1% for the year ended December 31, 2020
compared to the year ended December 31, 2019, primarily driven by lower expenses across the cost of revenues and
R&D expense activity categories, partially offset by higher expenses across the selling and marketing and G&A
expense activity categories. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics
segment Adjusted EBITDA expenses would have decreased 0.4%.
ESG and Climate Segment
The following table presents the results for the ESG and Climate segment for the years indicated:
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
Operating revenues:
Recurring subscriptions....................... $
Non-recurring......................................
Operating revenues total...........................
Adjusted EBITDA expenses.....................
Adjusted EBITDA .................................... $
Adjusted EBITDA margin % ...................
162,609
3,583
166,192
136,444
29,748
$
$
109,945
1,419
111,364
88,513
22,851
$
$
89,563
1,096
90,659
68,846
21,813
17.9%
20.5%
24.1%
47.9%
152.5%
49.2%
54.2%
30.2%
22.8%
29.5%
22.8%
28.6%
4.8%
ESG and Climate operating revenues increased 49.2% for the year ended December 31, 2021 compared to the
year ended December 31, 2020, primarily driven by growth from recurring subscriptions related to Ratings, Climate
50
and Screening products. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate
operating revenues would have increased 43.4%.
ESG and Climate segment Adjusted EBITDA expenses increased 54.2% forff
the year ended December 31,
2021 compared to the year ended December 31, 2020, reflecting higher compensation expenses to support growth,
reflected across all expense activity categories. Adjusting for the impact of foreign
fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 51.8%.
currency exchange rate
ff
ESG and Climate operating revenues increased 22.8% for the year ended December 31, 2020 compared to the
year ended December 31, 2019, primarily driven by strong growth from recurring subscriptions related to Ratings,
Climate, and Screening products. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and
Climate operating revenues would have increased 22.3%.
ESG and Climate segment Adjusted EBITDA expenses increased 28.6% for the year ended December 31,
2020 compared to the year ended December 31, 2019, reflecting higher compensation expenses to support growth,
reflected across all expense activity categories. Adjusting for the impact of foreign
fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 28.4%.
currency exchange rate
ff
All Other – Private
PP
Assets Segment
The following table presents the results for the All Other – Private Assets segment for the years indicated:
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
Operating revenues:
Recurring subscriptions ...................... $
Non-recurring .....................................
Operating revenues total ..........................
Adjusted EBITDA expenses ....................
Adjusted EBITDA.................................... $
Adjusted EBITDA margin % ...................
79,624
1,665
81,289
64,358
16,931
$
$
20.8%
$
$
51,536
2,187
53,723
44,481
9,242
17.2%
47,227
2,048
49,275
42,890
6,385
13.0%
54.5%
(23.9%)
51.3%
44.7%
83.2%
9.1%
6.8%
9.0%
3.7%
44.7%
All Other – Private Assets operating revenues increased 51.3% for the year ended December 31, 2021
compared to the year ended December 31, 2020, primarily driven by revenues attributable to the acquisition of RCA
included as of September 13, 2021 (the date we completed the acquisition). Excluding the acquisition of RCA, the
increase in operating revenues was primarily driven by growth from recurring subscriptions related to both
Enterprise Analytics and Global Intel products and benefits from foreign currency exchange rate fluff ctuations.
Adjusting for both the impact of acquisitions and foreign currency exchange rate fluctuations, All Other – Private
Assets operating revenues would have increased 4.0%. All Other - Private Assets operating revenues would have
increased 10.0% when excluding the impact of acquisitions and increased 45.3% when excluding the impact of
foreign currency exchange rate fluctuations.
ff
All Other – Private Assets segment Adjusted EBITDA expenses increased 44.7% for the year ended
December 31, 2021 compared to the year ended December 31, 2020, primarily driven by the acquisition of RCA.
All Other - Private Assets segment Adjusted EBITDA expenses would have decreased 0.2% when excluding the
impact of acquisitions and increased 41.9% when excluding the impact of foreign currency exchange rate
fluctuations.
All Other – Private Assets operating revenues increased 9.0% for the year ended December 31, 2020
compared to the year ended December 31, 2019, primarily driven by growth from recurring subscriptions related to
both Enterprise Analytics and Global Intel products. Adjusting for the impact of foreign
fluctuations, All Other – Private Assets operating revenues would have increased 9.2%.
currency exchange rate
ff
All Other – Private Assets segment Adjusted EBITDA expenses increased 3.7% for the year ended December
31, 2020 compared to the year ended December 31, 2019, primarily driven by higher expenses across the R&D and
selling and marketing expense activity categories, partially offset by lower expenses across the cost of revenues and
51
G&A expense activity categories. Adjusting for the impact of foreign currency exchange rate fluff ctuations, All Other
– Private Assets segment Adjusted EBITDA expenses would have increased 4.8%.
Operating Metrics
Run Rate
“Run Rate” estimates at a particular point in time the annualized value of the recurring revenues under our
client license agreements (“Client Contracts”) for the next 12 months, assuming all Client Contracts that come up
for renewal, or reach the end of the committed subscription period, are renewed and assuming then-current currency
exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are
linked to an investment product’s assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the
market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or
reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not
include fees associated with “one-time” and other non-recurring transactions. In addition, we add to Run Rate the
annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts,
even though the license start date, and associated revenue recognition, may not be effective until a later date. We
remove from Run Rate the annualized fee value associated with products or services under any Client Contract with
respect to which we have received a notice of termination, non-renewal or an indication the client does not intend to
continue their subscription during the period and have determined that such notice evidences the client’s final
decision to terminate or not renew the applicable products or services, even though such notice is not effective until
a later date.
Changes in our recurring revenues typically lag changes in Run Rate. The actual amount of recurring revenues
we will realize over the following 12 months will differ from Run Rate for numerous reasons, including:
•
fluctuations in revenues associated with new recurring sales;
• modifications, cancellations and non-renewals of existing Client Contracts, subject to specified notice
requirements;
•
•
•
•
•
•
•
•
differences between the recurring license start date and the date the Client Contract is executed due to, for
example, contracts with onboarding periods or fee waiver periods;
fluctuations in asset-based fees, which may result from changes in certain investment products’ total
expense ratios, market movements, including foreign currency exchange rates, or from investment
inflows into and outflows from investment products linked to our indexes;
fluctuations in fees based on trading volumes of futures and options contracts linked to our indexes;
fluctuations in the number of hedge funds for which we provide investment information and risk analysis
to hedge fund investors;
price changes or discounts;
revenue recognition differences under U.S. GAAP, including those related to the timing of
implementation and report deliveries for certain of our products and services;
fluctuations in foreign currency exchange rates; and
the impact of acquisitions and divestitures.
52
The following table presents Run Rates by reportable segment as of the dates indicated and the growth
percentages over the years indicated:
December 31,
2019
December 31,
2021 to 2020
December 31,
2020 to 2019
% Change
December 31,
2021
Index:
694,591
Recurring subscriptions .................... $
589,320
Asset-based fees................................
1,283,911
Index total...............................................
585,223
Analytics.................................................
199,597
ESG and Climate....................................
All Other - Private Assets.......................
135,150
Total Run Rate ....................................... $ 2,203,881
As of
December 31,
2020
(in thousands)
$
618,391
464,108
1,082,499
555,145
138,317
56,499
$ 1,832,460
$
559,257
396,140
955,397
526,845
101,423
50,824
$ 1,634,489
Recurring subscriptions total.................. $ 1,614,561
Asset-based fees .....................................
589,320
Total Run Rate ....................................... $ 2,203,881
$ 1,368,352
464,108
$ 1,832,460
$ 1,238,349
396,140
$ 1,634,489
p
December 31, 2021 Compared to December 31, 2020
,
,
12.3%
27.0%
18.6%
5.4%
44.3%
139.2%
20.3%
18.0%
27.0%
20.3%
10.6%
17.2%
13.3%
5.4%
36.4%
11.2%
12.1%
10.5%
17.2%
12.1%
Total Run Rate increased 20.3%, driven by an 18.0% increase from recurring subscriptions and 27.0%
increase from asset-based fees. Adjusting for the impact of acquisitions or foreign currency exchange rate
fluctuations, recurring subscriptions Run Rate would have increased 12.4% and 19.0%, respectively.
Run Rate from Index asset-based fees increased 27.0%, primarily driven by higher AUM in ETFs and non-
ETF indexed funds linked to MSCI indexes, partially offset by a 0.13 average basis point fee decrease in ETFs.
Run Rate from Index recurring subscriptions increased 12.3%, primarily driven by growth from market cap-
weighted index products and strong growth from factor, ESG and climate index products and reflected growth
across all regions and client segments.
Run Rate from Analytics products increased 5.4%, primarily driven by growth in both Multi-Asset Class and
Equity Analytics products. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics Run
Rate would have increased 6.8%.
Run Rate from ESG and Climate products increased 44.3%, driven by growth in all products, primarily driven
by growth in Ratings, Climate and Screening products. Adjusting for the impact of foreign
Climate Run Rate would have increased 47.1%.
ff
currency, ESG and
Run Rate from All Other - Private Assets increased 139.2%, primarily driven by the acquisition of RCA and
growth in the Global Intel products. Adjusting for both the impact of acquisitions and foreign currency exchange
rate fluctuations, All Other - Private Assets Run Rate would have increased 7.6%. Adjusting for the impact of
acquisitions or foreign currency exchange rate fluctuations, All Other - Private Assets Run Rate would have
increased 4.7% and 143.5%, respectively.
p
December 31, 2020 Compared to December 31, 2019
,
,
Total Run Rate grew 12.1%. Recurring subscription Run Rate grew 10.5%. Adjusting for the impact of
foreign currency exchange rate fluctuations, recurring subscriptions Run Rate would have increased 9.4%.
53
Run Rate from asset-based fees increased 17.2%, driven by higher AUM in equity ETFs linked to MSCI
indexes, higher prices in futures and options and higher prices in non-ETF indexed funds linked to MSCI indexes.
Partially offsetting the impact of the increase in AUM in equity ETFs linked to MSCI indexes was a change in fee
levels of certain products as well as change in product mix, which was the primary driver of a decline in average
basis point fees to 2.67 at December 31, 2020 from 2.82 at December 31, 2019. As of December 31, 2020, the value
of AUM in equity ETFs linked to MSCI indexes was $1,103.6 billion, up $169.2 billion, or 18.1%, from $934.4
billion as of December 31, 2019. The increase of $169.2 billion consisted of market appreciation of $93.6 billion
and net inflows of $75.6 billion.
Index recurring subscription Run Rate grew 10.6%, primarily driven by strong growth in market cap-weighted
index products, custom and specialized index products and factor and ESG and climate index products.
Run Rate from Analytics products increased 5.4%, driven by growth in both Multi-Asset Class and Equity
Analytics Run Rate
Analytics products. Adjusting for the impact of foreign currency exchange rate fluctuations,
would have increased 4.0%.
ff
Run Rate from ESG and Climate products increased 36.4%, primarily driven by strong growth in Ratings and
Climate products. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate Run
Rate would have increased 32.6%.
Run Rate from All Other - Private Assets increased 11.2%, primarily driven by growth in both Enterprise
Analytics and Global Intel products. Adjusting for the impact of foreign currency exchange rate fluctuations, All
Other – Private Assets Run Rate would have increased 6.6%.
Sales
Sales represents the annualized value of products and services clients commit to purchase from MSCI and will
result in additional operating revenues. Non-recurring sales represent the actual value of the customer agreements
entered into during the period and are not a component of Run Rate. New recurring subscription sales represent
additional selling activities, such as new customer agreements, additions to existing agreements or increases in price
that occurred during the period and are additions to Run Rate. Subscription cancellations reflect client activities
during the period, such as discontinuing products and services and/or reductions in price, resulting in reductions to
Run Rate. Net new recurring subscription sales represent the amount of new recurring subscription sales net of
subscription cancellations during the period, which reflects the net impact to Run Rate during the period.
Total gross sales represent the sum of new recurring subscription sales and non-recurring sales. Total net sales
represent the total gross sales net of the impact from subscription cancellations.
54
The following table presents our recurring subscription sales, cancellations and non-recurring sales by
reportable segment for the years indicated:
Years Ended
% Change
December 31, December 31, December 31, December 31,
2021 to 2020
2021
2019
2020
(in thousands)
December 31,
2020 to 2019
New recurring subscription sales
Index ................................................. $
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
New recurring subscription sales total ...
Subscription cancellations
Index .................................................
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
Subscription cancellations total..............
Net new recurring subscription sales
Index .................................................
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
Net new recurring subscription sales
total.........................................................
Non-recurring sales
Index .................................................
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
Non-recurring sales total ........................
Gross sales
99,686 $
71,656
69,964
14,142
255,448
85,411 $
61,538
40,786
6,121
193,856
78,325
66,992
24,877
7,675
177,869
(24,399)
(34,291)
(4,811)
(6,737)
(70,238)
75,287
37,365
65,153
7,405
(27,398)
(40,003)
(5,593)
(2,787)
(75,781)
58,013
21,535
35,193
3,334
(21,767)
(31,623)
(3,928)
(2,540)
(59,858)
56,558
35,369
20,949
5,135
16.7%
16.4%
71.5%
131.0%
31.8%
(10.9%)
(14.3%)
(14.0%)
141.7%
(7.3%)
29.8%
73.5%
85.1%
122.1%
9.0%
(8.1%)
64.0%
(20.2%)
9.0%
25.9%
26.5%
42.4%
9.7%
26.6%
2.6%
(39.1%)
68.0%
(35.1%)
185,210
118,075
118,011
56.9%
0.1%
54,030
12,407
4,135
1,694
72,266
41,463
10,996
1,134
1,442
55,035
30,262
15,947
1,587
1,303
49,099
108,587
82,939
26,464
8,978
226,968
86,820
51,316
22,536
6,438
167,110
30.3%
12.8%
264.6%
17.5%
31.3%
21.2%
15.9%
76.8%
109.4%
31.7%
30.0%
53.0%
90.7%
90.5%
48.7%
37.0%
(31.0%)
(28.5%)
10.7%
12.1%
16.8%
(12.5%)
58.4%
(15.8%)
9.7%
14.6%
(36.6%)
61.2%
(25.8%)
3.6%
Index ................................................. $
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
Total gross sales ..................................... $
Net sales
Index ................................................. $
Analytics ...........................................
ESG and Climate ..............................
All Other - Private Assets .................
Total net sales......................................... $
153,716 $
84,063
74,099
15,836
327,714 $
126,874 $
72,534
41,920
7,563
248,891 $
129,317 $
49,772
69,288
9,099
257,476 $
99,476 $
32,531
36,327
4,776
173,110 $
55
Retention Rate
Another key metric is our “Retention Rate.” The following table presents our Retention Rate by reportable
segment for the periods indicated:
Index
Analytics
ESG and
Climate
All
Other -
Private
Assets
Total
2021
96.3%
Three Months Ended March 31, ............... 96.6% 95.8% 97.0% 95.1%
94.4%
Three Months Ended June 30, .................. 95.6% 92.7% 96.4% 93.7%
Three Months Ended September 30, ........ 96.0% 93.4% 96.1% 91.0% (1) 94.5%
Three Months Ended December 31, ......... 96.0% 93.4% 96.6% 88.1% (1) 94.4%
Year Ended December 31,........................ 96.1% 93.8% 96.5% 90.5% (1) 94.7%
2020
Three Months Ended March 31, ............... 96.3% 93.7% 94.1% 95.7%
Three Months Ended June 30, .................. 94.7% 92.0% 93.1% 96.2%
Three Months Ended September 30, ........ 95.0% 93.8% 95.2% 94.8%
Three Months Ended December 31, ......... 94.4% 90.1% 95.6% 91.4%
Year Ended December 31,........................ 95.1% 92.4% 94.5% 94.5%
2019
Three Months Ended March 31, ............... 96.5% 93.7% 96.0% 95.7%
Three Months Ended June 30, .................. 97.1% 94.2% 94.2% 93.4%
Three Months Ended September 30, ........ 96.0% 93.6% 96.6% 97.1%
Three Months Ended December 31, ......... 93.0% 92.8% 93.4% 91.5%
Year Ended December 31,........................ 95.7% 93.6% 95.1% 94.4%
95.2%
95.5%
95.0%
92.9%
94.7%
95.0%
93.5%
94.5%
92.6%
93.9%
(1)
Includes RCA’s Run Rate commencing as of the acquisition date of September 13, 2021. Retention rate for All Other – Private Assets
excluding the impact of RCA was 93.7%, 87.0% and 92.4% for the three months ended September 30, 2021, three months ended
December 31, 2021 and year ended December 31, 2021, respectively.
Retention Rate is an important metric because subscription cancellations decrease our Run Rate and ultimately
our future operating revenues over time. The annual Retention Rate represents the retained subscription Run Rate
(subscription Run Rate at the beginning of the fiscal year less actual cancels during the year) as a percentage of the
subscription Run Rate at the beginning of the fiscal year.
The Retention Rate for a non-annual period is calculated by annualizing the cancellations for which we have
received a notice of termination or for which we believe there is an intention not to renew or discontinue the
subscription during the non-annual period, and we believe that such notice or intention evidences the client’s final
decision to terminate or not renew the applicable agreement, even though such notice is not effective until a later
date. This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the fiscal
year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized
Retention Rate for the period.
For example, in the fourth quarter of 2021, we recorded cancellations of $20.3 million. To derive the
Retention Rate for the fourth quarter, we annualized the actual cancellations during the quarter of $20.3 million to
derive $81.4 million of annualized cancellations. This $81.4 million was then divided by the $1,444.2 million
subscription Run Rate at the beginning of the year, which included RCA's Run Rate as of the date of acquisition, to
derive a cancellation rate of 5.6%. The 5.6% was then subtracted fromff
100.0% to derive a Retention Rate of 94.4%
for the fourth quarter.
Retention Rate is computed by operating segment on a product/service-by-product/service
tt
basis. In general, if
a client reduces the number of products or services to which it subscribes within a segment, or switches between
products or services within a segment, we treat it as a cancellation for purposes of calculating our Retention Rate
except in the case of a product or service switch that management considers to be a replacement product or service.
In those replacement cases, only the net change to the client subscription, if a decrease, is reported as a cancel. In the
Analytics and the ESG and Climate operating segments, substantially all product or service switches are treated as
replacement products or services and netted in this manner, while in our Index and Real Estate operating segments,
product or service switches that are treated as replacement products or services and receive netting treatment occur
56
only in certain limited instances. In addition, we treat any reduction in fees resulting from a down-sell of the same
product or service as a cancellation to the extent of the reduction. We do not calculate Retention Rate for that
portion of our Run Rate attributable to assets in index-linked investment products or futures and options contracts, in
each case, linked to our indexes.
For the year ended December 31, 2021, 29.0% of our cancellations occurred in the fourth quarter. In our
product lines, Retention Rate is generally higher during the first three quarters and lower in the fourth quarter, as the
fourth quarter is traditionally the largest renewal period in the year.
Liquidity and Capital Resources
We require capital to fundff
ongoing operations, internal growth initiatives and acquisitions. Our primary
sources of liquidity are cash flows generated from our operations, existing cash and cash equivalents and credit
capacity under our existing credit facility. In addition, we believe we have access to additional funding in the public
and private markets. We intend to use these sources of liquidity to, among other things, service our existing and
future debt obligations, fund our working capital requirements for capital expenditures, investments, acquisitions
and dividend payments, and make repurchases of our common stock. In connection with our business strategy, we
regularly evaluate acquisition and strategic partnership opportunities. We believe our liquidity, along with other
financing alternatives, will provide the necessary capital to fund these transactions and achieve our planned growth.
Senior Notes and Credit Agreement
We have an aggregate of $4,200.0 million in senior unsecured notes (collectively, the “Senior Notes”)
outstanding and a $500.0 million undrawn Revolving Credit Agreement with a syndicate of banks as of December
31, 2021. See Note 6, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements
included herein for additional information on the Senior Notes and Revolving Credit Agreement.
The Senior Notes and the Revolving Credit Agreement are fully and unconditionally, and jointly and
severally, guaranteed by our direct or indirect wholly owned domestic subsidiaries that account for more than 5% of
our and our subsidiaries’ consolidated assets, other than certain excluded subsidiaries (the “subsidiary guarantors”).
Amounts due under the Revolving Credit Agreement are our and the subsidiary guarantors’ senior unsecured
obligations and rank equally with the Senior Notes and any of our other unsecured, unsubordinated debt, senior to
any of our subordinated debt and effectively subordinated to our secured debt to the extent of the assets securing
such debt.
The indentures governing our Senior Notes (the “Indentures”) among us, each of the subsidiary guarantors,
and Wells Fargo Bank, National Association, as trustee, contain covenants that limit our and certain of our
subsidiaries’ ability to, among other things, incur liens, enter into sale/leaseback transactions and consolidate, merge
or sell all or substantially all of our assets. In addition, the Indentures restrict our non-guarantor subsidiaries’ ability
to create, assume, incur or guarantee additional indebtedness without such non-guarantor subsidiaries guaranteeing
the Senior Notes on a pari passu basis.
The Revolving Credit Agreement contains affirmative and restrictive covenants that, among other things, limit
our ability and/or the ability of our existing or future subsidiaries to:
•
•
incur liens and further negative pledges;
incur additional indebtedness or prepay, redeem or repurchase indebtedness;
• make loans or hold investments;
• merge, dissolve, liquidate, consolidate with or into another person;
•
enter into acquisition transactions;
•
•
•
•
•
enter into sale/leaseback transactions;
issue disqualified capital stock;
sell, transfer or dispose of assets;
pay dividends or make other distributions in respect of our capital stock or engage in stock repurchases,
redemptions and other restricted payments;
create new subsidiaries;
57
•
•
•
•
permit certain restrictions affecting our subsidiaries;
change the nature of our business, accounting policies or fiscal periods;
enter into any transactions with affiliates other than on an arm’s-length basis; and
amend our organizational documents or amend, modify or change the terms of certain agreements relating
to our indebtedness.
The Revolving Credit Agreement and the Indentures also contain customary events of default, including those
relating to non-payment, breach of representations, warranties or covenants, cross-default and cross-acceleration,
and bankruptcy and insolvency events, and, in the case of the Revolving Credit Agreement, invalidity or impairment
of loan documentation, change of control and customary ERISA defaults in addition to the foregoing. None of the
restrictions above are expected to impact our ability to effectively operate the business.
The Revolving Credit Agreement also requires us and our subsidiaries to achieve financial and operating
results sufficient to maintain compliance with the following financial ratios on a consolidated basis through the
termination of the Revolving Credit Agreement: (1) the maximum Consolidated Leverage Ratio (as defined in the
Revolving Credit Agreement) measured quarterly on a rolling four-quarter basis shall not exceed 4.25:1.00 (or
4.50:1.00 for two fiscal quarters following a material acquisition) and (2) the minimum Consolidated Interest
Coverage Ratio (as defined in the Revolving Credit Agreement) measured quarterly on a rolling four-quarter basis
shall be at least 4.00:1.00. As of December 31, 2021, our Consolidated Leverage Ratio was 3.28:1.00 and our
Consolidated Interest Coverage Ratio was 8.27:1.00. As of December 31, 2021, there were no amounts drawn and
outstanding under the Revolving Credit Agreement.
Our non-guarantor subsidiaries under the Senior Notes consist of: (i) domestic subsidiaries of the Company
that account for 5% or less of consolidated assets of the Company and its subsidiaries and (ii) any foreign or
domestic subsidiary of the Company that is deemed to be a controlled foreign corporation within the meaning of
Section 957 of the Internal Revenue Code of 1986, as amended. Our non-guarantor subsidiaries as of December 31,
2021, accounted for approximately $1,258.4 million, or 61.6%, of our total revenue for the 12 months ended
December 31, 2021, approximately $452.2 million, or 42.2%, of our consolidated operating income for the 12
months ended December 31, 2021, and approximately $2,334.9 million, or 42.4%, of our consolidated total assets
(excluding intercompany assets) and $1,004.6 million, or 17.7%, of our consolidated total liabilities, in each case as
of December 31, 2021.
Share Repurchases
Our Board of Directors has approved a stock repurchase program forff
the purchase of shares of the Company’s
common stock in the open market. See Note 11, “Shareholders’ Equity (Deficit),” of the Notes to Consolidated
Financial Statements included herein for additional information on our stock repurchase program.
As of trade date February 10, 2022, a total of $955.1 million remained available on the share repurchase
authorization. This authorization may be modified, suspended or terminated by the Board of Directors at any time
without prior notice.
Cash Dividends
On September 17, 2014, our Board of Directors approved a plan to initiate a regular quarterly cash dividend to
our shareholders. On October 30, 2014, we began paying regular quarterly cash dividends and have paid such
dividends each quarter thereafter.
On January 24, 2022, the Board of Directors declared a quarterly dividend of $1.04 per share of common
stock to be paid on February 28, 2022 to shareholders of record as of the close of trading on February 18, 2022.
58
Cash Flows
The following table presents the Company’s cash and cash equivalents as of the dates indicated:
Cash and cash equivalents...............................................
$
1,421,449
$
1,300,521
$
1,506,567
December 31,
2021
As of
December 31,
2020
(in thousands)
December 31,
2019
The following table presents the breakdown of the Company’s cash flows for the periods indicated:
Years Ended
% Change
December 31,
2021
December 31, December 31, December 31,
2021 to 2020
2019
2020
(in thousands)
December 31,
2020 to 2019
Net cash provided by operating
activities ................................................. $
Net cash used in investing activities ......
Net cash provided by (used in)
financing activities .................................
Effect of exchange rate changes.............
Net increase (decrease) in cash .............. $
936,069
(1,035,713)
$
811,109
(241,791)
$
709,523
(71,937)
229,505
(8,933)
120,928
(779,038)
3,674
$ (206,046) $
(36,667)
1,472
602,391
15.4%
nm
129.5%
nm
158.7%
14.3%
(236.1%)
nm
149.6%
(134.2%)
nm: not meaningful
Cash and Cash Equivalents
We typically seek to maintain minimum cash balances globally of approximately $200.0 million to $250.0
million for general operating purposes. As of December 31, 2021 and 2020, $542.2 million and $423.4 million,
respectively, of the cash and cash equivalents were held by foreign subsidiaries. Repatriation of some foreign cash
may be subject to certain withholding taxes in local jurisdictions and other distribution restrictions. We believe the
global cash and cash equivalent balances that are maintained will be available to meet our global needs whether for
general corporate purposes or other needs, including acquisitions or expansion of our products.
Cash Flows From Operating Activities
Cash flows from operating activities consist of net income adjusted for certain non-cash items and changes in
assets and liabilities. The year-over-year increase for the year ended December 31, 2021 compared to the year ended
December 31, 2020 was primarily driven by higher cash collections from customers, partially offset by higher
payments for income taxes and cash expenses.
Our primary uses of cash from operating activities are for the payment of cash compensation expenses,
interest expenses, income taxes, technology costs, market data costs and office rent. Historically, the payment of
cash for compensation and benefits is at its highest level in the first quarter when we pay discretionary employee
compensation related to the previous fiscal year.
Cash Flows From Investing Activities
The year-over-year change for the year ended December 31, 2021 compared to the year ended December 31,
2020 was primarily driven by the acquisition of RCA, partially offset by the absence of the $190.8 million equity
method investment in Burgiss.
Cash Flows From Financing Activities
The year-over-year change for the year ended December 31, 2021 compared to the year ended December 31,
2020 was primarily driven by the impact of lower share repurchases and higher proceeds from the senior notes
offerings made during the year ended December 31, 2021.
59
We believe that global cash flows from operations, together with existing cash and cash equivalents and funds
available under our existing revolving credit facility and our ability to access the debt and capital markets for
additional funds, will continue to be sufficient to fund our global operating activities and cash commitments forff
investing and financing activities, such as material capital expenditures and share repurchases, for at least the 12
months following issuance of this Form 10-K and for the foreseeable future thereafter. In addition, we expect that
foreign cash flows from operations, together with existing cash and cash equivalents, will continue to be sufficient
fund our foreign operating activities and cash commitments forff
investing activities, such as material capital
expenditures, for at least the 12 months following issuance of this Form 10-K and for the foreseeable future
thereafter.
ff
ff
to
Contractual Obligations
Our contractual obligations consist primarily of our debt obligations arising from the issuance of the Senior
Notes, leases for office space, leases for equipment and other operating leases and obligations to vendors arising out
of market data contracts. The following table summarizes our contractual obligations for the periods indicated as of
December 31, 2021:
Years Ending December 31,
2025
2024
2023
Thereafter
(in thousands)
Senior Notes (1) .......................................
5,660,948 155,875 155,875 155,875 155,875 155,875 4,881,573
73,539
23,924
Operating leases......................................
14,547
35,137
Vendor obligations .................................
Other obligations (2) ................................
—
7,968
Total contractual obligations .................. $6,080,293 $256,964 $229,963 $222,904 $207,347 $193,456 $4,969,659
198,325
201,628
19,392
22,717
18,796
9,959
29,427
43,196
1,465
20,447
17,134
—
28,271
72,818
—
Total
2026
2022
(1)
(2)
Includes the impact of payments for the principal amount on the 2029 Senior Notes, the 2030 Senior Notes, the 3.875% Senior Notes due
2031, the 3.625% Senior Notes due 2031 and the 2033 Senior Notes plus interest based on the 4.000%, 3.625%, 3.875%, 3.625% and
3.250% coupon interest rates, respectively.
Primarily includes amounts payable related to an estimated one-time tax on deemed repatriation of historic earnings of foreign
subsidiaries (the “Toll Charge”) imposed after Tax Reform was enacted. The Toll Charge is included within “Other non-current
liabilities” in our Consolidated Statements of Financial Condition.
The obligations related to our uncertain tax positions, which are not considered material, have been excluded
from the table above because of the uncertainty surrounding the timing and final amounts of any settlement.
Recent Accounting Standards Updates
See Note 2, “Recent Accounting Standards Updates,” of the Notes to the Consolidated Financial Statements
included herein for further information.
ff
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Risk
We are subject to foreign currency exchange fluctuation risk. Exchange rate movements can impact the U.S.
dollar-reported value of our revenues, expenses, assets and liabilities denominated in non-U.S. dollar currencies or
where the currency of such items is different than the functional currency of the entity where these items were
recorded.
We generally invoice our clients in U.S. dollars; however, we invoice a portion of our clients in Euros, British
pounds sterling, Japanese yen and a limited number of other non-U.S. dollar currencies. For the years ended
December 31, 2021 and 2020, 15.1% and 14.1%, respectively, of our revenues were subject to foreign currency
exchange rate risk and primarily included clients billed in foreign currency as well as U.S. dollar exposures on non-
U.S. dollar foreign operating entities. Of the 15.1% of non-U.S. dollar exposure for the year ended December 31,
2021, 41.6% was in Euros, 26.5% was in British pounds sterling and 23.8% was in Japanese yen. Of the 14.1% of
non-U.S. dollar exposure for the year ended December 31, 2020, 40.2% was in Euros, 27.2% was in Japanese yen
and 24.6% was in British pounds sterling.
Revenues from asset-based fees represented 27.1% and 23.6% of operating revenues for the years ended
December 31, 2021 and 2020, respectively. While a substantial portion of our asset-based fees are invoiced in U.S.
dollars, the fees are based on the assets in investment products, of which approximately three-fifths are invested in
60
securities denominated in currencies other than the U.S. dollar. Accordingly, declines in such other currencies
against the U.S. dollar will decrease the fees payable to us under such licenses. In addition, declines in such
currencies against the U.S. dollar could impact the attractiveness of such investment products resulting in net fund
outflows, which would further reduce the fees payable under such licenses.
We are exposed to additional foreign currency risk in certain of our operating costs. Approximately 41.1% and
40.8% of our operating expenses for the years ended December 31, 2021 and 2020, respectively, were denominated
in foreign currencies, the significant majority of which were denominated in British pounds sterling, Indian rupees,
Hungarian forints, Euros, Swiss francs, Mexican pesos and Hong Kong dollars.
We have certain monetary assets and liabilities denominated in currencies other than local functional amounts
and when these balances are remeasured into their local functional currency, either a gain or a loss results from the
change of the value of the functional currency as compared to the originating currencies. We manage foreign
currency exchange rate risk, in part, through the use of derivative financial instruments comprised principally of
forward contracts on foreign currency which are not designated as hedging instruments forff
objective of the derivative instruments is to minimize the impact on the income statement of the volatility of
amounts denominated in certain foreign currencies. We recognized total foreign currency exchange losses of
$1.9 million for the year ended December 31, 2021 and foreign currency exchange losses of $2.8 million for the
year ended December 31, 2020.
accounting purposes. The
61
Item 8.
Financial Statements and Supplementary
ll
Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)......................................................
Consolidated Statements of Financial Condition as of December 31, 2021 and December 31, 2020 ...................
Consolidated Statements of Income for the Years Ended December 31, 2021, December 31, 2020, and
December 31, 2019 ............................................................................................................................................
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, December 31,
2020, and December 31, 2019 ...........................................................................................................................
Consolidated Statements of Shareholders’ Equity (Deficit) for the Years Ended December 31,
2021, December 31, 2020, and December 31, 2019 ..........................................................................................
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, December 31, 2020, and
December 31, 2019 ............................................................................................................................................
Notes to Consolidated Financial Statements...........................................................................................................
Page
63
65
66
67
68
69
70
62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of MSCI Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of MSCI Inc. and its subsidiaries (the
“Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive
income, of shareholders' equity (deficit) and of cash flows for each of the three years in the period ended December 31,
2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited
the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control - Integrated
II
Commission (COSO).
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
II
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effeff ctiveness of internal control over financial reporting,
included in Management's Annual Report On Internal Control Over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
As described in Management’s Annual Report On Internal Control Over Financial Reporting, management has excluded
Real Capital Analytics, Inc. from its assessment of internal control over financial reporting as of December 31, 2021,
because it was acquired by the Company in a purchase business combination during 2021. We have also excluded Real
Capital Analytics, Inc. from our audit of internal control over financial reporting. Real Capital Analytics, Inc. is a wholly-
owned subsidiary whose total assets and total operating revenues excluded from management’s assessment and our audit
of internal control over financial reporting represent 0.9% and 1.1%, respectively, of the related consolidated financial
statement amounts as of and for the year ended December 31, 2021.
Definition and Limitations of Internal Control over Financial Repor
e
tinrr
g
ff
reporting is a process designed to provide reasonable assurance regarding the
A company’s internal control over financial
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
63
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Acquisition of Real Capital Analytics, Inc. - Valuation
VV
of Customer Relationshipsi
and Proprietary Data Intangible Assets
As described in Note 5 to the consolidated financial statements, the Company completed the acquisition of Real Capital
Analytics, Inc. for an aggregate cash purchase price of $949 million in 2021, which resulted in $394 million of acquired
intangible assets, including customer relationships of $176 million and proprietary data of $186 million, being recorded.
The fair values of acquired intangible assets were determined using the relief from royalty method, the replacement cost
method and multi-period excess earnings method. The significant assumptions used to estimate the fair value of the
acquired intangible assets included, forecasted cash flows which were determined based on certain assumptions which
included, among others, projected future revenues, and expected market royalty rate, technology obsolescence rates, and
discount rates.
The principal considerations for our determination that performing procedures relating to the valuation of customer
relationships and proprietary data intangible assets acquired in the Real Capital Analytics, Inc. acquisition is a critical
audit matter are (i) the significant judgment by management when developing the fair value of the customer relationships
and proprietary data intangible assets acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in
performing procedures and evaluating management’s aforementioned significant assumptions related to forecasted cash
flows, expected market royalty rate, technology obsolescence rates, and discount rates; and (iii) the audit effort involved
the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the acquisition accounting, including controls over management’s valuation of the customer relationships and
proprietary data intangible assets and controls over the development of the aforementioned significant assumptions related
to forecasted cash flows, expected market royalty rate, technology obsolescence rates, and discount rates. These
procedures also included, among others (i) reading the purchase agreement and (ii) testing management’s process for
developing the fair value of the customer relationships and proprietary data intangible assets. Testing management’s
process included (i) evaluating the appropriateness of the valuation methods; (ii) testing the completeness and accuracy of
data provided by management; and (iii) evaluating the reasonableness of the aforementioned significant assumptions
related to forecasted cash flows, expected market royalty rate, technology obsolescence rates, and discount rates for the
customer relationships and proprietary data intangible assets. Evaluating the reasonableness of the forecasted cash flows
involved considering company specific factors and the past performance of the acquired business and comparable
businesses. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness
of the valuation methods and in the evaluation of the reasonableness of certain significant assumptions related to the
forecasted cash flows as well as the expected market royalty rate, technology obsolescence rates, and discount rates.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2022
We have served as the Company’s auditor since 2014.
64
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MSCI INC.
As of
December 31,
2021
December 31,
2020
(In thousands, except per share and share data)
ASSETS
Current assets:
Cash and cash equivalents ............................................................................................ $
Accounts receivable, net of allowances........................................................................
Prepaid income taxes ....................................................................................................
Prepaid and other assets................................................................................................
Total current assets .......................................................................................................
Property, equipment and leasehold improvements, net................................................
Right of use assets ........................................................................................................
Goodwill .......................................................................................................................
Intangible assets, net.....................................................................................................
Equity method investment ............................................................................................
Deferred tax assets........................................................................................................
Other non-current assets ...............................................................................................
Total assets .................................................................................................................. $
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................................................................................... $
Income taxes payable....................................................................................................
Accrued compensation and related benefits .................................................................
Other accrued liabilities................................................................................................
Deferred revenue ..........................................................................................................
Total current liabilities..................................................................................................
Long-term debt .............................................................................................................
Long-term operating lease liabilities ............................................................................
Deferred tax liabilities ..................................................................................................
Other non-current liabilities..........................................................................................
Total liabilities ............................................................................................................
Commitments and Contingencies (see Note 6 and Note 10)
Shareholders' equity (deficit):
Preferred Stock (par value $0.01, 100,000,000 shares authorized,
$
$
$
1,421,449
664,511
5,951
51,499
2,143,410
66,715
144,584
2,236,386
593,341
218,763
40,119
63,385
5,506,703
13,448
59,635
207,640
145,302
824,912
1,250,937
4,161,422
150,029
3,650
104,132
5,670,170
1,300,521
558,569
20,097
46,411
1,925,598
80,446
153,330
1,566,022
234,748
190,898
23,627
23,978
4,198,647
14,253
26,195
161,557
143,894
675,870
1,021,769
3,366,777
152,342
12,774
88,219
4,641,881
no shares issued)........................................................................................................
—
—
Common stock (par value $0.01; 750,000,000 common shares authorized;
133,162,178 and 132,829,175 common shares issued and 82,439,449
and 82,573,407 common shares outstanding at December 31, 2021
and December 31, 2020, respectively) ......................................................................
Treasury shares, at cost (50,722,729 and 50,255,768 common shares held
at December 31, 2021 and December 31, 2020, respectively) ..................................
Additional paid-in capital .............................................................................................
Retained earnings .........................................................................................................
Accumulated other comprehensive loss .......................................................................
Total shareholders' equity (deficit) ...........................................................................
Total liabilities and shareholders' equity (deficit) ................................................... $
1,332
1,328
(4,540,144)
1,457,623
2,976,517
(58,795)
(163,467)
5,506,703
$
(4,342,535)
1,402,537
2,554,295
(58,859)
(443,234)
4,198,647
See Notes to Consolidated Financial Statements.
65
MSCI INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
December 31,
December 31,
December 31,
2021
2019
2020
(In thousands, except per share data)
Operating revenues ......................................................................... $
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization) ........
Selling and marketing .......................................................................
Research and development................................................................
General and administrative ...............................................................
Amortization of intangible assets......................................................
Depreciation and amortization of property, equipment and
leasehold improvements.................................................................
Total operating expenses ................................................................
2,043,544
$
1,695,390
$
1,557,796
358,684
243,185
111,564
147,893
80,592
28,901
970,819
291,704
216,496
101,053
114,627
56,941
29,805
810,626
294,961
219,298
98,334
110,093
49,410
29,999
802,095
Operating income ............................................................................
1,072,725
884,764
755,701
Interest income ..................................................................................
Interest expense.................................................................................
Other expense (income) ....................................................................
(1,497)
159,614
56,472
(5,030)
156,324
47,245
(16,403)
148,041
20,745
Other expense (income), net ...........................................................
214,589
198,539
152,383
Income before provision for income taxes ....................................
Provision for income taxes................................................................
Net income ....................................................................................... $
858,136
132,153
725,983
Earnings per share:
Basic.................................................................................................. $
Diluted............................................................................................... $
8.80
8.70
686,225
84,403
601,822
7.19
7.12
$
$
$
603,318
39,670
563,648
6.66
6.59
$
$
$
Weighted average shares outstanding:
Basic..................................................................................................
Diluted...............................................................................................
82,508
83,479
83,716
84,517
84,644
85,536
See Notes to Consolidated Financial Statements.
66
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
MSCI INC.
Net income ........................................................................................ $
Other comprehensive income (loss):
725,983
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
601,822
$
December 31,
2019
$
563,648
Foreign currency translation adjustments....................................
Income tax effect....................................................................
(3,624)
943
4,771
(62)
Foreign currency translation adjustments, net ..................................
(2,681)
4,709
Pension and other post-retirement adjustments ...........................
Income tax effect....................................................................
3,546
(801)
(1,675)
686
2,037
(776)
1,261
(6,477)
1,036
Pension and other post-retirement adjustments, net..........................
2,745
(989)
(5,441)
Other comprehensive income (loss), net of tax.................................
64
3,720
(4,180)
Comprehensive income..................................................................... $
726,047
$
605,542
$
559,468
See Notes to Consolidated Financial Statements.
67
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
MSCI INC.
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Accumulated
Other
Retained Comprehensive
Income (Loss)
Earnings
Total
(in thousands)
Balance at December 31, 2018 ...................................................... $
Net income .....................................................................................
Dividends declared ($2.52 per common share) .............................
Other comprehensive income (loss), net of tax .............................
Shares withheld for tax withholding and exercises........................
Common stock issued ....................................................................
Compensation payable in common stock
and options ..................................................................................
Common stock repurchased and held in treasury ..........................
Common stock issued to Directors and
(held in)/released from treasury ..................................................
Exercise of stock options ...............................................................
Balance at December 31, 2019 ...................................................... $
Net income .....................................................................................
Cumulative-effect adjustment........................................................
Dividends declared ($2.92 per common share) .............................
Dividends paid in shares ................................................................
Other comprehensive income (loss), net of tax .............................
Shares withheld for tax withholding and exercises........................
Common stock issued ....................................................................
Compensation payable in common stock ......................................
Common stock repurchased and held in treasury ..........................
Common stock issued to Directors and
(held in)/released from treasury ..................................................
Balance at December 31, 2020 ...................................................... $
Net income .....................................................................................
Dividends declared ($3.64 per common share) .............................
Dividends paid in shares ................................................................
Other comprehensive income (loss), net of tax .............................
Shares withheld for tax withholding and exercises........................
Common stock issued ....................................................................
Compensation payable in common stock ......................................
Common stock repurchased and held in treasury ..........................
Common stock issued to Directors and
(held in)/released from treasury ..................................................
$
$1,856,951
563,648
(221,305 )
$
$2,199,294
601,822
631
(247,452 )
1,300
$(3,272,774 ) $ 1,306,428
(189,994 )
(102,081 )
(935 )
23
1
230
41,138
3,235
1,324
$(3,565,784 ) $ 1,351,031
186
51,320
4
(51,176 )
(727,343 )
1,768
1,328
$(4,342,535 ) $ 1,402,537
$
$2,554,295
725,983
(303,761 )
128
54,958
4
(58,794 )
(139,580 )
765
(58,399 ) $ (166,494 )
563,648
(221,075 )
(4,180 )
(189,994 )
23
(4,180 )
41,138
(102,081 )
(935 )
3,236
(62,579 ) $ (76,714 )
601,822
631
(247,452 )
186
3,720
(51,176 )
4
51,320
(727,343 )
3,720
1,768
(58,859 ) $ (443,234 )
725,983
(303,761 )
128
64
(58,794 )
4
54,958
(139,580 )
64
765
Balance at December 31, 2021 ...................................................... $
1,332
$(4,540,144 ) $ 1,457,623
$2,976,517
$
(58,795 ) $ (163,467 )
See Notes to Consolidated Financial Statements.
68
MSCI INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Net income....................................................................................................................... $
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets ................................................................................
Stock-based compensation expense.............................................................................
Depreciation and amortization of property, equipment and leasehold improvements
Amortization of right of use assets ..............................................................................
Loss on impairment of right of use assets....................................................................
Amortization of debt origination fees ..........................................................................
Loss on extinguishment of debt ...................................................................................
Deferred taxes ..............................................................................................................
Other adjustments ........................................................................................................
Changes in assets and liabilities, net of the effect of acquisitions and dispositions:
Accounts receivable .....................................................................................................
Prepaid income taxes ...................................................................................................
Prepaid and other assets ...............................................................................................
Other non-current assets ..............................................................................................
Accounts payable .........................................................................................................
Income taxes payable...................................................................................................
Accrued compensation and related benefits ................................................................
Other accrued liabilities ...............................................................................................
Defeff rred revenue..........................................................................................................
Long-term operating lease liabilities ...........................................................................
Other non-current liabilities.........................................................................................
Other ............................................................................................................................
Net cash provided by operating activities ...................................................................
Cash flows from investing activities
Acquisition of a business, net of cash acquired ...........................................................
Acquisition of equity method investment ....................................................................
Acquisition of assets, net of cash acquired ..................................................................
Capital expenditures ....................................................................................................
Capitalized software development costs......................................................................
Other ............................................................................................................................
Net cash used in investing activities .............................................................................
Cash flows from financing activities
Proceeds from borrowings, inclusive of premium.......................................................
Repayment of borrowings............................................................................................
Repurchase of common stock held in treasury ............................................................
Payment of dividends...................................................................................................
Payment of debt issuance costs in connection with debt .............................................
Proceeds from exercise of stock options......................................................................
Net cash provided by (used in) financing activities ....................................................
December 31,
2021
Years Ended
December 31,
2020
(in thousands)
December 31,
2019
725,983
$
601,822
$
563,648
80,592
54,917
28,901
24,632
8,385
4,923
59,103
(111,369)
(146 )
(99,203)
15,264
(4,240)
(35,445)
(2,195)
33,903
42,719
(9,249)
116,863
(22,078)
21,536
2,273
936,069
(948,989)
(26,361)
(6,512)
(13,509)
(39,285)
(1,057)
(1,035,713 )
1,803,750
(1,051,810 )
(198,374)
(302,449)
(21,612)
-
229,505
56,941
51,094
29,805
24,049
—
4,445
44,930
(55,645)
1,744
(57,606)
11,608
(410)
(3,792)
7,482
9,576
(2,641)
1,674
98,330
(22,497)
6,536
3,664
811,109
-
(190,816)
—
(21,826)
(29,149)
—
(241,791)
1,405,000
(1,142,382)
(778,519)
(246,444)
(16,693)
-
(779,038)
49,410
41,199
29,999
22,489
—
4,073
16,794
(20,767)
1,093
(25,923)
(13,200)
(7,698)
(239 )
2,584
(2,240)
25,217
3,664
35,366
(20,244)
3,851
447
709,523
(18,177)
—
—
(29,116)
(24,654)
10
(71,937)
1,000,000
(513,125)
(292,075)
(222,922)
(11,781)
3,236
(36,667)
Effect of exchange rate changes ...................................................................................
(8,933)
3,674
1,472
Net (decrease) increase in cash.....................................................................................
Cash and cash equivalent, beginning of period ..........................................................
Cash and cash equivalent, end of period ..................................................................... $
120,928
1,300,521
1,421,449
Supplemental disclosure of cash flow information:
Cash paid for interest ................................................................................................... $
Cash paid for income taxes, net of refunds received ................................................... $
Supplemental disclosure of non-cash investing activities
Property, equipment and leasehold improvements in other accrued liabilities ........... $
Supplemental disclosure of non-cash financing activities
Cash dividends declared, but not yet paid ................................................................... $
151,335
222,620
3,498
2,599
(206,046)
1,506,567
1,300,521
163,391
113,646
3,061
1,438
$
$
$
$
$
602,391
904,176
1,506,567
141,484
72,935
3,690
1,039
$
$
$
$
$
See Notes to Consolidated Financial Statements.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MSCI INC.
1. INTRODUCTION AND BASIS OF PRESENTATION
Organization
MSCI Inc., together with its wholly owned subsidiaries (the “Company” or “MSCI”) is a leading provider of
critical decision support tools and solutions for the global investment community. Our mission-critical offerings help
investors address the challenges of a transforming investment landscape and power better investment decisions.
Leveraging our knowledge of the global investment process and our expertise in research, data and technology, we
enable our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more
effective portfolios. Our products and services include indexes; portfolio construction and risk management tools;
environmental, social and governance (“ESG”) and climate solutions; and real estate market and transaction data
and analysis.
Basis of Presentation
The consolidated financial statements and accompanying notes to financial statements, which include the
accounts of MSCI Inc. and its wholly owned subsidiaries, are prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).
Certain prior period amounts have been reclassified to conform to the current period presentation. Effective
January 1, 2021, the ESG and Climate operating segment is being presented as a separate reportable segment. The
operating segments of Real Estate and The Burgiss Group, LLC (“Burgiss”) do not individually meet the segment
reporting thresholds and have been combined and presented as part of the All Other – Private Assets reportable
segment. As of December 31, 2021, the Company had an approximately $218.8 million equity method investment in
Burgiss, representing a 33.6% equity ownership.
ff
Significant Accounting Policies
Basis of Financial Statements and Use of Estimates
The Company makes certain estimates and judgments that can affect the reported amounts of assets and
liabilities as of the date of the consolidated financial statements, as well as the reported amounts of operating
revenues and expenses during the periods presented. Significant estimates and judgments made by management
include such examples as assessment of impairment of goodwill and intangible assets and income taxes. The
Company believes that estimates used in the preparation of these consolidated financial
however, actual results could differ materially from these estimates. Inter-company balances and transactions are
eliminated in consolidation.
statements are reasonable;
ff
Revenue Recognition
Performance Obligations and Transaction Price
The Company recognizes revenues forff
products and services when performance obligations are satisfied. For
revenue arrangements containing multiple products or services, the Company accounts for the individual products or
services as a separate performance obligation if they are distinct. A product or service is distinct if a client can
benefit from it either on its own or together with other resources that are readily available to the client, and the
Company’s promise to transfer the product or service to the client is separately identifiable from other promises in
the contract. If both criteria are not met, the promised products or services are accounted for as a combined
performance obligation.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for
transferring products or services to the client. The Company allocates the transaction price to each performance
obligation identified in the contract based on the best estimate of a relative standalone selling price of each distinct
product or service in the contract. To allocate the transaction price to each performance obligation on a relative
standalone selling price basis, at contract inception the Company determines the standalone selling prices of the
distinct products or services underlying each performance obligation in proportion to the total transaction price. This
standalone selling price may be the contract price but is more often than not the best estimate of the price the
70
Company would receive for selling the product or service separately in similar circumstances and to other similar
customers. A client can receive a discount for purchasing a bundle of products or services if the sum of the
standalone selling price of those promised products or services in the contract exceeds the promised consideration in
the contract.
For services where the transaction price is variable based upon assets under management (“AUM”), volume of
trades, fee levels or number of investments linked to MSCI’s indexes, the transaction price is based upon pricing
models and is not allocated at the inception of the contract but rather falls within the sales and usage-based royalty
exception under which the price and associated revenue are based upon actual known performance or best estimates
of actual performance during the performance period.
Revenue is recognized when a client obtains control of promised products or services in an amount that
reflects the consideration the entity expects to receive in exchange for those products or services. Determining when
control has transferred can sometimes require management’s judgment (e.g., implementation services), which could
affect the timing of revenue recognition. Revenue is recognized exclusive of any applicable sales or other indirect
taxes.
Disaggregation of Revenue
Revenues are characterized by type, which broadly reflects the nature of how they are recognized or earned.
Our revenue types are recurring subscriptions, asset-based fees and non-recurring revenues. We also group our
revenues by segment.
y yp
Revenues By Type
Recurring subscription revenues represent fees earned from clients primarily under renewable contracts or
agreements and are generally paid annually or quarterly in advance and recognized in most cases ratably over the
term of the license or service pursuant to the contract terms. Revenues from subscription agreements for the receipt
of periodic benchmark reports, digests and other publications, which are most oftenff
offerings, are generally billed and recognized upon delivery of such reports or data updates.
associated with our real estate
Asset-based fees are principally recognized based on the estimated AUM linked to our indexes from
independent third-party sources or the most recently reported information provided by the client. Asset-based fees
also include revenues related to futures and options contracts linked to our indexes, which are primarily based on
trading volumes and fee levels. Asset-based fees are generally variable based upon AUM or the volume of trades or
fee levels and are generally billed quarterly in arrears.
Non-recurring revenues primarily represent fees earned on products and services where we do not have
renewal clauses within the contract and revenues for providing customized reports, historical data sets, certain
derivative financial products and certain implementation and consulting services. Based on the nature of the services
provided, non-recurring revenues are generally billed upon delivery and recognized upon delivery or over the
service period.
Revenues By Segment
y
g
Index segment operating revenues consist of fees earned for licenses of index data subscriptions, performance
obligations to deliver the data are satisfied over time and, accordingly, revenue is recognized ratably over the term
of the agreement pursuant to the contract terms. With respect to licenses to create indexed investment products, such
as ETFs, passively managed funds, or licenses which allow certain exchanges to use MSCI’s indexes as the basis forff
futures and options contracts, MSCI’s performance obligation allows customers to use the Company’s intellectual
property (e.g., the indexes) as the basis of the funds
of the agreement. The fees earned for these rights are typically variable, in which case they are accrued under the
sales and usage-based royalty exception pursuant to the level of performance achieved, which is measured based on
AUM, volume of trades or other variable factors. The level of performance achieved is based on information
obtained from independent third-party sources or best estimates taking into account the most recently reported
information from the client.
or other investment products the customers create over the term
ff
Analytics segment operating revenues are recognized as MSCI satisfies performance obligations through
providing access to its proprietary models or hosted applications and, in some cases, delivery of managed services,
which are typically satisfied over time, and accordingly, operating revenues are recognized ratably over the term of
the service period. For implementation services, MSCI meets its performance obligation once the implementation is
71
complete and the related service is available for the client to use. Operating revenues are recognized at the point in
time when the implementation service is completed.
ESG and Climate segment operating revenues are recognized as MSCI’s performance obligations to provide
data to or update data for clients are satisfied. The majority of these performance obligations are satisfieff d over the
term of the license period, with operating revenues recognized ratably. For custom ESG research data, the
performance obligation is typically satisfied, and revenue is recognized, at the point in time when the data is updated
and available to the client.
All Other – Private Assets segment operating revenues are recognized based on performance obligations
satisfied over time and at a point in time. Operating revenues for many Real Estate products including Market
Information products and publications, subscriptions to Enterprise Analytics, Global Intel, and Income Analytics,
Climate Value-at-Risk solutions and licenses to transaction and market insights data, are recognized over time as
publications, analysis, insights and data are updated and made available to clients throughout the year. Operating
revenues for select Real Estate products, including benchmark reports, are recognized at the point in time when the
Company satisfies the performance obligation through delivery to the client.
Share-Based Compensation
Certain of the Company’s employees have received share-based compensation under various compensation
programs. The Company’s compensation expense reflects the fair value method of accounting for share-based
payments under ASC Subtopic 718-10, “Compensation—Stock Compensation.” ASC Subtopic 718-10 requires
measurement of compensation cost for equity-based awards at fair value and recognition of compensation cost over
the service period, net of estimated forfeitures per the Company’s policy.
The fair value of MSCI restricted stock units (“RSUs”) is measured using the price of MSCI’s common stock.
Restricted stock units that are subject to the achievement of multi-year total shareholder return targets (“PSUs”) are
performance awards with a market condition. The fair value of PSUs is determined using a Monte Carlo simulation
model that creates a normal distribution of future stock prices, which is then used to value the awards based on their
individual terms. From time to time, the Company awards restricted stock units subject to performance conditions
that are not linked to a market condition but are based on performance measures that impact the amount of shares
that each recipient will receive upon vesting. The fair value of such awards is measured using the price of MSCI’s
common stock.
Research and Development
The Company accounts for research and development costs in accordance with several accounting
pronouncements, including ASC Subtopic 730-10, “Research and Development.” ASC Subtopic 730-10 requires
that research and development costs generally be expensed as incurred. The majority of the Company’s research and
development costs are incurred in developing, reviewing and enhancing the methodologies and data models offered
within its product portfolio by monitoring investment trends and drivers globally, as well as analyzing product-
specific needs in areas such as capitalization-weighted, factor and specialized indexes, and instrument valuation, risk
modeling, portfolio construction, asset allocation and value-at-risk simulation.
Internal Use Software
The Company applies the provisions of ASC Subtopic 350-40, “Internal Use Software,” and accounts for the
cost of computer software developed for internal use by capitalizing qualifying costs, which are substantially
incurred during the application development stage. The amounts capitalized are included in Intangible Assets on the
Consolidated Statement of Financial Condition and include external direct costs of services used in developing
internal-use software and payroll and payroll-related costs of employees directly associated with the development
activities. Additionally, costs incurred relating to upgrades and enhancements to the softwff
are are capitalized if it is
determined that these upgrades or enhancements provide additional functionality to the software.
Capitalized software development costs are typically amortized on a straight-line basis over the estimated
useful life of the related product, which is typically three to fiveff
into service.
years, beginning with the date the software is placed
72
Costs incurred in the preliminary and post-implementation stages of MSCI’s products are expensed as
incurred.
Income Taxes
Provision for income taxes is provided for using the asset and liability method, under which deferred tax
assets and deferred tax liabilities are determined based on the temporary differences between the financial statement
and income tax bases of assets and liabilities using currently enacted tax rates. The Company elects to account forff
Global Intangible Low-Taxed Income (“GILTI”) in the year the tax is incurred. The Company recognizes interest
and penalties related to income tax matters within “Provision for income taxes” in the Consolidated Statement of
Income.
The Company regularly evaluates the likelihood of additional assessments in each of the taxing jurisdictions
in which it is required to file income tax returns. The Company has recorded additional tax expense related to open
tax years, which the Company’s management believes is adequate in relation to the potential for assessments. These
amounts have been recorded in “Other non-current liabilities” on the Consolidated Statement of Financial Condition.
The Company’s management believes the resolution of tax matters will not have a material effect on the Company’s
consolidated financial condition. However, to the extent the Company is required to pay amounts in excess of its
reserves, a resolution could have a material impact on its Consolidated Statement of Income for a particular future
period. In addition, an unfavorable tax settlement could require use of cash and result in an increase in the effective
tax rate in the period in which such resolution occurs.
ff
Deferred Revenue
Deferred revenues represent both cash received and the amounts billed to clients forff
products and services in
advance of satisfying performance obligations. Deferred revenue generally results in ratable recognition of operating
revenues over the license or subscription period, as the performance obligations are satisfied.
Accounts Receivable and Allowance for Doubtful Accounts
The Company’s clients generally pay subscription fees annually or quarterly in advance. MSCI’s policy is to
record to a receivable when a client is billed. For products and services that are provided in advance of billing, such
as for our asset-based fee products, unbilled revenue (or a “contract asset”) is included in Accounts Receivable on
the Company’s Consolidated Statement of Financial Condition.
The Company recognizes an allowance for doubtful accounts at the time invoices are sent to clients by
applying an estimate of the uncollectable amount based on client profiles, credit considerations and historical write-
offs. The Company does not require collateral from clients to mitigate credit risk.
Changes in the allowance for doubtful accounts from December 31, 2018 to December 31, 2021 were as
follows:
Amount
(in thousands)
Balance as of December 31, 2018 ................................................................. $
Addition (reduction) to credit loss expense...................................................
Write-offs, net of recoveries..........................................................................
Balance as of December 31, 2019 ................................................................. $
Addition (reduction) to credit loss expense...................................................
Adjustments and write-offs, net of recoveries...............................................
Balance as of December 31, 2020 ................................................................. $
Addition (reduction) to credit loss expense...................................................
Adjustments and write-offs, net of recoveries...............................................
Balance as of December 31, 2021 ................................................................. $
1,027
1,024
(336)
1,715
1,712
(1,844)
1,583
1,210
(456)
2,337
73
Goodwill
Goodwill is recorded as part of the Company’s acquisitions of businesses when the purchase price exceeds the
fair value of the net tangible and separately identifiable intangible assets acquired. The Company’s goodwill is not
amortized, but rather is subject to an impairment test each year, or more often if conditions indicate impairment may
have occurred, pursuant to ASC Subtopic 350-10, “Intangibles—Goodwill and Other.”
The Company tests goodwill for impairment on an annual basis on July 1st and on an interim basis when
certain events and circumstances exist. The test for impairment is performed at the reporting unit level. Goodwill
impairment is determined by comparing the fair value of a reporting unit with its carrying value. If the estimated fair
value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated
fair value is below carrying value, an impairment charge will be recorded up to, but not more than, the total amount
of goodwill allocated to the reporting unit.
The Company completed its annual goodwill impairment test as of July 1, 2021 on its Index, Analytics, ESG
and Climate and Real Estate reporting units, and no impairments were noted. The Company performed a
quantitative test for impairment and determined that the estimated fair value of the Company’s reporting units
substantially exceeded their respective carrying values.
Based on the results of the annual goodwill impairment testing performed and given there were no impairment
triggers identified as part of interim assessments, no impairment of goodwill was recorded during the years ended
December 31, 2021, 2020 and 2019.
Intangible Assets
The Company amortizes definite-lived intangible assets over their estimated useful lives. Definite-lived
intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable. The Company also reviews the useful lives on a quarterly basis
to determine if the period of economic benefit has changed. If the carrying value of an intangible asset exceeds its
fair value, an impairment charge would be recognized in an amount equal to the amount by which the carrying value
of the intangible asset exceeds its fair value. There were no events or changes in circumstances that would indicate
that the carrying value of the definite-lived intangible assets may not be recoverable during the years ended
December 31, 2021 and 2020.
The Company had no indefinite-lived intangible assets.
Foreign Currency Translation
Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at year-end
exchange rates, and income statement accounts are translated at weighted average exchange rates for the year. Gains
or losses resulting from translating foreign currency financial statements, net of any related tax effects,
are reflected
in accumulated other comprehensive loss, a separate component of shareholders’ equity (deficit). Gains or losses
resulting from foreign currency transactions incurred in currencies other than the local functional currency are
included in non-operating “Other expense (income)” on the Consolidated Statement of Income.
ff
Leases
MSCI leases office space, data centers and certain equipment under non-cancellable operating lease
agreements and determines if an arrangement is a lease at inception. The Company does not currently have any
financing lease arrangements.
Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease
liabilities represent the Company’s obligation to make lease payments arising from the lease. Right of use assets are
recognized on the commencement date based on the present value of lease payments over the lease term adjusted for
initial direct costs and lease incentives received or deemed probable of being received. MSCI uses its incremental
borrowing rate based on the information available on the commencement date in determining the present value of
lease payments. The lease terms include options to extend or terminate the lease when it is reasonably certain that
the Company will exercise that option.
74
Right of use assets and associated leasehold improvements are tested for impairment when there is a trigger
for impairment testing at the appropriate asset group level. When a trigger exists, the asset group is tested for
recoverability by comparing the estimated undiscounted cash flows to the asset group’s carrying value. If the asset
group fails the recoverability test, the Company will measure impairment loss as the difference between the fair
value and carrying value of the asset group.
Lease expense is recognized on a straight-line basis over the lease term and is included in “Operating
expenses” in the Consolidated Statement of Income. In situations where a right of use asset has been impaired, the
subsequent amortization of the right of use asset is then recorded on a straight-line basis over the remaining lease
term and is combined with accretion expense on the lease liability to result in single operating lease cost.
Some of the Company’s lease agreements include rental payments adjusted periodically for inflation which
are accounted for as variable lease amounts but are not reflected as a component of the Company’s lease liability.
Certain leases also require the Company to pay real estate taxes, insurance, maintenance and other operating
expenses associated with the leased premises or equipment which are also not reflected as a component of the
Company’s lease liability. The Company also subleases a small portion of its leased officff e space to third parties and
thereby applies sublessor accounting. Sublease income is presented in “Operating expenses” as an offset.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of furniture and fixtures, and computer and communications equipment
are accounted for using the straight-line method over the estimated useful life, and for leasehold improvements, over
the shorter of the estimated useful life or the lease term.
Treasury Stock
The Company holds repurchased shares of common stock as treasury stock. The Company accounts for
treasury stock under the cost method and includes treasury stock as a component of shareholders’ equity (deficit).
Accrued Compensation
A significant portion of the Company’s employee incentive compensation programs are discretionary. The
Company makes significant estimates in determining its accrued compensation and benefits expenses. Accrued cash
incentive estimates reflect an assessment of performance versus targets and other key performance indicators at the
Company, operating segment and employee level. The Company also reviews compensation and benefits expenses
throughout the year to determine how overall performance compares to management’s expectations. These and other
factors, including historical performance, are taken into account in accruing discretionary cash compensation
estimates quarterly.
Concentrations
For the years ended December 31, 2021, 2020 and 2019, BlackRock, Inc. accounted for 12.7%, 11.0%, and
11.5% of the Company’s consolidated operating revenues, respectively. For the years ended December 31, 2021,
2020 and 2019, BlackRock, Inc. accounted for 20.4%, 18.0% and 18.9% of the Index segment’s operating revenues,
respectively. No single customer accounted for 10.0% or more of operating revenues within the Analytics, ESG and
Climate and All Other – Private Assets segments for the years ended December 31, 2021, 2020 and 2019.
2. RECENT ACCOUNTING STANDARDS UPDATES
In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations
(Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” or ASU
2021-08, which requires contract assets and contract liabilities acquired in a business combination to be recognized
in accordance with ASC Topic 606. The Company early adopted ASU 2021-08 as of the issuance date and is
therefore required to retrospectively apply the standard to business combinations which occurred this fiscal year.
The Company’s adoption of the standard resulted in recognition of an additional $7.0 million in deferred revenue
and a reduction in deferred tax liabilities of $1.8 million as of September 13, 2021, associated with the acquisition of
Real Capital Analytics, Inc. (“RCA”).
75
3. REVENUE RECOGNITION
MSCI’s operating revenues are reported by product type, which generally reflects the timing of recognition.
The Company’s operating revenues types are recurring subscriptions, asset-based fees and non-recurring revenues.
The Company also disaggregates operating revenues by segment.
The tables that follow present the disaggregated operating revenues for the periods indicated:
(in thousands)
Operating Revenues Types
For the Year Ended December 31, 2021
Segments
Index
Analytics
ESG and
Climate
All Other -
Private
Assets
Total
Recurring subscriptions ..................... $
Asset-based fees ................................
Non-recurring ....................................
Total..................................................... $
650,629
553,991
47,144
1,251,764
$
$
533,178
—
11,121
544,299
$
$
162,609
—
3,583
166,192
$
$
79,624
—
1,665
81,289
$ 1,426,040
553,991
63,513
$ 2,043,544
(in thousands)
Operating Revenues Types
For the Year Ended December 31, 2020
Segments
Index
Analytics
ESG and
Climate
All Other -
Private
Assets
Total
Recurring subscriptions ..................... $
Asset-based fees ................................
Non-recurring ....................................
Total..................................................... $
580,393
399,771
36,331
1,016,495
$
$
506,301
—
7,507
513,808
$
$
109,945
—
1,419
111,364
$
$
51,536
—
2,187
53,723
$ 1,248,175
399,771
47,444
$ 1,695,390
(in thousands)
Operating Revenues Types
For the Year Ended December 31, 2019
Segments
Index
Analytics
ESG and
Climate
All Other -
Private
Assets
Total
Recurring subscriptions ..................... $
Asset-based fees ................................
Non-recurring ....................................
Total..................................................... $
530,968
361,927
28,042
920,937
$
$
486,282
—
10,643
496,925
$
$
89,563
—
1,096
90,659
$
$
47,227
—
2,048
49,275
$ 1,154,040
361,927
41,829
$ 1,557,796
The table that follows presents the change in accounts receivable and deferred revenue between the dates
indicated:
Accounts receivable
Deferred revenue
Opening (December 31, 2020) ...................................................
Closing (December 31, 2021).....................................................
Increase/(decrease) ...................................................................
Opening (December 31, 2019) ...................................................
Closing (December 31, 2020).....................................................
Increase/(decrease) ...................................................................
$
$
$
$
76
Accounts receivable
Deferred revenue
(in thousands)
$
558,569
664,511
105,942
(in thousands)
$
499,268
558,569
59,301
$
$
675,870
824,912
149,042
574,656
675,870
101,214
The amount of revenue recognized in the period that was included in the opening current deferred revenue,
which reflects the contract liability amounts, was $672.5 million, $555.8 million and $522.7 million for the years
ended December 31, 2021, 2020 and 2019 respectively. The difference between the opening and closing balances of
the Company’s deferred revenue was primarily driven by an increase in billings, partially offset by an increase in
amortization of deferred revenue to operating revenues. As of December 31, 2021, 2020 and 2019, the Company
carried a long-term deferred revenue balance of $23.4 million, $7.1 million and $4.3 million, respectively, in “Other
non-current liabilities” on the Consolidated Statement of Financial Condition.
For contracts that have a duration of one year or less, the Company has not disclosed either the remaining
performance obligation as of the end of the reporting period or when the Company expects to recognize the revenue.
The remaining performance obligations for contracts that have a duration of greater than one year and the periods in
which they are expected to be recognized are as follows:
As of
December 31,
2021
(in thousands)
First 12-month period ............................ $
Second 12-month period ........................
Third 12-month period...........................
Periods thereafter ...................................
Total ....................................................... $
476,131
273,355
96,332
40,901
886,719
4. EARNINGS PER COMMON SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of
common shares outstanding during the period. Common shares outstanding include common stock and vested
restricted stock unit awards where recipients have satisfied the explicit vesting terms. Diluted EPS reflects the
assumed conversion of all dilutive securities.
The following table presents the computation of basic and diluted EPS:
(in thousands, except per share data)
Net income................................................. $
725,983 $
601,822
$
563,648
December 31,
2021
Years Ended
December 31,
2020
December 31,
2019
Basic weighted average common shares
outstanding .............................................
82,508
83,716
84,644
Effect of dilutive securities:
Stock options, RSUs and PSUs .................
Diluted weighted average common shares
outstanding .............................................
971
801
892
83,479
84,517
85,536
Earnings per basic common share ......... $
8.80 $
Earnings per diluted common share...... $
8.70 $
7.19
7.12
$
$
6.66
6.59
5. ACQUISITIONS
On September 13, 2021, MSCI acquired all of the issued and outstanding preferred and common shares of
RCA for an aggregate cash purchase price of $949.0 million. This acquisition expands MSCI’s suite of real estate
solutions, providing the real estate industry with data, analytics, and support tools to manage investments and
understand performance and risk, including climate risk, within their portfolios. RCA has been accounted for as a
business combination using the acquisition method of accounting and has been integrated into the All Other –
Private Assets reportable segment, as a component of the Real Estate operating segment. A portion of RCA’s client
77
agreements do not have automatic renewal clauses at the end of the subscription period. Due to the historically high
retention rate and expectation that a substantial portion of the client agreements will be renewed, the associated
revenue is recorded as recurring subscription revenue.
The components of the preliminary purchase price allocation were as follows:
Accounts receivable..................................................
Other current assets...................................................
Property, equipment and leasehold
improvements, net...................................................
Right of use assets ....................................................
Other non-current assets ...........................................
Deferred revenue ......................................................
Other current liabilities .............................................
Long-term operating lease liabilities ........................
Deferred tax liabilities ..............................................
Intangible assets:
Proprietary data ...................................................
Customer relationships........................................
Acquired technology and software......................
Trademarks..........................................................
Goodwill ...................................................................
Purchase price, net of cash acquired.........................
Estimated
Useful Life
Fair Value
(in thousands)
$
$
9,645
3,721
1,205
6,441
3,270
(35,194)
(14,518)
(4,849)
(85,196)
185,500
175,700
31,500
890
670,874
948,989
11 Years
20 Years
9 Years
2 Years
The purchase price allocation is based on preliminary valuations and assessments. The estimates and
assumptions used may be subject to change within the measurement period, particularly for acquired intangible
assets and deferred taxes. As discussed in Note 2, the Company early adopted ASU 2021-08 which resulted in an
increase to deferred revenue and goodwill and a decrease in deferred tax liabilities recorded as of the opening
balance sheet date.
The Company, with the assistance of third-party valuation experts, utilized the following methodologies to
estimate the fair values of acquired intangible assets: the relief from royalty method, the replacement cost method
and the multi-period excess earnings method. The significant assumptions used to estimate the fair value of the
acquired intangible assets included, forecasted cash flows which were determined based on certain assumptions
which included, among others, projected future revenues, and expected market royalty rate, technology obsolescence
rates and discount rates.
The recorded goodwill is primarily attributable to the utilization of the acquired data as well as expanded
market opportunities. Goodwill attributable to the acquisition is not deductible for income tax purposes.
Revenue of RCA recognized within the consolidated financial statements subsequent to the acquisition date
was $22.1 million.
78
6. COMMITMENTS AND CONTINGENCIES
Senior Unsecured Notes. The Company had an aggregate of $4,200.0 million in senior unsecured notes
(collectively, the “Senior Notes”) outstanding at December 31, 2021, as presented in the table below:
Principal
amount
outstanding at
December 31,
2021
Maturity Date
Carrying
value at
December
31, 2021
Carrying
value at
December 31,
2020
Fair
Value at
December 31,
2021
Fair
Value at
December 31,
2020
(in thousands)
Long-term debt
4.750% senior unsecured notes due 2026.......
5.375% senior unsecured notes due 2027.......
4.000% senior unsecured notes due 2029....... November 15, 2029
3.625% senior unsecured notes due 2030....... September 1, 2030
3.875% senior unsecured notes due 2031....... February 15, 2031
3.625% senior unsecured notes due 2031....... November 1, 2031
3.250% senior unsecured notes due 2033....... August 15, 2033
August 1, 2026
May 15, 2027
Total long-term debt...........................................
$
-
-
1,000,000
900,000
1,000,000
600,000
700,000
4,200,000 $
-
-
991,455
894,263
989,973
593,538
692,193
4,161,422
$
496,257
495,819
990,364
395,458
988,879
-
-
3,366,777
$
-
-
1,047,950
924,777
1,046,620
625,536
710,906
4,355,789
$
522,325
538,100
1,073,040
419,428
1,063,430
-
-
3,616,323
Interest payments attributable to the Senior Notes are due as presented in the following
ff
table:
First semi-annual
interest
payment date
Second semi-
annual interest
payment date
Senior Notes
4.000% senior unsecured notes due 2029 ...........
3.625% senior unsecured notes due 2030 ...........
3.875% senior unsecured notes due 2031 ...........
3.625% senior unsecured notes due 2031(1)........
3.250% senior unsecured notes due 2033(2)........
May 15
March 1
June 1
May 1
February 15
November 15
September 1
December 1
November 1
August 15
(1)
(2)
The first payment occurred on November 1, 2021.
The first payment occuring on February 15, 2022.
The fair market value of the Company’s debt obligations represent Level 2 valuations. The Company utilizes
the market approach and obtains security pricing from a vendor who uses broker quotes and third-party pricing
services to determine fair values.
The $1,000.0 million aggregate principal amount of 4.000% senior unsecured notes due 2029 (the “2029
Senior Notes”) are scheduled to mature and be paid in full on November 15, 2029. At any time prior to November
15, 2024, the Company may redeem all or part of the 2029 Senior Notes at a redemption price equal to the sum of (i)
100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii)
accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the
Company may redeem all or part of the 2029 Senior Notes, together with accrued and unpaid interest, on or after
November 15, 2024, at redemption prices set forth in the indenture governing the 2029 Senior Notes. At any time
prior to November 15, 2022, the Company may use the proceeds of certain equity offerings to redeem up to 35% of
the aggregate principal amount of the 2029 Senior Notes, including any permitted additional notes, at a redemption
price equal to 104.000% of the principal amount plus accrued and unpaid interest, if any, to the redemption date, so
long as at least 50% of the aggregate principal amount of all notes (excluding any additional notes, if any) issued
under the indenture governing the 2029 Senior Notes remain outstanding after each such redemption occurs.
The $1,000.0 million aggregate principal amount of 3.875% senior unsecured notes due 2031 (the “2031A
Senior Notes”) are scheduled to mature and be paid in full on February 15, 2031. At any time prior to June 1, 2025,
the Company may redeem all or part of the 2031A Senior Notes at a redemption price equal to the sum of (i) 100%
of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and
unpaid interest, if any, to, but excluding, the redemption date. In addition, the Company may redeem all or part of
the 2031A Senior Notes, together with accrued and unpaid interest, on or after June 1, 2025, at redemption prices set
forth in the indenture governing the 2031A Senior Notes. At any time prior to June 1, 2023, the Company may use
the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2031A Senior
Notes, including any permitted additional notes, at a redemption price equal to 103.875% of the principal amount
plus accrued and unpaid interest, if any, to, but excluding, the redemption date, so long as at least 50% of the
79
aggregate principal amount of all notes (excluding any additional notes, if any) issued under the indenture governing
the 2031A Senior Notes remain outstanding after each such redemption occurs.
On March 26, 2021, the Company issued $500.0 million aggregate principal amount of 3.625% senior
unsecured notes due 2030 (the “Additional 2030 Senior Notes”) in a private offering that was exempt from the
registration requirements of the Securities Act. The Additional 2030 Senior Notes constitute a further
are fully fungible with, rank equally with and form a single series with the $400.0 million aggregate principal
amount of the 3.625% senior unsecured notes due 2030 issued by the Company on March 4, 2020 (the “Initial 2030
Senior Notes,” and together with the Additional 2030 Senior Notes, the “2030 Senior Notes”). In connection with
the completion of the offering of the Additional 2030 Senior Notes, the Company announced that it intended to use a
portion of the net proceeds from the offering, together with available cash, for the pre-maturity redemption of all
$500.0 million aggregate principal amount outstanding of its 4.750% senior unsecured notes due 2026 (the “2026
Senior Notes”). On April 12, 2021 the Company completed the pre-maturity redemption of all of its 2026 Senior
Notes. The pre-maturity redemption of the 2026 Senior Notes resulted in an approximately $21.8 million loss on
extinguishment that was recorded in other expense (income), which includes an applicable premium of
approximately $18.2 million (as set forth in the indenture governing the terms of the 2026 Senior Notes) and the
write-off of approximately $3.6 million of unamortized debt issuance costs associated with the 2026 Senior Notes.
issuance of,
ff
The 2030 Senior Notes are scheduled to mature and be paid in full on September 1, 2030. At any time prior to
March 1, 2025, the Company may redeem all or part of the 2030 Senior Notes at a redemption price equal to the
sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus
(iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the
Company may redeem all or part of the 2030 Senior Notes, together with accrued and unpaid interest, on or after
March 1, 2025, at redemption prices set forth in the indenture governing the 2030 Senior Notes. At any time prior to
March 1, 2023, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate
principal amount of the 2030 Senior Notes, including any permitted additional notes, at a redemption price equal to
103.625% of the principal amount plus accrued and unpaid interest, if any, to the redemption date, so long as at least
50% of the aggregate principal amount of the Initial 2030 Senior Notes (excluding the Additional 2030 Senior Notes
and any additional notes, if any) issued under the indenture governing the 2030 Senior Notes remain outstanding
after each such redemption occurs.
On May 14, 2021, the Company issued $600.0 million aggregate principal amount of 3.625% Senior
Unsecured Notes due 2031 (the “2031B Senior Notes”) in a private offering that was exempt from the registration
requirements of the Securities Act. The 2031B Senior Notes are scheduled to mature and be paid in full on
November 1, 2031. At any time prior to November 1, 2026, the Company may redeem all or part of the 2031B
Senior Notes at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-
whole premium as of the date of redemption, plus (iii) accrued and unpaid interest, if any, thereon, to the date of
redemption. In addition, the Company may redeem all or part of the 2031B Senior Notes, together with accrued and
unpaid interest, on or after November 1, 2026, at redemption prices set forth in the indenture governing the 2031B
Senior Notes. At any time prior to November 1, 2024, the Company may use the proceeds of certain equity offerings
to redeem up to 35% of the aggregate principal amount of the 2031B Senior Notes, including any permitted
additional notes, at a redemption price equal to 103.625% of the principal amount plus accrued and unpaid interest,
if any, to the redemption date, so long as at least 50% of the aggregate principal amount of all notes (excluding any
additional notes, if any) issued under the indenture governing the 2031B Senior Notes remain outstanding after
each
such redemption occurs.
ff
On August 17, 2021, the Company issued $700.0 million aggregate principal amount of 3.250% Senior
Unsecured Notes due 2033 (the “2033 Senior Notes”) in a private offering that was exempt from the registration
requirements of the Securities Act. In connection with the completion of the offering, the Company announced that
it intended to use a portion of the net proceeds from the offering for the pre-maturity redemption of all $500.0
million aggregate principal amount outstanding of its 5.375% senior unsecured notes due 2027 (the “2027 Senior
Notes”). On September 2, 2021 the Company completed the pre-maturity redemption of all of its 2027 Senior Notes.
The pre-maturity redemption of the 2027 Senior Notes resulted in an approximately $37.3 million loss on
extinguishment that was recorded in other expense (income), which includes an applicable premium of
approximately $33.6 million (as set forth in the indenture governing the terms of the 2027 Senior Notes) and the
write-off of approximately $3.7 million of unamortized debt issuance costs associated with the 2027 Senior Notes.
The 2033 Senior Notes are scheduled to mature and be paid in full on August 15, 2033. At any time prior to
August 15, 2027, the Company may redeem all or part of the 2033 Senior Notes at a redemption price equal to the
sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus
(iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the
80
Company may redeem all or part of the 2033 Senior Notes, together with accrued and unpaid interest, on or after
August 15, 2027, at redemption prices set forth in the indenture governing the 2033 Senior Notes. At any time prior
to August 15, 2024, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the
aggregate principal amount of the 2033 Senior Notes, including any permitted additional notes, at a redemption
price equal to 103.250% of the principal amount plus accrued and unpaid interest, if any, to the redemption date, so
long as at least 50% of the aggregate principal amount of all notes (excluding any additional notes, if any) issued
under the indenture governing the 2033 Senior Notes remain outstanding after each such redemption occurs.
Revolver. Since November 20, 2014, the Company has maintained a revolving credit agreement with a
syndicate of banks (as amended, the “Revolving Credit Agreement”). On March 29, 2021, the Company entered into
Amendment No. 4 (the “Fourth Amendment”) to the Revolving Credit Agreement. The Fourth Amendment, among
other things, (i) increased aggregate commitments available to be borrowed by $100.0 million to an aggregate of
$500.0 million of availability thereunder until November 2024, at which point the aggregate commitments will be
$467.5 million, and (ii) extended the term to March 2026. At December 31, 2021, the Revolving Credit Agreement
was undrawn.
In connection with the closings of the Senior Notes offerings, entry into the Revolving Credit Agreement and
the subsequent amendments, the Company paid certain financing fees which, together with the existing fees related
to prior credit facilities, are being amortized over their related lives. At December 31, 2021, $40.6 million of the
deferred financing fees and premium remain unamortized, $0.5 million of which is included in “Prepaid and other
assets,” $1.5 million of which is included in “Other non-current assets” and $38.6 million of which is included in
“Long-term debt” on the Consolidated Statement of Financial Condition.
7. LEASES
The Company recognized $30.6 million, $32.8 million and $35.6 million of operating lease expenses forff
the
years ended December 31, 2021, 2020 and 2019, respectively. The amounts associated with variable lease costs,
short-term lease costs and sublease income were not material for any of the years ended December 31, 2021, 2020
and 2019.
The Company’s leases have remaining lease terms of up to approximately 11 years. Some of these leases have
options to extend which, if exercised, would extend the maximum term to approximately 25 years. Some of the
leases also provide for early termination, the exercise of which would shorten the term of those leases by up to 5
years.
The Company recorded pre-tax impairment charges for the year ended December 31, 2021 of $8.4 million
associated with right of use assets. The impairment charges are included in General and administrative expenses
within the consolidated statements of income.
Future minimum commitments for the Company’s operating leases in place as of December 31, 2021, the
interest and other relevant line items in the Consolidated Statement of Financial Condition are as follows:
Maturity of Lease Liabilities
(in thousands)
Operating
Leases
2022 ........................................................................................ $
2023 ........................................................................................
2024 ........................................................................................
2025 ........................................................................................
2026 ........................................................................................
Thereafter ...............................................................................
Total lease payments ................................................................. $
Less: Interest...........................................................................
Present value of lease liabilities ............................................. $
28,271
29,427
23,924
22,717
20,447
73,539
198,325
(24,972)
173,353
Other accrued liabilities.......................................................... $
Long-term operating lease liabilities ...................................... $
23,324
150,029
81
The following table presents the lease term and discount rate for the Company’s operating leases in place as of
the periods indicated:
Lease Term and Discount Rate
Weighted-average remaining lease term (years)................
Weighted-average discount rate.........................................
As of
December 31, December 31,
2021
2020
8.16
3.09%
8.93
3.34%
The following table presents other information for the Company’s operating leases in place for the periods
indicated:
Other Information
Years Ended
December 31, December 31, December 31,
(in thousands)
Operating cash flows used for operating leases ................... $
Right of use assets obtained in exchange for new operating
lease liabilities......................................................................
$
2021
2020
2019
30,972 $
30,061 $
29,886
26,004 $
11,472 $
210,784
8. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
Property, equipment and leasehold improvements, net at December 31, 2021 and 2020 consisted of the
following:
Estimated
Useful Lives
December 31,
2021
December 31,
2020
As of
ff
...........................................
Computer & related equipment.......................... 2 to 5 years $
Furniture & fixtures
Leasehold improvements ................................... 1 to 21 years
Work-in-process.................................................
Subtotal.........................................................
Accumulated depreciation and amortization .....
Property, equipment and leasehold
7 years
—
(in thousands)
179,557 $
14,194
56,308
2,699
252,758
(186,043)
186,786
15,276
56,537
2,996
261,595
(181,149)
improvements, net...........................................
$
66,715 $
80,446
Depreciation and amortization expense of property, equipment and leasehold improvements was
$28.9 million, $29.8 million and $30.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.
9. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following table presents goodwill by reportable segment:
Index
(in thousands)
Goodwill at December 31, 2019 .... $ 1,204,694
Foreign exchange translation
adjustment ......................................
1,064
Goodwill at December 31, 2020 .... $ 1,205,758
Acquisitions....................................
—
Foreign exchange translation
adjustment ......................................
(315)
Goodwill at December 31, 2021 .... $ 1,205,443
$
$
$
(1)
Reflects the impact of the acquisition of RCA.
Analytics
ESG and
Climate
290,976
$
46,612
All Other -
Private Assets
20,586
$
Total
$ 1,562,868
—
290,976
—
—
290,976
$
$
1,435
48,047
—
—
48,047
$
$
655
21,241
670,874 (1)
3,154
$ 1,566,022
670,874
(195)
691,920
(510)
$ 2,236,386
82
Intangible Assets, Net
The following table presents the amount of amortization expense related to intangible assets by category for
the periods indicated:
(in thousands)
Amortization expense of acquired intangible assets.................... $
Amortization expense of internally developed
capitalized software ..................................................................
Write-off of internally developed capitalized software ...............
Total amortization of intangible assets expense .......................... $
December 31,
2021
Years Ended
December 31,
2020
December 31,
2019
42,242
$
34,049
$
34,773
22,337
16,013
80,592
$
22,892
—
56,941
$
14,637
—
49,410
Following management’s decision to discontinue development and cease related sales activities of certain
Analytics segment products and transition existing customers to other product offerings, the Company wrote off
$16.0 million of certain internally developed capitalized software intangible assets (consisting of $46.3 million of
gross intangible assets less $30.3 million of accumulated amortization) during the year ended December 31, 2021.
The non-cash charge is recorded as a component of “Amortization of intangible assets” on the Consolidated
Statement of Income.
The gross carrying and accumulated amortization amounts related to the Company’s intangible assets were as
follows:
Estimated
Useful Lives
As of
December 31, December 31,
2021
2020
(in thousands)
13 to 21 years
11 to 13 years
8 to 9 years
2 to 21.5 years
3 to 5 years
$
532,400 $
220,639
209,220
208,190
106,181
1,276,630
(5,782)
$ 1,270,848 $
356,700
28,627
177,720
207,300
113,188
883,535
(5,262)
878,273
$ (277,865) $ (253,465)
(15,730)
(174,032)
(143,207)
(57,464)
(643,898)
373
$ (677,507) $ (643,525)
(22,678)
(175,718)
(152,468)
(49,394)
(678,123)
616
$
$
254,535 $
197,961
33,502
55,722
56,787
598,507
(5,166)
593,341 $
103,235
12,897
3,688
64,093
55,724
239,637
(4,889)
234,748
Gross intangible assets:
Customer relationships...............................
Proprietary data ..........................................
Acquired technology and software ............
Trademarks.................................................
Internally developed capitalized software..
Subtotal ......................................................
Foreign exchange translation adjustment...
Total gross intangible assets ......................
Accumulated amortization:
Customer relationships...............................
Proprietary data ..........................................
Acquired technology and software ............
Trademarks.................................................
Internally developed capitalized software..
Subtotal ......................................................
Foreign exchange translation adjustment...
Total accumulated amortization.................
Net intangible assets:
Customer relationships...............................
Proprietary data ..........................................
Acquired technology and software ............
Trademarks.................................................
Internally developed capitalized software..
Subtotal ......................................................
Foreign exchange translation adjustment...
Total net intangible assets ..........................
83
Estimated amortization expense for succeeding years is presented below:
Years Ending December 31,
2022 ................................................................................. $
2023 .................................................................................
2024 .................................................................................
2025 .................................................................................
2026 .................................................................................
Thereafter ........................................................................
Total................................................................................. $
Amortization
Expense
(in thousands)
87,438
81,532
74,370
51,800
36,175
262,026
593,341
10. EMPLOYEE BENEFITS
The Company sponsors a 401(k) plan forff
eligible U.S. employees and defined contribution and defined benefit
pension plans that cover substantially all of its non-U.S. employees. Eligible employees may participate in the MSCI
401(k) plan (or any other regional defined contribution plan sponsored by MSCI) immediately upon hire. Eligible
employees receive 401(k) and other defined contribution plan matching contributions, which are subject to vesting
and certain other limitations. Additionally, some non-US employees are eligible to participate in and receive
contributions to defined benefit plans.
The following table reflects the employee benefits expense by cost, type and location in the Statement of
Income for the periods indicated:
Years Ended
December 31, December 31, December 31,
(in thousands)
Employee benefit cost type
401(k) and other defined contribution plans...........
Pension related net period benefit expense.............
Total........................................................................ $
2021
2020
2019
25,740
5,785
31,525 $
21,804
4,671
26,475 $
19,909
4,135
24,044
Location in the Statement of Income
Cost of revenues ..................................................... $
Selling and marketing .............................................
Research and development .....................................
General and administrative .....................................
Other expense (income)..........................................
Total........................................................................ $
12,231 $
9,489
6,271
2,620
914
31,525 $
9,913 $
7,910
5,328
2,289
1,035
26,475 $
9,387
7,368
4,705
1,844
740
24,044
The Company uses a measurement date of December 31st to calculate obligations under its pension and
postretirement plans. As of December 31, 2021 and 2020, the Company carried a net liability of $34.5 million and
$36.1 million, respectively, in “Other non-current liabilities” on the Consolidated Statement of Financial Condition
related to its future pension obligations. The fair value of the defined benefit plan assets was $30.2 million and $28.5
million at December 31, 2021 and 2020, respectively.
The Company’s retiree benefit plans include defined benefit plans for employees in Switzerland, as well as
other countries where MSCI maintains an operating presence.
Our Switzerland plans are government-mandated retirement funds that provide employees with a minimum
investment return, which is determined annually by the Swiss government and was 1.0% in the years ended
December 31, 2021, 2020 and 2019. Under the Switzerland plans, the Company and our employees are required to
make contributions into a fund managed by an independent investment fiduciary. Employer contributions must be in
an amount at least equal to the employee’s contribution. Employee contributions are based on the respective
employee’s age, salary and chosen contribution scale. As of December 31, 2021 and 2020, the Switzerland plans had
a gross pension liability of $34.0 million and $34.8 million, respectively, and plan assets that totaled $26.1 million
and $24.6 million, respectively. In the years ended December 31, 2021, 2020 and 2019, we recognized net periodic
benefit expense of $0.3 million, $0.5 million and $1.0 million, respectively, related to our Switzerland plans. The
84
discount rate forff
31, 2021 and 2020.
the Switzerland defined benefit pension plan was 0.30% and 0.10%, respectively, as of December
The investment strategies of the non-U.S. defined benefit plans vary according to the plan provisions and local
laws. The majority of the assets in the non-U.S. plans are in the Switzerland plans. The Switzerland plans are
associated with an insured collective retirement foundation, whereby assets are held in trust and the assets are
comingled with those of other participating companies. Investment decisions are made by a board of the collective
retirement foundation, comprised of participating company representatives and representatives from the insurer. The
overall strategy is to manage risk while maximizing total returns.
11. SHAREHOLDERS’ EQUITY (DEFICIT)
This note reflects the share repurchases and related activity as well as share-based compensation activity
recognized by the Company, for all periods referenced.
Return of capital
On Octoberr 29, 2020, the Board off Directors authorized a stockk
prepurchase program forr the purchase off pup to
$1,000.0 million worth off shares off MSCI’s common stockk in addition to the $804.5 million off authorization then
remaining under a previously existing share repurchase program (the “2020
prepurchase authorization.
$1,804.5 million off stockk
pRepurchase Pr gogram”) forrff
a total
fof
Share repurchases made pursuant to the 2020 Repurchase Program may take place in the open market or in
privately negotiated transactions from time to time based on market and other conditions. This authorization may be
modified, suspended or terminated by the Board of Directors at any time without prior notice. As of December 31,
2021, there was $1,589.2 million of available authorization remaining under the 2020 Repurchase Program.
The following table provides information with respect to repurchases of the Company’s common stock made
Dollar
Value of
Shares
Repurchased
Total
Average
Number of
Price
Shares
Paid Per
Share
Repurchased
(in thousands, except per share data)
412.25
291.76
147.97
339 $ 139,580
2,493 $ 727,344
690 $ 102,081
on the open market:
Year Ended
December 31, 2021...................................................... $
December 31, 2020...................................................... $
December 31, 2019...................................................... $
85
The following table presents dividends declared per common share as well as total amounts declared,
distributed and deferred for the periods indicated
Dividends
Per Share
Declared
Distributed
(Released)/
Deferred
2021
Three Months Ended March 31,...................................... $
Three Months Ended June 30, .........................................
Three Months Ended September 30, ...............................
Three Months Ended December 31,................................
Year Ended December 31,............................................... $
2020
Three Months Ended March 31,...................................... $
Three Months Ended June 30, .........................................
Three Months Ended September 30, ...............................
Three Months Ended December 31,................................
Year Ended December 31,............................................... $
2019
Three Months Ended March 31,...................................... $
Three Months Ended June 30, .........................................
Three Months Ended September 30, ...............................
Three Months Ended December 31,................................
Year Ended December 31,............................................... $
(in thousands, except per share data)
0.78 $ 65,947 $ 66,153 $
0.78
1.04
1.04
3.64 $ 303,761 $ 302,576 $
64,489
85,961
85,973
64,863
86,476
86,475
0.68 $ 59,233 $ 59,455 $
0.68
0.78
0.78
2.92 $ 247,452 $ 246,630 $
57,360
65,830
65,029
57,068
65,454
64,653
(206)
374
515
502
1,185
(222)
292
376
376
822
0.58 $ 55,339 $ 57,988 $ (2,649)
248
0.58
294
0.68
0.68
260
2.52 $ 221,304 $ 223,151 $ (1,847)
49,613
58,176
58,176
49,365
57,882
57,916
Common Stock
The following table presents activity related to shares of common stock issued and repurchased for the periods
indicated:
Common
Stock Issued
Treasury
Stock
1,064
2,387,145
Dividend payable/paid...................................................
Common stock issued and exercise of stock options ....
Shares withheld for tax withholding..............................
Shares repurchased under stock repurchase programs ..
Shares issued to Directors..............................................
Balance At December 31, 2018......................................... 130,029,926 (45,855,788)
(585)
—
— (1,077,815)
(689,891)
—
(403)
1,277
Balance At December 31, 2019......................................... 132,419,412 (47,624,482)
(337)
553
—
406,960
—
(165,239)
— (2,492,994)
27,284
Balance At December 31, 2020......................................... 132,829,175 (50,255,768)
(156)
—
(133,431)
(338,577)
5,203
Balance At December 31, 2021......................................... 133,162,178 (50,722,729)
Dividend payable/paid...................................................
Common stock issued....................................................
Shares withheld for tax withholding..............................
Shares repurchased under stock repurchase programs ..
Shares issued to Directors..............................................
Dividend payable/paid...................................................
Common stock issued....................................................
Shares withheld for tax withholding..............................
Shares repurchased under stock repurchase programs ..
Shares issued to Directors..............................................
268
331,427
—
—
1,308
2,250
Common Stock
Outstanding
84,174,138
479
2,387,145
(1,077,815)
(689,891)
874
84,794,930
216
406,960
(165,239)
(2,492,994)
29,534
82,573,407
112
331,427
(133,431)
(338,577)
6,511
82,439,449
Share-Based Compensation
The Company regularly issues share-based compensation to its employees and directors who are not
employees of the Company. The accounting guidance for share-based compensation requires measurement of
86
compensation cost for share-based awards at fair value and recognition of compensation cost over the service period,
net of estimated forfeitures.
In February 2022, the Company granted a portion of its employees awards in the form of RSUs, PSUs and
performance stock options (“PSOs”). The total number of units and options granted was 227,684. The aggregate fair
value of the awards was $79.6 million. The RSUs granted in 2022 vest at the end of a three-year service period. The
PSUs granted in 2022 vest at the end of a three-year service period, are subject to a one-year sale restriction and are
also subject to the achievement of an absolute total shareholder return compounded annual growth rate, measured
over a three-year period. The PSOs granted in 2022 vest and become exercisable at the end of a three-year service
period and are subject to a performance condition based on the combined level of achievement of a cumulative
revenue performance goal and a cumulative adjusted EPS performance goal, measured over a three-year period. All
of these awards are subject to forfeiture under specific criteria set in the award agreements.
In connection with awards under its equity-based compensation and benefit plans, the Company is authorized
to use newly-issued shares or certain shares of common stock held in treasury.
The following table presents the amount of share-based compensation expense by category for the periods
indicated:
(in thousands)
Cost of revenues.......................................................... $
Selling and marketing .................................................
Research and development..........................................
General and administrative .........................................
Other expense (income) ..............................................
Total share-based compensation expense ................... $
Years Ended
December 31, December 31, December 31,
2020
14,523 $
13,545
7,344
19,826
379
55,617 $
2021
17,285 $
14,411
7,913
17,463
1,416
58,488 $
2019
11,190
14,943
5,966
11,991
—
44,090
The windfall tax benefits for share-based compensation expense related to RSUs, PSUs and other restricted
stock unit awards (together, the “Share-based Awards”) as well as stock options granted to Company employees and
to directors who are not employees of the Company were $22.3 million, $20.9 million and $82.5 million for the
years ended December 31, 2021, 2020 and 2019, respectively.
As of December 31, 2021, $52.3 million of compensation cost related to MSCI unvested share-based awards
granted to the Company’s employees and to directors who are not employees of the Company had not yet been
recognized. The unrecognized compensation cost relating to unvested stock-based awards expected to vest will be
recognized primarily over the next one to five years.
In connection with awards under its equity-based compensation and benefit plans, the Company is authorized
to issue shares of common stock. As of December 31, 2021, 3.8 million shares of common stock were available for
future grants under these plans.
Certain Company employees have been granted Share-based Awards pursuant to a share-based compensation
plan. The plan provides for the deferral of a portion of certain employees’ discretionary compensation with awards
made in the forff m of Share-based Awards. Recipients of Share-based Awards generally have rights to receive
dividend equivalents that are subject to vesting. The Company reports the target number of PSUs granted unless it
has determined, based on the actual achievement of performance measures, that an employee will receive a different
ff
amount of shares underlying the PSUs, in which case the Company reports the amount of shares employees are
likely to receive.
87
The fair value of the PSUs on the award dates were estimated under the Monte Carlo method using the
following assumptions:
Years Ended
December 31, December 31, December 31,
2021
2020
2019
Risk free interest rate ..............................................
Historical stock price volatility...............................
Term (in years) .......................................................
Discount of Lack of Marketability .........................
0.33%
34.13%
4.0
4.0%
1.28%
25.42%
3.8
0.0%
2.46%
21.98%
3.7
0.0%
The risk-free interest rate was determined based on the yields available on U.S. Constant Maturity Treasury
yield curve as of the valuation dates with a maturity commensurate with the terms. The expected stock price
volatility was determined using historical volatility. Since the PSU awards are dividend-protected, the assumed
dividend yield applied in the valuation was 0.0%.
The following table presents activity concerning the Company’s vested and unvested Share-based Awards
applicable to its employees (share data in thousands) for the period indicated:
For the Year Ended December 31, 2021
Vested and unvested Share-based Awards at
Weighted
Average
Grant
Date Fair
Value
Number of
Shares
December 31, 2020 .........................................................
Granted .........................................................................
Conversion to common stock .......................................
Canceled .......................................................................
739 $ 163.99
330 $ 265.99
(340) $ 153.66
(32) $ 274.66
Vested and unvested Share-based Awards at
December 31, 2021 (1) .....................................................
697 $ 217.05
(1)
As of December 31, 2021, 639 Share-based Awards, with a weighted average grant date fair value of $213.70, were vested or expected to
vest.
The total fair value of Share-based Awards held by the Company’s employees that converted to MSCI
common stock during the years ended December 31, 2021, 2020 and 2019 was $152.6 million, $133.6 million and
$401.7 million, respectively.
The following table presents activity concerning the Company’s unvested Share-based Awards related to its
employees (share data in thousands):
For the Year Ended December 31, 2021
Unvested Share-based Awards at December 31, 2020 ......
Granted .........................................................................
Vested ...........................................................................
Canceled .......................................................................
Unvested Share-based Awards at December 31, 2021 ......
Weighted
Average
Grant
Date Fair
Value
Number of
Shares
727 $ 164.58
293 $ 268.91
(318) $ 156.41
(32) $ 274.66
670 $ 217.05
Unvested Share-based Awards expected to vest................
612 $ 210.15
There were no remaining stock options outstanding that could be exercised during any of the years ended
December 31, 2021 and 2020. The intrinsic value of the stock options exercised by the Company’s employees
during the year ended December 31, 2019 was $22.1 million.
88
12. INCOME TAXES
The provision for income taxes (benefits) by taxing jurisdiction consisted of:
Years Ended
December 31, December 31, December 31,
2020
(in thousands)
2019
2021
Current
U.S. federal .......................................................... $
U.S. state and local ..............................................
Non U.S. ..............................................................
Deferred
U.S. federal ..........................................................
U.S. state and local ..............................................
Non U.S. ..............................................................
133,281 $
49,475
60,766
243,522
39,665 $
29,942
70,441
140,048
31,493
6,841
22,103
60,437
(79,812)
(25,981)
(5,576)
(111,369)
(44,507)
(8,911)
(2,227)
(55,645)
(11,941)
(4,001)
(4,825)
(20,767)
Provision for income taxes ........................................ $
132,153 $
84,403 $
39,670
The following table reconciles the U.S. federal statutory income tax rate to the effective income tax rate:
U.S. federal statutory income tax rate ...............
U.S. state and local income taxes, net of U.S.
December 31,
2021
Years Ended
December 31,
2020
December 31,
2019
21.00%
21.00%
21.00%
federal income tax benefits.............................
2.90%
3.14%
2.51%
Change in tax rates applicable to non-U.S.
earnings ..........................................................
(5.09%)
(3.30%)
(3.74%)
Foreign Derived Intangible Income (FDII),
net of GILTI (1) ................................................
Domestic tax credits and incentives ..................
Valuation allowance ..........................................
Excess share-based compensation.....................
Other..................................................................
Effective income tax rate...................................
(1.09%)
(0.59%)
—%
(2.65%)
0.92%
15.40%
(3.84%)
(0.59%)
—%
(3.24%)
(0.87%)
12.30%
1.05%
(0.31%)
(0.10%)
(13.94%)
0.11%
6.58%
(1)
The year ended December 31, 2020 includes (3.00%) released during the year related to the favorable impact on prior years from final
regulations clarifying certain provisions of the Tax Cuts and Jobs Act (“Tax Reform”).
89
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when
such differences are expected to reverse. Significant components of the Company’s deferred tax assets and liabilities
as of December 31, 2021 and 2020, were as follows:
As of
December 31, December 31,
2021
2020
(in thousands)
Deferred tax assets:
Capitalized expenses............................................... $
Unearned revenue ...................................................
Lease liabilities .......................................................
Employee compensation and benefit plans.............
Interest expense carryforwards ...............................
Loss carryforwards .................................................
Pension....................................................................
Other .......................................................................
Subtotal ...................................................................
Less: valuation allowance.......................................
Total deferred tax assets ............................................... $
Deferred tax liabilities:
94,265 $
56,810
39,507
20,216
11,215
18,173
2,229
3,509
245,924
(36)
245,888 $
—
46,530
40,786
20,602
7,901
3,071
3,066
—
121,956
—
121,956
Intangible assets...................................................... $ (147,118) $
Right of use assets...................................................
Property, equipment and leasehold
(32,106)
(51,862)
(35,634)
improvements, net................................................
Unremitted foreign earnings ...................................
Unearned revenue ...................................................
Other .......................................................................
(20,197)
(1,279)
—
(2,131)
Total deferred tax liabilities ......................................... $ (209,419) $ (111,103)
10,853
Net deferred tax assets.................................................. $
(27,136)
(3,059)
—
—
36,469 $
As presented in the table above, the Company has certain loss and interest carryforward items. The tax value
of the U.S. portion of the interest carryforward was zero and $0.7 million as of December 31, 2021 and December
31, 2020, respectively. The tax value of the non-U.S. portion of the interest carryforward was $11.2 million and $7.2
million as of December 31, 2021 and December 31, 2020, respectively. These carryforwards are subject to annual
limitations on utilization over an indefinite life.
Net operating loss carryforwards in the U.S. were $69.7 million with a tax value of $17.9 million and $8.7
million with a tax value of $1.8 million as of December 31, 2021 and December 31, 2020, respectively. The increase
in the net operating loss carryforward in the U.S. is primarily attributable to the September 13, 2021 acquisition of
RCA. These carryforwards are subject to annual limitations and will begin to expire in 2026. The tax value of the
non-U.S. portion of the net operating loss was $0.3 million and $1.2 million as of December 31, 2021 and December
31, 2020 respectively. These carryforwards are subject to annual limitations and will begin to expire in 2023.
The Company believes the majority of the deferred tax assets at December 31, 2021 are more likely than not
to be realized based on expectations as to future taxable income in the jurisdictions in which it operates with the
exception of a loss carryforward in one jurisdiction where it has established a valuation allowance of $0.04 million.
As of December 31, 2021, the Company has recorded prepayments of taxes in the amount of $36.5 million in
“Other non-current assets” on the Consolidated Statements of Financial Condition, as the amounts are not
anticipated to be received until after December 31, 2022.
90
The following table presents changes in the Company’s deferred tax asset valuation allowance for the periods
indicated:
Years Ended
December 31, December 31, December 31,
2020
(in thousands)
2019
2021
Beginning balance ...................................................... $
Additions charged to cost and expenses .....................
Deductions ..................................................................
Ending balance............................................................ $
— $
36
—
36 $
— $
—
—
— $
632
—
(632)
—
The following table presents the components of income before provision for income taxes generated by
domestic or foreign operations for the periods indicated:
Years Ended
December 31, December 31, December 31,
2020
(in thousands)
2021
2019
Domestic ..................................................................... $
Foreign (1) ....................................................................
Total income before provision for income taxes......... $
417,679 $
440,457
858,136 $
353,049 $
333,176
686,225 $
351,177
252,141
603,318
(1)
Foreign income before provision for income taxes is defined as income generated from operations located outside the U.S., which
includes income from foreign branches of U.S. companies.
As of December 31, 2021, the Company has provided for applicable state income and foreign
ff
withholding
taxes on all undistributed earnings of its foreign subsidiaries.
The Company regularly assesses the likelihood of additional assessments in each of the taxing jurisdictions in
which it files income tax returns. The Company has established unrecognized tax benefits that the Company believes
are adequate in relation to the potential for additional assessments. Once established, the Company adjusts
unrecognized tax benefits only when more information is available or when an event occurs necessitating a change.
Based on the current status of income tax audits, the Company believes it is reasonably possible that the total
amount of unrecognized benefits may decrease by approximately $31.6 million in the next twelve months as a result
of the resolution of tax examinations.
The Company believes the resolution of tax matters will not have a material effect on the Consolidated
Statement of Financial Condition of the Company, although a resolution could have a material impact on the
Company’s Consolidated Statement of Income for a particular future
for any period in which such resolution occurs.
period and on the Company’s effective tax rate
ff
91
The following table presents a reconciliation of the beginning and ending amount of the gross unrecognized
tax benefits, excluding interest and penalties, for the years ended December 31, 2021, 2020 and 2019:
Gross unrecognized tax benefits
(in thousands)
Beginning balance..................................................... $
Increases based on tax positions related to the
Years Ended
December 31, December 31, December 31,
2020
15,841 $
2021
16,621 $
2019
14,091
current period.........................................................
511
292
2,413
Increases based on tax positions related to
prior periods...........................................................
20,321
2,099
Decreases based on tax positions related to
prior periods...........................................................
Decreases related to settlements
with taxing authorities ...........................................
Decreases related to a lapse of
—
—
—
—
—
—
—
applicable statute of limitations .............................
Ending balance.......................................................... $
(4,414)
33,039 $
(1,611)
16,621 $
(663)
15,841
The total amount of unrecognized tax benefits was $33.0 million, $16.6 million and $15.8 million as of
ff
the effective tax rate
periods. The increase in unrecognized tax benefits in the year ended December 31, 2021 is principally due
December 31, 2021, 2020 and 2019, respectively, which, if recognized, would favorably affect
in future
to the filing of prior year refund claims. The Company recognizes the accrual of interest and penalties related to
unrecognized tax benefits in the “Provision for income taxes” in the Consolidated Statement of Income. For the
years ended December 31, 2021 and 2020, the Company recognized zero and for the year ended December 31,
2019, the Company recognized $0.4 million of interest in the Consolidated Statement of Income with respect to
unrecognized tax benefits. Penalties of $0.3 million, $0.4 million and zero were recognized in the Consolidated
Statement of Income and the Consolidated Statement of Financial Position for the years ended December 31, 2021,
2020 and 2019, respectively. The amount of accrued interest, which includes interest related to uncertain tax
positions and accrued income tax expense, recorded on the Consolidated Statement of Financial Condition as of
December 31, 2021, 2020 and 2019 was $0.9 million.
ff
The Company is under examination by tax authorities in certain jurisdictions, including foreign jurisdictions,
such as the United Kingdom, Switzerland and India, and states in the U.S. in which the Company has significant
operations, such as New York and California. The tax years currently under examination vary by jurisdiction but
include years ranging from 2008 through 2020.
13. SEGMENT INFORMATION
ASC Subtopic 280-10, “Segment Reporting,” establishes standards for reporting information about operating
segments. Operating segments are defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker, or CODM, in deciding
how to allocate resources and assess perforff mance. MSCI’s Chief Executive Officer and its President and Chief
Operating Officer, who are together considered to be its CODM, review financial information
presented on an
operating segment basis for purposes of making operating decisions and assessing financial performance.
ff
The CODM measures and evaluates reportable segments based on segment operating revenues as well as
Adjusted EBITDA and other measures. The Company excludes the following items from segment Adjusted
EBITDA: provision for income taxes, other expense (income), net, depreciation and amortization of property,
equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or
adjustments, including impairment related to sublease of leased property, certain non-recurring acquisition-related
integration and transaction costs and the impact related to the vesting of multi-year restricted stock units granted in
2016 to certain senior executives that are subject to the achievement of multi-year total shareholder return targets,
which are performance targets with a market condition (the “2016 Multi-Year PSUs”), that the CODM does not
consider for the purposes of making decisions to allocate resources among segments or to assess segment
performance. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported
consolidated net income and are included in the reconciliation that follows.
92
The Company’s computation of segment Adjusted EBITDA may not be comparable to other similarly-titled
measures computed by other companies because all companies do not calculate segment Adjusted EBITDA in the
same fashion.
Operating revenues and expenses directly associated with each segment are included in determining its
operating results. Other expenses that are not directly attributable to a particular segment are based upon allocation
methodologies, including time estimates, revenue, headcount, sales targets, data center consumption and other
relevant usage measures. Due to the integrated structure of MSCI’s business, certain costs incurred by one segment
may benefit other segments. A segment may use the content and data produced by another segment without
incurring an arm’s-length intersegment charge.
The CODM does not review any information regarding total assets on an operating segment basis. Operating
segments do not record intersegment revenues, and, accordingly, there is none to be reported. The accounting
policies for segment reporting are the same as for MSCI as a whole.
The Company has five operating segments: Index, Analytics, ESG and Climate, Real Estate and Burgiss,
which are presented as the following four reportable segments: Index, Analytics, ESG and Climate and All Other –
Private Assets.
Effective January 1, 2021, the Company began presenting four reportable segments with the ESG and Climate
operating segment being presented as a separate reportable segment. The operating segments of Real Estate and
Burgiss do not individually meet the segment reporting thresholds and have been combined and presented as part of
All Other – Private Assets reportable segment. The Company’s ownership interest in Burgiss is classified as an
equity-method investment. Therefore, the All Other – Private Assets segment does not include the Company’s
proportionate share of operating revenues and Adjusted EBITDA related to Burgiss. The Company’s proportionate
share of the income or loss from its equity-method investment in Burgiss is not a component of Adjusted EBITDA
as it is reported as a component of other (expense) income, net. Prior period amounts have been recast to reflect the
current presentation.
The Index operating segment offers equity and fixed income indexes. The indexes are used in many areas of
the investment process, including indexed product creation (e.g., ETFs, mutual funds, annuities, futures, options,
structured products, over-the-counter derivatives), performance benchmarking, portfolio construction and
rebalancing, and asset allocation.
The Analytics operating segment offers risk management, performance attribution and portfolio management
content, applications and services that provide clients with an integrated view of risk and return and tools for
analyzing market, credit, liquidity, counterparty and climate risk across all majora
medium- and long-term time horizons. Clients access Analytics tools and content through MSCI’s proprietary
applications and application programming interfaces, third-party applications or directly through their own
platforms. Additionally, the Analytics operating segment also provides various managed services to help clients
operate more efficiently, including consolidation of client portfolio data from various sources, review and
reconciliation of input data and results, and customized reporting.
asset classes, spanning short-,
The ESG and Climate operating segment offers products and services that help institutional investors
understand how ESG and climate considerations can impact the long-term risk and return of their portfolio and
individual security-level investments. In addition, the ESG and Climate operating segment provides data, ratings,
research and tools to help investors navigate increasing regulation, meet new client demands and better integrate
ESG and climate elements into their investment processes.
The Real Estate operating segment offers real estate market and transaction data, benchmarks, return-
analytics, climate assessments and market insights for funds, investors, managers and other real estate market
participants. In addition, Real Estate performance and risk analytics range from enterprise-wide to property-specific
analysis. The Real Estate operating segment also provides business intelligence products to real estate owners,
managers, developers and brokers worldwide. Financial results related to the acquisition of RCA have been included
prospectively as a component of the Real Estate operating segment, presented as a component of the All Other –
Private Assets reportable segment, as of September 13, 2021.
The Burgiss operating segment represents the Company’s equity method investment in Burgiss, a global
provider of investment decision support tools forff
private capital.
93
The change in reportable segments has not resulted in any changes to MSCI’s Chief Operating Decision
Maker (“CODM”) or the basis for segment profitability. The CODM continues to measure and evaluate reportable
segments based on segment operating revenues as well as Adjusted EBITDA and other measures.
The following table presents operating revenues by reportable segment for the periods indicated:
Years Ended
December 31, December 31, December 31,
2020
(in thousands)
2019
2021
Operating revenues
Index ...................................................................... $ 1,251,764 $ 1,016,495 $
Analytics................................................................
ESG and Climate ...................................................
All Other - Private Assets......................................
920,937
496,925
90,659
49,275
Total............................................................................ $ 2,043,544 $ 1,695,390 $ 1,557,796
544,299
166,192
81,289
513,808
111,364
53,723
The following table presents segment profitability and a reconciliation to net income for the periods indicated:
Years Ended
December 31, December 31, December 31,
2020
(in thousands)
2021
2019
Index Adjusted EBITDA ............................................ $
Analytics Adjusted EBITDA ......................................
ESG and Climate Adjusted EBITDA..........................
All Other - Private Assets Adjusted EBITDA ............
Total operating segment profitability .....................
Amortization of intangible assets................................
Depreciation and amortization of property,
equipment and leasehold improvements ..................
Impairment related to sublease of leased property......
Acquisition-related integration and
transaction costs (1) ....................................................
2016 Multi-Year PSUs grant payroll tax expense ......
Operating income ......................................................
Other expense (income), net .......................................
Provision for income taxes..........................................
Net income ................................................................. $
951,312 $
198,799
29,748
16,931
1,196,790
80,592
766,493 $
172,924
22,851
9,242
971,510
56,941
28,901
7,702
29,805
—
6,870
—
1,072,725
214,589
132,153
725,983 $
—
—
884,764
198,539
84,403
601,822 $
670,188
152,113
21,813
6,385
850,499
49,410
29,999
—
—
15,389
755,701
152,383
39,670
563,648
(1)
Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the
acquired business that have occurred no later than 12 months after the close of the transaction.
94
Operating revenues by geography are based on the shipping address of the ultimate customer utilizing the
product. The following table presents revenue by geographic area for the periods indicated:
(in thousands)
Operating revenues
Americas:
Years Ended
December 31, December 31, December 31,
2020
2019
2021
United States ......................................................... $
Other......................................................................
Total Americas............................................................
Europe, the Middle East and Africa ("EMEA"):
United Kingdom....................................................
Other......................................................................
Total EMEA................................................................
Asia & Australia:
836,880 $
85,744
922,624
723,962 $
71,408
795,370
698,105
65,997
764,102
344,976
454,239
799,215
262,188
364,547
626,735
234,926
325,221
560,147
71,629
Japan......................................................................
161,918
Other......................................................................
Total Asia & Australia................................................
233,547
Total............................................................................ $ 2,043,544 $ 1,695,390 $ 1,557,796
80,591
192,694
273,285
91,419
230,286
321,705
Long-lived assets consist of property, equipment and leasehold improvements, right of use assets and
internally developed capitalized software, net of accumulated depreciation and amortization. The following table
presents long-lived assets by geographic area on the dates indicated:
As of
December 31, December 31,
2021
2020
(in thousands)
Long-lived assets
Americas:
United States ........................................................... $
Other........................................................................
Total Americas..............................................................
EMEA:
United Kingdom......................................................
Other........................................................................
Total EMEA..................................................................
Asia & Australia:
167,870 $
13,480
181,350
182,776
13,949
196,725
19,563
34,240
53,803
19,678
33,561
53,239
Japan........................................................................
Other........................................................................
Total Asia & Australia..................................................
Total.............................................................................. $
1,150
31,873
33,023
268,176 $
1,896
37,946
39,842
289,806
95
14. QUARTERLY RESULTS OF OPERATIONS (unaudited):
2021
2020
First
Second
Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
(in thousands, except per share data)
Second
Fourth
Third
Third
First
Operating revenues................................. $478,423 $498,180 $517,099 $549,842 $416,780 $409,616 $425,333 $443,661
75,935
Cost of revenues.....................................
56,662
Selling and marketing ............................
27,056
Research and development.....................
27,872
General and administrative ....................
Amortization of intangible assets...........
14,770
Depreciation and amortization of
70,704
52,668
24,901
27,613
14,333
74,609
55,549
26,562
30,833
13,776
87,327
58,191
27,531
30,182
30,396
70,456
51,617
22,534
28,309
14,062
89,674
59,819
28,352
38,110
14,105
85,780
56,467
24,862
34,728
15,068
95,903
68,708
30,819
44,873
21,023
property, equipment and
leasehold improvements......................
Total operating expenses........................
Operating income ...................................
Interest income .......................................
Interest expense......................................
Other expense (income) .........................
Other expense (income), net ..................
Income before provision for
7,143
224,048
254,375
(386)
37,584
1,149
38,347
7,020
240,647
257,533
(347)
39,557
22,628
61,838
6,809
236,869
280,230
(396)
42,137
37,839
79,580
7,929
269,255
280,587
(368)
40,336
(5,144)
34,824
7,567
208,896
207,884
(3,483)
40,231
8,287
45,035
7,463
194,441
215,175
(771)
41,227
35,552
76,008
7,494
197,713
227,620
(475)
37,536
1,516
38,577
7,281
209,576
234,085
(301)
37,330
1,890
38,919
195,166
income taxes........................................
Provision for income taxes.....................
38,950
Net income ............................................. $196,819 $165,423 $169,876 $193,865 $148,125 $115,123 $182,358 $156,216
216,028
19,209
195,695
30,272
162,849
14,724
189,043
6,685
139,167
24,044
245,763
51,898
200,650
30,774
Earnings per basic common
share ....................................................
Earnings per diluted common
share ....................................................
$
$
Weighted average shares outstanding
used in computing per share data
Basic.......................................................
Diluted....................................................
15. SUBSEQUENT EVENTS
2.38 $
2.01 $
2.06 $
2.35 $
1.75 $
1.38 $
2.18 $
1.89
2.36 $
1.99 $
2.03 $
2.32 $
1.73 $
1.36 $
2.16 $
1.87
82,640
83,493
82,454
83,295
82,470
83,554
82,473
83,578
84,870
85,548
83,666
84,349
83,602
84,479
82,737
83,707
Subsequent to the year ended December 31, 2021 and through trade date of February 10, 2022, the Company
repurchased an additional 1.2 million shares of common stock at an average price of $515.83 per share for a total
value of $634.1 million.
On January 24, 2022, the Board of Directors of the Company declared a quarterly dividend of $1.04 per share
of common stock to be paid on February 28, 2022 to shareholders of record as of the close of trading on February
18, 2022.
96
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a). Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures thatt
t areaa designed to ensure that information required
to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), is recorded, processed, summarized and reported within thett
and that such information is accumulated and communicated to management, including our Chief Executive Officer
(“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding
time periods specified in the SEC’s rules and forms,
required disclosure.
aa
Management of the Company, with t
tt hett
participation of its CEO and CFO, evaluated the effectiveness
ff
of the
Company’s disclosure controls and procedures. Based on their evaluation, as of December 31, 2021, the end of the period
covered by this Annual Report on Form 10-K, the Company’s
disclosure controls and procedures (as defined in RulesRR
CEO and CFO have concluded that the Company’s
aa
13a-15(e) and 15d-15(e) under the Exchange Act) were effective.
(b). Management’s Annual Report On Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under
the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal
financial officers or persons performing similar functions and effected by the Company’s Board of Directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with GAAP and includes those policies
and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our
transactions and dispositions of our assets,
provide reasonable assurance that transactions are recorded as necessary to permit preparation of our
financial statements in accordance with GAAP, and that our receipts and expenditures are being made
only in accordance with authorizations of management and directors of the Company, and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial
statements.
ff
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31,
2021 based on the criteria described in Internal Control—Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, management, including the Company’s CEO and CFO, concluded that, as of
December 31, 2021, our internal control over financial reporting was effective in providing reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Management excluded Real Capital Analytics, Inc.
(“RCA”), acquired on September 13, 2021, from its evaluation of internal control over financial reporting as of
December 31, 2021. As of December 31, 2021, total assets of RCA, excluding acquisition method fair value
adjustments, represented 0.9% of our consolidated total assets. RCA represented 1.1% of our consolidated operating
revenues for the year ended December 31, 2021.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, has audited and issued a
report on the effectiveness of our internal control over financial reporting as of December 31, 2021, which appears
on page 63 of this Annual Report on Form 10-K.
97
(c). Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2021 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
None.
98
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Except for the information relating to our Executive Officers set forth in Part I of this Annual Report on Form
10-K, we incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which
will be filed no later than 120 days after December 31, 2021.
Information regarding our Code of Ethics and Business Conduct and Corporate Governance Policies is
incorporated herein by reference from our Proxy Statement, which will be filed no later than 120 days after
December 31, 2021. Any amendments to, or waivers from, a provision of our Code of Ethics that apply to our
principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions and that relates to any element of the Code of Ethics enumerated in paragraph (b) of
Item 406 of Regulation S-K shall be disclosed by posting such information on our website at www.msci.com. The
information on our website is not and should not be considered a part of this Annual Report on Form 10-K.
Item 11.
Executive Compensation
We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which
will be filed no later than 120 days after December 31, 2021.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
We incorporate by reference the additional information responsive to this Item appearing in our Proxy
Statement, which will be filed no later than 120 days after December 31, 2021.
Equity Compensation Plans
On February 18, 2016, the Board of Directors, upon the recommendation of the Compensation & Talent
Management Committee of the Board of Directors (the “Compensation Committee”), approved the MSCI Inc. 2016
Non-Employee Directors Compensation Plan (the “Directors Plan”), a cash and equity incentive compensation plan
that was approved by shareholders at the Company’s 2016 annual meeting of shareholders. The Directors Plan
replaced the Company’s then existing non-employee director compensation plan, the MSCI Inc. Independent
Directors’ Equity Compensation Plan (the “2011 Plan”). The total number of shares authorized to be awarded under
the Directors Plan is 352,460, which is equal to the number of shares that remained available for issuance under the
2011 Plan. Under the MSCI Inc. Non-Employee Directors Deferral Plan, directors may elect to defer receipt of all or
any portion of any shares of our common stock issuable upon conversion of any stock unit or any retainer elected to
be paid in shares of our common stock until (i) 60 days following separation of service or (ii) the earlier of a
specified date or 60 days following separation of service.
On February 18, 2016, the Board of Directors, upon the recommendation of the Compensation Committee,
approved the MSCI Inc. 2016 Omnibus Plan (“Omnibus Plan”), an equity incentive compensation plan that was
approved by shareholders at the Company’s 2016 annual meeting of shareholders. The Omnibus Plan replaced the
Company’s then existing equity compensation plan, the MSCI Inc. Amended and Restated 2007 Equity Incentive
Compensation Plan (as amended, the “2007 Plan”). Compensation paid to the Company’s executive officers
historically complied with the performance-based compensation exception under 162(m) of the IRC (“162(m)”) by
being granted pursuant to the MSCI Inc. Performance
Shareholder approval of the Omnibus Plan constituted approval of the material terms of the performance goals under
the Omnibus Plan for purposes of 162(m). In light of the final Section 162(m) regulations published in December
2020, which, among other things, eliminated the performance-based compensation exception under Section 162(m),
the Compensation Committee determined to cease awarding compensation to the Company’s executive officers
under the Performance Plan starting with calendar year 2021.
Formula and Incentive Plan (the “Performance Plan”).
ff
99
Pursuant to the Omnibus Plan, the Company reserved 7,565,483 shares of common stock for issuance; plus
any additional shares which become available due to forfeiture, expiration or cancellation of outstanding awards,
which were registered under the Securities Act following approval by the Company’s shareholders. This is in
addition to currently outstanding awards under the 2007 Plan. The Omnibus Plan permits the Compensation
Committee to make grants of a variety of equity-based awards (such as stock options, stock appreciation rights,
restricted stock units, restricted stock, performance awards and other stock-based awards) totaling up to 7,565,483
and other cash-based awards to eligible recipients, including employees and consultants. No awards will be granted
under the Omnibus Plan after the earliest to occur of (i) April 28, 2026, (ii) the maximum number of shares available
for issuance having been issued and (iii) the Board of Directors terminating the Omnibus Plan in accordance with its
terms.
The following table presents certain information with respect to our equity compensation plans at
December 31, 2021:
Number of
securities
remaining
available
for future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column(a))
(c)
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights
(a)
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
(b) (2)
Equity Compensation Plans Approved by Security
Holders
MSCI Inc. 2016 Omnibus Plan
Restricted Stock Units (“RSUs”) ..............................
198,092
Performance Stock Units (“PSUs”) (1) ..................... 1,215,771
Total MSCI Inc. 2016 Omnibus Plan .......................... 1,413,863
N/A
N/A
N/A
—
—
3,524,169
MSCI Inc. 2016 Non-Employee Directors
Compensation Plan (RSUs).........................................
3,137
N/A
279,080
Equity Compensation Plans Not Approved by Security
Holders...........................................................................
Total ....................................................................... 1,417,000
— N/A
N/A
—
3,803,249
(1)
(2)
The numbers included for PSUs in column (a) reflect the maximum payout. Assuming target number payout, the number of securities to
be issued upon vesting of PSUs is 496,061.
Does not reflect the unvested RSUs or PSUs included in column (a) because these awards have no exercise price.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which
will be filed no later than 120 days after December 31, 2021.
Item 14.
Principal Accountant Fees and Services
We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which
will be filed no later than 120 days after December 31, 2021.
100
Item 15.
Exhibit and Financial Statement Schedules
(a)(1) Financial Statements
PART IV
The financial statements are provided under Part II, Item 8. “Financial Statements and Supplementary Data”
of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules
No financial statement schedules are provided because the information called for is not applicable or not
required or is included in the consolidated financial statements or the notes thereto provided under Part II, Item 8.
“Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
(a)(3) Exhibits
The information required by this Item is set forth below.
EXHIBIT INDEX
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
Descriptionp
Third Amended and Restated Certificate of
Incorporation
Amended and Restated By-laws
Form of Senior Indenture
Form of Subordinated Indenture
Form of Common Stock Certificate
Indenture, dated as of November 7, 2019, among
MSCI Inc., each of the subsidiary guarantors party
thereto and Wells Fargo Bank, National
Association, as Trustee
Form of Note for MSCI Inc. 4.000% Senior Notes
due November 15, 2029 (included in Exhibit 4.4)
Indenture, dated as of March 4, 2020, among MSCI
Inc., each of the subsidiary guarantors party thereto
and Wells Fargo Bank, National Association, as
Trustee.
Form of Note for MSCI Inc. 3.625% Senior Notes
due September 1, 2030 (included in Exhibit 4.6).
Indenture, dated as of May 26, 2020, among MSCI
Inc., each of the subsidiary guarantors party thereto
and Wells Fargo Bank, National Association, as
Trustee.
Form of Note for MSCI Inc. 3.875% Senior Notes
due February 15, 2031 (included in Exhibit 4.8).
Indenture, dated as of May 14, 2021, among MSCI
Inc., each of the subsidiary guarantors party thereto
and Wells Fargo Bank, National Association, as
Trustee.
Form of Note for MSCI Inc. 3.625% Senior Notes
due November 1, 2031 (included in Exhibit 4.10).
Indenture, dated as of August 17, 2021, among
MSCI Inc., each of the subsidiary guarantors party
thereto and Wells Fargo Bank, National
Association, as Trustee.
101
Form
10-Q
8-K/A
S-3
S-3
10-Q
8-K
File No.
001-33812
Exhibit No. Filing Date
g
5/4/2012
3.1
001-33812
333-
206232
333-
206232
001-33812
001-33812
3.1
4.1
4.2
4.1
4.1
1/11/2021
8/7/2015
8/7/2015
5/4/2012
11/7/2019
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
001-33812
4.2
11/7/2019
001-33812
4.1
3/04/2020
001-33812
4.2
3/04/2020
001-33812
4.1
5/26/2020
001-33812
4.2
5/26/2020
001-33812
4.1
5/14/2021
001-33812
4.2
5/14/2021
001-33812
4.1
8/17/2021
Exhibit
Number
4.13
4.14
10.1*
10.2*
Descriptionp
Form of Note for MSCI Inc. 3.250% Senior Notes
due August 15, 2033 (included in Exhibit 4.12).
Description of Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934
Summary of Non-Employee Director Compensation
Non-Employee Directorr Stockk
Guidelines
Ownership
p
y
10.3* MSCI Inc. 2016 Non-Employee Directors
Compensation Plan, as amended
10.4* MSCI Inc. Non-Employee Director Deferral Plan,
as amended
10.5* MSCI Inc. Change in Control Severance Plan,
adopted May 28, 2015
Form
8-K
File No.
001-33812
Exhibit No. Filing Date
g
8/17/2021
4.2
Filed Herewith
Filed Herewith
001-33812
10.8
4/29/2016
001-33812
10.3
5/5/2017
001-33812
10.9
4/29/2016
001-33812 10.109 2/24/2017
10-Q
10-Q
10-Q
10-K
10.6* MSCI Inc. Performance Formula and Incentive Plan
10.7* MSCI Inc. Executive Committee Stock Ownership
Proxy
001-33812 Annex C 2/28/2008
Filed Herewith
Guidelines
10.8* MSCI Inc. Clawback Policy
10.9* MSCI Inc. 2016 Omnibus Incentive Plan
10.10* MSCI Inc. Annual Incentive Plan
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
Form of 2019 Award Agreement for Restricted
Stock Units for Employees Under the MSCI Inc.
2016 Omnibus Incentive Plan
Form of 2019 Annual Performance Award
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. Omnibus
Incentive Plan
Form of 2019 Annual Performance Award
Agreement for Performance Stock Units for
Managing Directors Under the MSCI Inc. Omnibus
Incentive Plan
Special Restricted Stock Unit Award Agreement
Under the MSCI Inc. 2016 Omnibus Incentive Plan
Form of 2019 Award Agreement for Restricted
Stock Units for Directors Under the MSCI Inc. 2016
Non-Employee Directors Compensation Plan
Form of 2020 Award Agreement for Restricted
Stock Units for Employees Under the MSCI Inc.
2016 Omnibus Incentive Plan
Form of 2020 Annual Performance Award
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
Form of 2020 Annual Performance Award
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
Form of 2020 Award Agreement for Restricted
Stock Units for Directors Under the MSCI Inc. 2016
Non-Employee Directors Compensation Program
Form of 2021 Award Agreement for Restricted
Stock Units for Employees Under the MSCI Inc.
2016 Omnibus Incentive Plan
Form of 2021 Annual Performance Award
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
102
10-K
S-8
10-K
10-K
001-33812 10.189 2/22/2019
99.1 04/28/2016
333-
210987
001-33812 10.166 2/26/2018
001-33812 10.185 2/22/2019
10-K
001-33812 10.186 2/22/2019
10-K
001-33812 10.187 2/22/2019
10-Q
10-Q
001-33812
10.5
5/3/2019
001-33812
10.6
5/3/2019
10-K
001-33812 10.216 2/18/2020
10-K
001-33812 10.217 2/18/2020
10-K
001-33812 10.218 2/18/2020
10-Q
001-33812
10.1
4/29/2020
10-K
001-33812 10.232 2/12/2021
10-K
001-33812 10.233 2/12/2021
Exhibit
Number
10.22*
10.23*
10.24*
10.25*
10.26*
Descriptionp
Form of 2021 Annual Performance Award
Agreement for Performance Stock Units for
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
Form of 2021 Award Agreement for Restricted
Stock Units for Directors Under the MSCI Inc. 2016
Non-Employee Directors Compensation Plan.
Form of 2022 Award Agreement for Restricted
Stock Units for Employees Under the MSCI Inc.
2016 Omnibus Incentive Plan
Form of 2022 Annual Performance Award
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
Form of 2022 Annual Performance Stock Option
Agreement for Performance Stock Units forff
Managing Directors Under the MSCI Inc. 2016
Omnibus Incentive Plan
Form
10-K
File No.
Exhibit No. Filing Date
001-33812 10.234 2/12/2021
g
10-Q
001-33812
10.1
7/27/2021
Filed Herewith
Filed Herewith
Filed Herewith
10.27* Offerr Letter, executed March 11, 2014, yby and
between MSCI Inc. and Scottt Crum
10-Q
001-33812
10.1
5/4/2018
10.28* Offer Letter, executed September 24, 2020, between
8-K
001-33812
10.1
9/25/2020
MSCI Inc. and Andrew C. Wiechmann
10.30
10.29* Employment Letter, entered into on April 27, 2021,
between MSCI Inc. and C.D. Baer Pettit.
Revolving Credit Agreement, dated as of November
20, 2014, among MSCI Inc., as the Borrower, each
of the Subsidiary Guarantors party thereto,
JPMorgan Chase Bank, N.A., as the Administrative
Agent and L/C Issuer, the Other Lenders Party
Thereto and JPMorgan Chase Bank, N.A., as Lead
Arranger and Bookrunner
Amendmentt No. 1 to the Revolving
Agreement, dated Augustt 4, 2016, among MSCI
Inc., each off the subsidiary guarantors party thereto,
JPMorgan Chase Bank, N.A., as Administrative
party
y
t and L/C Issuerr and the otherr lenders p
Credit
t
10.31
10.32
10.33
10.34
10.35
thereto
Amendment No. 2 to the Revolving Credit
Agreement, dated May 18, 2018, among MSCI Inc.,
each of the subsidiary guarantors party thereto,
JPMorgan Chase Bank, N.A., as Administrative
Agent and L/C Issuer and the other lenders party
thereto
Amendment No. 3 to the Revolving Credit
Agreement, dated November 15, 2019, among
MSCI Inc., each of the subsidiary guarantors party
thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and L/C Issuer and the other
lenders party thereto
Amendment No. 4 to the Revolving Credit
Agreement, dated March 29, 2021, among MSCI
Inc., each of the subsidiary guarantors party thereto,
JPMorgan Chase Bank, N.A., as Administrative
Agent and L/C Issuer and the other lenders party
thereto
Agreement of Lease dated September 16, 2011, by
and between 7 World Trade Center, LLC and MSCI
Inc.
103
10-Q
001-33812
10.2
4/28/2021
8-K
001-33812
10.1
5/18/2018
8-K
001-33812
10.1
8/05/2016
8-K
001-33812
10.1
5/18/2018
8-K
001-33812
10.1 11/19/2019
8-K
001-33812
10.1
3/30/2021
8-K
001-33812
10.1
9/22/2011
Exhibit
Number
Descriptionp
10.36††# Index License Agreement for Funds, dated as of
March 18, 2000, between Morgan Stanley Capital
International and Barclays Global Investors, N.A.
10.37††# Amendment to Index License Agreement for Funds
between Morgan Stanley Capital International and
Barclays Global Investors, N.A.
Form
10-K
File No.
001-33812
Exhibit No. Filing Date
g
2/12/2021
10.1
10-K
001-33812
10.2
2/12/2021
10.38††# Letter Agreement to Amend MSCI-BGI Fund Index
10-K
001-33812
10.3
2/12/2021
License Agreement, dated as of June 21, 2001,
between Morgan Stanley Capital International Inc.
and Barclays Global Investors, N.A.
10.39††# Addendum to the Index License Agreement for
Funds, dated as of September 18, 2002, between
Morgan Stanley Capital International Inc. and
Barclays Global Investors, N.A.
10-K
001-33812
10.4
2/12/2021
10.40††# Amendment to the Index License Agreement for
10-K
001-33812
10.5
2/12/2021
Funds, dated as of December 3, 2004, between
Morgan Stanley Capital International Inc. and
Barclays Global Investors, N.A.
10.41††# Amendment to the Index License Agreement for
Funds, dated as of May 1, 2005, between Morgan
Stanley Capital International Inc. and Barclays
Global Investors, N.A.
10.43
10.42††# Amendment to the Index License Agreement for
Funds, dated as of July 1, 2006, between Morgan
Stanley Capital International Inc. and Barclays
Global Investors, N.A.
Amendment to Index License Agreement for Funds,
dated as of June 5, 2007, between Morgan Stanley
Capital International Inc. and Barclays Global
Investors, N.A.
Amendment to Index License Agreement for Funds,
dated as of November 7, 2008, between MSCI Inc.
and Barclays Global Investors, N.A.
10.44
10-K
001-33812
10.6
2/12/2021
10-K
001-33812
10.7
2/12/2021
10-K
001-33812
10.8
1/31/2011
10-K
001-33812
10.9
2/29/2012
10.45††# Amendment to Index License Agreement for Funds,
10-K
001-33812 10.10 2/12/2021
10.46
dated as of December 9, 2008, between MSCI Inc.
and Barclays Global Investors, N.A.
Amendment to Index License Agreement for Funds,
dated as of April 1, 2009, between MSCI Inc. and
Barclays Global Investors, N.A.
10-K
001-33812 10.11 1/29/2010
10.47††# Amendment to Index License Agreement for Funds,
10-K
001-33812 10.12 2/12/2021
10.48
10.49
dated as of May 21, 2009, between MSCI Inc. and
Barclays Global Investors, N.A.
Amendment to Index License Agreement for Funds,
dated as of September 30, 2009, between MSCI Inc.
and Barclays Global Investors, N.A.
Amendment to Index License Agreement for Funds,
dated as of October 6, 2009, between MSCI Inc. and
Barclays Global Investors, N.A.
10-Q
001-33812
10.4
7/2/2010
10-K
001-33812 10.14 1/29/2010
10.50††# Amendment to the Index License Agreement for
10-K
001-33812 10.15 2/12/2021
Funds, dated as of October 4, 2011, by and between
MSCI Inc. and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.). Replaces in its entirety the
Amendment to Index License Agreement for Funds,
dated as of October 27, 2009, between MSCI Inc.
and Barclays Global Investors, N.A. filed as
Exhibit 10.15 to Form 10-K (001-33812) filed with
the SEC on February 29, 2012
104
Exhibit
Number
Descriptionp
10.52
10.51††# Amendment to Index License Agreement for Funds,
dated as of December 15, 2009, between MSCI Inc.
and Blackrock Institutional Trust Company, N.A.
Amendment to Index License Agreement for Funds,
dated as of June 13, 2011, between MSCI Inc. and
BlackRock Institutional Trust Company, N.A.
Amendment to Index License Agreement for Funds,
dated as of May 20, 2010
10.53
10.54††# Schedule No. 11043 to the Master Index License
Agreement for Index Based Funds, between MSCI
Inc. and BlackRock Institutional Trust Company,
N.A. (formerly, Barclays Global Investors, N.A.),
dated as of September 1, 2010
10.56
10.55††# Amendment to the Index License Agreement for
Funds, dated as of November 19, 2010, between
MSCI Inc. and Barclays Global Investors, N.A.
Amendment to the Index License Agreement for
Funds, dated as of June 21, 2011, by and between
MSCI Inc. and BlackRock Institutional Trust
Company, N.A. (formerly known as Barclays
Global Investors, N.A.)
10.57††# Amendment to the Index License Agreement for
Funds, dated as of July 1, 2011, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and Blackrock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
Form
10-K
File No.
Exhibit No. Filing Date
001-33812 10.46 2/12/2021
g
10-K
001-33812 10.58 2/29/2012
10-K
10-K
001-33812 10.59 1/31/2011
001-33812 10.49 2/12/2021
10-K
001-33812 10.50 2/12/2021
10-K
001-33812 10.62 2/29/2012
10-K
001-33812 10.52 2/12/2021
10.58††# Amendment to the Index License Agreement for
10-K
001-33812 10.53 2/12/2021
10.59
Funds, dated as of August 23, 2011, by and between
MSCI Inc. and Blackrock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
Amendment to the Index License Agreement for
Funds, dated as of October 4, 2011, by and between
MSCI Inc. and BlackRock Institutional Trust
Company, N.A. (formerly known as Barclays
Global Investors, N.A.)
10-K
001-33812 10.65 2/29/2012
10.60††# Amendment to the Index License Agreement for
10-K
001-33812 10.55 2/12/2021
10.61
Funds, dated as of October 4, 2011, by and between
MSCI Inc. and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
Amendment to the Index License Agreement for
Funds, dated as of December 16, 2011, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International, Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10-K
001-33812 10.67 2/29/2012
10.62††# Amendment to the Index License Agreement for
10-K
001-33812 10.62 2/12/2021
Funds, dated as of February 16, 2012, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
105
Exhibit
Number
Descriptionp
10.63††# Amendment to the Index License Agreement for
Funds, dated as of April 9, 2012, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.64††# Amendment to the Index License Agreement for
Funds, dated as of June 1, 2012, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
Form
10-K
File No.
Exhibit No. Filing Date
001-33812 10.63 2/12/2021
g
10-K
001-33812 10.64 2/12/2021
10.65††# Amendment to the Index License Agreement for
10-K
001-33812 10.65 2/12/2021
Funds, dated as of August 17, 2012, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.66††# Amendment to the Index License Agreement for
10-K
001-33812 10.66 2/12/2021
Funds, dated as of August 20, 2012, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.67††# Amendment to the Index License Agreement for
10-K
001-33812 10.67 2/12/2021
Funds, dated as of November 6, 2012, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.68††# Amendment to the Index License Agreement for
10-K
001-33812 10.68 2/12/2021
Funds, dated as of November 15, 2012, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.69††# Amendment to the Index License Agreement for
10-K
001-33812 10.69 2/12/2021
Funds, dated as of February 21, 2013, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A.
(formerly, Barclays Global Investors, N.A.)
10.70††# Amendment to the Index License Agreement for
10-K
001-33812 10.70 2/12/2021
Funds, dated as of March 20, 2013, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.71††# Amendment to the Index License Agreement for
10-K
001-33812 10.71 2/12/2021
Funds, dated as of September 11, 2013, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
106
Exhibit
Number
Descriptionp
10.72††# Amendment to the Index License Agreement for
Form
10-K
Funds, dated as of December 10, 2013, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.72 2/12/2021
g
10.73††# Amendment to the Index License Agreement for
10-K
001-33812 10.73 2/12/2021
Funds, dated as of December 16, 2013, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.74††# Amendment to the Index License Agreement for
10-K
001-33812 10.82 2/12/2021
Funds, dated as of January 23, 2014, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.75††# Amendment to the Index License Agreement for
10-K
001-33812 10.83 2/12/2021
Funds, dated as of January 23, 2014, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.76††# Letter Agreement to amend the Amendment to the
10-K
001-33812 10.85 2/12/2021
Index License Agreement for Funds, dated as of
March 18, 2014, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Institutional Trust Company,
N.A. (formerly, Barclays Global Investors, N.A.)
10.77††# Amendment to the Index License Agreement for
Funds, dated as of July 9, 2014, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.78††# Amendment to the Index License Agreement for
Funds, dated as of July 16, 2014, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.79††# Amendment to the Index License Agreement for
Funds, dated as of August 15, 2014, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.80††# Amendment to the Index License Agreement for
Funds, dated as of September 9, 2014, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10-K
001-33812 10.89 2/12/2021
10-K
001-33812 10.90 2/12/2021
10-K
001-33812 10.91 2/12/2021
10-K
001-33812 10.92 2/12/2021
10.81††# Amendment to the Index License Agreement for
10-K
001-33812 10.96 2/12/2021
Funds, dated as of October 30, 2014, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
107
Exhibit
Number
Descriptionp
10.82††# Amendment to the Index License Agreement for
Form
10-K
Funds, dated as of February 4, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.102 2/12/2021
g
10.83††# Amendment to the Index License Agreement for
10-K
001-33812 10.103 2/12/2021
Funds, dated as of February 25, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.84††# Letter Agreement (to amend the Amendment dated
December 10, 2013) to the Index License
Agreement for Funds, dated as of March 17, 2015,
by and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.85††# Amendment to the Index License Agreement for
Funds, dated as of April 20, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.86††# Amendment to the Index License Agreement for
Funds, dated as of April 20, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10-K
001-33812 10.104 2/12/2021
10-K
001-33812 10.105 2/12/2021
10-K
001-33812 10.106 2/12/2021
10.87††# Amendment (to amend the Amendment dated
10-K
001-33812 10.110 2/12/2021
February 21, 2013) to the Index License Agreement
for Funds, dated as of June 1, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.88††# Amendment to the Index License Agreement for
Funds, dated as of June 1, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10-K
001-33812 10.111 2/12/2021
10.89††# Amendment (to amend the Amendment dated
10-K
001-33812 10.112 2/12/2021
November 6, 2012) to the Index License Agreement
for Funds, dated as of June 4, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.90† Amendment (to amend the Amendments dated
10-K
011-33812 10.113 2/22/2019
January 23, 2014 and April 15, 2014) to the Index
License Agreement for Funds, dated as of June 4,
2015, by and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Fund Advisors (as successor to Barclays Global
Investors, N.A.)
10.91††# Amendment to the Index License Agreement for
10-K
001-33812 10.116 2/12/2021
Funds, dated as of August 1, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
108
Exhibit
Number
Descriptionp
10.92††# Amendment (to amend the Amendment dated
Form
10-K
October 4, 2011) to the Index License Agreement
for Funds, dated as of August 3, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.117 2/12/2021
g
10.93††# Amendment (to amend the Amendment dated
10-K
001-33812 10.118 2/12/2021
January 23, 2014) to the Index License Agreement
for Funds, dated as of August 3, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.94††# Amendment (to amend the Amendment dated
10-K
001-33812 10.119 2/12/2021
August 15, 2014) to the Index License Agreement
for Funds, dated as of August 3, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.95††# Letter Agreement (to amend the Amendment dated
August 15, 2014) to the Index License Agreement
for Funds, dated as of August 3, 2015, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
10.96††# Letter Agreement (to amend the Amendment dated
April 20, 2015) to the Index License Agreement for
Funds, dated as of October 9, 2015, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.97††# Letter Agreement (to amend the Amendment dated
December 10, 2013) to the Index License
Agreement for Funds, dated as of December 17,
2015, by and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Institutional Trust Company, N.A. (formerly,
Barclays Global Investors, N.A.)
Amendment (to amend the Amendment dated
January 23, 2014) to the Index License Agreement
for Funds, dated as of April 15, 2014, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.98
10-K
001-33812 10.120 2/12/2021
10-K
001-33812 10.121 2/12/2021
10-K
001-33812 10.122 2/12/2021
10-K
001-33812 10.126 2/26/2016
10.99††# Amendment to the Index License Agreement for
10-K
001-33812 10.127 2/12/2021
Funds, dated as of January 28, 2016, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
109
Exhibit
Number
Descriptionp
10.100††# Amendment to the Index License Agreement for
Form
10-K
File No.
Exhibit No. Filing Date
001-33812 10.129 2/12/2021
g
Funds, dated as of February 29, 2016, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.101††# Amendment to the Index License Agreement for
Funds, dated as of April 8, 2016, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.102††# Amendment (to amend the Amendment dated
December 16, 2011) to the Index License
Agreement for Funds, dated as of April 12, 2016, by
and between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10-K
001-33812 10.130 2/12/2021
10-K
001-33812 10.131 2/12/2021
10.103††# Amendment to the Index License Agreement for
10-K
001-33812 10.140 2/12/2021
Funds, dated as of April 29, 2016, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.104 Amendment to the Schedules to the Index License
Agreement for Funds, dated as of May 4, 2016, by
and between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.105††# Amendment to the Index License Agreement for
Funds, dated as of May 12, 2016, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.106††# Amendment to the Index License Agreement for
Funds, dated as of June 15, 2016, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.107††# Amendment (to amend the Amendment dated
February 29, 2016) to the Index License Agreement
for Funds, dated as of July 21, 2016, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10-K
001-33812 10.141 2/24/2017
10-K
001-33812 10.142 2/12/2021
10-K
001-33812 10.143 2/12/2021
10-K
001-33812 10.144 2/12/2021
10.108††# Amendment to the Index License Agreement for
10-K
001-33812 10.146 2/12/2021
Funds, dated as of August 1, 2016, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.109††# Amendment to the Index License Agreement for
Funds, dated as of October 12, 2016, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
110
10-K
001-33812 10.148 2/12/2021
Exhibit
Number
10.110 Amendment to the Schedules to the Index License
Descriptionp
Form
10-K
Agreement for Funds, dated as of November 30,
2016, by and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Fund Advisors (as successor to Barclays Global
Investors, N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.149 2/24/2017
g
10.111††# Amendment to the Index License Agreement for
10-K
001-33812 10.150 2/12/2021
Funds, dated as of December 5, 2016, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.112† Amendmentt to a Schedule to the Index License
Agreementt forr Funds, dated as of Decemberr 8,
2016, yby and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Fund Advisors (as successor to Barclays Global
Investors, N.A.)
10-K
001-33812 10.154 2/26/2018
10.113† Amendmentt to the Index License Agreementt
February 10, 2017, yby and
y
Funds, dated as off
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
rfor
10-K
001-33812 10.155 2/26/2018
10.114† Amendmentt No. 1 to the Index License Agreementt
10-K
001-33812 10.156 2/26/2018
forr Funds, dated as off April 6, 2017, by and
between MSCI ESG Research LLC and
Fund Advisors
BlackRock
k
10.115† Amendmentt to the Second Schedule to the Index
10-K
001-33812 10.157 2/22/2019
License Agreementt forrff Funds, dated as of pApril 12,
2017, yby and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Fund Advisors (as successor to Barclays Global
Investors, N.A.)
10.116† Amendmentt to the Index License Agreementt
rfor
yMay 26, 2017, yby and between
Funds, dated as off
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10-K
001-33812 10.159 2/26/2018
10.117† Amendmentt to the Previous Amendmentt and
10-K
001-33812 10.160 2/26/2018
Previous Name Change Amendmentt to the Index
License Agreementt forrff Funds, dated as fof
September
Septemberr 1, 2017, yby and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
10.118† Amendmentt to the Index License Agreementt
rfor
dated as off Octoberr 1, 2017, yby and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
rfor
10.119 Amendmentt to the Index License Agreementt
dated as off Octoberr 1, 2017, yby and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
111
10-K
001-33812 10.161 2/22/2019
10-K
001-33812 10.162 2/22/2019
Exhibit
Number
10.120† Amendmentt to the Index License Agreementt
dated as off Novemberr 1, 2017, yby and
Descriptionp
rfor
Form
10-K
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.163 2/26/2018
g
10.121† Amendmentt to the Index License Agreementt
January 18, 2018, yby and
y
Funds, dated as off
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
rfor
10-K
001-33812 10.169 2/22/2019
10.122† Amendmentt to the Index License gAgreementt
February 8, 2018, yby and
y
Funds, dated as off
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
rfor
10-K
001-33812 10.170 2/22/2019
10.123 Amendmentt to the Previous Amendmentt to the
Index License Agreement forr Funds, dated as fof
February 19, 2018, yby and betwee Mn
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
SCI Inc.
y
10-K
001-33812 10.171 2/22/2019
10.124† Amendmentt No. 2 to the Index License Agreementt
10-K
001-33812 10.172 2/22/2019
forr Funds, dated as off March 1, 2018, by and
between MSCI ESG Research LLC and
Fund Advisors
BlackRock
k
10.125 Amendment to the Schedules to the Index License
10-K
001-33812 10.173 2/22/2019
Agreement for Funds, dated as of May 15, 2018, by
and between MSCI Inc. and BlackRock Fund
Advisors
10.126† Amendmentt to the Index License Agreementt
rfor
Funds, dated as off June 1, 2018, yby and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.127† Amendmentt No. 3 to the Index License Agreementt
forr Funds, dated as off July 1, 2018, by and between
MSCI ESG Research LLC and BlackRockk Fund
Advisors
10-K
001-33812 10.175 2/22/2019
10-K
001-33812 10.176 2/22/2019
10.128 Amendment to the Schedules to the Index License
10-K
001-33812 10.177 2/22/2019
Agreement for Funds, dated as of September 1,
2018, by and between MSCI Inc. and BlackRock
Fund Advisors
10.129 Amendmentt to the Previous Amendmentt to the
Index License Agreement forr Funds, dated as fof
September
Septemberr 10, 2018, yby and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
10-K
001-33812 10.178 2/22/2019
112
Exhibit
Number
10.130† Amendmentt to the Previous Amendment, the
Descriptionp
Form
10-K
Previous Conversion Amendment and Previous
Name Change Amendment to the Index License
Agreementt forr Funds, dated as of
pSeptemberr 10,
2018, yby and between MSCI Inc. (formerly, Morgan
Stanley Capital International Inc.) and BlackRock
Fund Advisors (as successor to Barclays Global
Investors, N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.179 2/22/2019
g
10.131† Amendmentt to the Index License Agreementt
rfor
10-K
001-33812 10.180 2/22/2019
dated as off Octoberr 1, 2018, yby and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.132† Amendment to the Index License Agreement for
10-K
001-33812 10.181 2/22/2019
Funds, dated as of October 1, 2018, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Institutional Trust
Company, N.A. (formerly, Barclays Global
Investors, N.A.)
10.133† Amendmentt to the Index License Agreementt
dated as off Novemberr 1, 2018, yby and
rfor
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.134† Amendmentt to the Index License Agreementt
dated as off Novemberr 1, 2018, yby and
rfor
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.135† Amendmentt to the Previous Amendmentt to the
Index License Agreement forr Funds, dated as fof
Novemberr 16, 2018, yby and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
10-K
001-33812 10.182 2/22/2019
10-K
001-33812 10.183 2/18/2020
10-K
001-33812 10.184 2/22/2019
10.136†† Amendment, dated as of October 30, 2019, by and
10-Q
001-33812
10.1 10/31/2019
among MSCI Inc., MSCI Limited, BlackRock Fund
Advisors and BlackRock Institutional Trust
Company, N.A.
10.137 Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
January 31, 2019, by and between MSCI Inc. and
BlackRock Fund Advisors
10-K
001-33812 10.201 2/18/2020
10.138†† Amendmentt to the Index License gAgreementt
February 1, 2019, yby and
y
Funds, dated as off
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
rfor
10-K
001-33812 10.202 2/18/2020
10.139 Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
March 1, 2019, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
113
10-K
001-33812 10.203 2/18/2020
Form
10-K
File No.
Exhibit No. Filing Date
001-33812 10.204 2/18/2020
g
10-K
001-33812 10.205 2/18/2020
10-K
001-33812 10.206 2/18/2020
10-K
001-33812 10.207 2/18/2020
10-K
001-33812 10.208 2/18/2020
10-K
001-33812 10.209 2/18/2020
10-K
001-33812 10.210 2/18/2020
10-K
001-33812 10.211 2/18/2020
10-K
001-33812 10.212 2/18/2020
10-K
001-33812 10.213 2/18/2020
Descriptionp
Exhibit
Number
10.140 Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
March 1, 2019, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A.)
10.141†† Amendmentt to the Index License Agreementt
rfor
dated as off pApril 1, 2019, yby and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
rfor
dated as off pApril 1, 2019, yby and between
10.142†† Amendmentt to the Index License Agreementt
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
rfor
dated as off pApril 1, 2019, yby and between
10.143†† Amendmentt to the Index License Agreementt
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.144†† Amendment to the Index License Agreement for
Funds, dated as of April 1, 2019, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.145†† Amendment to the Index License Agreement for
Funds, dated as of April 1, 2019, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.146†† Amendment to the Index License Agreement for
Funds, dated as of April 1, 2019, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.147†† Amendment to the Index License Agreement for
Funds, dated as of April 1, 2019, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.148†† Amendment to the Index License Agreement for
Funds, dated as of October 1, 2019, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.149 Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
October 25, 2019, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors (as successor to
Barclays Global Investors, N.A., which was
succeeded by BlackRock Institutional Trust
Company, N.A.)
114
Exhibit
Number
Descriptionp
10.150†† Amendment to the Index License Agreement for
Form
10-K
Funds, dated as of November 25, 2019, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
File No.
Exhibit No. Filing Date
001-33812 10.214 2/18/2020
g
10.151†† Amendment to the Index License Agreement for
10-K
001-33812 10.215 2/18/2020
Funds, dated as of November 25, 2019, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.152 Amendment to the Schedules to the Index License
10-K
001-33812 10.222 2/12/2021
Agreement for Funds, dated as of February 3, 2020,
by and between MSCI Inc. and BlackRock Fund
Advisors
10.153 Amendment to the Schedules to the Index License
10-K
001-33812 10.223 2/12/2021
Agreement for Funds, dated as of February 3, 2020,
by and between MSCI ESG Research LLC and
BlackRock Fund Advisors
10.154 Amendment to the Schedules to the Index License
10-K
001-33812 10.224 2/12/2021
Agreement for Funds, dated as of March 9, 2020, by
and between MSCI Inc. and BlackRock Fund
Advisors
10.155††# Amendment to the Schedules to the Index License
10-K
001-33812 10.225 2/12/2021
Agreement for Funds, dated as of March 9, 2020, by
and between MSCI Inc. and BlackRock Fund
Advisors
10.156††# Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
April 1, 2020, by and between MSCI Inc. (formerly,
Morgan Stanley Capital International Inc.) and
BlackRock Fund Advisors
10.157††# Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
April 13, 2020, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors
10-K
001-33812 10.226 2/12/2021
10-K
001-33812 10.227 2/12/2021
10.158††# Amendment No. 5 to the Index License Agreement
10-K
001-33812 10.228 2/12/2021
for Funds, dated as of June 15, 2020, by and
between MSCI ESG Research LLC and BlackRock
Fund Advisors
10.159††# Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
August 19, 2020, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors
10.160††# Amendment to the Index License Agreement for
Funds, dated as of November 16, 2020, by and
between MSCI Inc. (formerly, Morgan Stanley
Capital International Inc.) and BlackRock Fund
Advisors (as successor to Barclays Global Investors,
N.A.)
10.161††# Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
December 1, 2020, by and between MSCI Inc.
(formerly, Morgan Stanley Capital International
Inc.) and BlackRock Fund Advisors
115
10-K
001-33812 10.229 2/12/2021
10-K
001-33812 10.230 2/12/2021
10-K
001-33812 10.231 2/12/2021
Exhibit
Number
Descriptionp
Form
10.162††# Amendmentt No. 4 to the Index License Agreementt
forr Funds, dated as off March 20, 2020, by and
between MSCI ESG Research LLC and
Fund Advisors
BlackRock
k
10.163††# Amendment to the Index License Agreement for
Funds, dated as of April 26, 2021, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.164††# Amendment to the Index License Agreement for
Funds, dated as of June 30, 2021, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.165††# Amendment to the Index License Agreement for
Funds, dated as of July 26, 2021, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.166††# Amendment to the Index License Agreement for
Funds, dated as of August 23, 2021, by and between
MSCI Inc. (formerly, Morgan Stanley Capital
International Inc.) and BlackRock Fund Advisors
(as successor to Barclays Global Investors, N.A.)
10.167††# Amendment to the Schedules to the Index License
Agreement for Funds, dated as of August 30, 2021,
by and between MSCI ESG Research LLC and
BlackRock Fund Advisors
21.1
23.1
24.1
10.168††# Amendment to the Previous Amendment to the
Index License Agreement for Funds, dated as of
December 9, 2021, by and between MSCI ESG
Research LLC and BlackRock Fund Advisors
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP
Powers of Attorney (included as part of Signature
Page)
Rule 13a-14(a) Certification of Chief Executive
Officer
Rule 13a-14(a) Certification of Chief Financial
Officer
Section 1350 Certification of Chief Executive
Officer and Chief Financial Officer
31.1
31.2
32.1
ff
101.INS XBRL Instance Document - the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline
XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase
Document.
101.LAB XBRL Taxonomy Extension Label Linkbase
Document.
File No.
Filed Herewith
Exhibit No. Filing Date
g
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Furnished Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
101.PRE XBRL Taxonomy Extension Presentation Linkbase
Filed Herewith
Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase
Document.
104.DEF Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101)
Filed Herewith
Filed Herewith
116
*
†
††
#
Indicates a management compensation plan, contract or arrangement.
Confidential treatment has been granted for a portion of this exhibit.
Certain confidential portions of this Exhibit have been omitted pursuant to Item 601(b) of Regulation S-K
because the identified confidential portions (i) are not material and (ii) are of the type that the Company treats
as private or confidential.
The Company agrees to furnish an unredacted copy of this exhibit to the Securities and Exchange Commission
upon its request.
Item 16.
Form 10-K Summary
None.
117
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
MSCI INC.
By:
/S/ HENRY A. FERNANDEZ
Name: Henry A. Fernandez
Title: Chairman and Chief Executive Officer
Date: February 11, 2022
118
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Andrew C. Wiechmann, Robert J. Gutowski and Cecilia Aza, and each or any one of them, his or her
true and lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for him or her and in
his or her name, place and stead, in the capacities indicated below, to sign any and all amendments to this Annual
Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming his or her signatures as they may be
signed by his or her said attorneys-in-fact and agents, or their substitute or substitutes, to any and all amendments to
this Annual Report on Form 10-K.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated.
Signature
Title
Date
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
/S/ HENRY A. FERNANDEZ
Henry A. Fernandez
Chairman and Chief Executive Officer
(principal executive officer)
/S/ ANDREW C. WIECHMANN
Andrew C. Wiechmann
Chief Financial Officer and Treasurer
(principal financial officer)
/S/ JENNIFER MAK
Jennifer Mak
/S/ ROBERT G. ASHE
Robert G. Ashe
/S/ WAYNE EDMUNDS
Wayne Edmunds
/S/ CATHERINE R. KINNEY
Catherine R. Kinney
/S/ JACQUES P. PEROLD
Jacques P. Perold
/S/ SANDY C. RATTRAY
Sandy C. Rattray
/S/ LINDA H. RIEFLER
Linda H. Riefler
/S/ MARCUS L. SMITH
Marcus L. Smith
/S/ RAJAT TANEJA
Rajat Taneja
/S/ PAULA VOLENT
Paula Volent
Global Controller and Head of Finance
Operations
(principal accounting officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
119
Subsidiaries of MSCI Inc.
EXHIBIT 21.1
The following is a list of the subsidiaries of MSCI Inc., excluding those subsidiaries that, considered in
the aggregate as a single subsidiary, do not constitute a significant subsidiary as of December 31, 2021.
Name
Barra, LLC
Investment Property Databank Limited
MSCI Barra (Suisse) Sàrl
MSCI ESG Research (UK) Limited
MSCI ESG Research LLC
MSCI G.K.
MSCI Limited
Real Capital Analytics, Inc.
RiskMetrics Solutions, LLC
Jurisdiction of
Incorporation/Organization
p
g
Delaware, U.S.A.
United Kingdom
Switzerland
United Kingdom
Delaware, U.S.A.
Japan
United Kingdom
New York, U.S.A.
Delaware, U.S.A.
SECTION 302 CERTIFICATION
EXHIBIT 31.1
I, Henry A. Fernandez, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of MSCI Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
Designed such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
reporting, or caused such internal control over financial
ff
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over finff ancial reporting.
Date: February 11, 2022
y
/s/ Henry A. Fernandez
Henry A. Fernandez
Chairman and Chief Executive Officer
(Principal Executive Officer)
SECTION 302 CERTIFICATION
EXHIBIT 31.2
I, Andrew C. Wiechmann, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of MSCI Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
Designed such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
reporting, or caused such internal control over financial
ff
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over finff ancial reporting.
Date: February 11, 2022
/s/ Andrew C. Wiechmann
Andrew C. Wiechmann
Chief Financial Officer and Treasurer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Henry A. Fernandez, Chairman and Chief Executive Officer of MSCI Inc. (the “Registrant”) and Andrew C.
Wiechmann, Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his/her knowledge:
1.
2.
The Registrant’s Annual Report on Form 10-K for the period ended December 31, 2021 (the “Periodic
Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Periodic Report fairly presents, in all material respects, the financial
condition of the Registrant at the end of the period covered by the Periodic Report and results of
operations of the Registrant for the periods covered by the Periodic Report.
Date: February 11, 2022
y
/s/ Henry A. Fernandez
Henry A. Fernandez
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Andrew C. Wiechmann
Andrew C. Wiechmann
Chief Financial Officer and Treasurer
(Principal Financial Officer)
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