RiskMetrics Group Releases 2009 Proxy Voting Policies

Executive Compensation Continues to be a Focus for Investors

New York, NY (November 25, 2008) – RiskMetrics Group, a leading provider of risk management and corporate governance services to the global financial community, today released its 2009 proxy voting policies, culminating an extensive policy formulation and updating process that included outreach to and input from hundreds of institutional investors and corporate issuers. RiskMetrics’ policies will be applied to all companies with shareholder meeting dates on or after February 1, 2009.

Clearly, the unprecedented market turmoil has renewed investor and regulatory focus on executive compensation practices, board accountability and oversight, and the quality of financial reporting. In particular, new rules under the U.S. financial bailout bill are targeting compensation issues such as clawbacks and golden parachutes. Accordingly, the three main areas of focus for RiskMetrics’ 2009 policy updates are executive compensation, board structure, and audit practices.

Both issuer and investor respondents to RiskMetrics policy survey demonstrated little tolerance for outsized pay packages with 70 percent of investors and 85 percent of issuers specifying pay relative to performance as “very important” in evaluating executive compensation practices. Thus, RiskMetrics’ policy guidelines on executive compensation have been expanded to examine practices that divorce pay from performance, such as tax gross-ups on severance payments and executive perks, and provisions that pay severance for voluntary departures more than a year following a takeover.

“Investors expressed strong views about pay-for-failure, and are likely to press companies even harder in 2009 to adopt compensation practices aimed at creating lasting shareholder value,” said Dr. Martha Carter, Co-Head of Global Governance Research at RiskMetrics Group.

RiskMetrics’ policy on pay-for-performance is being aligned to the provisions of the U.S. Treasury’s rules under TARP. Shareholder proposals for clawbacks of incentive pay may now receive support if companies’ policies do not match the standards set by the U.S. Treasury. At the same time, RiskMetrics will not view market deterioration, in itself, as an acceptable reason for companies to reprice stock options or reset goals under performance plans.

As in prior years, RiskMetrics will generally recommend in favor of shareholder proposals requiring the chair position be filled by an independent director, unless the company has a counterbalancing governance structure, good performance, and the absence of problematic governance issues.

“Half of investor respondents and nearly two-thirds of issuer respondents to our policy survey identified strong company performance as a satisfactory rationale for maintaining a combined role,” added Dr. Carter. “Our independent chair policy now incorporates a relative performance measure, which we have also applied to the other policies that assess performance.”

Over 90 percent of investor respondents to RiskMetrics’ policy survey identified misapplication of GAAP and ongoing material weaknesses in Section 404 disclosures as likely to prompt a vote against either board or audit committees. As such, RiskMetrics’ policy guidelines have been updated to specify these as triggers for in-depth analysis of accounting practices, and to recommend against audit committee members in the case of an adverse opinion from auditors.

The 2009 policy updates are accessible through RiskMetrics’ online Policy Gateway, which also contains helpful FAQs, summaries of outreach efforts, and other informational resources to provide all market participants with a better understanding of how RiskMetrics formulates and applies its corporate governance policies. In addition to its own policies, the corporate governance policies and philosophies of leading market participants are also available via RiskMetrics’ Policy Exchange platform.

On December 4 at 1:00 p.m. EST, RiskMetrics will host a webcast to review its 2009 policy updates. To register for the webcast, please visit: www.riskmetrics.com/webcasts/2009policy_perspectives.

About RiskMetrics Group

RiskMetrics Group is a leading provider of risk management and corporate governance products and services to participants in the global financial markets. By bringing transparency, expertise and access to the financial markets, RiskMetrics Group helps investors better understand and manage the risks associated with their financial holdings. Our solutions address a broad spectrum of risk across our clients’ financial assets. Headquartered in New York with 19 global offices, RiskMetrics Group serves some of the most prestigious institutions and corporations worldwide. For more information, please visit: www.riskmetrics.com.

RiskMetrics Group Media Contact:

Cheryl Gustitus
301.556.0538
cheryl.gustitus@riskmetrics.com

Sarah Cohn
212.354.4643
sarah.cohn@riskmetrics.com