FAQ TRANSITION PLAN for INSTITUTIONAL INVESTORS RISKMETRICS GOVERNANCE RISK INDICATORS. Page 1 of 5

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1 FAQ TRANSITION PLAN for INSTITUTIONAL INVESTORS RISKMETRICS GOVERNANCE RISK INDICATORS Page 1 of 5

2 1. What is RiskMetrics Governance Risk Indicators? RiskMetrics Governance Risk Indicators (GRId) are a new corporate governance yardstick for corporate issuers. The Indicators are based on best practices as encapsulated in ISS benchmark policies and the fully transparent methodology will be available to all market participants. There is also a dataset available for each company, covering all of the variables plus the scoring details used in the calculation of ratings. 2. When will Governance Risk Indicators launch? Governance Risk Indicators will be published on all covered proxy research reports beginning on March 17, The high-level Indicators will also be available at Yahoo! Finance. Proxy research reports published in the second half of March or beyond will include Governance Risk Indicators for covered companies in the U.S., Canada, the U.K., France, Germany, Netherlands, and Sweden. A more specific implementation timetable is included at the end of this document. 3. For whom is Governance Risk Indicators designed? Governance Risk Indicators are designed for institutional investors and are intended to give a concise, high-level view of a company s corporate governance structures and quick drills into particular areas of concern. 4. What other ways can equity asset managers use Governance Risk Indicators? The Indicators are designed to be easily integrated into an institution s process of evaluating companies on a number of other qualitative disciplines. Investor uses of the Indicators and underlying data include screening to limit the investable universe, equity research, quantitative factor modeling, and risk analysis. Investors can also customize the scoring mechanism to bring the indicators in line with their own policy views. 5. Why did RiskMetrics decide to introduce a successor to CGQ? We recognize that governance requirements, disclosures and company practices continue to evolve and investors are paying more attention than ever to how the companies they invest in are governed. RiskMetrics is in a unique position to build on years of experience with governance, quantitative modeling and data and felt the time was right to launch Governance Risk Indicators. 6. Will CGQ scores go away? CGQ scores will be frozen on March 17, 2010 and retired completely at the end of June Page 2 of 5

3 7. What are the key differences between Governance Risk Indicators and CGQ? We recognize that no two markets are alike. Therefore, Governance Risk Indicators will not take a uniform approach to evaluating global issuers governance standings, but will instead factor in local market nuances to assess best practices. Another key difference is Governance Risk Indicators tie to ISS proxy voting policy, which ensures timely updates to its assessment methodology, as well as greater congruence with our evaluation of shareholder ballot items. Fundamentally, Governance Risk Indicators are a more comprehensive screen of best practices, both in terms of variables and universe of coverage, particularly for non-u.s. markets. The new U.S. methodology includes a more robust compensation section, and questions in all categories are geared to capture more granular governance data. Overall, Governance Risk Indicators include a minimum of 70 variables for non-u.s. markets, depending on market practices and mandates. There are approximately 70 variables utilized in rating U.S. and Canadian companies. 8. How does the scoring work for Governance Risk Indicators? Scoring mechanisms will be consistent across markets, enabling meaningful comparisons while reflecting best practices in each local market. Rather than trying to combine very different aspects of governance into a single score, we assess issuers along four independent dimensions: board, compensation/remuneration, shareholder rights, and audit. GRId will focus on an absolute level of concern (low, medium, high) across the four discrete pillars, rather than ranking a company relative to industry or index peers. This absolute measure ensures assessments are determined entirely on a company s own governance practices. For more detailed information on the scoring methodology, please refer to the white paper published on our micro site. 9. What is the coverage universe for Governance Risk Indicators? Beginning the first half of 2010, Governance Risk Indicators will cover roughly 8,000 global companies, with an expansion to additional markets, including Japan and Australia planned for the second half of the year. U.S. Corporate Issuers will comprise the bulk of initial coverage, accounting for 6,400 companies or 80 percent of the total. Approximately 450 U.K. companies will be included in the initial roll-out, while coverage for Canada (480 companies), France (250), Germany (200), the Netherlands (100) and Sweden (100) will be the remainder. A complete dataset for Governance Risk Indicators is expected to be available by June 30, How often will the methodology be updated? The methodology will be updated annually in conjunction with ISS policy updates. Page 3 of 5

4 11. Why did RiskMetrics decide to align its ratings with its policy updates? RiskMetrics believes transparency around voting policies and philosophies has never been more important. To that end, we are engaging with a wider, more geographically diverse set of industry constituents during our policy formulation process, which will help us address the critical new issues our clients are facing. Since the methodology is transparent, market participants can reconstruct GRId ratings to identify issues and suggest improvements so it can be refreshed annually alongside our policy updates. This deliberate process will help shape Governance Risk Indicators, ensuring it is up-to-date, relevant, and tailored to address variations and gradations in governance practices across global capital markets. 12. Will there be a data verification site for corporate issuers? When will it be available? Yes we will make a data verification site freely available to all corporate issuers in the second half of March The Indicators criteria and scoring methodology is also be disclosed in our new technical document, which is published on our GRId micro site. 13. Will historic CGQ Profiles remain on Governance Analytics? Yes. The details in the CGQ Profiles will be frozen on March 17, 2010 and accessible in Governance Analytics until June 30, Will GRId Profiles replace CGQ Profiles? The Governance Risk Indicators company profile will be available as a PDF report, via the FTP site, and will include all of the factors leading to the company s ratings in each category. These will be available starting in May. 15. I currently receive a CGQ datafeed. How will this change and do I need to do anything to begin receiving the new file? The Governance Risk Indicators datafeed file is similar to the CGQ datafeed file in that it will also be posted to the FTP site daily as a pipe-delimited.txt file. The format of the file is changing slightly and a sample file is available on the micro site. Your account manager will be reaching out to you in the days ahead to ensure you are prepared for the new file. Page 4 of 5

5 16. Is Governance Risk Indicators intended to predict future performance or returns? No Governance Risk Indicators are one of many investment management tools to help institutions and other financial market participants measure and flag investment risk. We hope GRId will not only aid in the timely mitigation of portfolio risk, but also spur discussions on how best to improve corporate governance practices globally. 17. What additional documentation will you provide to explain the methodology? Will there be additional communications issued about the rollout timeframe? We have launched a micro site, located at: that contains a technical document, a white paper that explains our approach to developing GRId and its underlying methodology, additional information on GRId for corporate issuers and institutional investors, plus a sample of how GRId will appear in RiskMetrics proxy research reports. Implementation Timetable Category One Companies with March Meetings CGQ ratings will continue to be updated and published on proxy research reports. All companies in this category will have Governance Risk Indicators by June 30, Once Governance Risk Indicators are available, companies will receive an alert from our data verification site notifying them that their data can be reviewed. Governance Risk Indicators will be available to Institutional GRId Clients and the high-level Indicators will be available on Yahoo! Finance. Category Two Companies with April Meetings and Beyond Governance Risk Indicators will appear on proxy research reports beginning in the second half of March. Companies will receive an alert from our data verification site to review their information. Should the initial publication of the proxy research report display incorrect data in the GRId profile, we will issue a proxy research report alert, provided the meeting date has not passed. Page 5 of 5