If you’re a current shareholder or if you’re considering an investment in our stock, we think it’s important to give you a clear picture of how we run our company and how we communicate with shareholders. Our approach to running our business has never relied on the status quo. Because Morningstar does things a little differently, we’d like to give you some guidance on what to expect as a shareholder. Here are some of the key principles we follow in managing the company.

Our Values

Morningstar’s values are the foundation of our company. We use them to guide our business decisions and expect our employees to follow them as well.

Investors come first.

We believe that Morningstar’s strength comes largely from the faith that investors place in us. Our independence, integrity, and advocacy for investors’ interests are the foundation of our company. We strive to help investors achieve better results.

Great products.

We believe that Morningstar’s products must exceed our customers’ expectations and raise the standard over other existing products. To do this, our products must be not only innovative, but also reliable and of the highest quality. They must be marked by exemplary content, design, and usability.

Entrepreneurial spirit.

We believe that companies should never stop growing. Our entrepreneurial spirit inspires independent thought, agile decision-making, and an acceptance of creative and unconventional solutions to business challenges.

Uncompromising ethics.

We require our employees to adhere to high ethical standards, regardless of the impact on our business. We believe that high ethical standards should be pursued for their own sake, and we expect every Morningstar employee to treat our customers and their fellow employees as we would wish to be treated ourselves.

Great people.

We believe that every person who works at Morningstar contributes to our success. We want to attract talented, hard-working, enthusiastic people, so we create an environment that encourages employees to learn throughout their careers, allows them to advance based on merit, and rewards them for helping Morningstar thrive.

Financial success.

We believe that great products create value for our customers. This creates demand for our products and, in turn, generates financial success. Financial success strengthens our company and helps us continue to raise our standards and set more challenging goals.

Sustainable Responsibility.

We believe in the inherent value of an equitable and sustainable global economy. We share in the responsibility to build and maintain it.

Key Business Principles

With our company values as our foundation, there are six key principles we plan to follow as a public company.

Stay focused on helping investors.

Morningstar has always focused on placing investors’ interests first and doing what’s right for investors. Our mission is to create great products that help investors reach their financial goals. We believe this sense of mission is exceptionally strong at Morningstar. It pervades our organization, defines us, and sets us apart from other companies in our industry.

We plan to maintain this focus as a public company. We’re not interested in diversifying our business into areas that don’t relate to helping investors.

Because investors depend on our information to help them make well-informed investment decisions, we base our research on the principle of independence. We design our products to provide the pertinent facts and maintain an independent view. If we think an investment vehicle doesn’t meet the needs of investors, we won’t hesitate to express that opinion. This approach may cost us business in the short term, but we believe it’s the right thing to do and helps build a loyal following with our customers.

Maximize long-term results.

We strive to manage Morningstar to maximize our long-term results, while staying focused on our mission of helping investors and adhering to our company values. We define “long-term results” as our growth in our intrinsic value. We invest significantly in new product development and in enhancing our current offerings, as long we see attractive investment opportunities. We don’t plan to invest in every new project that comes along, but focus on new opportunities that can generate an above-average return on invested capital. We haven’t had a shortage of such opportunities in past and we don’t expect that to change any time soon. It typically takes many years to recoup these investments, but we believe they are critical to building long-term value for our shareholders.

No financial forecasts.

In contrast to most companies, we don’t plan to issue financial forecasts. We are uneasy with management forecasts because they are, by their nature, subjective and could have an effect on a company’s stock price. We prefer to avoid this potential conflict and let our results speak for themselves. We don’t want to create short-term incentives to ‘‘make the numbers’’ and possibly encourage our people to make decisions that aren’t in the long-term interest of shareholders.

Communicate with candor.

We’ll strive to communicate with candor and tell you the unvarnished truth about our business. Our goal is to communicate equally with all shareholders, without special treatment for large shareholders or research analysts. We do not host quarterly earnings calls and our executives do not generally participate in one-on-one meetings with institutional shareholders; encouraging a focus on short-term results is inconsistent with our mission to empower investor success over the long term.

Instead, we’ll answer your questions in written form on a regular basis. We’ll make those answers available to all shareholders at the same time through regular 8-K filings. Our intent is to keep you fully up-to-speed on what’s happening at Morningstar, but to do so in a way that treats everyone equally. In addition, we believe this policy will allow our management team to spend more time managing our business and building the value of the company over time.

In our communications with investors, we plan to give you regular updates on both our successes and our challenges. We believe it’s important to let you know what we can do better, not just what we’ve accomplished. We welcome questions from investors and strive to communicate openly as new developments occur.

Management aligned with shareholders.

Members of our board and executive leadership hold significant ownership stakes in Morningstar, and we expect that to continue.

To encourage shareholder alignment, our board of directors has established equity ownership requirements that apply to all of our executive officers and directors. Each executive officer and director is required to hold a total number of shares of Morningstar common stock valued at $5,000,000 or Morningstar shares and vested restricted stock units equivalent to at least 25% (33% in the case of executive officers) of restricted stock units or performance shares that he or she has been granted that vested after our initial public offering.

Key business measures.

When our analysts evaluate a stock, they focus on assessing the company’s estimated intrinsic value – the value of the company’s future cash flows, discounted to their worth in today’s dollars. Our approach to evaluating our own business works the same way. Our goal is to increase the intrinsic value of our business over time, which we believe is the best way to create value for our shareholders.

We provide four specific measures that can help you generate your own assessment of how our intrinsic value has changed over time:

  • Revenue (including organic revenue)
  • Operating income (loss) (including adjusted operating income)
  • Operating margin (including adjusted operating margin)
  • Free cash flow
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