Our Philosophy

Stay focused on helping investors.
Our mission is to empower investor success. 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’re not interested in diversifying our business into areas that do not 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 for our customers.

Maximize long-term results.
We strive 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 growth in our intrinsic value. We first seek to invest in organic growth opportunities and enhancing our current offerings. We believe that we continue to have ample opportunities to increase value given our diverse set of products and the large and growing addressable markets we serve. We also have pursued M&A when opportunities arise that meet our strategic objectives and long-term return hurdles. We have also consistently returned cash to shareholders as part of our capital allocation priorities to drive returns. Dividends have been core to our approach, and we opportunistically repurchase shares under our Board-approved repurchase program.

No financial forecasts.
We don’t issue financial forecasts. We believe that management forecasts are 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 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 answer your questions in written form on a regular basis and make those answers available to all shareholders at the same time through 8-K filings. We will at times edit questions for clarity or provide one comprehensive response for similar questions.

Our intent is to keep you 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 allows our management team to spend more time managing our business and building the value of the company over time. In our communications with investors, our goal is to share 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.

Maintain management alignment with shareholders.
Members of our board and executive leadership team hold significant ownership stakes in Morningstar. To encourage shareholder alignment, our board of directors has established equity ownership requirements that apply to all members of our executive leadership team 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.

Focus on increasing intrinsic value.
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