Why was stock-based compensation up almost 100% YoY in 2022 versus 2021 when organic revenue growth slowed to +10.8% in 2022 compared to +17.6% in 2021?

March 29, 2023

The primary driver of the increase in stock-based compensation in 2022 (and in the fourth quarter of 2022) was an increase in stock-based compensation related to the PitchBook plan. Stock-based compensation related to the plan totaled $37.2 million in 2022, up from $10.6 million in 2021 and $10.0 million in 2020, and represented all the PSUs reported in our financial disclosures. The 2022 increase in stock-based compensation related to the PitchBook plan was due both to the design of the plan, which includes higher target incentives in the third year, and, more importantly, PitchBook’s significant outperformance of targets for the year.

We initially adopted the PitchBook plan, which covers certain PitchBook employees, in connection with the acquisition of PitchBook. The first plan covered the 2017-2019 fiscal year period and has been renewed twice, first for the 2020-2022 fiscal year period and more recently for the 2023-2025 fiscal year period. The plans have all covered a three-year period with lower target awards in the first two years of the plan, and higher target incentives and meaningful upside in the third year of the plan, depending on how PitchBook performs relative to goals for the third year. The delivery of stock compensation is backloaded to help ensure that the three-year growth plan is achieved. For the first two plans, the awards were tied to revenue and cash flow targets; the renewed plan includes both a revenue and a profit margin target.

The plans have been designed to encourage the meeting of stretch goals over a three-year period for a high-growth, founder-led business. They align the participants’ incentives with Morningstar shareholders by giving them participation in the value PitchBook creates for the company. The plan has been effective at retaining PitchBook’s leadership and we’ve been happy with PitchBook’s performance.

While performance and related incentives for PitchBook were the primary driver of the increase in stock-based compensation in 2022, the expansion of the number of employees across Morningstar who received stock awards also contributed. We believe that stock compensation is important to align the interests of our employees with shareholders. Finally, grants issued under our Shared Ownership Program, whereby employees can elect to take a portion of their bonus in stock, increased due to a relatively high bonus payout in 2022 (based on 2021’s strong performance).

Given the structure of the PitchBook plan and the increased targets and upside in the third year relative to the first two years, we expect stock-based compensation as a percentage of revenue to decrease in 2023 relative to 2022.

Media Relations Contact

Media Hotline +1 312 696-6037


Legal Notices Privacy Policy Regulatory Disclosures Global Contacts