Form of Employee Non-Qualified Stock Option and Restricted Stock Grant Agreement
for the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock
Incentive Plan

Exhibit 10.2

[Moody’s Corporation Letterhead]

__________, 2004               

Dear [Name]:

     Congratulations! I am pleased to inform you that the Board of Directors of
Moody’s Corporation (“Moody’s”) awarded you          stock options with an
exercise price of US$         and          restricted shares on [date]. This
letter outlines the key terms and conditions of your equity award. After reading
this letter, please sign a copy and return it to          in Human Resources.

     Your equity award is subject to the terms and conditions of the 2001
Moody’s Corporation Key Employees’ Stock Incentive Plan (the “Plan”). A copy of
the Plan, as well as the original prospectus relating to the offering of shares
of Moody’s stock pursuant to the Plan, are enclosed with this letter.

     Moody’s has engaged Charles Schwab & Company as the Plan administrator.
Each Moody’s associate who received an equity award will be provided with a
Charles Schwab on-line brokerage account, at no cost to the associate, through
which Moody’s stock options may be exercised and in which shares will be
delivered when restrictions on your restricted shares lapse. You are strongly
encouraged to promptly complete the enclosed application form from Charles
Schwab Employee Stock Plan Services in order to open the account. A copy of that
information may be obtained on MoodysNet under the headings “Human Resources –
Equity Awards.” Once you exercise your options and purchase shares, or the
restrictions on your restricted shares lapse, you may transfer your shares to
another brokerage account or leave them in your Schwab account.

Your Equity Award

     Your equity award provides you with an equity stake in Moody’s through a
combination of stock options and restricted shares and an opportunity for
long-term capital appreciation. It provides a direct link between an associate’s
benefits and increases in stockholder value.

Details of Your Stock Option Grant

     Your options give you the right to buy Moody’s stock at a fixed price in
the future. This is called the exercise price. The value of your options is tied
directly to the stock market price of Moody’s stock during the life span of the
options. The higher the stock price rises in the future, the more valuable your
options become.

     Your stock option grant is a grant of non-qualified stock options, which
expires 10 years after the date of grant (date), or upon your termination of
employment, if earlier.

 

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The terms of the Plan notwithstanding, for purposes of this equity award,
Termination of Employment will occur on the date when you are no longer actively
employed by the Company or an Affiliate and will not be extended by any notice
period mandated under local law.

     Subject to your continued employment, your options will vest and become
exercisable with respect to 25% of the shares on each of the first, second,
third and fourth anniversaries of the date of grant, so that your options will
be 100% vested and exercisable after the fourth anniversary of the date of
grant, as set forth in the following schedule:

                  Timeframe from Date of Grant         (Vesting Date)

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  Vesting

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  Cumulative Vesting

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[date] (1 year)
    25 %     25 %
[date] (2 years)
    25 %     50 %
[date] (3 years)
    25 %     75 %
[date] (4 years)
    25 %     100 %

     You may exercise all or a portion of your options to purchase shares, to
the extent vested, at the fixed exercise price at any time after vesting
commences and on or before the expiration date (date). Further information on
how to exercise your options and pay the exercise price is set forth in the
enclosed informational brochure.

Details of Your Restricted Stock Grant

     Your restricted shares provide you with all the rights of a shareholder
from the date of grant, including the right to receive any dividends and to vote
your restricted shares. However, until such time as your restricted stock vests,
the shares may not be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by you otherwise than by will or by the laws of
descent and distribution, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance will be void and unenforceable against
Moody’s. Note that dividends will be subject to the same restrictions as the
shares to which they relate and will be accumulated and paid, without interest,
when the underlying shares vest. In the event of a stock split, a stock dividend
or similar change in Moody’s stock, your restricted shares will be adjusted as
determined by the Committee under the Plan.

     If you are an employee who, as of the date of grant, does not participate
in the Company’s Executive Performance Incentive Compensation (“EPIC”) bonus
plan and who is not a Moody’s KMV Managing Director, subject to your continued
employment, your restricted stock will vest with respect to 25% of the shares on
each of the first, second, third and fourth anniversaries of the date of grant,
so that your restricted grant

 

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will be 100% vested after the fourth anniversary of the date of grant, as set
forth in the following schedule:

                  Timeframe from Date of Grant         (Vesting Date)

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  Vesting

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  Cumulative Vesting

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[date] (1 year)
    25 %     25 %
[date] (2 years)
    25 %     50 %
[date] (3 years)
    25 %     75 %
[date] (4 years)
    25 %     100 %

     If you are an employee who, as of the date of grant, does participate in
the Company’s EPIC bonus plan (including “covered employees” as defined in
Section 162(m) of the U.S. Internal Revenue Code, as amended) or you are a
Moody’s KMV Managing Director, subject to your continued employment, your
restricted stock will vest to the extent that the Company has achieved certain
performance goals. The vesting of shares in any one year will be expressed as a
percentage of the “Target Shares” (equal to 25% of the number of restricted
shares granted to you), on the applicable vesting date as set forth in the
following schedule:

          Annual Operating Income Growth

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% of Target Shares Vesting

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Less than __%
    50 %
Between __% and __% (Inclusive)
    100 %
More than __%
    150 %

In addition, if your restricted stock is not fully vested on the fifth
anniversary of the date of grant, such restricted stock will vest in full on the
fifth anniversary of the date of grant regardless of whether the performance
goals described above have been achieved. In any event, no more than 100% of the
restricted shares granted to you shall vest regardless of whether the
performance goals have been achieved.

Transferability of Options and Restricted Shares

     Neither your options nor restricted shares may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by you otherwise
than by will or by the laws of descent and distribution, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance will
be void and unenforceable against Moody’s. During your lifetime, your options
are exercisable only by you.

 

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Nature of the Grant

In accepting the grant, you acknowledge that:

     (1) the Plan is established voluntarily by Moody’s, it is discretionary in
nature and it may be modified, suspended or terminated by Moody’s at any time,
as provided in the Plan and this letter;

     (2) the equity award is voluntary and occasional and does not create any
contractual or other right to receive future equity award grants, or benefits in
lieu of equity awards, even if equity awards have been granted repeatedly in the
past;

     (3) all decisions with respect to future equity awards, if any, will be at
the sole discretion of Moody’s;

     (4) your participation in the Plan shall not create a right to further
employment with your employer and shall not interfere with the ability of your
employer to terminate your employment relationship at any time with or without
cause;

     (5) you are voluntarily participating in the Plan;

     (6) the equity award is an extraordinary item that does not constitute
compensation of any kind for services of any kind rendered to Moody’s or to your
employer, and which is outside the scope of your employment contract, if any;

     (7) the equity award is not part of normal or expected compensation or
salary for any purpose, including, but not limited to, calculating any
severance, resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments;

     (8) in the event that you are not an employee of Moody’s Corporation, the
equity award will not be interpreted to form an employment contract or
relationship with Moody’s Corporation; and furthermore, the equity award will
not be interpreted to form an employment contract with any subsidiary or
affiliate of Moody’s Corporation;

     (9) the future value of the underlying shares is unknown and cannot be
predicted with certainty;

     (10) if the underlying shares do not increase in value, the options will
have no value;

     (11) if you exercise your options and obtain shares, the value of those
shares acquired upon exercise may increase or decrease in value, even below the
fixed exercise price;

     (12) no claim or entitlement to compensation or damages arises from
termination of the equity award, or diminution in value of the equity award or
the shares

 

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acquired through the equity award, and you irrevocably release Moody’s and your
employer from any such claim that may arise; and

     (13) notwithstanding any terms or conditions of the Plan to the contrary,
in the event of involuntary termination of your employment, your right to
receive equity awards and vest in such awards under the Plan, if any, will
terminate effective as of the date that you are no longer actively employed and
will not be extended by any notice period mandated under local law (e.g., active
employment would not include a period of “garden leave” or similar period
pursuant to local law); furthermore, in the event of involuntary termination of
employment, your right to exercise the options or take delivery of your
restricted shares after termination of employment, if any, will be measured by
the date of termination of your active employment and will not be extended by
any notice period mandated under local law.

Responsibility for Taxes

     Regardless of any action Moody’s or your employer takes with respect to any
or all income tax, social insurance, payroll tax or other tax-related
withholding (“Tax-Related Items”), you acknowledge that the ultimate liability
for all Tax-Related Items legally due by you is, and remains, your
responsibility and that Moody’s and/or your employer (1) make no representations
or undertakings regarding the treatment of any Tax-Related Items in connection
with any aspect of the equity award, including the grant of the equity award,
the vesting of the equity award, the exercise of the options, the subsequent
sale of shares acquired pursuant to the equity award and the receipt of any
dividends; and (2) do not commit to structure the terms of the equity award or
any aspect of the equity award to reduce or eliminate your liability for
Tax-Related Items.

     Prior to exercise of the options or the vesting of restricted shares, you
agree to pay or make adequate arrangements satisfactory to Moody’s and/or your
employer to satisfy all withholding obligations of Moody’s and/or your employer.
In this regard, you authorize Moody’s and/or your employer to withhold all
applicable Tax-Related Items legally payable by you from your wages or other
cash compensation paid to you by Moody’s and/or your employer or from proceeds
of the sale of the shares. Alternatively, or in addition, if permissible under
local law, Moody’s may (1) sell or arrange for the sale of shares that you
acquire to meet the withholding obligation for Tax-Related Items, and/or
(2) withhold in shares, provided that Moody’s only withholds the amount of
shares necessary to satisfy the minimum withholding amount. Finally, you shall
pay to Moody’s or your employer any amount of Tax-Related Items that Moody’s or
your employer may be required to withhold as a result of your participation in
the Plan that cannot be satisfied by the means previously described. Moody’s may
refuse to deliver the shares if you fail to comply with your obligations in
connection with the Tax-Related Items as described in this section.

 

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Income Tax Consequences

     You should consult your own tax advisor concerning the tax implications of
the Plan and your equity award.

Data Privacy

     You hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of your personal data as described in
this document by and among, as applicable, your employer and Moody’s and its
subsidiaries and affiliates for the exclusive purpose of implementing,
administering and managing your participation in the Plan.

     You understand that Moody’s and your employer hold certain personal
information about you, including, but not limited to, your name, home address
and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, any shares of stock or
directorships held in Moody’s, details of all options or any other entitlement
to shares of stock awarded, canceled, exercised, vested, unvested or outstanding
in your favor, for the purpose of implementing, administering and managing the
Plan (“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan (such
as Charles Schwab), that these recipients may be located in your country or
elsewhere, and that the recipient’s country may have different data privacy laws
and protections than your country. You understand that you may request a list
with the names and addresses of any potential recipients of the Data by
contacting your local human resources representative. You authorize the
recipients to receive, possess, use, retain and transfer the Data, in electronic
or other form, for the purposes of implementing, administering and managing your
participation in the Plan, including any requisite transfer of such Data as may
be required to a broker or other third party with whom you may elect to deposit
any shares of stock acquired through your equity award. You understand that Data
will be held only as long as is necessary to implement, administer and manage
your participation in the Plan. You understand that you may, at any time, view
Data, request additional information about the storage and processing of Data,
require any necessary amendments to Data or refuse or withdraw the consents
herein, without cost to you, by contacting in writing your local human resources
representative. You understand, however, that refusing or withdrawing your
consent may affect your ability to participate in the Plan. For more information
on the consequences of your refusal to consent or withdrawal of consent, you
understand that you may contact your local human resources representative.

Governing Law, Documents and Severability

     This equity award is made in the state of Delaware and is governed by, and
subject to, the laws of the state of Delaware applicable to contracts made and
to be

 

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performed in the state of Delaware, as provided in the Plan, and the
requirements of the New York Stock Exchange as well as the terms and conditions
set forth herein.

     If you have received this letter or any other document related to the Plan
translated into a language other than English, and if the translated version is
different than the English version, the English version will control.

     The terms and conditions provided herein are severable and if any one or
more provisions are determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.

Exercise and Share Issuance Restrictions

     Moody’s has the right to restrict or otherwise delay the issuance of stock
in connection with your equity award until the requirements of any applicable
laws or regulations and any stock exchange requirements have, in Moody’s
judgment, been satisfied in full. Moody’s also has the right to refuse to issue
or transfer any stock under the Plan if, in Moody’s judgment, such issuance or
transfer might violate any applicable law or regulation.

* * *

     If you have any questions regarding this one-time grant, please contact
your Human Resources representative.

                                                                              
                                                                   
                          Sincerely,

                                                                              
                                                                   
                           Moody’s Corporation

I hereby accept and agree to the foregoing terms of this equity award.

____________________________
Signature

____________________________
Name

____________________________
Date