10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended  December 31, 2007

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                      

Commission file number   1-1023

THE MCGRAW-HILL COMPANIES, INC.

(Exact name of registrant as specified in its charter)

New York	13-1026995
State or other jurisdiction of	(I.R.S. Employer
incorporation or organization	Identification No.)
1221 AVENUE OF THE AMERICAS, NEW YORK, N.Y.	10020
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code  (212) 512-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock — $1 par value	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

NONE

(Title of class)

(Title of class)

     Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     þ Yes      o No

     Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     o Yes     þ No

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     þYes     oNo

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.      o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12-b-2 of the Act).     o Yes     þ No

     The aggregate market value of voting stock held by non-affiliates of the Registrant as of the last business day of the second fiscal quarter ended June 30, 2007, was $23,070,469,142, based on the closing price of the common stock as reported on the New York Stock Exchange of $68.08 per common share. For purposes of this calculation, it is assumed that directors, executive officers and beneficial owners of more than 10% of the registrant outstanding stock are affiliates.

     The number of shares of common stock of the Registrant outstanding as of February 15, 2008 was 322,785,554 shares.

     Part I, Part II and Part III incorporate information by reference from the Annual Report to Shareholders for the year ended December 31, 2007. Part III incorporates information by reference from the definitive proxy statement mailed to shareholders March 20, 2008 for the annual meeting of shareholders to be held on April 30, 2008.

TABLE OF CONTENTS

Item			Page
		PART I
	1.	Business	1
	1a.	Risk Factors	2
	1b.	Unresolved Staff Comments	4
	2.	Properties	5
	3.	Legal Proceedings	7
	4.	Submission of Matters to a Vote of Security Holders	7
		Executive Officers of the Registrant	8
		PART II
	5.	Market for the Registrant’s Common Stock and Related Stockholder Matters and Issuer Purchases of Equity Securities	9
	6.	Selected Financial Data	10
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	7a.	Quantitative and Qualitative Disclosure about Market Risk	10
	8.	Consolidated Financial Statements and Supplementary Data	10
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	10
	9a.	Controls and Procedures	10
	9b.	Other Information	11
		PART III
	10.	Directors and Executive Officers of the Registrant	12
	11.	Executive Compensation	12
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	12
	13.	Certain Relationships and Related Transactions	13
	14.	Principal Accounting Fees and Services	13
		PART IV
	15.	Exhibits and Financial Statement Schedules	13
		Index to Financial Statements, Financial Statement Schedules and Exhibits	14
		Supplementary Schedule	15
		Signatures	16
		Exhibit Index and Exhibits	19
EX-10.9: KEY EXECUTIVE SHORT-TERM INCENTIVE DEFERRED COMPENSATION PLAN, AS AMENDED
EX-10.11: MANAGEMENT SEVERANCE PLAN, AS AMENDED
EX-10.12: EXECUTIVE SEVERANCE PLAN, AS AMENDED
EX-10.13: SENIOR EXECUTIVE SEVERANCE PLAN, AS AMENDED
EX-10.15: EMPLOYEE RETIREMENT PLAN SUPPLEMENT, AS AMENDED
EX-10.16: 401(K) SAVINGS AND PROFIT SHARING SUPPLEMENT, AS AMENDED
EX-10.18: SENIOR EXECUTIVE SUPPLEMENTAL DEATH, DISABILITY & RETIREMENT BENEFITS PLAN, AS AMENDED
EX-10.22: DIRECTOR DEFERRED COMPENSATION PLAN, AS AMENDED.
EX-10.23: DIRECTOR DEFERRED STOCK OWNERSHIP PLAN, AS AMENDED AND RESTATED
EX-12: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
EX-13: 2007 ANNUAL REPORT TO SHAREHOLDERS
EX-21: SUBSIDIARIES
EX-23: CONSENT OF ERNST & YOUNG LLP
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATIONS

PART I

Item 1. Business

The McGraw-Hill Companies, Inc. (the Registrant or the Company), incorporated in December 1925, is a leading global information services provider serving the financial services, education and business information markets with a wide range of information products and services. Additional markets include energy, construction, aerospace and defense, and marketing information services. The Company serves its customers through a broad range of distribution channels, including printed books, magazines and newsletters, online via Internet Websites and digital platforms, through wireless and traditional on-air broadcasting, and through a variety of conferences and trade shows.

The Registrant’s 21,171 employees are located worldwide. They perform the vital functions of analyzing the nature of changing demands for information and of channeling the resources necessary to fill those demands. By virtue of the numerous copyrights and licensing, trademark, and other agreements, which are essential to such a business, the Registrant is able to collect, compile, and disseminate this information. The Company’s books and magazines are printed by third parties. The Registrant’s principal raw material is paper, and the Registrant has assured sources of supply, at competitive prices, adequate for its business needs.

Descriptions of the Company’s principal products, broad services and markets, and significant achievements are hereby incorporated by reference from Exhibit (13), pages 24 and 25, containing textual material of the Registrant’s 2007 Annual Report to Shareholders.

The Registrant has an investor kit available online and in print that includes the current (and prior years) Annual Report, Proxy Statement, Form 10-Qs, Form 10-K, all filings through EDGAR with the Securities and Exchange Commission, the current earnings release and information with respect to the Dividend Reinvestment and Direct Stock Purchase Program. For online access go to www.mcgraw-hill.com/investor_relations and click on Digital Investor Kit. Requests for printed copies, free of charge, can be e-mailed to investor_relations@mcgraw-hill.com or mailed to Investor Relations, The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020-1095. You can call Investor Relations toll free at 866-436-8502. International callers may dial 212-512-2192.

The Registrant has adopted a Code of Ethics for the Company’s Chief Executive Officer and Senior Financial Officers that applies to its chief executive officer, chief financial officer, and chief accounting officer. To access such code, go to the Corporate Governance section of the Company’s Investor Relations Web site at www.mcgraw-hill.com/investor_relations. Any waivers that may in the future be granted from such Code will be posted at such Web site address. In addition to its Code of Ethics for the Chief Executive Officer and Senior Financial Officers noted above, the following topics may be found on the Registrant’s Web site at the above Web site address:

• Code of Business Ethics for all employees;

• Corporate Governance Guidelines;

• Audit Committee Charter;

• Compensation Committee Charter; and

• Nominating and Corporate Governance Committee Charter.

The foregoing documents are also available in print, free of charge, to any shareholder who requests them. Requests for printed copies may be e-mailed to corporate_secretary@mcgraw-hill.com or mailed to the Corporate Secretary, The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020-1095.

You may also read and copy materials that the Company has filed with the Securities and Exchange Commission (“SEC”) at the SEC’s public reference room located at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. In addition, the Company’s filings with the Commission are available to the public on the Commission’s Web site at www.sec.gov. Several years of SEC filings

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are also available at the Company’s Investor Relations Web site. Go to www.mcgraw-hill.com/investor_relations and click on the SEC Filings link.

     Certifications

The Company has filed the required certifications under Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits (31.1) and (31.2) to its annual report on Form 10-K for the fiscal year ended December 31, 2007. In addition the Company has filed the required certifications under Section 906 of the Sarbanes-Oxley Act of 2002 as Exhibit (32) to its annual report on Form 10-K for the fiscal year ended December 31, 2007. After the 2008 Annual Meeting of Shareholders, the Company intends to file with the New York Stock Exchange (“NYSE”) the CEO certification regarding the Company’s compliance with the NYSE’s corporate governance listing standards as required by NYSE rule 303A.12. Last year, the Company filed this CEO certification with the NYSE on May 17, 2007.

     Information as to Operating Segments

The relative contribution of the operating segments of the Registrant and its subsidiaries to operating revenue, operating profit, long-lived assets and geographic information for the three years ended December 31, 2007, are included in Exhibit (13), on pages 63 and 64 in the Registrant’s 2007 Annual Report to Shareholders and is hereby incorporated by reference.

Item 1a. Risk Factors

As required the Company is providing the following cautionary statements which identify factors that could cause the Company’s actual results to differ materially from historical and expected results. It is not possible to foresee or identify all such factors. Investors should not consider this list an exhaustive statement of all risks and uncertainties.

•	Historical Growth Rates
	Continuance of the Company’s historical growth rate depends upon a number of uncertain events including the outcome of the Company’s strategies of expanding its penetration in global markets, introduction of new products and services, and acquisitions. Difficulties, delays or failure of the Company’s strategies could cause the future growth of the Company to differ materially from its historical growth rate.
•	Changes in the Volume of Debt Securities Issued in Domestic and/or Global Capital Markets and Changes in Interest Rates and Other Volatility in the Financial Markets
	The Company’s results could be adversely affected by a reduction in the volume of debt securities issued in domestic and/or global capital markets. Unfavorable financial or economic conditions that either reduce investor demand for debt securities or reduce issuers’ willingness or ability to issue such securities could reduce the number and dollar volume of debt issuance for which Standard & Poor’s provides ratings services. In addition, increases in interest rates or credit spreads, volatility in financial markets or the interest rate environment, significant political or economic events, defaults of significant issuers and other market and economic factors may negatively impact the general level of debt issuance, the debt issuance plans of certain categories of borrowers, and/or the types of credit-sensitive products being offered. A sustained period of market decline or weakness could have a material adverse effect on the Company. The Company’s results could also be adversely affected because of public statements or actions by market participants, government officials and others who may be advocates of increased regulation, regulatory scrutiny or litigation.
•	Changes in Educational Funding
	The Company’s U.S. educational textbook and testing businesses may be adversely affected by changes in state educational funding as a result of changes in legislation, both at the federal and state level, changes in the state procurement process and changes in the condition of the local, state or U.S. economy. While in the past few years the availability of state and federal funding for elementary and high school education has improved due to legislative mandates such as No Child Left Behind (“NCLB”) and Reading First, future changes in federal funding and the state and local tax base could create an unfavorable environment, leading to budget issues resulting in a decrease in educational funding.

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•	Cyclical Nature of Customers’ Businesses
	A significant portion of the Company’s sales are to customers in educational markets. The School Education Group and the industry it serves are influenced strongly by the magnitude and timing of state adoption opportunities. Approximately 20 states currently use an adoption process to purchase textbooks. In the remaining states, known as “open territories”, textbooks are purchased independently by local districts or individual schools. The 2008 adoption market is projected to increase by approximately 10% to 15% as compared to 2007. While the adoption opportunities in 2008 and beyond are expected to increase there is no guarantee that the Company will be successful in the new state adoption market or in open territories.
•	Changes in the Global Advertising Markets / Affiliation Agreements
	Although advertising’s impact on the McGraw-Hill Companies is less than 5% of revenue, advertising is still a significant source of revenue in the Information & Media segment. In general, demand for advertising tends to correlate with changes in the level of economic activity in the United States and in the markets the Company serves. In addition, world, national and local events may affect advertising demand. Competition from other forms of media such as other magazines, broadcasters and Web sites, affects the Company’s ability to attract and retain advertisers. In addition, significant changes in the Company’s network affiliation agreements could affect the profitability of the Company’s broadcasting operations.
•	Possible Loss of Market Share or Revenue Through Competition or Regulation
	The markets for credit ratings as well as research, investment and advisory services are very competitive. The Financial Services segment competes domestically and internationally on the basis of a number of factors, including quality of ratings, research and investment advice, client service, reputation, price, geographic scope, range of products and services, and technological innovation. In addition, in some of the countries in which Standard & Poor’s competes, governments may provide financial or other support to locally-based rating agencies and may from time to time establish official credit rating agencies, credit ratings criteria or procedures for evaluating local issuers. The financial services industry is also subject to the potential for increasing regulation in the United States and abroad. The businesses conducted by the Financial Services segment are in certain cases regulated under the U.S. Credit Rating Agency Reform Act of 2006, Investment Advisers Act of 1940, the U.S. Securities Exchange Act of 1934, the National Association of Securities Dealers and/or the laws of the states or other jurisdictions in which they conduct business. In the past several years the U.S. Congress, the Securities and Exchange Commission (“SEC”), the European Commission, through the Committee of European Securities Regulators (“CESR”) and the International Organization of Securities Commissions (“IOSCO”), a global group of securities commissioners, have been reviewing the role of rating agencies and their processes and the need for greater oversight or regulations concerning the issuance of credit ratings or the activities of credit rating agencies. Local, national and multinational bodies have considered and adopted other legislation and regulations relating to credit rating agencies from time to time and are likely to continue to do so in the future. The Company does not believe that any new or currently proposed legislation, regulations or judicial determinations would have a materially adverse effect on its financial condition or results of operations. However, new legislation, regulations or judicial determinations applicable to credit rating agencies in the United States and abroad could affect the competitive position of Standard & Poor’s ratings services. Additional information on the SEC’s activities regarding rating agencies is provided in the Management’s Discussion and Analysis section of the Company’s 2007 Annual Report to Shareholders.
•	Broadcasting Regulations
	The Company’s broadcast stations are subject to regulatory developments that may affect their future profitability. All television stations are subject to Federal Communication Commission (“FCC”) regulation. Television stations broadcast under licenses that are generally granted and renewed for a period of eight years. The FCC regulates television station operations in several ways, including, but not limited to, employment practices, political advertising, indecency and obscenity, sponsorship identification, children’s programming, issue-responsive programming, signal carriage, ownership, and engineering, transmissions, antenna and other technical matters.
•	Introduction of New Products or Technologies
	The Company operates in highly competitive markets that are subject to rapid change, and the Company must continue to invest and adapt to remain competitive. There are substantial uncertainties associated with the Company’s efforts to develop new products and services for the markets it serves. The Company makes significant investments in new products and services that may not be profitable and even if they are profitable, operating margins for new products and businesses may be lower than the margins the Company has experienced historically. The Company also could experience threats to its existing businesses from the rise of new competitors due to the rapidly changing environment within which the Company operates. The Company relies on its information technology environment and certain critical databases, systems and applications to support key product and service offerings. The Company believes it has appropriate policies, processes and internal controls to ensure the stability of its information technology including security from unauthorized access and business continuity. The Company’s operating results may be adversely impacted by unanticipated system failures or data corruption.

3

•	Operating Costs and Expenses
	The Company’s major expense categories include employee compensation and printing, paper, and distribution costs for product-related manufacturing. The Company offers its employees competitive salary and benefit packages in order to attract and retain the quality employees required to grow and expand its businesses. Compensation costs are influenced by general economic factors, including those affecting the cost of health insurance and postretirement benefits, and any trends specific to the employee skill sets the Company requires. In addition, the Company’s reported earnings may be adversely affected by changes in pension costs and funding requirements due to poor investment returns and/or changes in pension regulations. Paper prices fluctuate based on the worldwide demand and supply for paper in general and for the specific types of paper used by the Company. The Company’s overall paper price increase is currently limited due to negotiated price reductions, long-term agreements, and short-term price caps for a portion of paper purchases that are not protected by long-term agreements. The Company’s books and magazines are printed by third parties. The Company typically has multi-year contracts for the production of books and magazines, a practice which reduces price fluctuations over the contract term. Any significant increase in these costs could adversely affect the Company’s results of operations. The Company makes significant investments in information technology data centers and other technology initiatives. Additionally, the Company makes significant investments in the development of programs for the el-hi market place. While the Company believes it is prudent in its investment strategies and execution of its implementation plans there is, however, no assurance as to the ultimate recoverability of these investments.
•	Protection of Intellectual Property Rights
	The Company’s products comprise intellectual property delivered through a variety of media, including print, broadcast and digital. The ability to achieve anticipated results depends in part on the Company’s ability to defend its intellectual property against infringement. The Company’s operating results may be adversely affected by inadequate legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets.
•	Exposure to Litigation
	The Company is involved in legal actions and claims arising from its business practices, as discussed in the Management’s Discussion and Analysis section of the Company’s Annual Report to Shareholders, and faces the risk that additional actions and claims will be filed in the future. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding or change in applicable legal standards could have a material effect on the Company’s financial position and results of operations.
•	Risk of Doing Business Abroad
	As the Company expands its operations overseas, it faces the increased risks of doing business abroad, including inflation, fluctuation in interest rates and currency exchange rates, changes in applicable laws and regulatory requirements, export and import restrictions, tariffs, nationalization, expropriation, limits on repatriation of funds, civil unrest, terrorism, unstable governments and legal systems, and other factors. Adverse developments in any of these areas could cause actual results to differ materially from historical and/or expected operating results.

Item 1b. Unresolved Staff Comments

      None.

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Item 2. Properties

The Registrant leases office facilities at 230 locations: 117 are in the United States. In addition, the Registrant owns real property at 22 locations, of which 10 are in the United States. The principal facilities of the Registrant are as follows:

	Owned	Square
	or	Feet
Locations	Leased	(thousands)		Segment
Domestic
New York, NY
55 Water Street	Leased		1,071	Financial Services
2 Penn Plaza	Leased		534	Various Segments
1221 Avenue of the Americas	Leased		420	Corporate Headquarters
				Various Segments
Blacklick, OH
Book Distr. Ctr.	Owned		558	McGraw-Hill Education
Office	Owned		73	McGraw-Hill Education
Ashland, OH	Leased		602	McGraw-Hill Education
Groveport, OH	Leased		506	McGraw-Hill Education
Columbus, OH
Orion Place	Owned		170	McGraw-Hill Education
East Commons	Leased		66	McGraw-Hill Education
East Windsor, NJ	Owned
Office & Data Center			415	Various Segments
Warehouse			407	Vacant
Delran, NJ	Leased		108	McGraw-Hill Education
DeSoto, TX	Leased
Book Distr. Ctr.			382	McGraw-Hill Education
Assembly Plant			418	McGraw-Hill Education
Monterey, CA	Owned		215	McGraw-Hill Education
Salinas, CA
Moffitt Street	Leased		98	Vacant
El Camino Road	Leased		79	McGraw-Hill Education
Westlake Village, CA	Leased		102	Information & Media
Mather, CA	Leased		56	McGraw-Hill Education
San Francisco, CA	Leased		53	Various Segments
San Diego, CA	Owned		43	Information & Media
Dubuque, IA
Chavenelle Drive	Leased		331	McGraw-Hill Education
Bell Street	Owned		139	McGraw-Hill Education
Chicago, IL	Leased		152	Various Segments

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	Owned	Square
	or	Feet
Locations	Leased	(thousands)		Segment
Burr Ridge, IL	Leased		137	McGraw-Hill Education
Centennial, CO	Owned		133	Various Segments
Denver, CO	Owned		88	Information & Media
Boulder, CO	Leased		66	Information & Media
Indianapolis, IN
North Michigan Road	Leased		127	McGraw-Hill Education
North Meridian Street	Owned		54	Information & Media
Washington, DC	Leased		69	Various Segments
Norcross, GA	Leased		66	McGraw-Hill Education
Lake Mary, FL	Leased		58	McGraw-Hill Education
Troy, MI	Leased		47	Information & Media
Boston, MA	Leased		42	Financial Services
Bothell, WA	Leased		39	McGraw-Hill Education
Foreign
Canary Wharf, England	Leased		266	Various Segments
Maidenhead, England	Leased		83	Various Segments
Wooburn, England	Leased		45	McGraw-Hill Education
Mexico City, Mexico	Leased		102	McGraw-Hill Education
Whitby, Canada	Owned
Office			80	McGraw-Hill Education
Book Distr. Ctr.			80	McGraw-Hill Education
Madrid, Spain	Leased		97	McGraw-Hill Education
Jurong, Singapore	Leased		92	McGraw-Hill Education
New Delhi, India	Leased		52	McGraw-Hill Education
Frankfurt, Germany	Leased		39	Various Segments

In October 2007 the Company moved from a leased facility in Dubuque, Iowa to a new owned facility.

During 2007, leased domestic properties decreased slightly due to expirations and lease buyouts.

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Item 3. Legal Proceedings

A writ of summons was served on The McGraw-Hill Companies, SRL and on The McGraw-Hill Companies, SA (both indirect subsidiaries of the Company) (collectively, “Standard & Poor’s”) on September 29, 2005 and October 7, 2005, respectively, in an action brought in the Tribunal of Milan, Italy by Enrico Bondi (“Bondi”), the Extraordinary Commissioner of Parmalat Finanziaria S.p.A. and Parmalat S.p.A. (collectively, “Parmalat”). Bondi has brought numerous other lawsuits in both Italy and the United States against entities and individuals who had dealings with Parmalat. In this suit, Bondi claims that Standard & Poor’s, which had issued investment grade ratings on Parmalat until shortly before Parmalat’s collapse in December 2003, breached its duty to issue an independent and professional rating and negligently and knowingly assigned inflated ratings in order to retain Parmalat’s business. Alleging joint and several liability, Bondi claims damages of euros 4,073,984,120 (representing the value of bonds issued by Parmalat and the rating fees paid by Parmalat) with interest, plus damages to be ascertained for Standard & Poor’s alleged complicity in aggravating Parmalat’s financial difficulties and/or for having contributed in bringing about Parmalat’s indebtedness towards its bondholders, and legal fees. The Company believes that Bondi’s allegations and claims for damages lack legal or factual merit. Standard & Poor’s filed its answer, counterclaim and third-party claims on March 16, 2006 and will continue to vigorously contest the action.

In a separate proceeding, the prosecutor’s office in Parma, Italy is conducting an investigation into the bankruptcy of Parmalat. In June 2006, the prosecutor’s office issued a Note of Completion of an Investigation (“Note of Completion”) concerning allegations, based on Standard & Poor’s investment grade ratings of Parmalat, that individual Standard & Poor’s rating analysts conspired with Parmalat insiders and rating advisors to fraudulently or negligently cause the Parmalat bankruptcy. The Note of Completion was served on eight Standard & Poor’s rating analysts. While not a formal charge, the Note of Completion indicates the prosecutor’s intention that the named rating analysts should appear before a judge in Parma for a preliminary hearing, at which hearing the judge will determine whether there is sufficient evidence against the rating analysts to proceed to trial. No date has been set for the preliminary hearing. On July 7, 2006, a defense brief was filed with the Parma prosecutor’s office on behalf of the rating analysts. The Company believes that there is no basis in fact or law to support the allegations against the rating analysts, and they will be vigorously defended by the subsidiaries involved.

The Company has learned that on August 9, 2007 a pro se action titled Blomquist v. Washington Mutual, et al., was filed in the District Court for the Northern District of California against numerous financial institutions, government agencies and individuals, including the Company and Mr. Harold McGraw III, the CEO of the Company, alleging various state and federal claims. The claims against the Company and Mr. McGraw concern Standard & Poor’s ratings of subprime mortgage-backed securities. An amended Complaint was filed in the Blomquist action on September 10, 2007 which added two other rating agencies as defendants. On February 19, 2008 the Company was served with the Complaint. In addition, the Company has learned that on August 28, 2007 a putative shareholder class action titled Reese v. Bahash, was filed in the District Court for the District of Columbia against Mr. Robert Bahash, the CFO of the Company, alleging claims under the federal securities laws and state tort law concerning Standard & Poor’s ratings, particularly its ratings of subprime mortgage-backed securities. Mr. Bahash has not been served with the Complaint. On February 11, 2008, the District Court in the Reese matter entered an order appointing a lead plaintiff in that action and permitting plaintiffs to amend the Complaint on or before April 16, 2008 to add additional defendants. The Company believes both Complaints to be without merit and intends to vigorously defend in the event that service is effected.

In addition, in the normal course of business both in the United States and abroad, the Company and its subsidiaries are defendants in numerous legal proceedings and are involved, from time to time, in governmental and self-regulatory agency proceedings, which may result in adverse judgments, damages, fines or penalties. Also, various governmental and self-regulatory agencies regularly make inquiries and conduct investigations concerning compliance with applicable laws and regulations. Based on information currently known by the Company’s management, the Company does not believe that any pending legal, governmental or self-regulatory proceedings or investigations will result in a material adverse effect on its financial condition or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of Registrant’s security holders during the last quarter of the period covered by this Report.

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Executive Officers of the Registrant

Name	Age		Position
Harold McGraw III		59	Chairman of the Board, President and Chief Executive Officer
Robert J. Bahash		62	Executive Vice President and Chief Financial Officer
Peter C. Davis		53	Executive Vice President, Global Strategy
Bruce D. Marcus		59	Executive Vice President and Chief Information Officer
David L. Murphy		62	Executive Vice President, Human Resources
Kenneth M. Vittor		58	Executive Vice President and General Counsel
David B. Stafford		45	Senior Vice President, Corporate Affairs and Executive Assistant to the Chairman, President and Chief Executive Officer

All of the above executive officers of the Registrant have been full-time employees of the Registrant for more than five years except for Peter Davis.

Mr. Davis, prior to becoming an officer of the Registrant on November 1, 2006 was a managing director at Novantas LLC, where he was responsible for the capital markets, asset management, and commercial and private banking practices. Prior to his tenure at Novantas, he was a partner at Booz Allen Hamilton.

Mr. Marcus, prior to becoming an officer of the Registrant on January 19, 2005, was Senior Vice President, Enterprise Systems, with responsibility for systems development across the Company. Prior to that, he was Vice President, Business Operations and Technology for Platts.

Mr. Murphy, prior to becoming an officer of the Registrant on July 22, 2002, spent most of his professional career with the Ford Motor Company where, most recently, he was Vice President, Human Resources.

Mr. Stafford, prior to becoming an officer of the Registrant on February 2, 2006, was Associate General Counsel in the Company’s Legal Department.

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PART II

Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters and Issuer Purchases of Equity Securities

On February 15, 2008, the closing price of the Registrant’s common stock was $40.94 per share as reported on the New York Stock Exchange. The approximate number of record holders of the Registrant’s common stock as of February 15, 2008 was 7,474.

	2007		2006
Dividends per share of common stock:
$0.205 per quarter in 2007	$	0.82
$0.1815 per quarter in 2006			$	0.726

On January 24, 2006 the Board of Directors approved a stock repurchase program authorizing the purchase of up to 45 million shares, which was approximately 12.1% of the total shares of the Company’s outstanding common stock as of January 24, 2006. As of December 31, 2006, 20 million shares remained available under the 2006 repurchase program. On January 31, 2007 the Board of Directors approved a new stock repurchase program authorizing the purchase of up to 45 million additional shares, which was approximately 12.7% of the total shares of the Company’s outstanding common stock as of January 31, 2007. In 2007, the Company repurchased 37 million shares, including the 20 million shares remaining under the 2006 program and 17 million shares from the 2007 program. As of December 31, 2007, 28 million shares remained available under the 2007 repurchase program. The repurchase program has no expiration date. The repurchased shares may be used for general corporate purposes, including the issuance of shares in connection with the exercise of employee stock options. Purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

The following table provides information on purchases made by the Company of its outstanding common stock during the fourth quarter of 2007 pursuant to the stock repurchase program authorized by the Board of Directors on January 31, 2007 (column c). In addition to purchases under the 2007 stock repurchase program, the number of shares in column (a) includes: 1) shares of common stock that are tendered to the Registrant to satisfy the employees’ tax withholding obligations in connection with the vesting of awards of restricted performance shares (such shares are repurchased by the Registrant based on their fair market value on the vesting date), and 2) shares of the Registrant deemed surrendered to the Registrant to pay the exercise price and to satisfy the employees’ tax withholding obligations in connection with the exercise of employee stock options. There were no other share repurchases during the quarter outside the stock repurchases noted below:

					(c)Total Number of		(d) Maximum Number
	(a)Total Number of				Shares Purchased as		of Shares that may
	Shares		(b)Average Price		Part of Publicly		yet be Purchased
	Purchased		Paid per		Announced Programs		Under the Programs
Period	(in millions)		Share		(in millions)		(in millions)
(Oct. 1 — Oct. 31, 2007)		—		—		—		35.0
(Nov. 1 — Nov. 30, 2007)		4.9	$	46.53		4.9		30.1
(Dec. 1 — Dec. 31, 2007)		2.1	$	45.14		2.1		28.0
Total — Qtr		7.0	$	46.11		7.0		28.0

Information concerning the high and low stock price of the Registrant’s common stock on the New York Stock Exchange is incorporated herein by reference from Exhibit (13), from page 82 of the 2007 Annual Report to Shareholders.

A performance graph that compares the Registrant’s cumulative total shareholder return during the previous five years with a performance indicator of the overall market (i.e., S&P 500), and the Registrant’s peer group is incorporated herein by reference from Exhibit (13), from page 2 of the 2007 Annual Report to Shareholders.

9

Item 6. Selected Financial Data

Incorporated herein by reference from Exhibit (13), from the 2007 Annual Report to Shareholders, pages 80 and 81.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Incorporated herein by reference from Exhibit (13), from the 2007 Annual Report to Shareholders, pages 24 to 52.

Item 7a. Quantitative and Qualitative Disclosure about Market Risk

Incorporated herein by reference from Exhibit (13), from the 2007 Annual Report to Shareholders, page 51.

Item 8. Consolidated Financial Statements and Supplementary Data

Incorporated herein by reference from Exhibit (13), from the 2007 Annual Report to Shareholders, pages 53 to 79.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9a. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2007, an evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934). Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2007.

Management’s Annual Report on Internal Control Over Financial Reporting

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404) and as defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934, management is required to provide the following report on the Company’s internal control over financial reporting:

1. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

2. The Company’s management has evaluated the system of internal control using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Management has selected the COSO framework for its evaluation as it is a control framework recognized by the SEC and the Public Company Accounting Oversight Board that is free from bias, permits reasonably consistent qualitative and quantitative measurement of the Company’s internal controls, is sufficiently complete so that relevant controls are not omitted and is relevant to an evaluation of internal controls over financial reporting.

10

3. Based on management’s evaluation under this framework, we have concluded that the Company’s internal controls over financial reporting were effective as of December 31, 2007. There are no material weaknesses in the Company’s internal control over financial reporting that have been identified by management.

4. The Company’s independent registered public accounting firm, Ernst & Young LLP, have audited the consolidated financial statements of the Company for the year ended December 31, 2007, and have issued their reports on the financial statements and the effectiveness of internal controls over financial reporting. These reports are located on pages 77 and 78 of the 2007 Annual Report to Shareholders.

     Other Matters

There have been no changes in the Company’s internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9b. Other Information

None.

11

PART III

Item 10.	Directors and Executive Officers of the Registrant
Incorporated herein by reference from the Registrant’s definitive proxy statement dated March 20, 2008 for the annual meeting of shareholders to be held on April 30, 2008.

Item 11.	Executive Compensation
Incorporated herein by reference from the Registrant’s definitive proxy statement dated March 20, 2008 for the annual meeting of shareholders to be held on April 30, 2008.

Item 12.	Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the Registrant’s definitive proxy statement dated March 20, 2008 for the annual meeting of shareholders to be held April 30, 2008.
The following table details the Registrant’s equity compensation plans as of December 31, 2007:

Equity Compensation Plans’ Information

						(c)
						Number of securities
				(b)		remaining available
	(a)			Weighted-average		for future issuance
	Number of securities to			exercise price of		under equity
	be issued upon exercise			outstanding		compensation plans
	of outstanding options,			options, warrants		(excluding securities reflected
Plan Category	warrants and rights			and rights		in column (a))
Equity compensation plans approved by security holders		32,048,615		$	39.6238		23,585,795
Equity compensation plans not approved by security holders		0			0		0
Total		32,048,615	(1)	$	39.6238		23,585,795	(2) (3)

(1)	Included in this number are 31,837,143 shares to be issued upon exercise of outstanding options under the Company’s Stock Incentive Plans and 211,472 deferred units already credited but to be issued under the Director Deferred Stock Ownership Plan.
(2)	Included in this number are 559,953 shares reserved for issuance under the Director Deferred Stock Ownership Plan. The remaining 23,025,842 shares are reserved for issuance under the 2002 Stock Incentive Plan (the “2002 Plan”) for Performance Stock, Restricted Stock, Other Stock-Based Awards, Stock Options and Stock Appreciation Rights (“SARs”).
(3)	Under the terms of the 2002 Plan, shares subject to an award (other than a stock option, SAR, or dividend equivalent) or shares paid in settlement of a dividend equivalent reduce the number of shares available under the 2002 Plan by one share for each such share granted or paid; shares subject to a stock option or SAR reduce the number of shares available under the 2002 Plan by one-third of a share for each such share granted. The 2002 Plan stipulates that in no case, as a result of such share counting, may more than 19,000,000 shares of stock be issued thereunder. Accordingly, for purposes of setting forth the figures in this column, the base figure from which issuances of stock awards are deducted, is deemed to be 19,000,000 shares for the 2002 Plan plus shares reserved for grant immediately prior to the amendments to the 2002 Plan of April 28, 2004.
	The 2002 Plan is also governed by certain share recapture provisions. The aggregate number of shares of stock available under the 2002 Plan for issuance are increased by the number of shares of stock granted as an award under the 2002 Plan or 1993 Employee Stock Incentive Plan (the “1993 Plan”)(other than stock option, SAR or 1993 Plan stock option awards) or by one-third of the number of shares of stock in the case of stock option, SAR or 1993 Plan stock option awards that are, in each case: forfeited, settled in cash or property other than stock, or otherwise not distributable under an award under the Plan; tendered or withheld to pay the exercise or purchase price of an award under the 2002 or 1993 Plans or to satisfy applicable wage or other required tax withholding in connection with the exercise, vesting or payment of, or other event related to, an award under the 2002 or 1993 Plan; or repurchased by the Company with the option proceeds in respect of the exercise of a stock option under the 2002 or 1993 Plans.

12

Item 13.	Certain Relationships and Related Transactions
Incorporated herein by reference from the Registrant’s definitive proxy statement dated March 20, 2008 for the annual meeting of shareholders to be held April 30, 2008.
On March 30, 2006, as part of its previously announced stock buyback program, the Company acquired 8.4 million shares of the Corporation’s stock from the holdings of the recently deceased William H. McGraw. The shares were purchased through the mixture of available cash and borrowings at a discount of approximately 2.4% from the March 30th New York Stock Exchange closing price through a private transaction with Mr. McGraw’s estate. This transaction closed on April 5, 2006 and the total purchase amount of $468.8 million was funded through a combination of cash on hand and borrowings in the commercial paper market. The transaction was approved by the Financial Policy and Audit Committees of the Company’s Board of Directors, and the Corporation received independent financial and legal advice concerning the purchase.

Item 14.	Principal Accounting Fees and Services
During the year ended December 31, 2007, Ernst & Young LLP audited the consolidated financial statements of the Corporation and its subsidiaries.
Incorporated herein by reference from the Registrant’s definitive proxy statement dated March 20, 2008 for the annual meeting of shareholders to be held April 30, 2008.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	1.	Financial Statements
		The Index to Financial Statements and Financial Statement Schedule on page 14 is incorporated herein by reference as the list of financial statements required as part of this report.
	2.	Financial Statement Schedules
		The Index to Financial Statements and Financial Statement Schedule on page 14 is incorporated herein by reference as the list of financial statements required as part of this report.
	3.	Exhibits
		The exhibits filed as part of this annual report on Form 10-K are listed in the Exhibit Index on pages 19 to 20, immediately preceding such Exhibits, and such Exhibit Index is incorporated herein by reference.

13

The McGraw-Hill Companies
Index to Financial Statements,
Financial Statement Schedules and Exhibits

	Reference
		Annual Report
	Form	to Share-
	10-K	holders (page)
Data incorporated by reference from Annual Report to Shareholders:
Report of Management			76
Report of Independent Registered Public Accounting Firm			77
Report of Independent Registered Public Accounting Firm			78
Consolidated balance sheet at December 31, 2007 and 2006			54-55
Consolidated statement of income for each of the three years in the period ended December 31, 2007			53
Consolidated statement of cash flows for each of the three years in the period ended December 31, 2007			56
Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, 2007			57
Notes to consolidated financial statements			58-75
Quarterly financial information			79
Financial Statement Schedule:
Consolidated schedule for each of the three years in the period ended December 31, 2007
II — Reserves for doubtful accounts and sales returns	15
Consent of Independent Registered Public Accounting Firm	Exhibit 23

All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or the notes thereto.

The financial statements listed in the above index which are included in the annual report to shareholders for the year ended December 31, 2007 are hereby incorporated by reference in Exhibit (13). With the exception of the pages listed in the above index, the 2007 annual report to shareholders is not to be deemed filed as part of Item 15 (a)(1).

14

THE McGRAW-HILL COMPANIES, INC.

SCHEDULE II — RESERVES FOR DOUBTFUL ACCOUNTS AND SALES RETURNS

(Thousands of dollars)

	Balance at										Balance
	beginning		Charged								at end
Additions/(deductions)	of year		to income		Deductions			Other			of year
					(A)			(B)
Year ended 12/31/07
Allowance for doubtful accounts	$	73,405	$	14,991	$	(17,810	)	$	—		$	70,586
Allowance for returns		188,515		8,580		—			—			197,095
	$	261,920	$	23,571	$	(17,810	)	$	—		$	267,681
Year ended 12/31/06
Allowance for doubtful accounts	$	74,396	$	19,577	$	(20,568	)	$	—		$	73,405
Allowance for returns		187,348		1,167		—			—			188,515
	$	261,744	$	20,744	$	(20,568	)	$	—		$	261,920
Year ended 12/31/05
Allowance for doubtful accounts	$	80,570	$	18,896	$	(23,044	)	$	(2,026	)	$	74,396
Allowance for returns		178,128		9,220		—			—			187,348
	$	258,698	$	28,116	$	(23,044	)	$	(2,026	)	$	261,744

(A)	Accounts written off, less recoveries.
(B)	In 2005, amounts primarily relate to the disposition of Corporate Value Consulting and the acquisitions of J.D. Power and Associates and Vista Research, Inc.

15

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

The McGraw-Hill Companies, Inc.  

                   Registrant 

By:	/s/ Kenneth M. Vittor
	Kenneth M. Vittor
	Executive Vice President and
	General Counsel
	February 29, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on February 29, 2008 on behalf of Registrant by the following persons who signed in the capacities as set forth below under their respective names. Registrant’s board of directors is comprised of twelve members and the signatures set forth below of individual board members, constitute at least a majority of such board.

/s/ Harold W. McGraw III  

Harold W. McGraw III 

Chairman, President and
Chief Executive Officer 

/s/ Robert J. Bahash  

Robert J. Bahash 

Executive Vice President and
Chief Financial Officer 

/s/ Luc Grégoire  

Luc Grégoire 

Senior Vice President and
Corporate Controller 

16

/s/ Pedro Aspe  

Pedro Aspe 

Director 

/s/ Sir Winfried F.W. Bischoff  

Sir Winfried F.W. Bischoff 

Director 

/s/ Douglas N. Daft  

Douglas N. Daft 

Director 

/s/ Linda Koch Lorimer  

Linda Koch Lorimer 

Director 

/s/ Robert P. McGraw  

Robert P. McGraw 

Director 

/s/ Hilda Ochoa-Brillembourg  

Hilda Ochoa-Brillembourg 

Director 

/s/ Sir Michael Rake  

Sir Michael Rake 

Director 

17

/s/ James H. Ross  

James H. Ross 

Director 

/s/ Edward B. Rust, Jr.  

Edward B. Rust, Jr. 

Director 

/s/ Kurt L. Schmoke  

Kurt L. Schmoke 

Director 

/s/ Sidney Taurel  

Sidney Taurel 

Director 

18

Exhibit
Number	Exhibit Index
(3)	Certificate of Incorporation of Registrant, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 1993 and Form 10-Q for the quarter ended June 30, 1998.
(3)	Amendment to Certificate of Incorporation of Registrant, incorporated by reference from Registrant’s Form 8-K filed April 27, 2005.
(3)	By-laws of Registrant, incorporated by reference from Registrant’s Form 10-Q for the quarter ended March 31, 2000.
(4)	Indenture dated as of November 2, 2007 between the Registrant, as issuer, and The Bank of New York, as trustee, incorporated by reference from Registrant’s Form 8-K dated November 2, 2007.
(10.1)	Form of Indemnification Agreement between Registrant and each of its directors and certain of its executive officers, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2004.
(10.2)*	Registrant’s 1987 Key Employee Stock Incentive Plan, as amended and restated as of December 6, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2006.
(10.3)*	Registrant’s Amended and Restated 1993 Employee Stock Incentive Plan, as amended and restated as of December 6, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2006.
(10.4)*	Registrant’s Amended and Restated 2002 Stock Incentive Plan, as amended and restated as of December 6, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2006.
(10.5)*	Form of Restricted Performance Share Terms and Conditions, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2004.
(10.6)*	Form of Restricted Performance Share Award, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2004.
(10.7)*	Form of Stock Option Award, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2004.
(10.8)*	Registrant’s Key Executive Short Term Incentive Compensation Plan, as amended and restated effective as of January 1, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2006.
(10.9)*	Registrant’s Key Executive Short-Term Incentive Deferred Compensation Plan, as amended and restated as of January 1, 2008.
(10.10)*	Registrant’s Executive Deferred Compensation Plan, incorporated by reference from Registrant’s Form SE filed March 28, 1991 and in connection with Registrant’s Form 10-K for the fiscal year ended December 31, 1990.
(10.11)*	Registrant’s Management Severance Plan, as amended and restated as of January 1, 2008.
(10.12)*	Registrant’s Executive Severance Plan, as amended and restated as of January 1, 2008.
(10.13)*	Registrant’s Senior Executive Severance Plan, as amended and restated as of January 1, 2008.
(10.14)	$1,200,000 Five-Year Credit Agreement dated as of July 20, 2004 among the Registrant, the lenders listed therein, and JP Morgan Chase Bank, as administrative agent, incorporated by reference from The Registrant’s Form 8-K dated July 22, 2004.
(10.15)*	Registrant’s Employee Retirement Plan Supplement, as amended and restated as of January 1, 2008.
(10.16)*	Registrant’s 401(k) Savings and Profit Sharing Supplement, as amended and restated as of January 1, 2008.

19

Exhibit
Number	Exhibit Index
(10.17)*	Registrant’s Management Supplemental Death and Disability Benefits Plan, as amended January 24, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2005.
(10.18)*	Registrant’s Senior Executive Supplemental Death, Disability & Retirement Benefits Plan, as amended and restated as of January 1, 2008.
(10.19)*	Resolutions amending certain of Registrant’s equity and compensation plans, as adopted on February 23, 2000, with respect to definitions of “Cause” and “Change of Control” contained therein, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2000.
(10.20)*	Registrant’s Director Retirement Plan, incorporated by reference from Registrant’s Form SE filed March 29, 1990 in connection with Registrant’s Form 10-K for the fiscal year ended December 31, 1989.
(10.21)*	Resolutions Freezing Existing Benefits and Terminating Additional Benefits under Registrant’s Directors Retirement Plan, as adopted on January 31, 1996, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 1996.
(10.22)*	Registrant’s Director Deferred Compensation Plan, as amended and restated as of January 1, 2008.
(10.23)*	Registrant’s Director Deferred Stock Ownership Plan, as amended and restated as of January 1, 2008.
(10.24)*	Aircraft Timeshare Agreement, dated as of September 15, 2004, by and between Standard & Poor’s Securities Evaluations, Inc. and Harold McGraw III, incorporated by reference from the Registrant’s Form 10-Q for the quarter ended September 30, 2004.
(12)	Computation of ratio of earnings to fixed charges.
(13)	Registrant’s 2007 Annual Report to Shareholders. Such Report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is furnished for the information of the Commission and is not deemed “filed” as part of this Form 10-K.
(21)	Subsidiaries of the Registrant.
(23)	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
(31.1)	Annual Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Annual Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Annual Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99)	Amendment to Rights Agreement, dated as of July 27, 2005, by and between the Registrant and The Bank of New York, as Rights Agent, incorporated by reference from Form 8-A/A filed August 3, 2005.

* These exhibits relate to management contracts or compensatory plan arrangements.

20

EX-10.9

     Exhibit 10.9

THE McGRAW-HILL COMPANIES, INC.

KEY EXECUTIVE SHORT-TERM INCENTIVE

DEFERRED COMPENSATION PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
KEY EXECUTIVE SHORT-TERM INCENTIVE
DEFERRED COMPENSATION PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

     It is intended that the Plan will aid in retaining and attracting employees by providing such employees with a means to defer receipt of Incentive Compensation to a future date. The Plan is intended to satisfy the requirements of Section 409A of the Code.

ARTICLE II
DEFINITIONS

     The following words and phrases as used herein shall have the following meanings:

     SECTION 2.01 “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

     SECTION 2.02 “Board” means the Board of Directors of the Company.

     SECTION 2.03 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.03; or

2

     (ii) A change in the composition of the Board such that the Directors who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.03, that any individual who becomes a Director subsequent to the effective date of the Plan, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

     SECTION 2.04 “Claimant” has the meaning set forth in Section 9.01 of the Plan.

3

     SECTION 2.05 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

     SECTION 2.06 “Committee” means the Compensation Committee of the Board.

     SECTION 2.07 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

     SECTION 2.08 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

     SECTION 2.09 “Deferred Account” means a bookkeeping account maintained by the Company for a Participant representing the Participant’s interest in the Incentive Compensation credited to such account pursuant to Sections 6.01 and 6.02 of the Plan.

     SECTION 2.10 “Determination Date” means the date on which the amount of a Participant’s Deferred Account is determined as provided in Sections 6.01 and 6.02 of the Plan. The last day of each calendar month shall be a Determination Date.

     SECTION 2.11 “Director” means an individual who is a member of the Board.

     SECTION 2.12 “Disability” means a Participant’s becoming disabled within the meaning of Section 409A(a)(2)(C) of the Code.

     SECTION 2.13 “Employment Termination Date” means the date of a Participant’s “separation from service” from the Company, as defined in Section 409A(a)(2)(A)(i) of the Code.

     SECTION 2.14 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

     SECTION 2.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

     SECTION 2.16 “Extension Notice” has the meaning set forth in Section 9.01 of the Plan.

     SECTION 2.17 “Incentive Compensation” means any short-term compensation cash award, payable by the Company to a Participant in a Plan Year pursuant to the provisions of The McGraw-Hill Companies, Inc. Key Executive Short-Term Incentive Compensation Plan, and successor programs thereto, and/or such other cash compensation as determined by the Committee.

     SECTION 2.18 “Participant” means each employee who participates in the Plan, as provided in Section 4.01 of the Plan.

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     SECTION 2.19 “Participation Agreement” means a deferral agreement, on such form as may be prescribed by the Committee, executed and filed by a Participant prior to the beginning of the first period for which the Participant’s Incentive Compensation is to be deferred pursuant to the Plan. A new Participation Agreement shall be executed and filed by a Participant for each Incentive Compensation deferral election.

     SECTION 2.20 “Plan” means The McGraw-Hill Companies, Inc. Key Executive Short-Term Incentive Deferred Compensation Plan, as amended from time to time.

     SECTION 2.21 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

     SECTION 2.22 “Plan Year” means the calendar year.

     SECTION 2.23 “Specified Employee” means a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the Code.

ARTICLE III
ADMINISTRATION

     SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article IX of the Plan, decisions of the Plan Administrator shall be reviewable by the Committee. Subject to Article IX of the Plan, the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

     SECTION 3.02 Binding Effect of Decisions. Subject to Article IX of the Plan, the decision or action of the Plan Administrator or Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

     SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Company to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

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ARTICLE IV
PARTICIPATION

     SECTION 4.01 Eligible Participants. Any individual who was a Participant in the Plan immediately prior to the effective date of this amendment and restatement shall continue to be a Participant on such date, subject to the terms and provisions of the Plan. Thereafter, participation in the Plan shall be limited to such Participants and to other executives selected by the Committee who elect to participate in the Plan by filing a Participation Agreement with the Company.

ARTICLE V
PARTICIPATION AGREEMENTS

     SECTION 5.01 Initial Participation Agreement. Each new Participant in the Plan may file an irrevocable Participation Agreement to defer payment of all or part of his Incentive Compensation to be earned during the Plan Year in which the individual becomes a Participant in the Plan and to have the Participant’s Deferred Account credited with such deferred amounts. In order to make a deferral pursuant to this Section 5.01, the Participant must file an executed Participation Agreement with the Company. This Participation Agreement must be filed within 30 days of the date on which the individual becomes eligible to participate in the Plan (or in any other account balance plan described in Treasury Regulation Section 1.409A-1(c)(2)(i)(A), or any successor provision thereto) and shall be effective with respect to compensation earned after the date of filing thereof.

     SECTION 5.02 Annual Participation Agreements. A Participant may file a Participation Agreement on an annual basis to defer payment of all or part of his Incentive Compensation to be earned during the next succeeding Plan Year and to have the Participant’s Deferred Account credited with such deferred amounts. In order to make a deferral pursuant to this Section 5.02, the Participant must file an executed Participation Agreement with the Company. The Participation Agreement must be filed not later than, and such Participation Agreement shall become irrevocable on, the last business day prior to the commencement of the Plan Year to which the Participation Agreement relates.

     SECTION 5.03 Applicability of Participation Agreement. With respect to Incentive Compensation deferrals, the deferral selected in each Participation Agreement shall apply only to the Participant’s Incentive Compensation paid for the Plan Year for which the respective Participation Agreement is applicable.

     SECTION 5.04 Elective Deferred Incentive Compensation. The amount of Incentive Compensation that a Participant elects to defer in his Participation Agreement shall be credited by the Company to the Participant’s Deferred Account at such times as the compensation would have been paid had it not been deferred.

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ARTICLE VI
DEFERRED ACCOUNTS

     SECTION 6.01 Accounts. Each Participant’s Deferred Account, as of each Determination Date, shall consist of the balance of the Participant’s Deferred Account as of the immediately preceding Determination Date. The Deferred Account of each Participant shall then be increased by any deferred Incentive Compensation credited to or reduced by the amount of all distributions, if any, made from such Deferred Account since the preceding Determination Date.

     SECTION 6.02 Interest Credit. As of each Determination Date, the Participant’s Deferred Account shall be increased by the amount of interest earned since the preceding Determination Date. Interest shall be credited at a rate determined to be in effect for each Plan Year based on 120% of the Applicable Federal Long-Term Rate as prescribed by the Internal Revenue Service in December of the year prior to the year in which the Incentive Compensation is credited. Notwithstanding the foregoing, if a Participant’s Deferred Account is paid in installments in accordance with Section 7.05 of the Plan, interest shall be credited, (i) for retired Participants, at the rate determined to be in effect during the Plan Year in which the Participant retires, and (ii) for all other installment payments, at the rate determined to be in effect during the Plan Year in which such payments commence.

     SECTION 6.03 Statement of Accounts. The Company shall submit to each Participant, by July 1 following the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance to the credit of such Participant in his Deferred Account as of the last day of the preceding Plan Year.

     SECTION 6.04 Vesting of Accounts. A Participant shall be 100% vested in his Deferred Account at all times.

ARTICLE VII
DISTRIBUTIONS

     SECTION 7.01 Payment Elections. A Participant may elect in any Participation Agreement whether payment of the balance of the amounts credited to his Deferred Account shall be made or commence (i) on a date specified by the Participant in the Participation Agreement, or (ii) upon the occurrence of an event described in Sections 7.02, 7.03 or 7.04 of the Plan. The Participant shall be entitled to the balance of the amounts credited to his Deferred Account, as determined under Sections 6.01 and 6.02 of the Plan and as payable in accordance with Section 7.05 of the Plan, as of the Determination Date coincident with or immediately following such specified date or the occurrence of such event.

     SECTION 7.02 Employment Termination. Payment of a Participant’s Deferred Account shall be made or commence as of the Determination Date coincident with or immediately following the Participant’s Employment Termination Date; provided, however, if such Participant is a Specified Employee as of the Participant’s Employment Termination Date then the payment shall be made or commence as of the six-month anniversary of the

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Determination Date coincident with or immediately following the Participant’s Employment Termination Date.

     SECTION 7.03 Death. If a Participant dies after the commencement of payments of his Deferred Account, or if a Participant dies while employed prior to any payments of the balance of the amounts credited to his Deferred Account, his Beneficiary shall receive a lump-sum payment equal to the balance of the amounts credited to his Deferred Account as of the Determination Date coincident with or immediately following the date of the Participant’s death.

     SECTION 7.04 Disability. In the event of a Participant’s Disability prior to his Employment Termination Date, such Participant shall receive a lump-sum payment of the balance of the amounts credited to his Deferred Account as of the Determination Date coincident with or immediately following the date of the Participant’s Disability.

     SECTION 7.05 Payment of Benefit. Except as otherwise provided in the Participant’s Participation Agreements, upon, or commencing upon, the first scheduled payroll date of the first calendar month following the earliest of the happening of the specified date, if any, or the occurrence of an event described in Sections 7.02, 7.03 or 7.04 of the Plan, the Company shall pay to the Participant the applicable portion of the balance of the amounts credited to his Deferred Account in a lump sum or in equal annual installments, as elected in the applicable Participation Agreements. If a Participant elects to receive payments in installments, payment of such portion of the balance of the amounts credited to his Deferred Account shall be in an amount which amortizes the Deferred Account balance thereof in equal annual payments of principal and interest over a period not to exceed 15 years. For purposes of determining the amount of the annual payment, the assumed rate of interest shall be the rate specified under the terms of Section 6.02 of the Plan.

     SECTION 7.06 Change in Election. No change in a Participant’s payment election shall be valid unless it is made in a Participation Agreement that is executed and filed with the Company in accordance with this Section 7.06. Any change in a Participant’s payment election with respect to his Deferred Account may not take effect until at least 12 months after the date on which the election is made in a Participation Agreement that is executed and filed with the Company and, in the case of a payment to be made or commenced on a specified date, the election is made in a Participation Agreement that is not executed and filed with the Company less than 12 months prior to the date of the Participant’s first such payment scheduled under the Plan. The first payment with respect to which the election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been made.

ARTICLE VIII
EFFECT OF CORPORATE TRANSACTIONS

     SECTION 8.01 Change in Control. (a) Notwithstanding anything contained in the Plan to the contrary, in the event of a Change in Control that is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, the Company shall immediately

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pay to each Participant in a lump sum the then remaining balance in his Deferred Account. The terms of Sections 11.01 and 11.02 of the Plan shall not be applicable following a Change in Control.

     (b) The reasonable legal fees incurred by any Participant to enforce his valid rights under this Section 8.01 shall be paid for by the Company to the Participant in addition to sums otherwise due hereunder, whether or not the Participant is successful in enforcing his rights or whether or not the matter is settled; provided that such payment shall be made not later than the end of the taxable year following the year in which such legal fees are incurred; provided, further, that no such payment shall be made after the last day of the sixth year following the expiration of the period described under Section 9.03 of the Plan.

ARTICLE IX
CLAIMS PROCEDURE

     SECTION 9.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice”) before the end of the initial 90- day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 9.02 of the Plan.

     SECTION 9.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review

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shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. If the Committee denies the claim on review, notice of the Committee’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

     SECTION 9.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 9.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

ARTICLE X
BENEFICIARY DESIGNATION

     SECTION 10.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan.

     SECTION 10.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

     SECTION 10.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

     SECTION 10.04 Effect of Payment. The payment under this Article X of the amounts due to a Participant under the Plan to a Beneficiary shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

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ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN

     SECTION 11.01 Amendment. The Board or the Committee may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company; provided, however, that, subject to Section 11.03 of the Plan, no amendment shall be effective to decrease or restrict any Deferred Account at the time of such amendment.

     SECTION 11.02 Company’s Right to Terminate. The Board or the Committee may terminate the Plan at any time with respect to future deferrals of Incentive Compensation if, in its judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interests of the Company. The Board or the Committee may also terminate the Plan in its entirety at any time, and, upon any such termination, the Company shall immediately pay to each Participant in a lump sum the then remaining balance in his Deferred Account, subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto).

     SECTION 11.03 Section 409A. If, in the good faith judgment of the Committee, any provision of the Plan or any Participation Agreement could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision therein to the contrary, the Committee shall have broad authority to amend or to modify the Plan or any Participation Agreement, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no Deferred Accounts are subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 11.03 shall be final, conclusive and binding on all persons.

ARTICLE XII
MISCELLANEOUS

     SECTION 12.01 Unsecured General Creditor. The Plan is an unfunded deferred compensation plan for a select group of management or highly compensated employees within the meaning of ERISA, and shall be construed and administered accordingly. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

     SECTION 12.02 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or

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convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

     SECTION 12.03 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Beneficiary) shall have no rights against the Company except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Company or to interfere with the rights of the Company to discipline or discharge him at any time.

     SECTION 12.04 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

     SECTION 12.05 Protective Provisions. A Participant will cooperate with the Company by furnishing any and all information requested by the Company, in order to facilitate the payment of benefits hereunder, and by taking such other action as may be requested by the Company.

     SECTION 12.06 Withholding; Payroll Taxes. To the extent that the Company is required to withhold any taxes or other amounts from the employee’s deferred compensation pursuant to any state, federal or local law, such amounts shall first be taken out of the portion of the Participant’s Incentive Compensation that is not deferred under the Plan, or the Participant’s base salary. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

     SECTION 12.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

     SECTION 12.08 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

     SECTION 12.09 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

     SECTION 12.10 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so

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apply. All references to sections are, unless otherwise indicated, to sections of the Plan. The Plan is intended to meet the requirements of Section 409A of the Code and shall be interpreted and construed consistent with such intent.

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EX-10.11

Exhibit 10.11

THE McGRAW-HILL COMPANIES, INC.

MANAGEMENT SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
MANAGEMENT SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The purpose of the Plan is to provide managers who are in a position to contribute to the success of the Company Group with reasonable compensation in the event of their termination of employment with the Company Group. The Plan is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Attorneys’ Fees” means any reasonable attorneys’ fees and disbursements incurred in pursuing a Disputed Claim.

          SECTION 2.02 “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.03 “Board” means the Board of Directors of the Company.

          SECTION 2.04 “Cause” means the Participant’s misconduct in respect of the Participant’s obligations to the Company Group or other acts of misconduct by the Participant occurring during the course of the Participant’s employment, which in either case results in or could reasonably be expected to result in material damage to the property, business or reputation of the Company Group; that in no event shall unsatisfactory job performance alone be deemed to be “Cause”; and, provided, further, that no termination of employment that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control shall be deemed to be for “Cause.”

          SECTION 2.05 “CEO” means the Chief Executive Officer of the Company.

          SECTION 2.06 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of

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Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.06; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.06, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the

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outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.07 “Claimant” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.08 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.09 “Commencement Date” means the first day of the first regular payroll cycle coincident with or next following the date of the Participant’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.

          SECTION 2.10 “Committee” means the Compensation Committee of the Board.

          SECTION 2.11 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.12 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.13 “Company Group” means the Company and its Subsidiaries.

          SECTION 2.14 “Comparable Position” has the meaning that shall be determined by the CEO after taking into account the job requirements of a Participant’s then current position and the position offered to a Participant, the duties of the two positions, the base pay of the two positions and such other factors as the CEO deems relevant. A Comparable Position may require a Participant to utilize different skills from those used in the Participant’s then current position. Aggregate levels of benefits, cash bonus opportunities and titles do not need to be taken into account by the CEO in assessing whether a position qualifies as a Comparable Position.

          SECTION 2.15 “Director” means an individual who is a member of the Board.

          SECTION 2.16 “Disability” means a Participant’s long-term disability pursuant to a determination of disability under the Company’s Long-Term Disability Plan.

          SECTION 2.17 “Disputed Claim” means a claim for payments under the Plan that is disputed by the Company.

          SECTION 2.18 “Effective Date” has the meaning set forth in Section 11.08 of the Plan.

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          SECTION 2.19 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.21 “Excise Tax” has the meaning set forth in Section 5.05 of the Plan.

          SECTION 2.22 “Extension Notice” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.23 “Local Position” has the meaning that shall be determined by the CEO using standards that are similar to the standards utilized under the Code (including, without limitation, the distance standard in Section 217(c)(1)(A) of the Code), for purposes of moving expense deductions, and such other factors as the CEO deems relevant.

          SECTION 2.24 “Long-Term Disability Plan” means The McGraw-Hill Companies, Inc. Long-Term Disability Plan, as amended from time to time (or any successor plan).

          SECTION 2.25 “Judgment or Award” means a nonappealable, final judgment from a court of competent jurisdiction or a binding arbitration award granting the Participant all or substantially all of the amount sought in a Disputed Claim.

          SECTION 2.26 “Monthly Base Salary” means a Participant’s highest regular monthly salary during the preceding 24-month period, excluding any of the following: year-end or other bonuses, incentive compensation, whether short-term or long-term, commissions, reimbursed expenses, and any payments on account of premiums on insurance or other contributions made to other welfare or benefit plans.

          SECTION 2.27 “Participant” means each employee who participates in the Plan, as provided in Section 4.01 of the Plan.

           SECTION 2.28 “Payment” has the meaning set forth in Section 5.06 of the Plan.

          SECTION 2.29 “Plan” means The McGraw-Hill Companies, Inc. Management Severance Plan, as amended from time to time.

          SECTION 2.30 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.31 “Protection Period” has the meaning set forth in Section 10.01 of the Plan.

          SECTION 2.32 “Release” means a termination and release agreement in the form approved by the Plan Administrator, which shall, among other things, release the Company

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Group, and each of their respective directors, officers, employees, agents, successors and assigns, from any and all claims that the Participant has or may have against the Company Group and each of their respective directors, officers, employees, agents, successors and assigns.

          SECTION 2.33 “Separation Pay” has the meaning set forth in Section 5.01(a)(i) of the Plan.

          SECTION 2.34 “Separation Period” has the meaning set forth in Section 5.01(a)(i) of the Plan.

          SECTION 2.35 “Separation Pay Plan” means the Separation Pay Plan of The McGraw-Hill Companies, Inc., as amended from time to time (or any successor plan).

          SECTION 2.36 “Specified Employee” means a Participant who is a “specified employee” within the meaning of Section 409A(a)(2)(b)(i) of the Code.

          SECTION 2.37 “Subsidiary” means any subsidiary of the Company at least 20% of whose voting shares are owned directly or indirectly by the Company.

          SECTION 2.38 “Substitute Position” means a position which may not be comparable in title, duties and responsibilities to a prior position, but which affords the Participant a comparable level of base pay and which, in the judgment of the CEO, is consistent with the experience, education or skills of the Participant. A Substitute Position may require a Participant to utilize different skills from those used in the Participant’s then current position. Aggregate levels of benefits, cash bonus opportunities and titles do not need to be taken into account by the CEO in assessing whether a position qualifies as a Substitute Position.

          SECTION 2.39 “Supplemental Separation Pay” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

          SECTION 2.40 “Supplemental Separation Period” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

          SECTION 2.41 “Termination of Employment at Company Convenience” means termination of the employment of a Participant initiated by the Company Group, other than for Cause, and other than by reason of death, Disability, voluntary resignation by a Participant, or lawful Company Group mandated retirement at normal retirement age.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article VIII, decisions of the Plan Administrator shall be reviewable by the CEO. Subject to Article VIII, the

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CEO shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article VIII, the decision or action of the CEO or Plan Administrator in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the CEO, the Plan Administrator, the Board (and each member thereof), and any employee of the Company Group to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

ARTICLE IV
PARTICIPATION

          SECTION 4.01 Eligible Participants. Subject to the approval of the CEO, the Plan Administrator shall from time to time select Participants from among those employees who are in Grade Level 25 or above (or equivalent successor grade) and who are determined by the Plan Administrator to be in a position to contribute to the success of the Company Group.

          SECTION 4.02 Participation Notification; Participation Agreement. The Company shall notify each Participant in writing of his participation in the Plan, and such notice shall also set forth the payments and benefits to which the Participant may become entitled. The Company may also enter into such agreements as the CEO deems necessary or appropriate with respect to a Participant’s rights under the Plan. Any such notice or agreement may contain such terms, provisions and conditions not inconsistent with the Plan, including but not limited to provisions for the extension or renewal of any such agreement, as shall be determined by the CEO, in his sole discretion.

          SECTION 4.03 Termination of Participation. A Participant shall cease to be a Participant in the Plan upon the earlier of (i) his receipt of all of the payments, if any, to which he is or becomes entitled under the terms of the Plan and the terms of any notice or agreement issued by the Company with respect to his participation hereunder, or (ii) the termination of his employment with the Company Group under circumstances not requiring payments under the terms of the Plan. In addition, a Participant shall cease to be a Participant in the Plan if, prior to the occurrence of a Termination of Employment at Company Convenience, the Participant is no longer in Grade Level 25 or above (or equivalent successor grade).

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ARTICLE V
PAYMENTS UPON TERMINATION OF EMPLOYMENT

          SECTION 5.01 Separation Pay. (a) In the event of a Termination of Employment at Company Convenience, the Participant shall be entitled to the following:

     (i) an amount of separation pay (the “Separation Pay”) equal to the Participant’s Monthly Base Salary for the number of months following the Participant’s Commencement Date (the “Separation Period”) equal to the number of full and partial years of the Participant’s continuous service with the Company Group, up to a maximum of 20 years, multiplied by 0.3, and payable over the Separation Period in accordance with the Company’s payroll practices in effect from time to time; provided that the Separation Pay shall not be less than three times such Monthly Base Salary and the Separation Period shall not be less than three months;

     (ii) if, not later than the date and time specified by the Plan Administrator, the Participant delivers to the Company a signed and valid Release, a supplemental amount of separation pay (the “Supplemental Separation Pay”) equal and in addition to the amount of the Participant’s Separation Pay and payable following the Separation Period over the number of months in the Separation Period (the “Supplemental Separation Period”) in accordance with the Company’s payroll practices in effect from time to time; provided, however, that a Release shall not be deemed delivered by the Participant if it is revoked by the Participant during any applicable revocation period set forth in the Release;

     (iii) active participation in all Company-sponsored retirement, life, medical, dental, accidental death and disability insurance benefit plans or programs in which the Participant was participating at the time of his termination for the Separation Period and any Supplemental Separation Period, but only to the extent permitted by applicable law as determined by the Company and not otherwise provided under the terms of such plans and programs, it being understood that continued participation in Company-sponsored retirement plans or programs shall be limited to such plans or programs that are not intended to be qualified under Section 401(a) or 401(k) of the Code; provided that the Participant shall be responsible for any required payments for participation in such plans or programs; provided, further, that, except with respect to amounts subject to Section 409A of the Code, the CEO may authorize, in his sole discretion, in lieu of the payments and benefits provided under this Section 5.01(a) of the Plan, payment to the Participant of a single lump sum equal to 110% of the sum of the Participant’s Separation Pay and any Supplemental Separation Pay (100% of Monthly Base Salary for the Separation Period and any Supplemental Separation Period in lieu of salary continuation, and 10% of Monthly Base Salary for such periods in lieu of benefits continuation).

          (b) The payments and benefits described in Section 5.01(a) of the Plan shall be in lieu of any other payments under the Plan or under any other severance pay or separation allowance plan, program or policy of the Company Group, including the Company’s Separation

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Pay Plan; provided, however, if payments pursuant to the terms and conditions of the Company’s Separation Pay Plan would result in greater payments to a Participant than would be payable under the Plan, said Participant shall in such event receive payments pursuant to the terms and conditions of the Company’s Separation Pay Plan in lieu of payments pursuant to the Plan.

          SECTION 5.02 Death. In the event a Participant dies after the commencement of payments pursuant to Section 5.01(a) of the Plan, the balance of said payments shall be payable in accordance with Article IX of the Plan.

          SECTION 5.03 Transfers. A Participant’s transfer to another employment location shall not by itself entitle a Participant to any payments or benefits under the Plan.

          SECTION 5.04 Corporate Transactions. A Participant shall not receive any payments or benefits under the Plan in the event of a sale of the business unit of the Company Group with which the Participant is associated, if the Participant (i) is offered a Local Position that is either a Comparable Position or a Substitute Position with the buyer or the Company Group, whether or not such offer is accepted by the Participant, or (ii) is employed following such transaction by the buyer or the Company Group.

          SECTION 5.05 Specified Employees. With respect to amounts subject to Section 409A of the Code, notwithstanding the other provisions of this Article V, no payment to a Specified Employee under the Plan shall be made or commenced prior to the date that is six months following the Specified Employee’s Commencement Date; provided that amounts under the Plan that are otherwise payable to the Specified Employee prior to such date shall be paid to the Specified Employee on or within 30 days after such date.

          SECTION 5.06 Section 280G. In the event that any payment or benefit received or to be received by any Participant pursuant to the Plan or any other plan or arrangement with the Company (each, a “Payment”) would constitute an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, or would otherwise be subject to the excise tax imposed under Section 4999 of the Code, or any similar federal or state law (an “Excise Tax”), as determined by an independent certified public accounting firm selected by the Company, the amount of the Participant’s Separation Pay (and Supplemental Separation Pay, if any) shall be limited to the largest amount payable, if any, that would not result in the imposition of any Excise Tax to the Participant, but only if, notwithstanding such limitation, the total Payments, net of all taxes imposed on the Participant with respect thereto, would be greater if no Excise Tax were imposed.

ARTICLE VI
MITIGATION AND OFFSET

          SECTION 6.01 Mitigation. No Participant shall be required to mitigate the amount of any payment under the Plan by seeking employment or otherwise, and there shall be no right of set-off or counterclaim, in respect of any claim, debt or obligation, against any payments to the Participant, his dependents, Beneficiaries or estate provided for in the Plan.

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          SECTION 6.02 Offset. If, after a Participant’s termination of employment with the Company Group, the Participant is employed by another entity or becomes self-employed, the amounts (if any) payable under the Plan to the Participant shall not be offset by the amounts (if any) payable to the Participant from such new employment with respect to services rendered during the severance period applicable to such Participant under the Plan.

ARTICLE VII
ATTORNEYS’ FEES FOR DISPUTED CLAIMS

          SECTION 7.01 General. If a Participant makes a Disputed Claim, the Company shall reimburse the Participant for Attorneys’ Fees; provided that the Participant enters into a repayment agreement with the Company, which shall require the Participant (i) to repay the Company for any reimbursements made pursuant to this Section 7.01 if the Participant does not obtain a Judgment or Award and (ii) to provide adequate security with respect to the amount subject to repayment under this Section 7.01. With respect to amounts subject to Section 409A, such reimbursement shall be made no later than the last day of the calendar year following the calendar year in which the applicable Attorneys’ Fee expense was incurred, subject to the timely presentation to the Company in writing of any periodic statements for Attorneys’ Fees. Unless the Judgment or Award specifies whether it constitutes “all or substantially all of the amount sought,” such determination shall be made by the Plan Administrator in its sole and absolute discretion.

          SECTION 7.02 Change in Control. If a Disputed Claim is made with respect to a termination of employment occurring during a period beginning on the date of a Change in Control and ending 24 months thereafter, the Participant shall be entitled to reimbursement of Attorneys’ Fees, whether or not the Participant obtains a Judgment or Award. Such reimbursement shall be made on a “pay-as-you-go” basis, as soon as practicable after presentation to the Company in writing of any periodic statements for Attorneys’ Fees, but in no event later than the last day of the Participant’s taxable year following the taxable year in which the applicable Attorneys’ Fees were incurred.

          SECTION 7.03 Six Month Period Prior to Change in Control. Without affecting the rights of a Participant under Section 7.01 of the Plan, a Participant shall be entitled to reimbursement of Attorneys’ Fees for a Disputed Claim in accordance with the terms of Section 7.02 of the Plan with respect to termination of employment occurring six months prior to a Change in Control, whether or not the Participant obtains a Judgment or Award; provided, however, that no reimbursement shall be made under this Section 7.03 in such case (i) unless and until the Change in Control actually occurs or (ii) if reimbursement has been made under Section 7.01 of the Plan.

          SECTION 7.04 Section 409A. The reimbursements made to a Participant under this Article VII during any calendar year shall not affect the amounts eligible for reimbursement in any other calendar year. No reimbursement of Attorneys’ Fees made pursuant to this Article VII shall be paid to any Participant following the last day of the sixth year following the termination of the period described in Section 8.03 of the Plan.

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ARTICLE VIII
CLAIMS PROCEDURE

          SECTION 8.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice”) before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 8.02 of the Plan.

          SECTION 8.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the CEO for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the CEO to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the CEO of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. If the CEO denies the claim on review, notice of the CEO’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

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          SECTION 8.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 8.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

          SECTION 8.04 Change in Control. Notwithstanding any other provision of the Plan, the authority granted pursuant to Articles III, VII and VIII to the Plan Administrator and to persons making determinations on claims for benefits and reviews of claims shall, when exercised (i) during the period of 24 months following a Change in Control or (ii) with respect to any termination of employment that occurs during the period of 24 months following a Change in Control or that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, shall not be “discretionary,” but shall be subject to de novo review by a court of competent jurisdiction or an arbitrator, as applicable.

ARTICLE IX
BENEFICIARY DESIGNATION

          SECTION 9.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan.

          SECTION 9.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

          SECTION 9.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

          SECTION 9.04 Effect of Payment. The payment under this Article IX of the amounts due to a Participant under the Plan to a Beneficiary shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

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ARTICLE X
AMENDMENT AND TERMINATION OF PLAN

          SECTION 10.01 Amendment and Termination. (a) The Company shall have the right at any time, in its discretion, to amend the Plan, in whole or in part, or to terminate the Plan, by resolution of the Board or Committee or delegate thereof, except that no amendment or termination shall impair or abridge the obligations of the Company to any Participant or the rights of any Participant under the Plan without the express written consent of the affected Participant (i) with respect to any termination of employment that occurred before such amendment or termination, or (ii) in all other cases, until 6 months have elapsed from the time of the amendment or termination. In addition, in no event shall the Plan be amended or terminated (x) during the period of 24 months following a Change in Control (the “Protection Period”), or (y) to the extent that it is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, in each case without the express written consent of the affected Participant. Notwithstanding the foregoing, except with respect to a termination of employment that occurs during the Protection Period, the Company shall have the right to terminate the Plan at any time following the Protection Period.

          (b) Except for the amendments made in accordance with Section 10.01(a) of the Plan, no modifications, alternations and/or changes made to the terms and/or provisions of the Plan, either globally or for an individual participant, will be effective unless evidenced by a writing that directly refers to the Plan and which is signed and dated by the Plan Administrator.

          SECTION 10.02 Section 409A. If, in the good faith judgment of the Plan Administrator, any provision of the Plan would violate the requirements of Section 409A of the Code, or otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Plan Administrator in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Plan Administrator shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no payment or benefit under the Plan is subject to tax under Section 409A of the Code. Any determinations made by the Plan Administrator under this Section 10.02 shall be final, conclusive and binding on all persons.

ARTICLE XI
MISCELLANEOUS

          SECTION 11.01 Effect on Other Plans. Except as expressly provided in Article V of the Plan with respect to the Company’s Separation Pay Plan, (i) nothing in the Plan shall affect the level of benefits provided to or received by any Participant (or the Participant’s estate or Beneficiaries) as part of any employee benefit plan of the Company, and (ii) the Plan shall not be construed to affect in any way the Participant’s rights and obligations under any other plan maintained by the Company on behalf of employees.

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          SECTION 11.02 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company Group. The assets of the Company Group shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company Group under the Plan. Any and all of the assets of the Company Group shall be, and remain, the general, unpledged, unrestricted assets of the Company Group. The obligation of the Company Group under the Plan shall be merely that of an unfunded and unsecured promise of the Company Group to pay money in the future.

          SECTION 11.03 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise require. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 11.04 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Beneficiary) shall have no rights against the Company Group except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Company Group or to interfere with the rights of the Company Group to discipline or discharge him at any time.

          SECTION 11.05 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 11.06 Withholding; Payroll Taxes. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 11.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 11.08 Effective Date. The Plan was initially effective as of January 28, 1987 (the “Effective Date”). This amendment and restatement is effective as of January 1, 2008.

          SECTION 11.09 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

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          SECTION 11.10 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 11.11 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.12

Exhibit 10.12

THE McGRAW-HILL COMPANIES, INC.

EXECUTIVE SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
EXECUTIVE SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The purpose of the Plan is to provide executives who are in a position to contribute materially to the success of the Company Group with reasonable compensation in the event of their termination of employment with the Company Group. The Plan is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Adverse Change in Conditions of Employment” means the occurrence of any of the following events:

     (i) An adverse change by the Company in the Participant’s function, duties or responsibilities, which change would cause the Participant’s position with the Company to become one of substantially less responsibility, importance or scope; or

     (ii) A 10% or larger reduction by the Company (in one or more steps) of the Participant’s Monthly Base Salary.

provided, however, that the Participant shall notify the Company within 90 days of the occurrence of a change described in Sections 2.01(i) or (ii) above and the Company shall have 30 days to cure such change to the reasonable satisfaction of the Participant (including retroactively with respect to monetary matters), which change, to the extent so cured, shall not be considered an Adverse Change in Conditions of Employment.

          SECTION 2.02 “Adverse Change in Conditions of Employment After a Change in Control” means the occurrence of any of the following after a Change in Control:

     (i) The failure to pay base salary to the Participant at a monthly rate at least equal to the highest rate paid to the Participant at any time during or after the 24-month period prior to the Change in Control, except as the result of a Company-wide reduction in base salaries pursuant to which the Participant’s Monthly Base Salary is decreased less than 10%;

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     (ii) The Participant’s annual incentive opportunity, taking into account all material factors such as targeted payment amounts and performance goals, is materially less favorable to the Participant than the most favorable such opportunity at any time during or after the 24-month period prior to the Change in Control;

     (iii) The Participant’s opportunity to earn long-term incentive payments, on the basis of the grant-date fair value of awards and taking into account vesting requirements and termination provisions of awards, is materially less favorable to the Participant than the most favorable such opportunity in effect at any time during or after the 24 months prior to the Change in Control;

     (iv) A material reduction by the Company in the aggregate value to the Participant of the pension and welfare benefit plans in which the Participant is eligible to participate;

     (v) The transfer of the Participant to a principal business location that increases by more than 35 miles the distance between the Participant’s principal business location and place of residence;

     (vi) Any adverse change in the Participant’s title or reporting relationship or adverse change by the Company in the Participant’s authority, functions, duties or responsibilities (other than which results solely from the Company ceasing to have a publicly traded class of common stock or the Participant no longer serving as the chief executive, or reporting to the chief executive, of an independent, publicly traded company as a result thereof), which change would cause the Participant’s position with the Company to become one of substantially less responsibility, importance or scope; or

     (vii) Any failure by a successor entity to the Company (including any entity that succeeds to the business or assets of the Company) to adopt the Plan;

provided, however, that the Participant shall notify the Company within 90 days of the facts and circumstances described in any of Sections 2.02(i) through (vii) above and the Company shall have 30 days to cure such facts and circumstances to the reasonable satisfaction of the Participant (including retroactively with respect to monetary matters), which facts and circumstances, to the extent so cured, shall not be considered an Adverse Change in Conditions of Employment After a Change in Control.

          SECTION 2.03 “Annual Base Salary” means a Participant’s highest rate of annual base salary during the 24-month period preceding the Participant’s termination of employment, excluding any of the following: year-end or other bonuses, incentive compensation, whether short-term or long-term, commissions, reimbursed expenses, and any payments on account of premiums on insurance or other contributions made to other welfare or benefit plans.

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          SECTION 2.04 “Annual Target Bonus” means a Participant’s highest, annual, target short-term incentive opportunity during the 24-month period preceding the Participant’s termination of employment.

          SECTION 2.05 “Attorneys’ Fees” means any reasonable attorneys’ fees and disbursements incurred in pursuing a Disputed Claim.

          SECTION 2.06 “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.07 “Board” means the Board of Directors of the Company.

          SECTION 2.08 “Cause” means the Participant’s misconduct in respect of the Participant’s obligations to the Company Group or other acts of misconduct by the Participant occurring during the course of the Participant’s employment, which in either case results in or could reasonably be expected to result in material damage to the property, business or reputation of the Company Group; provided that in no event shall unsatisfactory job performance alone be deemed to be “Cause”; and, provided, further, that no termination of employment that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control shall be deemed to be for “Cause.”

          SECTION 2.09 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.09; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this

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Section 2.09, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were membersof the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.10 “Claimant” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.11 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

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          SECTION 2.12 “Commencement Date” means the first day of the first regular payroll cycle coincident with or next following the date of the Participant’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.

          SECTION 2.13 “Committee” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.14 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.15 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.16 “Company Group” means the Company and its Subsidiaries.

          SECTION 2.17 “Director” means an individual who is a member of the Board.

          SECTION 2.18 “Disability” means a Participant’s long-term disability pursuant to a determination of disability under the Company’s Long-Term Disability Plan.

          SECTION 2.19 “Disputed Claim” means a claim for payments under the Plan that is disputed by the Company.

          SECTION 2.20 “Effective Date” has the meaning set forth in Section 11.08 of the Plan.

          SECTION 2.21 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.22 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.23 “Excise Tax” has the meaning set forth in Section 5.06 of the Plan.

          SECTION 2.24 “Extension Notice” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.25 “Long-Term Disability Plan” means The McGraw-Hill Companies, Inc. Long-Term Disability Plan, as amended from time to time (or any successor plan).

          SECTION 2.26 “Judgment or Award” means a nonappealable, final judgment from a court of competent jurisdiction or a binding arbitration award granting the Participant all or substantially all of the amount sought in a Disputed Claim.

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          SECTION 2.27 “Monthly Base Salary” means a Participant’s Annual Base Salary, divided by 12.

          SECTION 2.28 “Participant” means each employee who participates in the Plan, as provided in Section 4.01 of the Plan.

          SECTION 2.29 “Payment” has the meaning set forth in Section 5.06 of the Plan.

          SECTION 2.30 “Plan” means The McGraw-Hill Companies, Inc. Executive Severance Plan, as amended from time to time.

          SECTION 2.31 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.32 “Protection Period” has the meaning set forth in Section 10.01 of the Plan.

          SECTION 2.33 “Qualified Termination of Employment” means termination of the employment of a Participant with the Company Group (other than by reason of death, Disability, voluntary resignation by a Participant under circumstances not qualifying under this Section 2.33, or lawful Company-mandated retirement at normal retirement age) as follows:

     (i) By the Company for any reason other than for Cause,

     (ii) By the Participant after an Adverse Change in Conditions of Employment;

     (iii) By the Participant for any reason during the 30-day period following the first anniversary of a Change in Control (in the case of a Change in Control occurring prior to January 1, 2009); or

     (iv) By the Participant after an Adverse Change in Conditions of Employment After a Change in Control (in the case of a Change in Control occurring on or after January 1, 2009).

          SECTION 2.34 “Release” means a termination and release agreement in the form approved by the Plan Administrator, which shall, among other things, release the Company Group, and each of their respective directors, officers, employees, agents, successors and assigns, from any and all claims that the Participant has or may have against the Company Group and each of their respective directors, officers, employees, agents, successors and assigns, and the standard form of which shall not be modified after, in anticipation of, or at the request of any Person seeking to effect, a Change in Control, except to conform to changes in the requirements of applicable law.

          SECTION 2.35 “Separation Pay” has the meaning set forth in Section 5.01(a)(i) of the Plan.

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          SECTION 2.36 “Separation Period” has the meaning set forth in Section 5.01(a)(i) of the Plan.

          SECTION 2.37 “Separation Pay Plan” means the Separation Pay Plan of The McGraw-Hill Companies, Inc., as amended from time to time (or any successor plan).

          SECTION 2.38 “Specified Employee” means a Participant who is a “specified employee” within the meaning of Section 409A(a)(2)(b)(i) of the Code.

          SECTION 2.39 “Subsidiary” means any subsidiary of the Company at least 20% of whose voting shares are owned directly or indirectly by the Company.

          SECTION 2.40 “Supplemental Separation Pay” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

          SECTION 2.41 “Supplemental Separation Period” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article VIII, decisions of the Plan Administrator shall be reviewable by the Compensation Committee of the Board (the “Committee”). Subject to Article VIII, the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article VIII, the decision or action of the Committee or Plan Administrator in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Company Group to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

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ARTICLE IV
PARTICIPATION

          SECTION 4.01 Eligible Participants. Subject to the approval of the Committee, the Plan Administrator shall from time to time select Participants from among those employees who are in ECB 2 (or equivalent successor band) and who are determined by the Plan Administrator to be in a position to contribute materially to the success of the Company Group.

          SECTION 4.02 Participation Notification; Participation Agreement. The Company shall notify each Participant in writing of his participation in the Plan, and such notice shall also set forth the payments and benefits to which the Participant may become entitled. The Company may also enter into such agreements as the Committee deems necessary or appropriate with respect to a Participant’s rights under the Plan. Any such notice or agreement may contain such terms, provisions and conditions not inconsistent with the Plan, including but not limited to provisions for the extension or renewal of any such agreement, as shall be determined by the Committee, in its sole discretion.

          SECTION 4.03 Termination of Participation. A Participant shall cease to be a Participant in the Plan uponthe earlier of (i) his receipt of all of the payments, if any, to which he is or becomes entitled under the terms of the Plan and the terms of any notice or agreement issued by the Company with respect to his participation hereunder, or (ii) the termination of his employment with the Company Group under circumstances not requiring payments under the terms of the Plan. In addition, a Participant shall cease to be a Participant in the Plan if, prior to the occurrence of a Qualified Termination of Employment or a Change in Control, there is an Adverse Change in Conditions of Employment to which the Participant fails to object in writing within 90 days and as a result of which the Participant is no longer in grade level ECB 2 (or equivalent successor band).

ARTICLE V
PAYMENTS UPON TERMINATION OF EMPLOYMENT

          SECTION 5.01 Separation Pay. (a) In the event of a Qualified Termination of Employment, the Participant shall be entitled to the following:

     (i) an amount of separation pay (the “Separation Pay”) equal to the Participant’s Monthly Base Salary for the number of months following the Participant’s Commencement Date (the “Separation Period”) equal to the number of full and partial years of the Participant’s continuous service with the Company Group, up to a maximum of 20 years, multiplied by 0.45, and payable over the Separation Period in accordance with the Company’s payroll practices in effect from time to time; provided that the Separation Pay shall not be less than 4¹/2 times such Monthly Base Salary and the Separation Period shall not be less than 4¹/2 months; provided, further, that, in the event of a Qualified Termination of Employment that takes place on or after a Change in Control occurring on or after January 1, 2009, the Participant’s Separation Pay shall equal the sum of the

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Participant’s Annual Base Salary and Annual Target Bonus, multiplied by 0.75, and the Participant’s Separation Period shall be 9 months.

     (ii) if, not later than the date and time specified by the Plan Administrator, the Participant delivers to the Company a signed and valid Release, a supplemental amount of separation pay (the “Supplemental Separation Pay”) equal and in addition to the amount of the Participant’s Separation Pay and payable following the Separation Period over the number of months in the Separation Period (the “Supplemental Separation Period”) in accordance with the Company’s payroll practices in effect from time to time; provided, however, that a Release shall not be deemed delivered by the Participant if it is revoked by the Participant during any applicable revocation period set forth in the Release; provided, further, that if the Participant has attained age 40 on the Commencement Date, then no Supplemental Separation Pay shall be paid to the Participant prior to the date that is 60 days following the Commencement Date and the Supplemental Separation Pay otherwise payable to the Participant prior to such date shall be paid to the Participant on or within 30 days after such date; and, provided, further, that if the Participant’s Separation Period and Supplemental Separation Period exceed a total period of 12 months, the Company shall pay to the Participant in a lump sum, on or within 30 days following the first anniversary of the Participant’s Commencement Date, the total amount of his Separation Pay and Supplemental Separation Pay in excess of 12 months.

     (iii) active participation in all Company-sponsored retirement, life, medical, dental, accidental death and disability insurance benefit plans or programs in which the Participant was participating at the time of his termination for the Separation Period and any Supplemental Separation Period, but only to the extent permitted by applicable law as determined by the Company and not otherwise provided under the terms of such plans and programs, it being understood that continued participation in Company-sponsored retirement plans or programs shall be limited to such plans or programs that are not intended to be qualified under Section 401(a) or 401(k) of the Code; provided that the Participant shall be responsible for any required payments for participation in such plans or programs; and, provided, further, that if the Participant’s Separation Period and Supplemental Separation Period exceed a total period of 12 months, the Participant shall be entitled to participate in such plans or programs for a maximum of 12 months and the Company shall pay to the Participant in a lump sum, on or with 30 days following the first anniversary of the Participant’s Commencement Date, the cash amount equal to 10% of the total amount of his Separation Pay and Supplemental Separation Pay in excess of 12 months.

          (b) The payments and benefits described in Section 5.01(a) of the Plan shall be in lieu of any other payments under the Plan or under any other severance pay or separation allowance plan, program or policy of the Company Group, including the Company’s Separation Pay Plan; provided, however, if payments pursuant to the terms and conditions of the Company’s Separation Pay Plan would result in greater payments to a Participant than would be payable

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under the Plan, said Participant shall in such event receive payments pursuant to the terms and conditions of the Company’s Separation Pay Plan in lieu of payments pursuant to the Plan.

          SECTION 5.02 Death. In the event a Participant dies after the commencement of payments pursuant to Section 5.01(a) of the Plan, the balance of said payments shall be payable in accordance with Article IX of the Plan.

          SECTION 5.03 Transfers. A Participant’s transfer to another employment location shall not by itself constitute an Adverse Change in Conditions of Employment; provided, however, that such an Adverse Change in Conditions of Employment shall be deemed to exist if, after a Change in Control, a Participant is transferred to a principal business location so as to increase the distance between the principal business location and such Participant’s place of residence at the time of the Change in Control by more than 35 miles.

          SECTION 5.04 Corporate Transactions. A Participant shall not receive any payments or benefits under the Plan in the event of a sale of the business unit of the Company Group with which the Participant is associated as an executive, provided that the Participant is offered a position and salary with the buyer or the Company Group comparable to the position and salary of the Participant immediately prior to said sale, whether or not such offer is accepted by the Participant. If, however, the Participant is not offered a comparable position and salary, the Participant shall be entitled to payments hereunder. A position shall not be deemed to be a “comparable position” for purposes of this Section 5.04 if it increases the distance between the Participant’s principal business location and the Participant’s place of residence at the time of the sale by more than 50 miles or such other distance standard as may be established from time to time under Section 217(c)(1)(A) of the Code.

          SECTION 5.05 Specified Employees. With respect to amounts subject to Section 409A of the Code, notwithstanding the other provisions of this Article V, no payment to a Specified Employee under the Plan shall be made or commenced prior to the date that is six months following the Specified Employee’s Commencement Date; provided that amounts under the Plan that are otherwise payable to the Specified Employee prior to such date shall be paid to the Specified Employee on or within 30 days after such date.

          SECTION 5.06 Section 280G. In the event that any payment or benefit received or to be received by any Participant pursuant to the Plan or any other plan or arrangement with the Company (each, a “Payment”) would constitute an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, or would otherwise be subject to the excise tax imposed under Section 4999 of the Code, or any similar federal or state law (an “Excise Tax”), as determined by an independent certified public accounting firm selected by the Company, the amount of the Participant’s Separation Pay (and Supplemental Separation Pay, if any) shall be limited to the largest amount payable, if any, that would not result in the imposition of any Excise Tax to the Participant, but only if, notwithstanding such limitation, the total Payments, net of all taxes imposed on the Participant with respect thereto, would be greater if no Excise Tax were imposed.

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ARTICLE VI
MITIGATION AND OFFSET

          SECTION 6.01 Mitigation. No Participant shall be required to mitigate the amount of any payment under the Plan by seeking employment or otherwise, and there shall be no right of set-off or counterclaim, in respect of any claim, debt or obligation, against any payments to the Participant, his dependents, Beneficiaries or estate provided for in the Plan.

          SECTION 6.02 Offset. If, after a Participant’s termination of employment with the Company Group, the Participant is employed by another entity or becomes self-employed, the amounts (if any) payable under the Plan to the Participant shall not be offset by the amounts (if any) payable to the Participant from such new employment with respect to services rendered during the severance period applicable to such Participant under the Plan.

ARTICLE VII
ATTORNEYS’ FEES FOR DISPUTED CLAIMS

          SECTION 7.01 General. If a Participant makes a Disputed Claim, the Company shall reimburse the Participant for Attorneys’ Fees; provided that the Participant enters into a repayment agreement with the Company, which shall require the Participant (i) to repay the Company for any reimbursements made pursuant to this Section 7.01 if the Participant does not obtain a Judgment or Award and (ii) to provide adequate security with respect to the amount subject to repayment under this Section 7.01. With respect to amounts subject to Section 409A, such reimbursement shall be made no later than the last day of the calendar year following the calendar year in which the applicable Attorneys’ Fee expense was incurred, subject to the timely presentation to the Company in writing of any periodic statements for Attorneys’ Fees. Unless the Judgment or Award specifies whether it constitutes “all or substantially all of the amount sought,” such determination shall be made by the Plan Administrator in its sole and absolute discretion.

          SECTION 7.02 Change in Control. If a Disputed Claim is made with respect to a termination of employment occurring during a period beginning on the date of a Change in Control and ending 36 months thereafter, the Participant shall be entitled to reimbursement of Attorneys’ Fees, whether or not the Participant obtains a Judgment or Award. Such reimbursement shall be made on a “pay-as-you-go” basis, as soon as practicable after presentation to the Company in writing of any periodic statements for Attorneys’ Fees, but in no event later than the last day of the calendar year following the calendar year in which the applicable Attorneys’ Fees were incurred.

          SECTION 7.03 Six Month Period Prior to Change in Control. Without affecting the rights of a Participant under Section 7.01 of the Plan, a Participant shall be entitled to reimbursement of Attorneys’ Fees for a Disputed Claim in accordance with the terms of Section 7.02 of the Plan with respect to termination of employment occurring six months prior to a Change in Control, whether or not the Participant obtains a Judgment or Award; provided, however, that no reimbursement shall be made under this Section 7.03 in such case (i) unless and

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until the Change in Control actually occurs or (ii) if reimbursement has been made under Section 7.01 of the Plan.

          SECTION 7.04 Section 409A. The reimbursements made to a Participant under this Article VII during any calendar year shall not affect the amounts eligible for reimbursement in any other calendar year. No reimbursement of Attorneys’ Fees made pursuant to this Article VII shall be paid to any Participant following the last day of the sixth year following the termination of the period described in Section 8.03 of the Plan.

ARTICLE VIII
CLAIMS PROCEDURE

          SECTION 8.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice”) before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 8.02 of the Plan.

          SECTION 8.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the

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Claimant receives an Extension Notice. If the Committee denies the claim on review, notice of the Committee’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 8.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 8.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

          SECTION 8.04 Change in Control. Notwithstanding any other provision of the Plan, the authority granted pursuant to Articles III, VII and VIII to the Plan Administrator and to persons making determinations on claims for benefits and reviews of claims shall, when exercised (i) during the period of 36 months following a Change in Control or (ii) with respect to any termination of employment that occurs during the period of 36 months following a Change in Control or that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, shall not be “discretionary,” but shall be subject to de novo review by a court of competent jurisdiction or an arbitrator, as applicable.

ARTICLE IX
BENEFICIARY DESIGNATION

          SECTION 9.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan.

          SECTION 9.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

          SECTION 9.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

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          SECTION 9.04 Effect of Payment. The payment under this Article IX of the amounts due to a Participant under the Plan to a Beneficiary shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

ARTICLE X
AMENDMENT AND TERMINATION OF PLAN

          SECTION 10.01 Amendment and Termination. (a) The Company shall have the right at any time, in its discretion, to amend the Plan, in whole or in part, or to terminate the Plan, by resolution of the Board or Committee or delegate thereof, except that no amendment or termination shall impair or abridge the obligations of the Company to any Participant or the rights of any Participant under the Plan without the express written consent of the affected Participant (i) with respect to any termination of employment that occurred before such amendment or termination, or (ii) in all other cases, until 6 months have elapsed from the time of the amendment or termination. In addition, in no event shall the Plan be amended or terminated (x) during the period of 36 months following a Change in Control (the “Protection Period”), or (y) to the extent that it is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, or (z) with respect to a termination under Section 2.33(iii), in each case without the express written consent of the affected Participant. Notwithstanding the foregoing, except with respect to a termination of employment that occurs during the Protection Period, the Company shall have the right to terminate the Plan at any time following the Protection Period.

          (b) Except for the amendments made in accordance with Section 10.01(a) of the Plan, no modifications, alterations and/or changes made to the terms and/or provisions of the Plan, either globally or for an individual participant, will be effective unless evidenced by a writing that directly refers to the Plan and which is signed and dated by the Plan Administrator.

          SECTION 10.02 Section 409A. If, in the good faith judgment of the Plan Administrator, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Plan Administrator in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Plan Administrator shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no payment or benefit under the Plan is subject to tax under Section 409A of the Code. Any determinations made by the Plan Administrator under this Section 10.02 shall be final, conclusive and binding on all persons.

ARTICLE XI
MISCELLANEOUS

          SECTION 11.01 Effect on Other Plans. Except as expressly provided in Article V of the Plan with respect to the Company’s Separation Pay Plan, (i) nothing in the Plan shall affect the level of benefits provided to or received by any Participant (or the Participant’s estate

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or Beneficiaries) as part of any employee benefit plan of the Company, and (ii) the Plan shall not be construed to affect in any way the Participant’s rights and obligations under any other plan maintained by the Company on behalf of employees.

          SECTION 11.02 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

          SECTION 11.03 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise require. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 11.04 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Beneficiary) shall have no rights against the Company Group except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Company Group or to interfere with the rights of the Company Group to discipline or discharge him at any time.

          SECTION 11.05 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 11.06 Withholding; Payroll Taxes. To the extent required by the law in effect at the time payments are made, the Company shall withhold from made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 11.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

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          SECTION 11.08 Effective Date. The Plan was initially effective as of January 28, 1987 (the “Effective Date”). This amendment and restatement is effective as of January 1, 2008.

          SECTION 11.09 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 11.10 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 11.11 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.13

Exhibit 10.13

THE McGRAW-HILL COMPANIES, INC.

SENIOR EXECUTIVE SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
SENIOR EXECUTIVE SEVERANCE PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The purpose of the Plan is to provide senior executives who are in a position to contribute materially to the success of the Company Group with reasonable compensation in the event of their termination of employment with the Company Group. The Plan is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Adverse Change in Conditions of Employment” means the occurrence of any of the following events:

     (i) An adverse change by the Company in the Participant’s function, duties or responsibilities, which change would cause the Participant’s position with the Company to become one of substantially less responsibility, importance or scope; or

     (ii) A 10% or larger reduction by the Company (in one or more steps) of the Participant’s Monthly Base Salary.

provided, however, that the Participant shall notify the Company within 90 days of the occurrence of a change described in Sections 2.01(i) or (ii) above and the Company shall have 30 days to cure such change to the reasonable satisfaction of the Participant (including retroactively with respect to monetary matters), which change, to the extent so cured, shall not be considered an Adverse Change in Conditions of Employment.

          SECTION 2.02 “Adverse Change in Conditions of Employment After a Change in Control” means the occurrence of any of the following after a Change in Control:

     (i) The failure to pay base salary to the Participant at a monthly rate at least equal to the highest rate paid to the Participant at any time during or after the 24-month period prior to the Change in Control, except as the result of a Company-wide reduction in base salaries pursuant to which the Participant’s Monthly Base Salary is decreased less than 10%;

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     (ii) The Participant’s annual incentive opportunity, taking into account all material factors such as targeted payment amounts and performance goals, is materially less favorable to the Participant than the most favorable such opportunity at any time during or after the 24-month period prior to the Change in Control;

     (iii) The Participant’s opportunity to earn long-term incentive payments, on the basis of the grant-date fair value of awards and taking into account vesting requirements and termination provisions of awards, is materially less favorable to the Participant than the most favorable such opportunity in effect at any time during or after the 24 months prior to the Change in Control;

     (iv) A material reduction by the Company in the aggregate value to the Participant of the pension and welfare benefit plans in which the Participant is eligible to participate;

     (v) The transfer of the Participant to a principal business location that increases by more than 35 miles the distance between the Participant’s principal business location and place of residence;

     (vi) Any adverse change in the Participant’s title or reporting relationship or adverse change by the Company in the Participant’s authority, functions, duties or responsibilities (other than which results solely from the Company ceasing to have a publicly traded class of common stock or the Participant no longer serving as the chief executive, or reporting to the chief executive, of an independent, publicly traded company as a result thereof), which change would cause the Participant’s position with the Company to become one of substantially less responsibility, importance or scope; or

     (vii) Any failure by a successor entity to the Company (including any entity that succeeds to the business or assets of the Company) to adopt the Plan;

provided, however, that the Participant shall notify the Company within 90 days of the facts and circumstances described in any of Sections 2.02(i) through (vii) above and the Company shall have 30 days to cure such facts and circumstances to the reasonable satisfaction of the Participant (including retroactively with respect to monetary matters), which facts and circumstances, to the extent so cured, shall not be considered an Adverse Change in Conditions of Employment After a Change in Control.

          SECTION 2.03 “Annual Base Salary” means a Participant’s highest rate of annual base salary during the 24-month period preceding the Participant’s termination of employment, excluding any of the following: year-end or other bonuses, incentive compensation, whether short-term or long-term, commissions, reimbursed expenses, and any payments on account of premiums on insurance or other contributions made to other welfare or benefit plans.

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          SECTION 2.04 “Annual Target Bonus” means a Participant’s highest, annual, target short-term incentive opportunity during the 24-month period preceding the Participant’s termination of employment.

          SECTION 2.05 “Attorneys’ Fees” means any reasonable attorneys’ fees and disbursements incurred in pursuing a Disputed Claim.

          SECTION 2.06 “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.07 “Board” means the Board of Directors of the Company.

          SECTION 2.08 “Cause” means the Participant’s misconduct in respect of the Participant’s obligations to the Company Group or other acts of misconduct by the Participant occurring during the course of the Participant’s employment, which in either case results in or could reasonably be expected to result in material damage to the property, business or reputation of the Company Group; provided that in no event shall unsatisfactory job performance alone be deemed to be “Cause”; and, provided, further, that no termination of employment that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control shall be deemed to be for “Cause.”

          SECTION 2.09 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.09; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this

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Section 2.09, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.10 “Claimant” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.11 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

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          SECTION 2.12 “Commencement Date” means the first day of the first regular payroll cycle coincident with or next following the date of the Participant’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.

          SECTION 2.13 “Committee” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.14 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.15 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.16 “Company Group” means the Company and its Subsidiaries.

          SECTION 2.17 “Director” means an individual who is a member of the Board.

          SECTION 2.18 “Disability” means a Participant’s long-term disability pursuant to a determination of disability under the Company’s Long-Term Disability Plan.

          SECTION 2.19 “Disputed Claim” means a claim for payments under the Plan that is disputed by the Company.

          SECTION 2.20 “Effective Date” has the meaning set forth in Section 11.08 of the Plan.

          SECTION 2.21 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.22 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.23 “Excise Tax” has the meaning set forth in Section 5.06 of the Plan.

          SECTION 2.24 “Extension Notice” has the meaning set forth in Section 8.01 of the Plan.

          SECTION 2.25 “Long-Term Disability Plan” means The McGraw-Hill Companies, Inc. Long-Term Disability Plan, as amended from time to time (or any successor plan).

          SECTION 2.26 “Judgment or Award” means a nonappealable, final judgment from a court of competent jurisdiction or a binding arbitration award granting the Participant all or substantially all of the amount sought in a Disputed Claim.

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          SECTION 2.27 “Monthly Base Salary” means a Participant’s Annual Base Salary, divided by 12.

          SECTION 2.28 “Participant” means each employee who participates in the Plan, as provided in Section 4.01 of the Plan.

          SECTION 2.29 “Payment” has the meaning set forth in Section 5.06 of the Plan.

          SECTION 2.30 “Plan” means The McGraw-Hill Companies, Inc. Senior Executive Severance Plan, as amended from time to time.

          SECTION 2.31 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.32 “Protection Period” has the meaning set forth in Section 10.01 of the Plan.

          SECTION 2.33 “Qualified Termination of Employment” means termination of the employment of a Participant with the Company Group (other than by reason of death, Disability, voluntary resignation by a Participant under circumstances not qualifying under this Section 2.33, or lawful Company-mandated retirement at normal retirement age) as follows:

     (i) By the Company for any reason other than for Cause,

     (ii) By the Participant after an Adverse Change in Conditions of Employment;

     (iii) By the Participant for any reason during the 30-day period following the first anniversary of a Change in Control (in the case of a Change in Control occurring prior to January 1, 2009); or

     (iv) By the Participant after an Adverse Change in Conditions of Employment After a Change in Control (in the case of a Change in Control occurring on or after January 1, 2009).

          SECTION 2.34 “Release” means a termination and release agreement in the form approved by the Plan Administrator, which shall, among other things, release the Company Group, and each of their respective directors, officers, employees, agents, successors and assigns, from any and all claims that the Participant has or may have against the Company Group and each of their respective directors, officers, employees, agents, successors and assigns, and the standard form of which shall not be modified after, in anticipation of, or at the request of any Person seeking to effect, a Change in Control, except to conform to changes in the requirements of applicable law.

          SECTION 2.35 “Separation Pay” has the meaning set forth in Section 5.01(a)(i) of the Plan.

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          SECTION 2.36 “Separation Period” has the meaning set forth in Section 5.01(a)(i) of the Plan.

          SECTION 2.37 “Separation Pay Plan” means the Separation Pay Plan of The McGraw-Hill Companies, Inc., as amended from time to time (or any successor plan).

          SECTION 2.38 “Specified Employee” means a Participant who is a “specified employee” within the meaning of Section 409A(a)(2)(b)(i) of the Code.

          SECTION 2.39 “Subsidiary” means any subsidiary of the Company at least 20% of whose voting shares are owned directly or indirectly by the Company.

          SECTION 2.40 “Supplemental Separation Pay” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

          SECTION 2.41 “Supplemental Separation Period” has the meaning set forth in Section 5.01(a)(ii) of the Plan.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article VIII, decisions of the Plan Administrator shall be reviewable by the Compensation Committee of the Board (the “Committee”). Subject to Article VIII, the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article VIII, the decision or action of the Committee or Plan Administrator in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Company Group to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

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ARTICLE IV
PARTICIPATION

          SECTION 4.01 Eligible Participants. Subject to the approval of the Committee, the Plan Administrator shall from time to time select Participants from among those employees who are in ECB 1 (or equivalent successor band) and who are determined by the Plan Administrator to be in a position to contribute materially to the success of the Company Group.

          SECTION 4.02 Participation Notification; Participation Agreement. The Company shall notify each Participant in writing of his participation in the Plan, and such notice shall also set forth the payments and benefits to which the Participant may become entitled. The Company may also enter into such agreements as the Committee deems necessary or appropriate with respect to a Participant’s rights under the Plan. Any such notice or agreement may contain such terms, provisions and conditions not inconsistent with the Plan, including but not limited to provisions for the extension or renewal of any such agreement, as shall be determined by the Committee, in its sole discretion.

          SECTION 4.03 Termination of Participation. A Participant shall cease to be a Participant in the Plan upon the earlier of (i) his receipt of all of the payments, if any, to which he is or becomes entitled under the terms of the Plan and the terms of any notice or agreement issued by the Company with respect to his participation hereunder, or (ii) the termination of his employment with the Company Group under circumstances not requiring payments under the terms of the Plan. In addition, a Participant shall cease to be a Participant in the Plan if, prior to the occurrence of a Qualified Termination of Employment or a Change in Control, there is an Adverse Change in Conditions of Employment to which the Participant fails to object in writing within 90 days and as a result of which the Participant is no longer in grade level ECB 1 (or equivalent successor band).

ARTICLE V
PAYMENTS UPON TERMINATION OF EMPLOYMENT

          SECTION 5.01 Separation Pay. (a) In the event of a Qualified Termination of Employment, the Participant shall be entitled to the following:

     (i) an amount of separation pay (the “Separation Pay”) equal to the Participant’s Monthly Base Salary for the number of months following the Participant’s Commencement Date (the “Separation Period”) equal to the number of full and partial years of the Participant’s continuous service with the Company Group, up to a maximum of 15 years, multiplied by 0.8, and payable over the Separation Period in accordance with the Company’s payroll practices in effect from time to time; provided that the Separation Pay shall not be less than six times such Monthly Base Salary and the Separation Period shall not be less than six months; provided, further, that, in the event of a Qualified Termination of Employment that takes place on or after a Change in Control occurring on or after January 1, 2009, the Participant’s Separation Pay shall equal the sum of the

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Participant’s Annual Base Salary and Annual Target Bonus and the Participant’s Separation Period shall be 12 months.

     (ii) if, not later than the date and time specified by the Plan Administrator, the Participant delivers to the Company a signed and valid Release, a supplemental amount of separation pay (the “Supplemental Separation Pay”) equal and in addition to the amount of the Participant’s Separation Pay and payable following the Separation Period over the number of months in the Separation Period (the “Supplemental Separation Period”) in accordance with the Company’s payroll practices in effect from time to time; provided, however, that a Release shall not be deemed delivered by the Participant if it is revoked by the Participant during any applicable revocation period set forth in the Release; provided, further, that if the Participant has attained age 40 on the Commencement Date, then no Supplemental Separation Pay shall be paid to the Participant prior to the date that is 60 days following the Commencement Date and the Supplemental Separation Pay otherwise payable to the Participant prior to such date shall be paid to the Participant on or within 30 days after such date; and, provided, further, that if the Participant’s Separation Period and Supplemental Separation Period exceed a total period of 12 months, the Company shall pay to the Participant in a lump sum, on or within 30 days following the first anniversary of the Participant’s Commencement Date, the total amount of his Separation Pay and Supplemental Separation Pay in excess of 12 months.

     (iii) active participation in all Company-sponsored retirement, life, medical, dental, accidental death and disability insurance benefit plans or programs in which the Participant was participating at the time of his termination for the Separation Period and any Supplemental Separation Period, but only to the extent permitted by applicable law as determined by the Company and not otherwise provided under the terms of such plans and programs, it being understood that continued participation in Company-sponsored retirement plans or programs shall be limited to such plans or programs that are not intended to be qualified under Section 401(a) or 401(k) of the Code; provided that the Participant shall be responsible for any required payments for participation in such plans or programs; and, provided, further, that if the Participant’s Separation Period and Supplemental Separation Period exceed a total period of 12 months, the Participant shall be entitled to participate in such plans or programs for a maximum of 12 months and the Company shall pay to the Participant in a lump sum, on or with 30 days following the first anniversary of the Participant’s Commencement Date, the cash amount equal to 10% of the total amount of his Separation Pay and Supplemental Separation Pay in excess of 12 months.

          (b) The payments and benefits described in Section 5.01(a) of the Plan shall be in lieu of any other payments under the Plan or under any other severance pay or separation allowance plan, program or policy of the Company Group, including the Company’s Separation Pay Plan; provided, however, if payments pursuant to the terms and conditions of the Company’s Separation Pay Plan would result in greater payments to a Participant than would be payable

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under the Plan, said Participant shall in such event receive payments pursuant to the terms and conditions of the Company’s Separation Pay Plan in lieu of payments pursuant to the Plan.

          SECTION 5.02 Death. In the event a Participant dies after the commencement of payments pursuant to Section 5.01(a) of the Plan, the balance of said payments shall be payable in accordance with Article IX of the Plan.

          SECTION 5.03 Transfers. A Participant’s transfer to another employment location shall not by itself constitute an Adverse Change in Conditions of Employment; provided, however, that such an Adverse Change in Conditions of Employment shall be deemed to exist if, after a Change in Control, a Participant is transferred to a principal business location so as to increase the distance between the principal business location and such Participant’s place of residence at the time of the Change in Control by more than 35 miles.

          SECTION 5.04 Corporate Transactions. A Participant shall not receive any payments or benefits under the Plan in the event of a sale of the business unit of the Company Group with which the Participant is associated as an executive, provided that the Participant is offered a position and salary with the buyer or the Company Group comparable to the position and salary of the Participant immediately prior to said sale, whether or not such offer is accepted by the Participant. If, however, the Participant is not offered a comparable position and salary, the Participant shall be entitled to payments hereunder. A position shall not be deemed to be a “comparable position” for purposes of this Section 5.04 if it increases the distance between the Participant’s principal business location and the Participant’s place of residence at the time of the sale by more than 50 miles or such other distance standard as may be established from time to time under Section 217(c)(1)(A) of the Code.

          SECTION 5.05 Specified Employees. With respect to amounts subject to Section 409A of the Code, notwithstanding the other provisions of this Article V, no payment to a Specified Employee under the Plan shall be made or commenced prior to the date that is six months following the Specified Employee’s Commencement Date; provided that amounts under the Plan that are otherwise payable to the Specified Employee prior to such date shall be paid to the Specified Employee on or within 30 days after such date.

          SECTION 5.06 Section 280G. In the event that any payment or benefit received or to be received by any Participant pursuant to the Plan or any other plan or arrangement with the Company (each, a “Payment”) would constitute an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, or would otherwise be subject to the excise tax imposed under Section 4999 of the Code, or any similar federal or state law (an “Excise Tax”), as determined by an independent certified public accounting firm selected by the Company, the amount of the Participant’s Separation Pay (and Supplemental Separation Pay, if any) shall be limited to the largest amount payable, if any, that would not result in the imposition of any Excise Tax to the Participant, but only if, notwithstanding such limitation, the total Payments, net of all taxes imposed on the Participant with respect thereto, would be greater if no Excise Tax were imposed.

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ARTICLE VI
MITIGATION AND OFFSET

          SECTION 6.01 Mitigation. No Participant shall be required to mitigate the amount of any payment under the Plan by seeking employment or otherwise, and there shall be no right of set-off or counterclaim, in respect of any claim, debt or obligation, against any payments to the Participant, his dependents, Beneficiaries or estate provided for in the Plan.

          SECTION 6.02 Offset. If, after a Participant’s termination of employment with the Company Group, the Participant is employed by another entity or becomes self-employed, the amounts (if any) payable under the Plan to the Participant shall not be offset by the amounts (if any) payable to the Participant from such new employment with respect to services rendered during the severance period applicable to such Participant under the Plan.

ARTICLE VII
ATTORNEYS’ FEES FOR DISPUTED CLAIMS

          SECTION 7.01 General. If a Participant makes a Disputed Claim, the Company shall reimburse the Participant for Attorneys’ Fees; provided that the Participant enters into a repayment agreement with the Company, which shall require the Participant (i) to repay the Company for any reimbursements made pursuant to this Section 7.01 if the Participant does not obtain a Judgment or Award and (ii) to provide adequate security with respect to the amount subject to repayment under this Section 7.01. With respect to amounts subject to Section 409A, such reimbursement shall be made no later than the last day of the calendar year following the calendar year in which the applicable Attorneys’ Fee expense was incurred, subject to the timely presentation to the Company in writing of any periodic statements for Attorneys’ Fees. Unless the Judgment or Award specifies whether it constitutes “all or substantially all of the amount sought,” such determination shall be made by the Plan Administrator in its sole and absolute discretion.

          SECTION 7.02 Change in Control. If a Disputed Claim is made with respect to a termination of employment occurring during a period beginning on the date of a Change in Control and ending 36 months thereafter, the Participant shall be entitled to reimbursement of Attorneys’ Fees, whether or not the Participant obtains a Judgment or Award. Such reimbursement shall be made on a “pay-as-you-go” basis, as soon as practicable after presentation to the Company in writing of any periodic statements for Attorneys’ Fees, but in no event later than the last day of the calendar year following the calendar year in which the applicable Attorneys’ Fees were incurred.

          SECTION 7.03 Six Month Period Prior to Change in Control. Without affecting the rights of a Participant under Section 7.01 of the Plan, a Participant shall be entitled to reimbursement of Attorneys’ Fees for a Disputed Claim in accordance with the terms of Section 7.02 of the Plan with respect to termination of employment occurring six months prior to a Change in Control, whether or not the Participant obtains a Judgment or Award; provided, however, that no reimbursement shall be made under this Section 7.03 in such case (i) unless and

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until the Change in Control actually occurs or (ii) if reimbursement has been made under Section 7.01 of the Plan.

          SECTION 7.04 Section 409A. The reimbursements made to a Participant under this Article VII during any calendar year shall not affect the amounts eligible for reimbursement in any other calendar year. No reimbursement of Attorneys’ Fees made pursuant to this Article VII shall be paid to any Participant following the last day of the sixth year following the termination of the period described in Section 8.03 of the Plan.

ARTICLE VIII
CLAIMS PROCEDURE

          SECTION 8.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice") before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 8.02 of the Plan.

          SECTION 8.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the

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Claimant receives an Extension Notice. If the Committee denies the claim on review, notice of the Committee’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 8.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 8.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

          SECTION 8.04 Change in Control. Notwithstanding any other provision of the Plan, the authority granted pursuant to Articles III, VII and VIII to the Plan Administrator and to persons making determinations on claims for benefits and reviews of claims shall, when exercised (i) during the period of 36 months following a Change in Control or (ii) with respect to any termination of employment that occurs during the period of 36 months following a Change in Control or that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, shall not be “discretionary,” but shall be subject to de novo review by a court of competent jurisdiction or an arbitrator, as applicable.

ARTICLE IX
BENEFICIARY DESIGNATION

          SECTION 9.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan.

          SECTION 9.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

          SECTION 9.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

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          SECTION 9.04 Effect of Payment. The payment under this Article IX of the amounts due to a Participant under the Plan to a Beneficiary shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

ARTICLE X
AMENDMENT AND TERMINATION OF PLAN

          SECTION 10.01 Amendment and Termination. (a) The Company shall have the right at any time, in its discretion, to amend the Plan, in whole or in part, or to terminate the Plan, by resolution of the Board or Committee or delegate thereof, except that no amendment or termination shall impair or abridge the obligations of the Company to any Participant or the rights of any Participant under the Plan without the express written consent of the affected Participant (i) with respect to any termination of employment that occurred before such amendment or termination, or (ii) in all other cases, until 6 months have elapsed from the time of the amendment or termination. In addition, in no event shall the Plan be amended or terminated (x) during the period of 36 months following a Change in Control (the “Protection Period”), or (y) to the extent that it is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control, or (z) with respect to a termination under Section 2.33(iii), in each case without the express written consent of the affected Participant. Notwithstanding the foregoing, except with respect to a termination of employment that occurs during the Protection Period, the Company shall have the right to terminate the Plan at any time following the Protection Period.

          (b) Except for the amendments made in accordance with Section 10.01(a) of the Plan, no modifications, alterations and/or changes made to the terms and/or provisions of the Plan, either globally or for an individual participant, will be effective unless evidenced by a writing that directly refers to the Plan and which is signed and dated by the Plan Administrator.

          SECTION 10.02 Section 409A. If, in the good faith judgment of the Plan Administrator, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Plan Administrator in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Plan Administrator shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no payment or benefit under the Plan is subject to tax under Section 409A of the Code. Any determinations made by the Plan Administrator under this Section 10.02 shall be final, conclusive and binding on all persons.

ARTICLE XI
MISCELLANEOUS

          SECTION 11.01 Effect on Other Plans. Except as expressly provided in Article V of the Plan with respect to the Company’s Separation Pay Plan, (i) nothing in the Plan shall affect the level of benefits provided to or received by any Participant (or the Participant’s estate

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or Beneficiaries) as part of any employee benefit plan of the Company, and (ii) the Plan shall not be construed to affect in any way the Participant’s rights and obligations under any other plan maintained by the Company on behalf of employees.

          SECTION 11.02 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

          SECTION 11.03 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise require. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 11.04 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Beneficiary) shall have no rights against the Company Group except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Company Group or to interfere with the rights of the Company Group to discipline or discharge him at any time.

          SECTION 11.05 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 11.06 Withholding; Payroll Taxes. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 11.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

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          SECTION 11.08 Effective Date. The Plan was initially effective as of January 28, 1987 (the “Effective Date”). This amendment and restatement is effective as of January 1, 2008.

          SECTION 11.09 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 11.10 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 11.11 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.15

Exhibit 10.15

THE McGRAW-HILL COMPANIES, INC.
EMPLOYEE RETIREMENT PLAN SUPPLEMENT

(Amended and restated effective as of January 1, 2008, unless otherwise provided)

ARTICLE I
PURPOSE

          The principal purpose of the Plan is to provide selected employees of the Employer, with retirement benefits which would have been provided under the ERP (a) were it not for the limitations imposed by Sections 401(a)(17) and 415 of the Code, and (b) had the Participant’s Earnings on which Benefits are based included amounts deferred under deferred compensation plans of an Employer and amounts paid under certain severance plans of the Company.

          Effective January 1, 2004, the Broadcasting ERIP Supplement was merged into the Plan and any benefits due to participants in the Broadcasting ERIP Supplement shall be paid from the Plan.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Accounting Date” has the meaning set forth in the ERIP.

          SECTION 2.02 “Actuarial Equivalent” has the meaning given such term in Section II of the ERP.

          SECTION 2.03 “Appeal Reviewer” has the meaning set forth in the ERP.

          SECTION 2.04 “Beneficiary” has the meaning set forth in the ERP.

          SECTION 2.05 “Benefit” means the benefit payable to a Participant or his Beneficiary under Article V of the Plan.

          SECTION 2.06 “Board” means the Board of Directors of the Company.

          SECTION 2.07 “Broadcasting ERIP Supplement” means The McGraw-Hill Broadcasting Company, Inc. Employee Retirement Income Plan Supplement.

          SECTION 2.08 “Broadcasting Participant” means a Participant who was a participant in the Broadcasting ERIP Supplement on December 31, 2003.

          SECTION 2.09 “Change in Control” means the first to occur of any of the following events:

      (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.09; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.09, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of

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the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.10 “Claimant” has the meaning set forth in Section 6.01 of the Plan.

          SECTION 2.11 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.12 “Committee” means the Compensation Committee of the Board.

          SECTION 2.13 "Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.14 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.15 “Continuous Service” has the meaning set forth in the ERP.

          SECTION 2.16 “Director” means an individual who is a member of the Board.

          SECTION 2.17 “Dollar Income” has the meaning set forth in the ERIP.

          SECTION 2.18 “Earnings” for purposes of Section 5.01(c) of the Plan has the meaning set forth in the ERIP. All other references to “Earnings” in the Plan mean all compensation paid by the Employer to an Employee for services rendered, including short-term incentive compensation. Earnings shall also include any reductions in compensation made pursuant to The McGraw-Hill Companies, Inc. Flexible Spending Account Plan, The 401(k) Savings and Profit Sharing Plan of The McGraw-Hill Companies, Inc. and Its Subsidiaries, the Transportation Benefit Program and similar plans of the Company’s subsidiaries. For purposes of the Plan, “Earnings” excludes all other executive contingent compensation.

          SECTION 2.19 “Effective Date” means the date set forth in Section 8.08 of the Plan.

          SECTION 2.20 “Employee” has the meaning set forth in the ERP.

          SECTION 2.21 “Employer” means the Company and its subsidiaries.

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          SECTION 2.22 “Employment Termination Date” means the date of a Participant’s “separation from service” from the Company, as defined in Section 409A(a)(2)(A)(i) of the Code.

          SECTION 2.23 “ERIP” means the Employee Retirement Income Plan of McGraw-Hill Broadcasting Company, Inc. and Its Subsidiaries as in effect on December 31, 2003.

          SECTION 2.24 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.25 “ERP” means the Employee Retirement Plan of The McGraw-Hill Companies, Inc. and Its Subsidiaries.

          SECTION 2.26 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.27 “Extension Notice” has the meaning set forth in Section 6.01 of the Plan.

          SECTION 2.28 “Key Executive Plan” means The McGraw-Hill Companies, Inc. Key Executive Short-Term Incentive Deferred Compensation Plan, as amended from time to time, or successor programs thereto.

          SECTION 2.29 “Participant” means an Employee of an Employer who has been selected to participate in the Plan, as provided in Article IV, and includes a Severance Plan Participant.

          SECTION 2.30 “Plan” means The McGraw-Hill Companies, Inc. Employee Retirement Plan Supplement, as amended from time to time.

          SECTION 2.31 “Plan Administrator” has the meaning set forth in the ERP.

          SECTION 2.32 “Retirement Benefit” has the meaning set forth in the ERP.

          SECTION 2.33 “Unit” has the meaning set forth in the ERIP.

          SECTION 2.34 “Units of Variable Income” has the meaning set forth in the ERIP.

          SECTION 2.35 “Severance Plan” means The McGraw-Hill Companies, Inc. Management Severance Plan, The McGraw-Hill Companies, Inc. Executive Severance Plan or The McGraw-Hill Companies, Inc. Senior Executive Severance Plan, as amended from time to time, or successor programs thereto.

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          SECTION 2.36 “Severance Plan Earnings” means the total amount of salary continuation payments paid to a Severance Plan Participant under a Severance Plan (excluding any amount paid in a lump sum in lieu of salary continuation).

          SECTION 2.37 “Severance Plan Participant” means a former Employee of an Employer who is entitled to remain an active participant in certain Company-sponsored plans and programs under a Severance Plan (and who is not paid a single lump sum payment in lieu thereof).

          SECTION 2.38 “Specified Employee” means a Participant who is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code.

          SECTION 2.39 “Stable Assets Fund Rate” means the annual rate of return of the SPSP Stable Assets Fund, within the meaning of such term under The 401(k) Savings and Profit Sharing Plan of The McGraw-Hill Companies, Inc. and Its Subsidiaries.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Plan Administrator, who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article VI of the Plan, decisions of the Plan Administrator shall be reviewable by the Appeal Reviewer and the Committee. Subject to Article VI of the Plan, the Appeal Reviewer and the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article VI of the Plan, the decision or action of the Appeal Reviewer, Plan Administrator or Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Appeal Reviewer, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Employer to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

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ARTICLE IV
PARTICIPATION

          SECTION 4.01 Continuing Participants. Any individual who was a Participant in the Plan immediately prior to the effective date of this amendment and restatement shall continue to be a Participant on such date, subject to the terms and provisions of the Plan.

          SECTION 4.02 New Participants. Any Employee of the Employer (other than a Participant described in Section 4.01 of the Plan) who is selected by the Committee to be eligible to participate in the Plan shall become a Participant as of the first day of the month coinciding with or next following his selection.

ARTICLE V
BENEFITS

          SECTION 5.01 Basic Benefit. (a) Except as provided in Section 5.01(c) of the Plan, for each year that a Participant is employed by an Employer beginning on or after the later of (i) January 1 of the year in which the Participant’s participation in the Plan commenced or (ii) January 1, 1989, the Participant shall be entitled to receive a Benefit, expressed as a life annuity, in an amount equal to the applicable percentage of the sum of (A) the Participant’s Earnings for such year in excess of the maximum amount of compensation that may be taken into account under the ERP as a result of the limitation of Section 401(a)(17) of the Code in effect for such year, (B) any short-term incentive compensation for such year deferred by the Participant under the Key-Executive Plan, and (C) for each year after December 31, 1996, any salary earned for such year which is deferred by the Participant under any plan or arrangement of the Employer. Any salary or short-term incentive compensation that is deferred by a Participant shall be excluded from Earnings in the year paid to the Participant.

          (b) For purposes of clause (a) above, the applicable percentage is 1%, except that in the case of a Participant who was a participant in the ERP on June 30, 1986, and who had (A) as of that date attained age 45 and completed five years of Continuous Service, and (B) whose attained age in whole years and whole months, plus years of Continuous Service, equals 60 or more, the applicable percentage is 1.4%.

          (c) A Broadcasting Participant’s Benefit for years prior to 2004 shall be determined in accordance with the following:

     (i) For each year that such a Participant was employed by an employer under the Broadcasting ERIP Supplement beginning on or after the later of (A) January 1 of the year in which the Participant’s participation in the Broadcasting ERIP Supplement commenced or (B) January 1, 1990, the Participant shall be credited with (x) Dollar Income equal to 1% of the sum of (1) the Participant’s Earnings for such year in excess of the maximum amount of compensation that may be taken into account under the ERIP as a result of the limitation of Section 401(a)(17) of the Code in effect for such year and (2) any short-term incentive compensation deferred by the Participant under the Key Executive Plan, and (y) Units of Variable Income equal to the result of dividing the amount in (x) by the dollar value of a Unit as of the Accounting Date for such year. The

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Participant’s Benefit, expressed as a life annuity, shall be equal to the sum of (1) his Dollar Income and (2) the result of multiplying the total of the Units of Variable Income credited to the Participant by the dollar value of a Unit as of the Accounting Date for the year preceding the commencement of payments under the Plan.

     (ii) Notwithstanding the foregoing, such a Participant shall only be entitled to earn benefits under the Plan with respect to years after 2003 if he is designated to receive future benefits by the Committee.

     (iii) In the event that a participant in the Broadcasting ERIP Supplement terminated employment with all employers under the Broadcasting ERIP Supplement prior to 2004 but is entitled to future or current benefits under the Broadcasting ERIP Supplement, such benefits shall be paid under the Plan in an amount determined under the Broadcasting ERIP Supplement and set forth in Appendix A.

          SECTION 5.02 Additional Benefits. In addition to the Benefit under Section 5.01 of the Plan, a Participant will be eligible to receive the following Benefits:

          (a) In the event that any Retirement Benefit payable to a Participant under the ERP is limited by Section 415 of the Code (or any successor provision thereto) or any provision of the ERP implementing such limitation, the Participant shall be entitled to receive a Benefit in an amount equal to the difference, expressed as a life annuity, between (i) the benefit the Participant would have received under the ERP if Section 415 of the Code (or any successor provision thereto) or any such implementing retirement plan provision were disregarded, and (ii) the benefit which the Participant is entitled to receive under the provisions of the ERP.

          (b) Effective April 26, 2000, a Severance Plan Participant shall be entitled to receive a Benefit in an amount equal to the difference, expressed as a life annuity, between (i) the benefit the Participant would have received under the ERP had the Participant continued to earn credit under the ERP for purposes of benefit accrual with respect to the Participant’s Severance Plan Earnings and (ii) the benefit which the Participant is entitled to receive under the ERP.

          SECTION 5.03 Payment of Benefits. (a) Subject to the other provisions of this Section 5.03 and Section 5.04 of the Plan, and except as would violate the requirements of Sections 409A(a)(2), 409A(a)(3) and 409A(a)(4) of the Code, the Benefits provided by this Article V shall be paid to a Participant in accordance with the following:

     (i) The Benefits shall be paid as a single-life annuity or, if different, in the form of actuarially equivalent life annuity elected by the Participant, subject to and in accordance with the procedures prescribed by the Plan Administrator from time to time.

     (ii) The Benefits shall be paid commencing on the first day of the calendar month following the later of (A) the first anniversary of the Participant’s Employment Termination Date and (B) as the case may be, the Participant’s attaining (1) age 62, if the Participant completed ten years of Continuous Service and is not due a benefit under the ERIP, or (2) age 65.

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The Benefits provided by this Article V shall be paid in accordance with the foregoing to a Participant’s Beneficiary in the event of the death of the Participant, if such Beneficiary is entitled to benefits under the provisions of the ERP.

          (b) Notwithstanding anything contained herein to the contrary, a Participant who does not have five years of Continuous Service under ERP when he ceases to be an employee of the Employer or ceases to have any salary continuation installment due under a Severance Plan, if later, shall forfeit the Benefits provided by this Article V, unless his Employment Termination Date occurs on or after his 65^th birthday or his death.

          (c) If the lump-sum Actuarial Equivalent of the Benefits provided to a Participant by this Article V (other than a Participant who is a Specified Employee) or to a Participant’s Beneficiary, determined using the interest rate for lump sums under the ERP, is equal to or less than $10,000 as of the Participant’s Employment Termination Date or, in the case of a Beneficiary, at the time the Benefit is payable to the Beneficiary under the Plan, such amount will be paid to the Participant or Beneficiary in a lump sum as soon as practicable thereafter, but, in the case of a Participant, in no event later than December 31 of the calendar year in which occurs the Participant’s Employment Termination Date or, if later, the date which is two and one-half months following the Participant’s Employment Termination Date.

          (d) In the event that, in accordance with Section 5.03(a)(ii), the payment of Benefits commences on a date that is later than the first day of the calendar month following the later of (A) the Participant’s Employment Termination Date and (B) as the case may be, the Participant’s attaining (1) age 62, if the Participant completed ten years of Continuous Service and is not due a benefit under the ERIP, or (2) age 65, then the Participant (or the Participant’s Beneficiary) shall be paid interest at the Stable Assets Fund Rate for the period commencing on such date and ending on the date on which the payment of Benefits commences in accordance with Section 5.03(a)(ii).

          SECTION 5.04 Payment of Benefits in Event of Change in Control. In lieu of the Benefits payable under Sections 5.01 through 5.03 of the Plan, in the event of a Change in Control that is also a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, (i) each Participant or Beneficiary who is then receiving Benefits shall be paid immediately upon such Change in Control a lump-sum payment equal to the Actuarial Equivalent of such Benefits measured as of the date of such Change in Control; (ii) each other Participant who is not a member of The McGraw-Hill Companies, Inc. Senior Executive Supplemental Death, Disability & Retirement Benefits Plan shall be paid immediately upon such Change in Control a lump-sum payment equal to the Actuarial Equivalent of the Benefits to which that Participant is entitled under Sections 5.01 and 5.02 of the Plan as of the date of such Change in Control.

ARTICLE VI
CLAIMS PROCEDURE

          SECTION 6.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their

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method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice”) before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 6.02 of the Plan.

          SECTION 6.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Appeal Reviewer for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Appeal Reviewer to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Appeal Reviewer of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. If the Appeal Reviewer denies the claim on review, notice of the Appeal Reviewer’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 6.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 6.02 of the Plan or lose any rights to

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bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN

          SECTION 7.01 Amendment and Termination. The Board or the Committee or any delegate thereof may cause the Plan to be amended at any time and from time to time, prospectively or retroactively, and the Board may terminate the Plan in its entirety at any time; provided, however, that no amendment to the Plan may be made by the Committee that materially increases benefits to Participants. In addition, the Board may terminate the Plan in its entirety at any time and, in connection with any such termination, may pay to each Participant or Beneficiary his Benefits under the Plan, subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto). Notwithstanding the foregoing provisions of this Section 7.01, subject to the provisions of Section 7.02 of the Plan, no amendment or termination shall reduce the Benefit or rights of any Participant except with the written consent of the Participant or other person then receiving such Benefit. In addition, after a Change in Control, the definition of “Actuarial Equivalent” in Section 2.02 may not be amended.

          SECTION 7.02 Section 409A. The Plan is intended to meet the requirements of Section 409A of the Code and shall be interpreted and construed consistent with such intent. If, in the good faith judgment of the Committee, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Committee shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no Benefits are subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 7.02 shall be final, conclusive and binding on all persons.

ARTICLE VIII
MISCELLANEOUS

          SECTION 8.01 Unsecured General Creditor. The Plan is an unfunded deferred compensation plan for a select group of management or highly compensated employees within the meaning of ERISA, and shall be construed and administered accordingly. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Employer. The assets of the Employer shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Employer under the Plan. Any and all of the Employer’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The

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Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Employer to pay money in the future.

          SECTION 8.02 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise required. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 8.03 Conditions of Payment of Benefit. Notwithstanding any provision of the Plan to the contrary, the right of a Participant or his Beneficiary to receive the Benefit otherwise payable hereunder shall cease upon the discharge of the Participant from employment with the Employer for acts which constitute fraud, embezzlement, or dishonesty, and shall be determined by the Appeal Reviewer in his sole discretion.

          SECTION 8.04 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Beneficiary) shall have no rights against the Employer except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Employer or to interfere with the rights of the Employer to discipline or discharge him at any time.

          SECTION 8.05 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Employer.

          SECTION 8.06 Withholding. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 8.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 8.08 Effective Date. The Plan initially was effective as of December 1, 1989 (the “Effective Date”). This amendment and restatement is effective as of January 1, 2008.

          SECTION 8.09 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

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          SECTION 8.10 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 8.11 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.16

Exhibit 10.16

THE McGRAW-HILL COMPANIES, INC.
401(k) SAVINGS AND PROFIT SHARING PLAN SUPPLEMENT

(Effective as of January 1, 2008, unless otherwise provided)

ARTICLE I
PURPOSE

          The principal purpose of the Plan is to provide selected employees of the Employer with retirement benefits which would have been provided as profit sharing and matching contributions under the SPSP (a) were it not for the limitations imposed by Sections 401(a)(17), 401(k) and 415 of the Code, and (b) if the Participant’s Earnings on which matching contributions are based had included amounts deferred under deferred compensation plans of an Employer and amounts paid under certain severance plans of the Company.

          Effective January 1, 2004, the Broadcasting EIP Supplement was merged into the McGraw-Hill SIP Supplement and the Broadcasting ERIP Supplement was merged into the McGraw-Hill ERAP Supplement, and, effective as of the Effective Date, the McGraw-Hill SIP Supplement, the McGraw-Hill ERAP Supplement, the S&P SIP Supplement and the S&P ERAP Supplement shall be merged into the Plan, and any benefits due to participants in the Broadcasting EIP Supplement, Broadcasting ERIP Supplement, McGraw-Hill SIP Supplement, McGraw-Hill ERAP Supplement, S&P SIP Supplement and S&P ERAP Supplement shall be paid from the Plan.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Account” means the Matching Contribution Account or Profit Sharing Account established for each Participant under the Plan.

          SECTION 2.02 “Appeal Reviewer” has the meaning set forth in the SPSP.

          SECTION 2.03 “Benefit” means the benefit payable to a Participant or his Designated Beneficiary under Article V of the Plan.

          SECTION 2.04 “Board” means the Board of Directors of the Company.

          SECTION 2.05 “Broadcasting EIP Supplement” means The McGraw-Hill Broadcasting Company, Inc. Employees’ Investment Plan Supplement.

          SECTION 2.06 “Broadcasting ERIP Supplement” means The McGraw-Hill Broadcasting Company, Inc. Employee Retirement Income Plan Supplement.

          SECTION 2.07 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.07; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.07, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either

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directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

           SECTION 2.08 “Claimant” has the meaning set forth in Section 6.01 of the Plan.

          SECTION 2.09 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.10 “Committee” means the Compensation Committee of the Board.

          SECTION 2.11 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.12 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.13 “Designated Beneficiary” has the meaning set forth in the SPSP.

          SECTION 2.14 “Director” means an individual who is a member of the Board.

          SECTION 2.15 “Earnings” means all compensation paid by the Employer to a Participant for services rendered, including short-term incentive compensation. Earnings shall also include any reductions in compensation made pursuant to The McGraw-Hill Companies, Inc. Flexible Spending Account Plan, SPSP, the Transportation Benefit Program and similar plans of the Company’s subsidiaries. For purposes of the Plan, “Earnings” excludes all other executive contingent compensation.

          SECTION 2.16 “Effective Date” has the meaning set forth in Section 8.08 of the Plan.

          SECTION 2.17 “Election Effective Date” means (i) for each taxable year, January 1 of such year, and (ii) for the taxable year in which the Participant commences employment with the Employer, the date that is 30 days following the commencement thereof.

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          SECTION 2.18 “Employer” means the Company and its subsidiaries.

          SECTION 2.19 “Employment Termination Date” means the date of a Participant’s “separation from service” from the Company, as defined in Section409A(a)(2)(A)(i) of the Code.

          SECTION 2.20 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.21 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.22 “Extension Notice” has the meaning set forth in Section 6.01 of the Plan.

          SECTION 2.23 “Key Executive Plan” means The McGraw-Hill Companies, Inc. Key Executive Short-Term Incentive Deferred Compensation Plan, as amended from time to time, or successor programs thereto.

          SECTION 2.24 “Matching Contribution Account” means the matching contribution account established for each Participant under the Plan.

          SECTION 2.25 “McGraw-Hill ERAP Supplement” means The McGraw-Hill Companies, Inc. Employee Retirement Account Plan Supplement.

          SECTION 2.26 “McGraw-Hill SIP Supplement” means The McGraw-Hill Companies, Inc. Savings Incentive Plan Supplement.

          SECTION 2.27 “Participant” means each employee who participates in the Plan, as provided in Article IV of the Plan, and includes a Severance Plan Participant.

          SECTION 2.28 “Plan” means The McGraw-Hill Companies, Inc. 401(k) Savings and Profit Sharing Plan Supplement, as amended from time to time.

          SECTION 2.29 “Plan Administrator” has the meaning set forth in the SPSP.

          SECTION 2.30 “Profit Sharing Account” means the profit sharing account established for each Participant under the Plan.

          SECTION 2.31 “Severance Plan” means The McGraw-Hill Companies, Inc. Management Severance Plan, The McGraw-Hill Companies, Inc. Executive Severance Plan or The McGraw-Hill Companies, Inc. Senior Executive Severance Plan, as amended from time to time, or successor programs thereto.

          SECTION 2.32 “Severance Plan Earnings” means the total amount of salary continuation payments paid to a Severance Plan Participant under a Severance Plan (excluding any amount paid in a lump sum in lieu of salary continuation).

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          SECTION 2.33 “Severance Plan Participant” means a former employee of an Employer who is entitled to remain an active participant in certain Company-sponsored plans and programs under a Severance Plan (and who is not paid a single lump sum payment in lieu thereof).

          SECTION 2.34 “SPSP” means The 401(k) Savings and Profit Sharing Plan of The McGraw-Hill Companies, Inc. and Its Subsidiaries.

          SECTION 2.35 “SPSP Stable Assets Fund” has the meaning set forth in the SPSP.

          SECTION 2.36 “S&P ERAP Supplement” means the Standard & Poor’s Employee Retirement Account Plan Supplement.

          SECTION 2.37 “S&P SIP Supplement” means the Standard & Poor’s’ Savings Incentive Plan Supplement.

          SECTION 2.38 “Tax-Deferred Contributions” has the meaning set forth in the SPSP.

          SECTION 2.39 “Vested Percentage” has the meaning set forth in Section 5.04(b) of the Plan.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Plan Administrator, who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article VI of the Plan, decisions of the Plan Administrator shall be reviewable by the Appeal Reviewer and the Committee. Subject to Article VI of the Plan, the Appeal Reviewer and the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article VI of the Plan, the decision or action of the Appeal Reviewer, Plan Administrator or Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Appeal Reviewer, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Employer to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

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ARTICLE IV
PARTICIPATION

          SECTION 4.01 Continuing Participants. Any individual who was a participant in the McGraw-Hill SIP Supplement, McGraw-Hill ERAP Supplement, S&P SIP Supplement or S&P ERAP Supplement immediately prior to the Effective Date shall be a Participant on such date, subject to the terms and provisions of the Plan. Each Participant’s Matching Contribution Account shall be credited with the amount earned under the McGraw-Hill SIP Supplement and the S&P SIP Supplement and each Participant’s Profit Sharing Account shall be credited with the amount earned under the McGraw-Hill ERAP Supplement and the S&P ERAP Supplement.

          SECTION 4.02 New Participants. Any employee of the Employer (other than a Participant described in Section 4.01 of the Plan) who is selected by the Plan Administrator to be eligible to participate in the Plan shall become a Participant as of the first day of the month coinciding with or next following his selection.

ARTICLE V
BENEFITS

          SECTION 5.01 Credits to Matching Contribution Account. (a) As of December 31 of the year beginning on or after the later of (i) January 1 of the year in which the Participant’s participation in the Plan commenced or (ii) January 1, 2008, there shall be credited to the Participant’s Matching Contribution Account an amount equal to 4¹/2% of the Participant’s Earnings for such year in excess of the limitation on Earnings under Section 401(a)(17) of the Code (or any successor provision). Notwithstanding the foregoing, no credit shall be made to the Matching Contribution Account of a Participant for any year with respect to whom Tax-Deferred Contributions were not made in an amount equal to the limitation on elective deferrals for such year under Section 402(g) of the Code, unless such amount of Tax-Deferred Contributions would have been made on the Participant’s behalf in the absence of the limitations of Section 415 of the Code (or any successor provision thereto) or any provision of SPSP implementing such limitation. In addition, no credit shall be made to a Participant’s Matching Contribution Account with respect to (i) the year in which the Participant’s Employment Termination Date occurs, unless the Participant is eligible for early or normal retirement under the Company’s Employee Retirement Plan, is terminated by an Employer through no fault of his own or has any salary continuation installment due under a Severance Plan or (ii) the year after the year in which the Participant’s Employment Termination Date occurs for any reason or in which the Participant ceases to have any salary continuation installment due under a Severance Plan, if later.

          (b) As of December 31 of the year beginning on or after the later of (i) January 1 of the year in which the Participant’s participation in the Plan commenced or (ii) January 1, 2008, there shall be credited to the Participant’s Matching Contribution Account an amount equal to 4¹/2% of (A) any short-term incentive compensation for such year deferred by the Participant under the Company’s Key Executive Plan, and (B) any salary earned for such year that is deferred by the Participant under any plan or arrangement of the Employer. Any salary or short-term incentive compensation that is deferred by a Participant shall be excluded from Earnings in the year paid to the Participant. No credit shall be made to a Participant’s Matching Contribution Account with respect to any year after the year in which the Participant’s Employment

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Termination Date occurs or in which the Participant ceases to have any salary continuation installment due under a Severance Plan, if later.

          (c) There shall also be credited to the Participant’s Matching Contribution Account as of December 31 of each such year in which Tax-Deferred Contributions on behalf of the Participant are limited by Section 415 of the Code (or any successor provision thereto) or any provision of SPSP implementing such limitation, an amount equal to the difference between (i) the sum of (A) 200% of the first 3% of the Tax-Deferred Contributions and (B) 150% of the second 3% of the Tax-Deferred Contributions which would have been made on behalf of the Participant to SPSP for such year if Section 415 of the Code (or any successor provision thereto) or any such implementing provision were disregarded, and (ii) the Tax-Deferred Contributions made on behalf of the Participant to SPSP for such year. No credit shall be made to a Participant’s Matching Contribution Account with respect to (i) the year in which the
Participant’s Employment Termination Date occurs, unless the Participant is eligible for early or normal retirement under the Company’s Employee Retirement Plan, is terminated by an Employer through no fault of his own or has any salary continuation installment under a Severance Plan or (ii) the year after the year in which the Participant’s Employment Termination Date occurs for any reason or in which the Participant ceases to have any salary continuation installment due under a Severance Plan, if later.

          (d) An amount shall be credited to a Severance Plan Participant’s Matching Contribution Account equal to the amount of Employer Matching Contributions that would have been credited to such Participant’s Employer Contribution Account under SPSP had the Participant made Tax-Deferred Contributions under SPSP with respect to the Participant’s Severance Plan Earnings at the rate in effect for the period immediately prior to the Participant’s Employment Termination Date. This amount shall be credited to the Severance Plan Participant’s Matching Contribution Account at such time as it would have been credited under SPSP.

          SECTION 5.02 Credits to Profit Sharing Account. (a) As of December 31 of the year beginning on or after the later of (i) January 1 of the year in which the Participant’s participation in the Plan commenced or (ii) January 1, 2008, there shall be credited to the Participant’s Profit Sharing Account an amount equal to 5% of the sum of (A) the Participant’s Earnings for such year in excess of the maximum amount of compensation that may be taken into account under Section 5.2 of the SPSP as a result of the limitations of Section 401(a)(17) of the Code for such year and (B) any short-term incentive compensation for such year deferred by the Participant under the Company’s Key Executive Plan, and (C) any salary earned for such year which is deferred by the Participant under any plan or arrangement of the Employer. Any salary or short-term incentive compensation that is deferred by a Participant shall be excluded from Earnings in the year paid to the Participant. No credit with respect to clause (A) of the preceding sentence shall be made to a Participant’s Profit Sharing Account with respect to (i) the year in which the Participant’s Employment Termination Date occurs, unless the Participant is eligible for early or normal retirement under the Company’s Employee Retirement Plan, is terminated by an Employer through no fault of his own or has any salary continuation installment due under a Severance Plan, or (ii) the year after the year in which the Participant’s Employment Termination Date occurs for any reason or the Participant ceases to have any salary continuation installment

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due under a Severance Plan, if later. No credit with respect to clause (B) of the first sentence of this Section shall be made to a Participant’s Profit Sharing Account with respect to any year after the year in which the Participant’s Employment Termination Date occurs or in which the Participant ceases to have any salary continuation installment due under a Severance Plan, if later.

          (b) An amount shall be credited to a Severance Plan Participant’s Profit Sharing Account equal to the amount that would have been credited to such Participant’s account under Section 5.2 of the SPSP had the Participant been eligible to have an employer contribution be made to the Participant’s account under Section 5.2 of the SPSP with respect to such Participant’s Severance Plan Earnings. This amount shall be credited to the Severance Plan Participant’s Profit Sharing Account at such time as it would have been credited under the SPSP.

          SECTION 5.03 Additional Credits to Accounts. (a) An additional amount shall be credited to the Participant’s Accounts as of December 31 of each year beginning on or after the later of (i) January 1 of the year following the year in which the initial credit is made to the Account or (ii) January 1, 2009.

          (b) With respect to Matching Contribution Accounts only, the additional credit shall equal the sum of (i) and (ii), where (i) is the product of (A) the balance of the Matching Contribution Account as of January l of such year, and (B) the annual rate of return of the SPSP Stable Assets Fund for the year; and (ii) is the amount of interest that would have been credited if 1/12 of the annual credit for the year under Section 5.01 of the Plan had instead been credited at the end of each calendar month in the year and each monthly credit earned interest for the remainder of the year at an annual effective rate of return equal to the SPSP Stable Assets Fund rate for the year.

          (c) With respect to Profit Sharing Accounts only, the additional amount shall be equal to the product of (i) the balance of the Profit Sharing Account as of January l of such year and (ii) the annual rate of return of the SPSP Stable Assets Funds for such year. No additional amount shall be credited to the Participant’s Profit Sharing Account for any period after December 31 of the year in which the Participant’s Employment Termination Date occurs or in which the Participant ceases to have any salary continuation installment due under a Severance Plan, if later.

          SECTION 5.04 Payment of Benefit. (a) The Benefit provided under the Plan shall consist of the balance of the Participant’s Accounts as of each applicable payment date under this Section 5.04. Subject to Section 5.05 of the Plan, and except as would violate the requirements of Sections 409A(a)(2), (a)(3) and (a)(4) of the Code, payment of the Benefit to a Participant shall be made in a lump sum, on July 1 of the calendar year following the Participant’s Employment Termination Date, and, in addition, in the case of a Severance Plan Participant, on July 1 of the subsequent calendar year. The Benefit provided under this Article shall be paid in accordance with the preceding sentence to the Participant’s Designated Beneficiary in the event of the death of the Participant, whether prior to or after commencement of benefits under SPSP, if such Designated Beneficiary is entitled to benefits under the provisions of SPSP.

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          (b) Notwithstanding anything contained herein to the contrary, with respect to Profit Sharing Accounts only, a Participant who does not have five years of Continuous Service under SPSP when he ceases to be an employee of the Employer or ceases to have any salary continuation installment due under a Severance Plan, if later, shall forfeit the balance credited to his Profit Sharing Account attributable to amounts earned under the McGraw-Hill ERAP Supplement and the S&P ERAP Supplement and shall be entitled only to the Vested Percentage of the remainder of his Profit Sharing Account attributable to credits credited to his Profit Sharing Account; provided that the, in each case, unless his Employment Termination Date occurs after his 65^th birthday or his death. A Participant’s “Vested Percentage” shall be determined as follows:

Years of Continuous Service	Vested Percentage
Less than 2		0	%
2 but less than 3		20	%
3 but less than 4		40	%
4 but less than 5		60	%
5 or more		100	%

          SECTION 5.05 Payment of Benefits in Event of Change in Control. In lieu of the Benefits payable under Section 5.04 of the Plan, in the event of a Change in Control that is also a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, each Participant who has not received payment of the Participant’s Benefit shall receive a lump sum payment immediately upon such Change in Control equal to the Benefit to which that Participant is entitled under Section 5.04 of the Plan.

ARTICLE VI
CLAIMS PROCEDURE

          SECTION 6.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice”) before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Plan Administrator denies the claim, the Plan Administrator shall give to the Claimant (i) a

9

written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 6.02 of the Plan.

          SECTION 6.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Appeal Reviewer for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Appeal Reviewer to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Appeal Reviewer of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. If the Appeal Reviewer denies the claim on review, notice of the Appeal Reviewer’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 6.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 6.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN

          SECTION 7.01 Amendment and Termination. The Board or the Committee or any delegate thereof may cause the Plan to be amended at any time and from time to time, prospectively or retroactively; provided, however, that no amendment to the Plan may be made by the Committee that materially increases benefits to Participants. In addition, the Board may terminate the Plan in its entirety at any time and, in connection with any such termination, may

10

pay to each Participant or Designated Beneficiary his Benefits under the Plan, subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto). Notwithstanding the foregoing provisions of this Section 7.01, subject to the provisions of Section 7.02 of the Plan, no amendment or termination shall reduce the Benefit or rights of any Participant except with the written consent of the Participant or other person then receiving such Benefit.

          SECTION 7.02 Section 409A. The Plan is intended to meet the requirements of Section 409A of the Code and shall be interpreted and construed consistent with such intent. If, in the good faith judgment of the Committee, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Committee shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no benefit under the Plan is subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 7.02 shall be final, conclusive and binding on all persons.

ARTICLE VIII
MISCELLANEOUS

          SECTION 8.01 Unsecured General Creditor. The Plan is an unfunded deferred compensation plan for a select group of management or highly compensated employees within the meaning of ERISA, and shall be construed and administered accordingly. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Employer. The assets of the Employer shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Employer under the Plan. Any and all of the Employer’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Employer to pay money in the future.

          SECTION 8.02 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise required. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 8.03 Conditions of Payment of Benefit. Notwithstanding any provision of the Plan to the contrary, the right of a Participant or his Designated Beneficiary to

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receive the Benefit otherwise payable hereunder shall cease upon the discharge of the Participant from employment with the Employer for acts which constitute fraud, embezzlement, or dishonesty, and shall be determined by the Appeal Reviewer in his sole discretion.

          SECTION 8.04 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Participant, and the Participant (or his Designated Beneficiary) shall have no rights against the Employer except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Employer or to interfere with the rights of the Employer to discipline or discharge him at any time.

          SECTION 8.05 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Designated Beneficiary, his heirs and legal representatives, and the Employer.

          SECTION 8.06 Withholding. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 8.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 8.08 Effective Date. The Plan is effective as of January 1, 2008 (the “Effective Date”).

          SECTION 8.09 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 8.10 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 8.11 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.18

Exhibit 10.18

THE McGRAW-HILL COMPANIES, INC.

SENIOR EXECUTIVE SUPPLEMENTAL

DEATH, DISABILITY & RETIREMENT BENEFITS PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
SENIOR EXECUTIVE SUPPLEMENTAL
DEATH, DISABILITY & RETIREMENT BENEFITS PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The Company desires to retain the services of and provide rewards and incentives to members of a select group of management employees who contribute to the success of the Company.

          In order to achieve this objective, the Company has adopted the Plan to provide disability or supplemental retirement benefits for certain management employees who become Members of such Plan and supplemental death benefits for the Beneficiaries of deceased Members.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Actuarial Equivalent” or “Actuarially Determined” means a benefit of equivalent value when computed on the basis of 7% interest compounded annually and the 1971 group mortality tables (determined separately by sex).

          SECTION 2.02 “Attained Age” or “Attaining Age” means the age of a Member as of his last birthday.

          SECTION 2.03 “Basic Long-Term Disability Plan” means The McGraw-Hill Companies, Inc. Long Term Disability Plan, as amended from time to time (or any successor plan).

          SECTION 2.04 “Beneficiary” means the person, persons or entity designated by the Member to receive any benefits payable under the Plan. Any Member’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.05 “Board” means the Board of Directors of the Company.

          SECTION 2.06 “Cause” means the Member’s misconduct in respect of the Member’s obligations to the Company or other acts of misconduct by the Member occurring during the course of the Member’s employment, which in either case results in or could reasonably be expected to result in material damage to the property, business or reputation of the

2

Company; provided that in no event shall unsatisfactory job performance alone be deemed to be “Cause”; and, provided, further, that no termination of employment that is carried out at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in Control shall be deemed to be for “Cause.”

          SECTION 2.07 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.07; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.07, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result

3

of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.08 “Claimant” has the meaning set forth in Section 9.01 of the Plan.

          SECTION 2.09 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.10 “Committee” means the Compensation Committee of the Board.

          SECTION 2.11 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.12 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.13 “Death Benefit” means any benefit paid to a Beneficiary upon the death of a Member as provided under the terms of the Plan.

          SECTION 2.14 “Director” means an individual who is a member of the Board.

          SECTION 2.15 “Disability” or “Disabled” means the Member (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

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          SECTION 2.16 “Distribution Date” means a Member’s Retirement Date or, if the Member is a Specified Employee as of his Employment Termination Date, the six-month anniversary of such date.

          SECTION 2.17 “Early Retirement” means a Member’s retirement during the period commencing on the first day of the month coincident with or immediately following the Member’s 50^th birthday and ending on the Member’s Normal Retirement Date.

          SECTION 2.18 “Effective Date” has the meaning set forth in Section 12.07 of the Plan.

          SECTION 2.19 “Employment Termination Date” means the date of a Member’s “separation from service” from the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code.

          SECTION 2.20 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.21 “Excess Benefit Plan” means The McGraw-Hill Companies, Inc. Employee Retirement Plan Supplement, Standard & Poor’s Employee Retirement Plan Supplement and any amendments or successor plans thereto.

          SECTION 2.22 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.23 “Extension Notice” has the meaning set forth in Section 9.01 of the Plan.

          SECTION 2.24 “Final Monthly Earnings” means:

     (i) For purposes of Article V and Article VIII, (1) the sum of (x) a Member’s highest rate of annual base salary in effect during the 36-month period immediately preceding retirement (other than pursuant to Section 5.02 of the Plan), termination without Cause pursuant to Section 5.03 of the Plan, or termination following a Change in Control as provided in Article VIII, and (y) the Member’s highest 100% target annual short-term incentive opportunity during that same 36-month period (2) divided by 12; or

     (ii) For purposes of Article VII, (1) the greater of (A) 1.5 times a Member’s annual base salary in effect immediately preceding the date of the Member’s Disability or (B) the sum of (x) the Member’s highest rate of annual base salary in effect during any portion of such 36-month period occurring prior to January 1, 2005, and during which the Member participated in the Plan, and (y) the Member’s highest 100% target annual short-term incentive opportunity during that same portion of such 36-month period (2) divided by 12.

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          SECTION 2.25 “Good Reason” means voluntary termination based on any of the following: (1) reduction in the Member’s base salary, (2) reduction of the Member’s incentive compensation award opportunities, (3) transfer of the Member to a principal business location so as to increase the distance between the principal business location and such Member’s place of residence at the time of the Change in Control by more than 35 miles, (4) significant reduction in the Member’s responsibilities and status within the Company or a change in the Member’s title or office without prior written consent, (5) involuntary discontinuation of the Member’s participation in any life insurance, health and accident or disability plan maintained by the Company, (6) involuntary elimination of the Member’s paid vacation or (7) for any reason during the 30-day period following the first anniversary of a Change in Control.

          SECTION 2.26 “Member” means an employee who is part of a select group of management and has become a Member as provided in Article IV hereof.

          SECTION 2.27 “Monthly Disability Income” means a monthly income due a Disabled Member as provided in Article VII hereof.

          SECTION 2.28 “Monthly Retirement Income” means a monthly income due a Retired Member which shall commence as of his Distribution Date and continue for the period provided herein.

          SECTION 2.29 “Named Fiduciary” means the Executive Vice President, Human Resources of the Company.

          SECTION 2.30 “Normal Retirement Date” means the first day of the month coincident with or immediately following the Member’s 65^th birthday.

          SECTION 2.31. “Plan” means The McGraw-Hill Companies, Inc. Senior Executive Supplemental Death, Disability & Retirement Benefits Plan, as amended from time to time.

          SECTION 2.32 “Primary Social Security” means the estimated Primary Insurance Amount (payable monthly) available to a Member at age 62, or his Distribution Date, whichever is later, under the Social Security Act in effect at that time.

          SECTION 2.33 “Qualified Plan” means the Employee Retirement Plan of The McGraw-Hill Companies, Inc. and its Subsidiaries, the Retirement Plan for Employees of Standard & Poor’s Corporation and Participating Subsidiaries and any amendments or successor plans thereto.

          SECTION 2.34 “Retired Member” means any Member of the Plan who has qualified for retirement and has retired, and who is eligible to receive a Monthly Retirement Income by direction of the Committee. The term “Retired Member” shall also include any Member terminated without Cause and who is eligible to receive a Monthly Retirement Income pursuant to Section 5.03 of the Plan, and any Member for whom the Committee has approved a Monthly Retirement Income under Section 5.02 of the Plan.

6

          SECTION 2.35 “Retirement Date” means the first day of the month coincident with or immediately following the Member’s Employment Termination Date due to any of the following: (1) retirement pursuant to Sections 5.01 or 5.03 of the Plan, (2) termination without Cause or retirement if so approved by the Committee pursuant to Section 5.02 of the Plan, (3) termination without Cause pursuant to Section 5.03 of the Plan, or (4) termination for any reason described in Sections 8.02 or 8.03 of the Plan.

          SECTION 2.36 “Specified Employee” means a specified employee within the meaning of Section 409A(a)(2)(b)(i) of the Code.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Committee, which shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as it may deem necessary or desirable.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article IX, the decision or action of the Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Committee and the Board (and each member thereof), and any employee of the Company and its affiliates to whom fiduciary responsibilities have been delegated under the Plan, shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

ARTICLE IV
MEMBERSHIP

          SECTION 4.01 Eligible Members. Eligibility for membership in the Plan shall be determined by the Committee in its sole discretion, on an individual basis; provided that each individual who was a Member immediately prior to the effective date of this amendment and restatement shall continue to be a Member on such date, subject to the terms and provisions of the Plan.

          SECTION 4.02 Removal of Members. (a) The Committee shall also have the right to remove a Member from the Plan at any time in its sole discretion if the Member is no longer eligible to participate in the Plan under the terms of Section 4.04 of the Plan.

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          (b) A Member whose benefits under the Plan have commenced to be paid shall not be removed from membership in the Plan and such benefits shall not be terminated thereafter for any reason.

          (c) If a Member whose benefits under the Plan have not commenced to be paid is removed from the Plan, all future benefits payable under the Plan to the Member or his Beneficiary shall cease.

          (d) Notwithstanding anything contained herein to the contrary, Article VIII shall be applicable to a Member who is removed from the Plan following the Change in Control.

          SECTION 4.03 Continuous Employment Requirement. Subject to Section 8.02 of the Plan, the payment of benefits to the Member or his Beneficiary under the Plan is conditioned upon the continuous employment of the Member by the Company (including periods of disability and authorized leaves of absence) from the date of the Member’s participation in the Plan until the Member’s Retirement Date, Disability or death, whichever first occurs.

          SECTION 4.04 Compensation Requirement. Employees who are selected to participate in the Plan shall be chosen from employees who are in Executive Compensation Band 1 and Executive Compensation Band 2.

ARTICLE V
MONTHLY RETIREMENT INCOME

          SECTION 5.01 Normal Retirement. (a) A Member who retires on his Normal Retirement Date shall be entitled to receive, commencing on the Member’s Distribution Date, a Monthly Retirement Income under the Plan as calculated by the Committee. The amount of a Member’s Monthly Retirement Income shall be 55% of Final Monthly Earnings reduced by the amounts set forth in Sections 5.01(b), 5.01(c), 5.01(d) and 5.01(e) of the Plan.

          (b) One hundred percent (100%) of his monthly Primary Social Security benefit as of the Member’s Retirement Date.

          (c) One hundred percent (100%) of the monthly income, received from the Qualified Plan and the Excess Benefit Plan as of the Member’s Retirement Date. Such amount shall be Actuarially Determined as of the Member’s Retirement Date as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          (d) One hundred percent (100%) of benefits received from the qualified pension plans of any previous employers. Such amounts shall be Actuarially Determined as of the Member’s Retirement Date as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          (e) The annuity value of the hypothetical account balance maintained in accordance with the Qualified Plan as of as of the Member’s Retirement Date. This amount shall be determined, in accordance with the rules of the Qualified Plan for this determination, as a life

8

annuity payable in equal monthly installments. This value will be determined so as to reflect the same reduction for early commencement as the Qualified Plan benefit in Section 5.01(c) of the Plan.

          SECTION 5.02 Early Retirement With Committee Approval. (a) A Member (i) between the ages of 50-54 who elects Early Retirement or whose employment is terminated by the Company other than for Cause and who has ten years or more of continuous service with the Company, or (ii) who elects Early Retirement or whose employment is terminated without Cause subsequent to Attaining Age 55 and less than ten years of continuous service with the Company, may, with the written approval of the Committee, receive a Monthly Retirement Income, if any, in such amount and containing such terms and conditions as may be determined by the Committee. Further, a Member for whom the Committee has approved a Monthly Retirement Income under this Section 5.02 and who is between the ages of 50-54, shall begin to receive, upon the later of the Member’s Distribution Date and the first day of the month coincident with or immediately following Attaining Age 55, such Monthly Retirement Income as described in this Section 5.02.

          (b) If such Member dies, however, before Attaining Age 55 and the Member had elected a joint and survivor annuity option at the time of such Member’s retirement or termination of employment, then the deceased Member’s spouse, if such spouse is still surviving, shall receive reduced Monthly Retirement Income payments hereunder at the time when the deceased Member would have Attained Age 55.

          (c) If a Member is approved for a Monthly Retirement Income payment under this Section 5.02, the Member also may be entitled to receive a post-retirement Death Benefit in accordance with the provisions of Section 6.03 of the Plan, provided that at the time the Monthly Retirement Income payment is approved hereunder for the Member the Committee also approves the payment of the post-retirement Death Benefit for the Member.

          SECTION 5.03 Early Retirement After Age 55. (a) A Member who has Attained Age 55, has ten years or more of continuous service with the Company and either elects Early Retirement or is terminated by the Company other than for Cause, shall receive, commencing on the Member’s Distribution Date, a Monthly Retirement Income equal to 55% of Final Monthly Earnings reduced by 4% for every year that the Member’s Attained Age on his Retirement Date is less than 65, as set forth in the following table:

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			MONTHLY
			RETIREMENT
			INCOME AS A
ATTAINED AGE	BENEFIT FORMULA		PERCENT OF
AT RETIREMENT	AS A % OF FINAL	REDUCTION	FINAL MONTHLY
DATE	MONTHLY EARNINGS	FACTOR	EARNINGS
55	55%	40%	33.0%
56	55	36	35.2
57	55	32	37.4
58	55	28	39.6
59	55	24	41.8
60	55	20	44.0
61	55	16	46.2
62	55	12	48.4
63	55	8	50.6
64	55	4	52.8

          A Member’s Monthly Retirement Income shall be further reduced by the amounts set forth in Sections 5.03(b), 5.03(c), 5.03(d) and 5.03(e) of the Plan.

          (b) One hundred percent (100%) of his Primary Social Security benefit as of the Member’s Retirement Date. A Member who retires prior to Attaining Age 62 shall have his benefits reduced by his Primary Social Security payable at age 62 regardless of whether it is received.

          (c) One hundred percent (100%) of the monthly income, calculated in the form of a straight life annuity, that he receives from the Qualified Plan and the Excess Benefit Plan as of the Member’s Retirement Date. Such amount shall be Actuarially Determined as of the Member’s Retirement Date as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          (d) One hundred percent (100%) of benefits received from the qualified pension plans of any previous employers. Such amounts shall be Actuarially Determined as of the Member’s Retirement Date as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          (e) The annuity value of the hypothetical account balance maintained in accordance with the Qualified Plan as of the Member’s Retirement Date. This amount shall be determined, in accordance with the rules of the Qualified Plan for this determination, as a life annuity payable in equal monthly installments. This value will be determined so as to reflect the same reduction for early commencement as the Qualified Plan benefit in Section 5.03(c) of the Plan.

          SECTION 5.04 Minimum Service Requirement. A Member who has less than ten years of continuous service with the Company and who elects Early Retirement without the

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written consent of the Committee shall not be entitled to receive a Monthly Retirement Income under the terms of the Plan.

          SECTION 5.05 Retirement After Age 65. If a Member remains in the employ of the Company subsequent to his Normal Retirement Date, no Monthly Retirement Income shall be paid until the Member’s Distribution Date. At that time he shall be entitled to receive a Monthly Retirement Income calculated as though he had retired on his Normal Retirement Date.

          SECTION 5.06 Form of Payment. The basic form of Monthly Retirement Income (to which the formula indicated in Section 5.01 of the Plan applies) shall be a monthly income commencing on the Member’s Distribution Date and continuing for his life. Alternatively, the Member shall be entitled to receive any Actuarially Equivalent life annuity that is permitted under the Qualified Plan, subject to the requirements of Section 409A(a)(4)(C) of the Code. The Member’s Monthly Retirement Income shall in all circumstances be calculated as of the Member’s Retirement Date, as if such benefits commenced on such date. If the Member is a Specified Employee as of his Employment Termination Date, then the payments that otherwise would have been paid to the Member prior to his Distribution Date shall be paid to the Member in a lump sum on such date. Interest at the rate used to determine Actuarially Equivalent benefits under the Plan shall be credited on such payments for the period, if any, commencing on the Member’s Normal Retirement Date (or, if later the Member’s Retirement Date), and ending on the Member’s Distribution Date.

ARTICLE VI
DEATH BENEFITS

          SECTION 6.01. In the event of the death of a Member or a Disabled Member prior to his Retirement Date, in lieu of a Monthly Retirement Income or Monthly Disability Benefit, the Member’s Beneficiary shall be entitled to receive a lump-sum Death Benefit within 60 days following the Member’s date of death. Such pre-retirement Death Benefit shall be equal to 400% of the Member’s annual base salary in effect at the time of his death.

          SECTION 6.02. In the event of the death of a Retired Member subsequent to Attaining Age 55, the Member’s Beneficiary shall be entitled to receive a lump-sum Death Benefit in an amount equal to 100% of the Member’s annual base salary in effect at the Member’s Retirement Date. This Death Benefit is in addition to any Monthly Retirement Income benefits that may be payable to a Member’s Beneficiary.

          SECTION 6.03. In the event of the death of a Member who has been approved for a Monthly Retirement Income payment and for a Death Benefit under Section 5.02 of the Plan, the Member’s Beneficiary shall be entitled to receive a lump-sum Death Benefit in an amount equal to 100% of the Member’s annual base salary in effect at the time of the Member’s retirement or termination of employment.

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ARTICLE VII
DISABILITY BENEFITS

          SECTION 7.01. (a) If a Member is determined to be Disabled prior to his Normal Retirement Date, the Disabled Member shall be entitled to receive a Monthly Disability Income equal to 50% of the Member’s Final Monthly Earnings reduced by Sections 7.01(b), 7.01(c) and 7.01(d) of the Plan. Such income benefit shall be payable to the Member until Attaining Age 65 or death, whichever first occurs.

          (b) One hundred percent (100%) of his monthly benefit received from the Basic Long-Term Disability Plan, payments from Social Security, Workers’ Compensation and/or other federal, state or employer group insurance plans.

          (c) One hundred percent (100%) of his monthly income paid from the Qualified Plan. Such amount shall be Actuarially Determined as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          (d) One hundred percent (100%) of benefits received from the qualified pension plans of any previous employers. Such amounts shall be Actuarially Determined as a life annuity payable in equal monthly installments, regardless of the actual form of payment.

          SECTION 7.02. Upon Attaining Age 65, the Disabled Member shall be entitled to receive a Monthly Retirement Income under Section 5.01 of the Plan.

ARTICLE VIII
SPECIAL RULES IN THE EVENT OF A CHANGE IN CONTROL

          SECTION 8.01. Notwithstanding anything to the contrary in any other section of the Plan, in the event of a Change in Control, neither the Company nor the Board or the Committee shall thereafter terminate, modify or amend, in whole or in part, any or all of the provisions of the Plan.

          SECTION 8.02. (a) If the employment of a Member is terminated voluntarily for Good Reason within 24 months after a Change in Control that is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code or is involuntarily terminated (except for Cause) at any time after such a Change in Control, said Member shall receive on the Member’s Distribution Date a lump-sum distribution computed as of such date of the Actuarial Equivalent of the monthly benefit he would have received under the Plan as if (1) he had continued as an employee of the Company until the later of Attaining Age 50 or his Retirement Date, and he had then elected to receive payments under the Plan; (2) he had at least 10 years of continuous service with the Company as of the date of the Change in Control; and (3) he was granted written consent for Early Retirement under the Plan by the Committee. The lump-sum Actuarial Equivalent of the monthly benefit he would have received shall be determined by assuming that he had continued in the employment of the Company until the later of Attaining Age 50 or his Retirement Date, and if under age 50 by assuming that he received the Final Monthly Earnings that he was receiving on his Employment Termination Date until Attaining

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Age 50. The amount shall be determined by computing the amounts set forth in Sections 8.02(b) through 8.02(f) of the Plan, and then subtracting the sum of the amounts in Sections 8.02(c), 8.02(d), 8.02(e), and 8.02(f) of the Plan from the amount in Section 8.02(b) of the Plan.

          (b) The lump-sum Actuarial Equivalent computed as of the Member’s Distribution Date of a benefit payable monthly for life in the amount of a percentage, as specified in the schedule below, of the Member’s Final Monthly Earnings that he was receiving on his Employment Termination Date, assuming payments commence on the later of the Member’s Distribution Date or his 55^th birthday.

	BENEFIT AMOUNT
ATTAINED AGE AT	AS A % OF FINAL
RETIREMENT DATE	MONTHLY EARNINGS
Age 60 and below	44.0%
61	46.2
62	48.4
63	50.6
64	52.8
65	55.0

          In addition, a Member shall receive on his Distribution Date a lump-sum distribution of the Actuarial Equivalent of the post-retirement lump-sum Death Benefit described in Sections 6.02 and 6.03 of the Plan, with the Actuarial Equivalent computed as of the Member’s Distribution Date, and for a Member under age 50, assuming that the Death Benefit would be payable only if death occurred after Attaining Age 50.

          The payments pursuant to this Section 8.02 shall be in lieu of payments to be made pursuant to Articles V and VI hereof.

          (c) The lump-sum Actuarial Equivalent computed as of the Member’s Distribution Date of 100% of the monthly Primary Social Security benefit. If, as of his Employment Termination Date, the Member has not Attained Age 50, then the monthly Primary Social Security benefit will be calculated by assuming that he had continued in the employment of the Company until Attaining Age 50 and by assuming that he received the same Final Monthly Earnings until that date. For all Members, the Primary Social Security benefit will be computed assuming he received no earnings after the later of Attaining Age 50 or his Employment Termination Date until Attaining Age 62.

          (d) The lump-sum Actuarial Equivalent computed as of the Member’s Distribution Date of 100% of his monthly income calculated in the form of a straight life annuity under the Qualified Plan, commencing as of the earliest date (but not before the Member’s Distribution Date) that the Member would be eligible to begin to receive monthly benefits from the Qualified Plan. If as of his Employment Termination Date the Member has not Attained Age 50 then the benefit to be received from the Qualified Plan will be calculated by assuming he had continued in the employment of the Company until Attaining Age 50, and by assuming that he received the same Final Monthly Earnings that he was receiving as of his Employment

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Termination Date until Attaining Age 50, and assuming that he had continued to accrue a benefit under the Qualified Plan until Attaining Age 50. The benefit from the Qualified Plan payable as of the earliest date that the Member could elect to receive a benefit under the Qualified Plan (or the Member’s Distribution Date, if later) shall be reduced for early commencement (if any) according to the provisions of the Qualified Plan in effect as of the date of the Change in Control.

          (e) The balance of the hypothetical account maintained in accordance with the Qualified Plan, reflecting hypothetical Member and Company contributions, and the assumed investment return, accumulated to the later of the Member’s Distribution Date or Attaining Age 50.

          (f) The lump-sum Actuarial Equivalent of the benefits, if any, the Member is eligible to receive from qualified plans of any previous employers, determined as of the Member’s Distribution Date assumed to be payable as of the earliest date that the Member could elect to have the benefit payable, or his age as of the Member’s Distribution Date, if later.

          SECTION 8.03. Except as set forth in Section 8.02 of the Plan, if the employment of a Member is terminated voluntarily for any reason at any time after a Change in Control that is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code has occurred, said Member shall receive on his Distribution Date a lump-sum distribution computed as of the Member’s Retirement Date of the Actuarial Equivalent of the monthly benefit he is entitled to receive under the Plan pursuant to Article V and adjusted for interest payable in accordance with the last sentence of Section 5.06 of the Plan. In addition, said Member shall receive on his Distribution Date a lump-sum distribution of the Actuarial Equivalent of the post-retirement lump-sum Death Benefit described in Sections 6.02 and 6.03 of the Plan, computed as described in the second paragraph of Section 8.02(b) of the Plan.

          SECTION 8.04. In the event of a Change in Control, the Committee shall elect either to:

     (i) if such Change in Control is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, provide each Retired Member with a lump-sum distribution of the Actuarial Equivalent of his Monthly Retirement Income and, in addition, provide each Retired Member with a lump-sum distribution of the Actuarial Equivalent of the post-retirement lump-sum Death Benefit described in Sections 6.02 and 6.03 of the Plan, in each case computed as of the date of such distribution and subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision); or

     (ii) provide sufficient funds to the existing “rabbi trust” for which The Bank of New York has been designated as trustee (or to any successor trustee), or in lieu of The Bank of New York, as trustee, to any similar legal entity selected by the Committee, to protect the Monthly Retirement Income and the post-retirement lump-sum Death Benefits which shall be payable to each Retired Member pursuant to Articles V and VI hereof.

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          In the event the Committee does not elect to comply with (i) or (ii) above within 30 days after a Change in Control has occurred, or such Change in Control is not a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, it shall be deemed as if the Committee had elected to comply with (ii) above, and the funds referred to in (ii) shall be provided to such trust within 15 days thereafter. Any payments pursuant to Section 8.04(i) of the Plan shall be in lieu of any further benefits under the Plan.

          SECTION 8.05. The provisions of this Article VIII shall supersede and take precedence over the provisions of any of the other sections of the Plan.

          SECTION 8.06. The reasonable legal fees incurred by any Member (or former Member who was a Member when the Change in Control occurred) or Retired Member to enforce his valid rights under this Article VIII shall be paid for by the Company to the Member or Retired Member in addition to sums otherwise due under the Plan, whether or not the Member or Retired Member is successful in enforcing his rights or whether or not the matter is settled; provided that such payment shall be made not later than the end of the taxable year in which such legal fees are incurred; provided, further, that no such payment shall be made after the last day of the sixth year following the Member or Retired Member’s Employment Termination Date.

ARTICLE IX
CLAIMS PROCEDURE

          SECTION 9.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Named Fiduciary for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Named Fiduciary shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Named Fiduciary shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Named Fiduciary expects to make a determination (the “Extension Notice”) before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made. If the Named Fiduciary denies the claim, the Named Fiduciary shall give to the Claimant (i) a written notice setting forth the specific reason or reasons for the denial of the claim, including references to the applicable provisions of the Plan, (ii) a description of any additional material or information necessary to perfect such claim along with an explanation of why such material or information is necessary, and (iii) appropriate information as to the Plan’s appeals procedures as set forth in Section 9.02 of the Plan.

          SECTION 9.02 Appeal of Denial. A Claimant whose claim is denied by the Named Fiduciary and who wishes to appeal such denial must request a review of the Named

15

Fiduciary’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Named Fiduciary. In connection with that review, the Claimant may examine, and receive free of charge, copies of pertinent Plan documents and submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. If the Committee denies the claim on review, notice of the Committee’s decision shall include (i) the specific reasons for the adverse determination, (ii) references to applicable Plan provisions, (iii) a statement that the Claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA following an adverse benefit determination on a review and a description of the applicable limitations period under the Plan. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 9.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 9.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Named Fiduciary. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review pursuant to Section 502(a) of ERISA.

ARTICLE X
BENEFICIARY DESIGNATION

          SECTION 10.01 Beneficiary Designation. Each Member shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Member of the benefits due him under the Plan.

          SECTION 10.02 Amendments. Any Beneficiary designation may be changed by a Member by the written filing of such change on a form prescribed by the Company and shall become effective only when received, accepted and acknowledged in writing by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

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          SECTION 10.03 No Beneficiary Designation. If a Member fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Member, then any amounts to be paid to the Member’s Beneficiary shall be paid to the Member’s estate.

          SECTION 10.04 Effect of Payment. The payment under this Article X of amounts due to a Member under the Plan shall completely discharge the Company’s obligations in respect of the Member under the Plan.

ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN

          SECTION 11.01 Amendment. Subject to Section 8.01 and 11.02 of the Plan, the Company reserves the right at any time and from time to time, by action of the Committee or the Board to terminate, modify or amend, in whole or in part, any or all of the provisions of the Plan, including specifically the right to make any such amendments effective retroactively; provided that no such action shall reduce the benefits or rights of any Disabled or Retired Member or his Beneficiary. In addition, the Company may amend or modify any provision of the Plan as to any particular Member by agreement with such Member, provided that such agreement is in writing, is executed by both the Company and the Member, and is filed with the Plan records. The provisions of any amendment or modification made by agreement between a Member and the Company shall apply only to the Member so agreeing and no other.

          SECTION 11.02 Section 409A. The Plan is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto and shall be interpreted and construed in accordance with such intent. If, in the good faith judgment of the Committee, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the requirements of Section 409A of the Code, and, notwithstanding any provision in the Plan to the contrary, the Committee shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no benefits under the Plan are subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 11.02 shall be final, conclusive and binding on all persons.

ARTICLE XII
MISCELLANEOUS

          SECTION 12.01 Unsecured General Creditor. The Plan is an unfunded deferred compensation plan for a select group of management or highly compensated employees within the meaning of ERISA, and shall be construed and administered accordingly. Members and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Members or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The

17

Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

          SECTION 12.02 Nonassignability. Each Member’s right under the Plan shall be nontransferable except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise require. Subject to the foregoing, neither a Member nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Member or any other person, nor be transferable by operation of law in the event of a Member’s or any other person’s bankruptcy or insolvency.

          SECTION 12.03 Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment with the Member, and the Member (or his Beneficiary) shall have no rights against the Company except as specifically provided herein. Moreover, nothing in the Plan shall be deemed to give a Member the right to be retained in the service of the Company or to interfere with the rights of the Company to discipline or discharge him at any time. A Retired Member shall not be considered an employee for any purposes under the law.

          SECTION 12.04 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Member or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 12.05 Withholding. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 12.06 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 12.07 Effective Date. The Plan was initially effective as of January 1, 1986 (the “Effective Date”). This amendment and restatement is effective as of January 1, 2008.

          SECTION 12.08 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 12.09 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

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          SECTION 12.10 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan.

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EX-10.22

Exhibit 10.22

THE McGRAW-HILL COMPANIES, INC.

DIRECTOR DEFERRED COMPENSATION PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
DIRECTOR DEFERRED COMPENSATION PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The purpose of the Plan is to provide funds for retirement or death for Directors (and their beneficiaries) of the Company. It is intended that the Plan will aid in retaining and attracting Directors by providing a means to supplement their standard of living at retirement. The Plan is intended to satisfy the requirements of Section 409A of the Code.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “AFR” has the meaning set forth in Section 6.02(c) of the Plan.

          SECTION 2.02 “Alternate Annual Rate” has the meaning set forth in Section 6.03(b) of the Plan.

          SECTION 2.03 “Alternate Rate” has the meaning set forth in Section 6.03(a) of the Plan.

          SECTION 2.04 “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.05 “Board” means the Board of Directors of the Company.

          SECTION 2.06 “Board Meeting Fees” means the cash compensation paid to a Director for attendance at meetings of the Board and Committees thereof, including without limitation, Board meeting fees, committee meeting fees and fees for serving as chairman of a committee.

          SECTION 2.07 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common

2

Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.07; or

     (ii) A change in the composition of the Board such that the Directors who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.07, that any individual who becomes a Director subsequent to the effective date of the Plan, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were

3

members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.08 “Claimant” has the meaning set forth in Section 9.01 of the Plan.

           SECTION 2.09 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.10 “Committee” means the Nominating and Corporate Governance Committee of the Board.

          SECTION 2.11 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

          SECTION 2.12 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

          SECTION 2.13 “Deferral Benefit” means the benefit as calculated in Article VI payable to a Participant commencing at his death, Disability or Projected Retirement Date.

          SECTION 2.14 “Deferral Election Agreement” means a deferral agreement, on such form as may be prescribed by the Committee, executed and filed by a Participant prior to the beginning of the first period for which the Participant’s Director Compensation is to be deferred pursuant to the Plan. A new Deferral Election Agreement shall be executed and filed by a Participant for each Director Compensation deferral election.

          SECTION 2.15 “Deferral Benefit Account” means a bookkeeping account maintained by the Company for a Participant representing the Participant’s interest in the Director Compensation credited to such account pursuant to Sections 6.01 and 6.02 of the Plan.

          SECTION 2.16 “Determination Date” means the date on which the amount of a Participant’s Deferral Benefit Account is determined as provided in Sections 6.01 and 6.02 of the Plan. The last day of each calendar month shall be a Determination Date.

          SECTION 2.17 “Director” means an individual who is a member of the Board.

          SECTION 2.18 “Director Compensation” means Retainer and Board Meeting Fees paid by the Company to a Director.

          SECTION 2.19 “Disability” means a Participant”s becoming disabled within the meaning of Section 409A(a)(2)(C) of the Code.

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          SECTION 2.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

          SECTION 2.21 “Extension Notice” has the meaning set forth in Section 9.01 of the Plan.

          SECTION 2.22 (a) “Moody’s Bond Index” means the average annual composite yield on Moody’s Seasoned Corporate Bond Yield Index for the preceding five years as determined from Moody’s Bond Record published by Moody’s Investors Services, Inc. (or any successor thereto), or, if such yield is no longer published, a substantially similar average selected by the Committee. For example:

	ANNUAL			1985 MOODY’S
YEAR	AVERAGE			BOND INDEX
1984		13.49	%
1983		12.78	%
1982		14.94	%
1981		15.06	%
1980		12.75	%
		69.02% ÷ 5 =			13.80	%

          (b) “Average Annual Moody’s Rate” means the average annual composite yield on Moody’s Seasoned Corporate Bond Yield Index for the preceding year as determined from Moody’s Bond Record published by Moody’s Investors Services, Inc. (or any successor thereto), or, if such yield is no longer published, a substantially similar average selected by the Committee.

          SECTION 2.23 “Participant” means each individual who participates in the Plan, as provided in Section 4.01 of the Plan.

           SECTION 2.24 “Plan” means The McGraw-Hill Companies, Inc. Director Deferred Compensation Plan, as amended from time to time.

          SECTION 2.25 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

          SECTION 2.26 “Plan Year” means the calendar year; provided that the last Plan Year with respect to a Director who ceases to be a Participant during a calendar year, shall begin on the first day of such calendar year and end on the day such Director ceases to be a Participant.

          SECTION 2.27 “Projected Retirement Date” means April 1 immediately following the Participant attaining age 70, or, if permitted by the Committee at the time a Deferral Election Agreement is filed by a Participant, some other date as specified in the Participant’s Deferral Election Agreement.

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          SECTION 2.28 “Retainer” means the cash portion of the amount paid to a Director as compensation for his services in that capacity, including, without limitation, fees for serving as a committee members and fees for serving as chairman of a committee.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article IX of the Plan, decisions of the Plan Administrator shall be reviewable by the Committee. Subject to Article IX of the Plan, the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article IX of the Plan, the decision or action of the Plan Administrator or Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Company to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

ARTICLE IV
PARTICIPATION

          SECTION 4.01 Eligible Participants. Any individual who was a Participant in the Plan immediately prior to the effective date of this amendment and restatement shall continue to be a Participant on such date, subject to the terms and provisions of the Plan. Thereafter, participation in the Plan shall be limited to such Participants and to other Directors who are not employees of the Company or any of its subsidiaries and who elect to participate in the Plan by filing a Deferral Election Agreement with the Company.

ARTICLE V
DEFERRALS AND ELECTIONS

          SECTION 5.01 Initial Deferral Election Agreement. Each new Participant in the Plan may file an irrevocable Deferral Election Agreement to defer payment of all or part of his Director Compensation to be earned during the Plan Year in which the Director becomes a

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Participant in the Plan and to have the Participant’s Deferral Benefit Account credited with such deferred amounts. In order to make a deferral pursuant to this Section 5.01, the Participant must file an executed Deferral Election Agreement with the Company. This Deferral Election Agreement must be filed within 30 days of the date on which the Director becomes eligible to participate in the Plan (or in any other account balance plan described in Treasury Regulation Section 1.409A-1(c)(2)(i)(A), or any successor provision thereto) and shall be effective with respect to compensation earned after the date of filing thereof.

          SECTION 5.02 Annual Deferral Election Agreement. A Participant may file a Deferral Election Agreement on an annual basis to defer payment of all or part of his Director Compensation to be earned during the next succeeding Plan Year and to have the Participant’s Deferral Benefit Account credited with such deferred amounts. In order to make a deferral pursuant to this Section 5.02, the Participant must file an executed Deferral Election Agreement with the Company. The Deferral Election Agreement must be filed not later than, and such Deferral Election Agreement shall become irrevocable on, the last business day prior to the commencement of the Plan Year to which the Deferral Election Agreement relates. Until a Deferral Election Agreement becomes irrevocable, it may be superseded by another Deferral Election Agreement or revoked in writing by the Participant.

          SECTION 5.03 Applicability of Deferral Election Agreement. A Deferral Election Agreement that is not superseded or revoked shall remain effective until the end of the Plan Year.

          SECTION 5.04 Elective Deferred Director Compensation. The amount of Director Compensation that a Director elects to defer in his Deferral Election Agreement shall be credited by the Company to the Participant’s Deferral Benefit Account at such times as the compensation would have been paid had it not been deferred.

ARTICLE VI
DEFERRAL BENEFIT ACCOUNTS

          SECTION 6.01 Accounts. Each Participant’s Deferral Benefit Account, as of each Determination Date, shall consist of the balance of the Participant’s Deferral Benefit Account as of the immediately preceding Determination Date. The Deferral Benefit Account of each Participant shall then be increased by any deferred Director Compensation credited to or reduced by the amount of all distributions, if any, made from such Deferral Benefit Account since the preceding Determination Date.

          SECTION 6.02 Interest Credit. (a) For Director Compensation deferred in 1986, as of each Determination Date, the Participant’s Deferral Benefit Account shall be increased by the amount of interest earned since the preceding Determination Date. The Deferral Benefit Account shall be maintained and increased by the monthly equivalent of Moody’s Bond Index plus 6% (up to a maximum of 150% of Moody’s Bond Index) until the Participant’s Projected Retirement Date. Subsequent to the Participant’s Projected Retirement Date, however, Moody’s Bond Index shall no longer be determined annually and shall be deemed to be the Moody’s Bond Index rate in effect during the year of the Participant’s Projected Retirement Date.

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In the event that a Participant’s service with the Board ceases prior to his Projected Retirement Date, other than for death or Disability, the Moody’s Bond Index rate shall no longer be determined annually and shall be determined to be the Moody’s Bond Index rate in effect during the Plan Year in which such cessation of services occurs.

          (b) For Director Compensation deferred in excess of the amount deferred by a Participant in 1986 or Director Compensation deferred by a Participant who began deferring subsequent to 1986 that has begun to pay out to such Participant whose service with the Board has ceased prior to January 1, 2004, the interest credit rate shall be deemed to be the Average Annual Moody’s Rate plus 2% (up to a maximum of 150% of the Average Annual Moody’s Rate) in effect during the year of the Participant’s Projected Retirement Date.

          (c) For Director Compensation deferred by a Participant whose service with the Board begins or continues after January 1, 2004, as of each Determination Date, the Participant’s Deferred Account shall be increased by the amount of interest earned since the preceding Determination Date. Interest shall be credited at a rate determined to be in effect for each Plan Year based on 120% of the Applicable Federal Long-Term Rate (“AFR”) as prescribed by the Internal Revenue Service in December of the year prior to the year in which the Director Compensation is credited. Subsequent to the Participant’s Projected Retirement Date, however, the AFR shall no longer be determined annually and shall be deemed to be the AFR in effect during the year of the Participant’s Projected Retirement Date. In the event that a Participant’s service with the Board ceases prior to his Projected Retirement Date, other than for death or Disability, the AFR shall no longer be determined annually and shall be determined to be the AFR in effect during the Plan Year in which such cessation of services occurs.

          SECTION 6.03 Alternate Rate. (a) For Director Compensation deferred in 1986, the interest credit rates in Section 6.02(a) of the Plan may be amended to the rate of Moody’s Bond Index as of the Determination Date (the “Alternate Rate”) in the Company’s sole discretion if marginal corporate tax rates are reduced or if any tax leveraged investment vehicle being utilized is no longer appropriate. In the event of a Change in Control, the interest credit rate cannot be changed to the Alternate Rate.

          (b) For Director Compensation deferred in excess of the amount deferred by a Participant in 1986, the interest credit rates in Section 6.02(b) of the Plan may be amended to the rate of the Average Annual Moody’s Rate as of the Determination Date (the “Alternate Annual Rate”) in the Company’s sole discretion if marginal corporate tax rates are reduced or if any tax leveraged investment vehicle being utilized is no longer appropriate. In the event of a Change in Control, the interest credit rate cannot be changed to the Alternate Annual Rate.

          SECTION 6.04 Statement of Accounts. The Company shall submit to each Participant, within 120 days following the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance to the credit of such Participant in his Deferral Benefit Account as of the last day of the preceding Plan Year.

          SECTION 6.05 Vesting of Accounts. A Participant shall be 100% vested in his Deferral Benefit Account at all times.

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ARTICLE VII
DISTRIBUTIONS

          SECTION 7.01 Retirement Benefit. A Participant shall be entitled to a Deferral Benefit equal to the balance of the amounts credited to his Deferral Benefit Account, as determined under Sections 6.01 and 6.02 of the Plan and as payable in accordance with Section 7.04 as of the Plan, as of Determination Date coincident with or immediately following his Projected Retirement Date.

          SECTION 7.02 Death. If a Participant dies after the commencement of payments of his Deferral Benefit, or if a Participant dies prior to any payments of the balance of the amounts credited to his Deferral Benefit Account, his Beneficiary shall receive a lump-sum payment equal to the balance of the amounts credited to his Deferral Benefit Account as of the Determination Date coincident with or immediately following the date of such Participant’s death.

          SECTION 7.03 Disability. In the event of a Participant’s Disability, such Participant shall receive a lump-sum payment of the balance of the amounts credited to his Deferral Benefit Account as of the Determination Date coincident with or immediately following the date of the Participant’s Disability.

          SECTION 7.04 Payment of Benefit. Upon, or commencing upon, the first day of the first calendar month following the happening of the specified date or the occurrence of the event described in Sections 7.01, 7.02 or 7.03 of the Plan, the Company shall pay to the Participant the applicable portion of the balance of the amounts credited to his Deferral Benefit Account in a lump sum or in equal annual installments, as elected in the applicable Deferral Election Agreement executed and filed by the Participant with the Company. If a Participant elects to receive payments in installments, payment of such portion of the balance of the amounts credited to his Deferral Benefit Account shall be in an amount which amortizes the Deferral Benefit Account balance thereof in equal annual payments of principal and interest over a period not to exceed 15 years. For purposes of determining the amount of the annual payment, the assumed rate of interest shall be the post-retirement rate under the terms of Section 6.02 of the Plan.

          SECTION 7.05 Change in Election. No change in a Participant’s payment election shall be valid unless it is made in a Deferral Election Agreement that is executed and filed with the Company in accordance with this Section 7.05. Any change in a Participant’s payment election with respect to his Deferral Benefit Account may not take effect until at least 12 months after the date on which the election is made in a Deferral Election Agreement that is executed and filed with the Company. The first payment with respect to which the election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been made.

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ARTICLE VIII
EFFECT OF CORPORATE TRANSACTIONS

          SECTION 8.01 Change in Control. (a) Notwithstanding anything contained in the Plan to the contrary, in the event of a Change in Control that is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, the Company shall immediately pay to each Participant in a lump sum the then remaining balance in his Deferral Benefit Account. The terms of Sections 11.01 and 11.02 of the Plan shall not be applicable following a Change in Control.

          (b) The reasonable legal fees incurred by any Participant to enforce his valid rights under this Section 8.01 shall be paid for by the Company to the Participant in addition to sums otherwise due hereunder, whether or not the Participant is successful in enforcing his rights or whether or not the matter is settled; provided that such payment shall be made not later than the end of the taxable year following the year in which such legal fees are incurred; provided, further, that no such payment shall be made after the last day of the sixth year following the expiration of the period described in Section 9.03 of the Plan.

ARTICLE IX
CLAIMS PROCEDURE

          SECTION 9.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the "Extension Notice") before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made.

          SECTION 9.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an

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extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 9.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 9.02 of the Plan or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review.

ARTICLE X
BENEFICIARY DESIGNATION

          SECTION 10.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under the Plan shall be paid in the event of his death prior to complete distribution to the Participant of the benefits due him under the Plan.

          SECTION 10.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

          SECTION 10.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

          SECTION 10.04 Effect of Payment. The payment under this Article X of the amounts due to a Participant under the Plan to a Beneficiary shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN

          SECTION 11.01 Amendment. The Board or the Committee may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company; provided, however, that, subject to Section 11.03 of the Plan, no amendment shall be effective to decrease or restrict any Deferral Benefit Account at the time of such amendment.

          SECTION 11.02 Company’s Right to Terminate. The Board or the Committee may terminate the Plan at any time with respect to future deferrals of Director Compensation if,

11

in its judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interests of the Company. The Board or the Committee may also terminate the Plan in its entirety at any time, and, upon any such termination, the Company shall immediately pay to each Participant in a lump sum the then remaining balance in his Deferral Benefit Account, subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto).

          SECTION 11.03 Section 409A. If, in the good faith judgment of the Committee, any provision of the Plan or any Deferral Election Agreement could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision therein to the contrary, the Committee shall have broad authority to amend or to modify the Plan or any Deferral Election Agreement, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no Deferral Benefit Accounts are subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 11.03 shall be final, conclusive and binding on all persons.

ARTICLE XII
MISCELLANEOUS

          SECTION 12.01 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

          SECTION 12.02 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 12.03 Rights and Obligations. Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection by the Company’s shareholders or to limit the rights of the shareholders to remove any Director.

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          SECTION 12.04 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 12.05 Protective Provisions. A Participant will cooperate with the Company by furnishing any and all information requested by the Company, in order to facilitate the payment of benefits hereunder, and by taking such other action as may be requested by the Company.

          SECTION 12.06 Withholding. To the extent that the Company is required to withhold any taxes or other amounts from the Participant’s deferred compensation pursuant to any state, federal or local law, such amounts shall first be taken out of the portion of the Participant’s Director Compensation that is not deferred under the Plan. To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder any taxes or other amounts required to be withheld for any federal, state or local government and other authorized deductions.

          SECTION 12.07 Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 12.08 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 12.09 Headings. The section headings in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 12.10 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan. The Plan is intended to meet the requirements of Section 409A of the Code and shall be interpreted and construed consistent with such intent.

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EX-10.23

Exhibit 10.23

THE McGRAW-HILL COMPANIES, INC.

DIRECTOR DEFERRED STOCK OWNERSHIP PLAN

(Amended and restated effective as of January 1, 2008)

THE McGRAW-HILL COMPANIES, INC.
DIRECTOR DEFERRED STOCK OWNERSHIP PLAN

(Amended and restated effective as of January 1, 2008)

ARTICLE I
PURPOSE

          The purposes of the Plan are to enable the Company to attract and retain qualified persons to serve as Directors, to enhance the equity interest of Directors in the Company, to solidify the common interests of its Directors and stockholders, and to encourage the highest level of Director performance by providing such Directors with a proprietary interest in the Company’s performance and progress, by crediting them annually with shares of Common Stock. The Plan is intended to satisfy the requirements of Section 409A of the Code.

ARTICLE II
DEFINITIONS

          The following words and phrases as used herein shall have the following meanings:

          SECTION 2.01 “Applicable Delivery Period” means a period of up to five years, as more fully described in Section 5.01 of the Plan.

          SECTION 2.02 “Beneficiary” means the person, persons or entity designated by the Participant to receive any shares of Common Stock deliverable in accordance with Section 7.01 of the Plan. Any Participant’s Beneficiary designation shall be made in a written instrument filed with the Company and shall become effective only when received, accepted and acknowledged in writing by the Company.

          SECTION 2.03 “Board” means the Board of Directors of the Company.

          SECTION 2.04 “Change in Control” means the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the

2

Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 2.04; or

     (ii) A change in the composition of the Board such that the Directors who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.04, that any individual who becomes a Director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those Directors who were members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such Director were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          SECTION 2.05 “Change in Control Consideration” means, with respect to each share of Common Stock credited to a Deferred Stock Account, (i) the amount of any cash, plus the value of any securities and other noncash consideration, constituting the most valuable

3

consideration per share of Common Stock paid to any shareholder in the transaction or series of transactions that results in a Change in Control or (ii) if no consideration per share of Common Stock is paid to any shareholder in the transaction or series of transactions that results in a Change in Control, the highest reported sales price, regular way, of a share of Common Stock in any transaction reported on the New York Stock Exchange or other national exchange on which such shares of Common Stock are listed or on NASDAQ during the 60-day period prior to and including the date of a Change in Control. To the extent that such consideration consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined by the Committee in good faith.

     SECTION 2.06 “Claimant” has the meaning set forth in Section 10.01 of the Plan.

     SECTION 2.07 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

     SECTION 2.08 “Committee” means the Nominating and Corporate Governance Committee of the Board.

     SECTION 2.09 “Common Stock” means the common stock, $1.00 par value per share, of the Company.

     SECTION 2.10 “Company” means The McGraw-Hill Companies, Inc., a corporation organized under the laws of the State of New York, or any successor corporation.

     SECTION 2.11 “Deferral Election” means an election pursuant to Article V of the Plan.

     SECTION 2.12 “Deferred Stock Account” means a bookkeeping account maintained by the Company for a Participant representing the Participant’s interest in the shares of Common Stock credited to such account pursuant to Section 6.01 of the Plan.

     SECTION 2.13 “Delivery Date” has the meaning set forth in Section 7.01 of the Plan.

     SECTION 2.14 “Director” means an individual who is a member of the Board.

     SECTION 2.15 “Dividend Equivalent” for a given dividend or distribution means a number of shares of Common Stock having a Value, as of the date such Dividend Equivalent is credited to a Deferred Stock Account, equal to the amount of cash, plus the fair market value on the date of distribution of any property, that is distributed with respect to one share of Common Stock pursuant to such dividend or distribution; such fair market value to be determined by the Committee in good faith.

     SECTION 2.16 “Effective Date” has the meaning set forth in Section 13.06 of the Plan.

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     SECTION 2.17 “Election Amount” means for each Participant who has made a Deferral Election pursuant to Article V of the Plan, with respect to each Plan Year, (i) the percentage that is set forth in the Deferral Election, multiplied by (ii) the total cash compensation receivable from the Company during the Plan Year by the Participant in his capacity as a Director, including without limitation, retainers, fees for serving as committee members, fees for serving as chairman of a committee, Board meeting fees and committee meeting fees.

     SECTION 2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.

     SECTION 2.19 “Extension Notice” has the meaning set forth in Section 10.01 of the Plan.

     SECTION 2.20 “Fraction” with respect to a person who was a Participant during part, but not all, of a calendar year, means the amount obtained by dividing (i) the number of calendar months during such calendar year that such person was a Participant by (ii) 12; provided that for purposes of the foregoing a partial calendar month shall be treated as a whole month.

     SECTION 2.21 “Installment Delivery Election” means the written election by a Participant, on such form as may be prescribed by the Committee, to receive delivery of shares of Common Stock in the Participant’s Deferred Stock Account in installments over the Applicable Delivery Period.

     SECTION 2.22 “Participant” means each individual who participates in the Plan, as provided in Section 4.01 of the Plan.

     SECTION 2.23 “Plan” means The McGraw-Hill Companies, Inc. Director Deferred Stock Ownership Plan, as amended from time to time.

     SECTION 2.24 “Plan Administrator” has the meaning set forth in Section 3.01 of the Plan.

     SECTION 2.25 “Plan Year” means the calendar year; provided that the last Plan Year with respect to a Director who ceases to be a Participant during a calendar year, shall begin on the first day of such calendar year and end on the day such Director ceases to be a Participant.

     SECTION 2.26 “Stock Amount” means, with respect to a Plan Year, the greater of (i) $30,000 or (ii) the average total cash compensation receivable (disregarding for this purpose Deferral Elections made by any Participant and deferral elections made under The McGraw-Hill Companies, Inc. Director Deferred Compensation Plan or any successor plan) during the Plan Year by the Participants who were Participants during the entire Plan Year in any capacity as Directors, including without, limitation retainers, fees for serving as committee members, Board meeting fees and committee meeting fees, provided, however, that any retainers for serving as committee chairs shall not be so included for this purpose.

     SECTION 2.27 “Value” of a share of Common Stock as of the last day of a given Plan Year shall mean the average (rounded up to the nearest cent) of the monthly average for

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each of the full calendar months during such Plan Year of the means between the reported high and low sale prices of a share of Common Stock on the New York Stock Exchange (or, if the Common Stock is not listed on such exchange, on any other national securities exchange on which the Common Stock is listed) for each trading day during each such calendar month. If the Common Stock is not traded on any national securities exchange, the Value of the Common Stock shall be determined by the Committee in good faith.

ARTICLE III
ADMINISTRATION

          SECTION 3.01 Administration. The Plan shall be administered by the Executive Vice President, Human Resources of the Company (the “Plan Administrator”), who shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as he may deem necessary or desirable. Subject to Article X of the Plan, decisions of the Plan Administrator shall be reviewable by the Committee. Subject to Article X of the Plan, the Committee shall also have the full authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan.

          SECTION 3.02 Binding Effect of Decisions. Subject to Article X of the Plan, the decision or action of the Plan Administrator or Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

          SECTION 3.03 Indemnification. To the fullest extent permitted by law, the Plan Administrator, the Committee and the Board (and each member thereof), and any employee of the Company to whom fiduciary responsibilities have been delegated shall be indemnified by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.

ARTICLE IV
PARTICIPATION

          SECTION 4.01 Eligible Participants. Any individual who was a Participant in the Plan immediately prior to the effective date of this amendment and restatement shall continue to be a Participant on such date, subject to the terms and provisions of the Plan, and each other individual who becomes a Director thereafter during the term of the Plan, shall be a Participant in the Plan, in each case during such period as such individual remains a Director and is not an employee of the Company or any of its subsidiaries.

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ARTICLE V
DEFERRALS AND ELECTIONS

          SECTION 5.01 Initial Election. Each new Participant in the Plan may make an irrevocable Deferral Election to defer payment of all or part of the total cash compensation for services as a Director to be earned during the Plan Year in which the Director becomes a Participant in the Plan and to have the Participant’s Deferred Stock Account credited with shares of Common Stock equal in Value to such deferred compensation. In order to make a Deferral Election pursuant to this Section 5.01, the Participant must deliver to the Company a written notice of the Deferral Election setting forth the percentage of the Participant’s total cash compensation to be deferred. This notice must be delivered within 30 days of the date on which the Participant becomes a Director and shall be effective with respect to compensation earned after the date of delivery thereof. The Participant shall be permitted to make an irrevocable Installment Delivery Election at the time of the Deferral Election.

          SECTION 5.02 Annual Elections. A Participant may make a Deferral Election on an annual basis to defer payment of all or part of the total cash compensation for services as a Director to be earned during the next succeeding Plan Year and to have the Participant’s Deferred Stock Account credited with shares of Common Stock equal in Value to such deferred compensation. In order to make a Deferral Election pursuant to this Section 5.02, the Participant must deliver to the Company a written notice of the Deferral Election setting forth the percentage of the Participant’s total cash compensation to be deferred. This notice must be delivered no later than, and such Deferral Election shall become irrevocable on, the last business day prior to the commencement of the Plan Year to which the Deferral Election relates. Any such written notice of the Deferral Election pursuant to this Section 5.02 shall remain in effect for subsequent Plan Years unless such Participant delivers a written notice setting forth a different Deferral Election which shall be applied to future Plan Years until further written notice is received by the Company pursuant to this Section 5.02. The Participant shall be permitted to make an Installment Delivery Election at the time of the Deferral Election. Such Installment Delivery Election shall become irrevocable on the last business day prior to the commencement of the Plan Year to which the Installment Delivery Election relates.

ARTICLE VI
DEFERRED ACCOUNTS

          SECTION 6.01 Accounts. The Company shall maintain a Deferred Stock Account for each Participant. As part of the compensation payable to each Participant for service on the Board, the Deferred Stock Account of each Participant shall be credited with shares of Common Stock as set forth in Section 6.02 of the Plan.

          SECTION 6.02 Credit of Shares of Common Stock. (a) On the first business day following the last day of each Plan Year, the Deferred Stock Account of each Director who was a Participant at any time during such Plan Year shall be credited with (i) a number of shares of Common Stock having a Value equal to the sum of (A) the Stock Amount multiplied by the applicable Fraction and (B) the Election Amount, if any; plus (ii) a number of shares of Common Stock equal to (A) the number of shares of Common Stock credited as of that date pursuant to clause (i) multiplied by (B) the Dividend Equivalent for each dividend paid or other distribution

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made with respect to the Common Stock, the record date for which occurred during such Plan Year and at a time when such Participant was a Participant.

          (b) In addition, on the first business day following the last day of each Plan Year, each Deferred Stock Account that has not, as of such date, been delivered in full pursuant to Section 7.01 of the Plan shall be credited with a number of shares of Common Stock equal to (i) the number of shares of Common Stock in such Deferred Stock Account as of such date (before taking into account any amounts that are credited as of such date pursuant to Section 6.02 of the Plan) multiplied by (ii) the Dividend Equivalent for each dividend paid or other distribution made with respect to the Common Stock, the record date for which occurred during such Plan Year and at a time when such Participant was a Participant.

ARTICLE VII
DISTRIBUTIONS

          SECTION 7.01 Delivery of Shares of Common Stock. The shares of Common Stock in a Participant’s Deferred Stock Account as of the date the Participant ceases to be a Director for any reason (the “Delivery Date”) shall be delivered or begin to be delivered in accordance with this Section 7.01 on or as soon as practicable, but in no event more than 60 days after the Delivery Date. Such shares of Common Stock shall be delivered at one time; provided that if the number of shares of Common Stock so credited includes a fractional share, such number shall be rounded up to the nearest whole number of shares; and provided, further, that if the Director has in effect a valid Installment Delivery Election pursuant to Article V of the Plan, then the applicable portion of such shares of Common Stock shall be delivered in equal yearly installments over the Applicable Delivery Period, with the first such installment being delivered on the first anniversary of the Delivery Date; provided that if in order to equalize such installments, fractional shares of Common Stock would have to be delivered, such installments shall be adjusted by rounding up to the nearest whole share. If any such shares of Common Stock are to be delivered after the Director has become legally incompetent, they shall be delivered to the Director’s legal guardian. If any such shares of Common Stock are to be delivered after the Director has died, they shall be delivered to the Director’s Beneficiary; provided that if the Director dies with a valid Installment Delivery Election in effect, the Committee shall deliver all remaining undelivered shares of Common Stock to the Director’s Beneficiary as soon as practicable. Reference to a Director in the Plan shall be deemed to refer to the Director’s legal guardian or the Beneficiary, where appropriate.

          SECTION 7.02 Voting and Other Rights. Shares of Common Stock delivered to a Participant pursuant to Section 7.01 of the Plan shall be issued in the name of the Participant, and the Participant shall be entitled to all rights of a shareholder with respect to Common Stock for all such shares of Common Stock issued in his name, including the right to vote the shares of Common Stock, and the Participant shall receive all dividends and other distributions paid or made with respect thereto.

          SECTION 7.03 General Restrictions. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any shares of Common Stock under the Plan prior to fulfillment of all of the following conditions:

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     (i) Listing or approval for listing upon official notice of issuance of such shares on the New York Stock Exchange, or such other securities exchange as may at the time be a market for the Common Stock;

     (ii) Any registration or other qualification of such shares of Common Stock under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and

     (iii) Obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.

ARTICLE VIII
SHARES AVAILABLE

          SECTION 8.01 Shares Available. Subject to Article IX of the Plan, the maximum number of shares of Common Stock which may be credited to Deferred Stock Accounts pursuant to the Plan is 640,000 in the aggregate. Shares of Common Stock issuable under the Plan may be taken from authorized but unissued or treasury shares of the Company or purchased on the open market.

ARTICLE IX
EFFECT OF CORPORATE TRANSACTIONS

          SECTION 9.01 Change in Capital Structure. In the event that there is, at any time after the Board adopts the Plan, any change in the Common Stock by reason of any stock dividend, stock split, combination of shares, exchange of shares, warrants or rights offering to purchase Common Stock at a price below its fair market value, reclassification, recapitalization, merger, consolidation, spin-off or other change in capitalization of the Company, appropriate adjustment shall be made in the number and kind of shares or other property subject to the Plan and the number and kind of shares or other property held in the Deferred Stock Accounts, and any other relevant provisions of the Plan by the Committee, whose determination shall be binding and conclusive on all persons.

          SECTION 9.02 Change in Control. Without limiting the generality of the foregoing, and notwithstanding any other provision of the Plan, in the event of a Change in Control that is a “change in control event” within the meaning of Section 409A(a)(2)(A)(v) of the Code, the following shall occur on the date of the Change in Control (the “Change in Control Date”): (i) the last day of the then-current Plan Year shall be deemed to occur on the Change in Control Date and such Plan Year shall be the last Plan Year under the Plan; (ii) the Deferred Stock Accounts shall be credited with shares of Common Stock pursuant to Section 6.02 of the Plan, as if, for this purpose, the Participants ceased to be Participants on the Change in Control Date; (iii) the Company shall immediately pay to each Participant in a lump sum the Change in Control Consideration multiplied by the number of shares of Common Stock held in the Participant’s Deferred Stock Account immediately before such Change in Control; and (iv) the Plan shall be terminated with respect to each Participant’s Deferred Stock Account.

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          SECTION 9.03 Share Conversion. If the shares of Common Stock credited to the Deferred Stock Accounts are converted pursuant to this Section 9.03 into another kind or form of property (including cash), references in the Plan to the Common Stock shall be deemed, where appropriate, to refer to such other kind or form of property, with such other modifications as may be required for the Plan to operate in accordance with its purposes. Without limiting the generality of the foregoing, references to delivery of certificates for shares of Common Stock shall be deemed to refer to delivery of cash and the incidents of ownership of any other property held in the Deferred Stock Accounts.

ARTICLE X
CLAIMS PROCEDURE

          SECTION 10.01 Claims. In the event any person or his authorized representative (a “Claimant”) disputes the amount of, or his entitlement to, any benefits under the Plan or their method of payment, such Claimant shall file a claim in writing with, and on the form prescribed by, the Plan Administrator for the benefits to which he believes he is entitled, setting forth the reason for his claim. The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim and shall be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claim. The Plan Administrator shall consider the claim and within 90 days of receipt of such claim, unless special circumstances exist which require an extension of the time needed to process such claim, the Plan Administrator shall inform the Claimant of its decision with respect to the claim. In the event of special circumstances, the response period can be extended for an additional 90 days, as long as the Claimant receives written notice advising of the special circumstances and the date by which the Plan Administrator expects to make a determination (the “Extension Notice") before the end of the initial 90-day response period indicating the reasons for the extension and the date by which a decision is expected to be made.

          SECTION 10.02 Appeal of Denial. A Claimant whose claim is denied by the Plan Administrator and who wishes to appeal such denial must request a review of the Plan Administrator’s decision by filing a written request with the Committee for such review within 60 days after such claim is denied. Such written request for review shall contain all relevant comments, documents, records and additional information that the Claimant wishes the Committee to consider, without regard to whether such information was submitted or considered in the initial review of the claim by the Plan Administrator. In connection with that review, the Claimant may submit such written comments as may be appropriate. Written notice of the decision on review shall be furnished to the Claimant within 60 days after receipt by the Committee of a request for review. In the event of special circumstances which require an extension of the time needed for processing, the response period can be extended for an additional 60 days, as long as the Claimant receives an Extension Notice. The Claimant shall be notified no later than five days after a decision is made with respect to the appeal.

          SECTION 10.03 Statute of Limitations. A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action within three years of the date the final decision on the adverse benefit determination on review is issued or should have been issued under Section 10.02 of the Plan or

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lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. Notwithstanding anything in the Plan to the contrary, a Claimant must exhaust all administrative remedies available to such Claimant under the Plan before such Claimant may seek judicial review.

ARTICLE XI
BENEFICIARY DESIGNATION

          SECTION 11.01 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person, persons, entity or entities as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom shares of Common Stock shall be delivered in accordance with Section 7.01 of the Plan from the Participant’s Deferred Stock Account in the event of such Participant’s death prior to complete distribution to the Participant of the shares of Common Stock due him under the Plan.

          SECTION 11.02 Amendments. Any Beneficiary designation may be changed by a Participant by the written filing of such change on a form prescribed by the Company. The new Beneficiary designation form shall cancel all Beneficiary designations previously filed.

          SECTION 11.03 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then any amounts to be paid to the Participant’s Beneficiary shall be paid to the Participant’s estate.

          SECTION 11.04 Effect of Payment. The delivery of shares of Common Stock under this Article XI due to a Participant to a Beneficiary under the Plan shall completely discharge the Company’s obligations in respect of the Participant under the Plan.

ARTICLE XII
AMENDMENT AND TERMINATION OF PLAN

          SECTION 12.01 Amendment. The Board or the Committee may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company without further approval of the Company’s stockholders, except to the extent required by the Rules of the New York Stock Exchange (or rules of any other exchange or quotation system on which the Company’s securities are then listed).

          SECTION 12.02 Company’s Right to Terminate. The Board or the Committee may terminate the Plan at any time and, in connection with any such termination, may deliver to each Participant the shares of Common Stock credited to his Deferred Stock Account, subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto). Notwithstanding any other provision of the Plan to the contrary, neither the Board nor the Committee shall be authorized to exercise any discretion with respect to the selection of persons to receive credits of shares of Common Stock under the Plan or concerning the amount or timing of such credits under the Plan, and, subject to Section 12.03 of the Plan, no amendment or termination of the Plan shall adversely affect the interest of any

11

Participant in shares previously credited to such Participant’s Deferred Stock Account without that Participant’s express written consent.

          SECTION 12.03 Section 409A. If, in the good faith judgment of the Committee, any provision of the Plan could otherwise cause any person to be subject to the interest and penalties imposed under Section 409A of the Code, such provision shall be modified by the Committee in its sole discretion to maintain, to the maximum extent practicable, the original intent of the applicable provision without causing the interest and penalties under Section 409A of the Code to apply, and, notwithstanding any provision in the Plan to the contrary, the Committee shall have broad authority to amend or to modify the Plan, without advance notice to or consent by any person, to the extent necessary or desirable to ensure that no benefits are subject to tax under Section 409A of the Code. Any determinations made by the Committee under this Section 12.03 shall be final, conclusive and binding on all persons.

ARTICLE XIII
MISCELLANEOUS

          SECTION 13.01 Unsecured General Creditor. Participants and their Beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

          SECTION 13.02 Nonassignability. Each Participant’s rights under the Plan shall be nontransferable except by will or by the laws of descent and distribution. Subject to the foregoing, neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

          SECTION 13.03 Rights and Obligations. Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection by the Company’s shareholders or to limit the rights of the shareholders to remove any Director.

          SECTION 13.04 Binding Effect. The Plan shall be binding upon and shall inure to the benefit of the Participant or his Beneficiary, his heirs and legal representatives, and the Company.

          SECTION 13.05 Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock pursuant to the Plan, that a

12

Participant make arrangements satisfactory to the Committee for the withholding of any taxes required by law to be withheld with respect to the issuance or delivery of such shares of Common Stock, including without limitation, by the withholding of shares of Common Stock that would otherwise be so issued or delivered, by withholding from any other payment due to the Participant, or by a cash payment to the Company by the Participant.

          SECTION 13.06 Effective Date and Term. The Plan was initially effective as of July 1, 1996. This amendment and restatement is effective as of January 1, 2008. The Plan shall remain in effect until the earlier of (i) its termination by action of the Board, (ii) its termination as set forth in Section 12.02 of the Plan, or (iii) no shares of Common Stock remain available under the Plan.

          SECTION 13.07  Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

          SECTION 13.08 Governing Law. The Plan shall be construed under the laws of the State of New York, to the extent not preempted by federal law.

          SECTION 13.09 Headings. The section headings used in this document are for ease of reference only and shall not be controlling with respect to the application and interpretation of the Plan.

          SECTION 13.10 Rules of Construction. Any words herein used in the masculine shall be read and construed in the feminine where they would so apply. Words in the singular shall be read and construed as though used in the plural in all cases where they would so apply. All references to sections are, unless otherwise indicated, to sections of the Plan. The Plan is intended to meet the requirements of Section 409A of the Code and shall be interpreted and construed consistent with such intent.

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EX-12

Exhibit (12)

THE McGRAW-HILL COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Years Ended December 31,
	2007		2006		2005		2004		2003
	(In thousands of dollars)
Earnings
Earnings from continuing operations before income tax expense (a)(b)(c)(d)(e)	$	1,622,532	$	1,404,823	$	1,359,962	$	1,168,905	$	1,113,676
Fixed charges (e)		132,742		90,140		80,411		75,856		72,411
Total Earnings	$	1,755,274	$	1,494,963	$	1,440,373	$	1,244,761	$	1,186,087
Fixed Charges(e)
Interest expense	$	64,362	$	26,637	$	19,622	$	15,641	$	12,275
Portion of rental payments deemed to be interest		68,380		63,503		60,789		60,215		60,136
Total Fixed Charges	$	132,742	$	90,140	$	80,411	$	75,856	$	72,411
Ratio of Earnings to Fixed Charges:		13.2x		16.6x		17.9x		16.4x		16.4x

(a)	2007 includes the impact of the following items: $43.7 million pre-tax restructuring charge and a $17.3 million pre-tax gain on sale of the mutual fund data business.
(b)	2006 includes the impact of the following items: $31.5 million pre-tax restructuring charge and a $21.1 million pre-tax reduction in operating profit related to the transformation of Sweets from a primarily print catalogue to bundled print and online services. In 2006, as a result of the adoption of Financial Accounting Standards Board’s Statement No. 123(R), “Share Based Payment”, the Company incurred stock-based compensation expense of $136.2 million. Included in this expense is a one-time charge for the elimination of the Company’s restoration stock option program of $23.8 million. In 2005, stock-based compensation was $51.1 million.
(c)	2005 includes a $6.8 million pre-tax gain on sale of Corporate Value Consulting (CVC), a $5.5 million pre-tax loss on the sale of The Healthcare Information Group and a $23.2 million pre-tax restructuring charge.
(d)	2003 includes a $131.3 million pre-tax gain on the sale of 45% interest of Rock-McGraw, Inc.
(e)	For purposes of computing the ratio of earnings to fixed charges, “earnings from continuing operations before income tax expense” excludes undistributed equity in income of less than 50%-owned companies, primarily the Company’s earnings in its 45% interest in Rock-McGraw, Inc., which was sold in 2003. The Rock-McGraw earnings for year ended December 31, 2003 were $16.6 million. The Company did not have earnings from Rock-McGraw in 2007, 2006, 2005 and 2004. “Fixed charges” consist of (1) interest on debt and interest related to the sale leaseback of Rock-McGraw, Inc. (see Note 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2007), and (2) the portion of the Company’s rental expense deemed representative of the interest factor in rental expense.

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EX-13

Exhibit 13

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One Company
One Focus

TO OUR SHAREHOLDERS:

For The McGraw-Hill Companies, 2007 was filled with significant achievements—and some equally big challenges.

It was a year in which we delivered record results and impressive growth thanks to the outstanding performance of our business portfolio. But it was also a year in which the U.S. housing bubble burst and the market for mortgage-related securities deteriorated, fueling disruption in the capital markets and causing a slowdown in our fourth-quarter results.

It was a year in which phrases like “subprime mortgage” and “credit crunch” made headlines and ratings agencies were thrust into an unfamiliar spotlight—with questions raised about their performance, policies and practices.

As we reflect on the events of the past year and focus on our opportunities for 2008 and beyond, there is one imperative shared by the management team across The McGraw-Hill Companies—to extend our record of growth while generating superior shareholder value.

Our senior leadership team is actively managing through the current environment. We believe that steps we are taking now will strengthen our operations and position us for continued growth. And while it’s difficult to make definitive predictions, history tells us that our markets will stabilize and the current turmoil will eventually pass.

The long-term prospects in our markets remain bright.

The need for capital, the need for knowledge and the need for transparent business information are strong and enduring global trends that will keep us moving ahead for many years— and we remain intensely focused on anticipating and meeting these needs.

We are truly one company with one focus: providing our customers with the highest-quality data, analytics and information that they can use to help them succeed.

One Focus for Shareholders

The McGraw-Hill Companies’ focus on delivering essential information and insight for our customers, as well as our strong management of a portfolio of market-leading brands, has enabled us to produce a long record of consistent and sustainable earnings growth.

In 2007, we achieved another year of outstanding performance, despite challenging conditions:

» Diluted earnings per share increased 22.5% to $2.94 for the year;

» Revenue grew by 8.3% to $6.8 billion;

» Net income rose 14.9% to $1 billion.

Demonstrating management’s commitment to increasing
shareholder value, we returned $2.5 billion to shareholders in 2007 through a combination of share repurchases and
dividend payments.

» In January 2008, we announced a 7.3% increase in the annual cash dividend to $0.88, extending our record of raising the dividend every year since 1974. Over the past 35 years, we have raised our dividend at a compound annual rate of 10.3%.

» We repurchased 37 million shares during 2007 and finished the year with 322.4 million shares outstanding, a decrease of 31.6 million shares from year-end 2006.

» We began 2008 with 28 million shares remaining under the current share repurchase authorization, and have announced our intention to initially repurchase another 20 million shares, subject to market conditions.

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The Corporation celebrated several important milestones in 2007. Harold McGraw III commemorates the 10th anniversary of the partnership between Standard & Poor’s and the Taiwan Ratings Corporation (left); Dubuque, Iowa Mayor Roy Buol and Mr. McGraw cut the ribbon to dedicate the Corporation’s new state-of-the-art Higher Education facility (center); At an employee forum, Mr. McGraw celebrates the Corporation's top-10 designation as one of Working Mother magazine’s 100 Best Companies (right).

Since 1996, we have returned $8.4 billion to our shareholders through stock buybacks and dividends, a long-term record that underscores our commitment to you.

Focused on Solutions for Critical Issues

The disruption in the world’s credit markets has led to scrutiny of the actions and capabilities of many market participants, including credit ratings firms.

Standard & Poor’s is taking a leadership role in addressing the issues that arose in 2007 and has launched a series of important initiatives to enhance the ratings process in four key areas:

» Governance:	further ensuring the independence and integrity of our ratings opinions.
» Analytics:	enhancing the quality of our credit ratings.
» Information:	providing increased transparency to market participants.
» Education:	improving the public’s understanding of the ratings process and how ratings opinions should be used.

To develop these actions, we conducted a comprehensive assessment of S&P’s governance and analytical policies and practices. We also worked with financial market experts and engaged in dialogue with global market participants, regulators and legislators. S&P is currently implementing these enhancements and will continue to develop and introduce further measures as needed.

Our goal in taking these steps is not only to enhance S&P’s governance and controls, but also to minimize even the potential for perceived conflicts of interest, providing a greater

understanding of how S&P’s ratings are determined, what they mean, and how they are affected by market trends and events.

Credit ratings play a vital role in the capital formation process, and S&P has a long track record of helping investors assess credit risk. By strengthening the ratings process and increasing transparency, we will serve the public interest by building greater confidence in credit ratings for global markets.

Focusing on Another Year of Growth

Entering 2008, we expect to achieve another year of growth, although at a slower pace than in 2007. We anticipate that the economy and conditions in the credit markets will begin to improve later in the year, and we are ready to capitalize on all available opportunities.

To prepare us for the year ahead, we restructured certain business operations in the fourth quarter of 2007, consistent with our efforts to streamline operations and lower costs. The steps we took resulted in a 3% reduction in our workforce, and while the decision to reduce staff is never easy, we believe these steps will strengthen our efficiency.

Global expansion remains a priority. International revenue represented 26% of our total revenue in 2007. We expect that international revenue will continue to increase in the years ahead, with all three business segments contributing to our growing diversification.

McGraw-Hill Education had substantial accomplishments in 2007, and is well positioned for further growth in 2008.

In 2007, the School Education Group captured a market-leading 32% share of the state new adoption market. We achieved strong results across the K-5 and 6-12 markets, increasing revenue by 6.8% in an industry that grew 2.7%.

5

“We are truly one company with one focus: providing our customers with the highest-quality data, analytics and information that they can use to help them succeed.”

International expansion remains a driver of the Corporation’s strategic plans for growth. South Korean Prime Minister Han Duck-soo hosts Harold McGraw III to discuss the proposed free trade agreement with the United States (left); Mr. McGraw meets with Kamal Nath, India’s Minister of Commerce and Industry, to discuss U.S.-India relations (right).

In 2008, we are prepared to seize key opportunities across a healthy K-12 state new adoption market, which we expect will exceed 2007 by 10% to 15% and reach $900 to $950 million. We have strong programs in reading, math, art and music, science, health, business education, and technical and vocational education, all of which make significant contributions to our results each year. Additionally, our continued investments in digital learning products and services provide a competitive advantage at all levels of education.

The recently enacted federal education budget will keep all of No Child Left Behind’s major programs in place in 2008, including state accountability testing. Accountability is the driver behind the growth of our new formative assessment program called Acuity, which recently won an $80 million, five-year contract with New York City, as well as statewide contracts with Indiana and West Virginia.

Revenue in our Higher Education, Professional and International Group grew by 7.6% in 2007. We expect sales in the U.S. college market to grow by 3% to 4% in 2008 and believe we will outperform the market this year.

Digital products and services will be one of the keys. In higher education, where the demand for technology-based products continues to grow, we are capitalizing on the opportunities by finding new ways to connect our content with iPods, MP3 players and laptops. Not surprisingly, the demand for digital products is greatest among professionals, where our online subscription revenue continues to grow faster than conventional product sales as we expand our offerings in science, medicine and engineering.

The diversity and breadth of Standard & Poor’s offerings and a strong performance overseas helped produce solid growth in 2007, despite the decline in the U.S. structured finance market. In 2008, notwithstanding challenges in the credit markets, we expect to produce another year of growth by continuing to take advantage of opportunities inherent in the diversified portfolio we have built.

More than 40% of S&P’s ratings revenue came from international sources in 2007, and we are continuing to expand our global ratings business. S&P has recently extended its international ratings coverage in Central and Eastern Europe, the Persian Gulf, South Africa and Turkey. In 2008, S&P has already opened new offices in Dubai, Johannesburg and Tel Aviv.

In 2007, we continued to make solid progress in building ratings revenue from nontransaction sources, including surveillance fees, annual contracts and subscriptions. We also benefited from ratings that are not directly linked to the issuance of new public debt. These nontraditional ratings, including infrastructure financing, counterparty risk ratings and bank loan ratings, have grown to represent more than 25% of our ratings revenue.

As we look ahead, we remain confident about our prospects in the U.S. corporate and public finance markets in 2008, while expecting a more conservative approach to financing in the structured markets and reduced investor appetite for complex products.

We also expect continued strong growth in S&P’s data and information products and index services, which are unrelated to ratings and accounted for 26% of our Financial Services revenue in 2007.

6

“The need for capital, the need for knowledge and the need for transparent business information will continue to drive our business for many years to come.”

The ongoing success of the Corporation is a result of its employees’ dedication to meeting the needs of customers, markets and communities. Harold McGraw III presents a “CEO Most Valuable Partner” award to J.D. Power and Associates’ Tokyo office for outstanding community service (left); Mr. McGraw also recognizes recipients of the 2007 Excellence in Leadership Award for their contributions to the Corporation’s growth (center); Mr. McGraw welcomes employees’ children for the Corporation’s annual “Bring Your Child to Work Day” (right).

We introduced 52 new indices last year, and are expanding our index business with the goal of providing an index for every investment category. At the end of 2007, assets under management in exchange-traded funds based on S&P indices had grown to a record $235.3 billion, a 46% increase over 2006.

Capital IQ continues to attract new customers and expand its services in providing online data, tools and analytics. It had more than 2,200 customers at the end of 2007, up from 700 since the acquisition in 2004. Capital IQ’s expanded database now covers virtually all of the world’s public companies as well as the vast majority of private equity firms.

In Information & Media, we continue to make progress in providing our customers with higher-value information products and services that are directly integrated into their workflow and infrastructure. By providing industry-leading intelligence, benchmarks, analytics and solutions from strong, trusted brands, we continue to turn industry performance measures into information that enables business professionals and other consumers to make better decisions.

The demand for J.D. Power and Associates’ customer satisfaction measurements is strong and poised for further global expansion, not only within the automotive market, but also into new sectors like financial services. Pricing information from Platts, traditionally associated with oil markets, is increasingly the benchmark for other energy and commodities markets including gas, power and steel. We also continue to strengthen the McGraw-Hill Construction Network by enhancing analytics and providing forecasts to help firms anticipate emerging trends.

Finally, we expect our Broadcasting Group to get a boost in 2008 from political advertising. We also anticipate continued growth in online advertising revenue, primarily at BusinessWeek.com.

One Company Moving Forward

Looking ahead, the diversity and resilience of our portfolio of leading brands will continue to serve us well in 2008. Our portfolio is constructed to generate consistent revenue and earnings growth while reducing the volatility associated with capital market cycles. We believe our results demonstrated this in 2007 and we expect to continue this growth in the year ahead.

I am confident that the long-term prospects in our markets remain very strong. The need for capital, the need for knowledge and the need for transparent business information will continue to drive our business for many years to come.

It is my privilege to work with the talented men and women of The McGraw-Hill Companies, who, as one company with one focus, successfully carry out our mission each and every day. Our accomplishments in 2007 and the realization of our potential would not be possible without their hard work and dedication. I also want to thank our Board of Directors for its guidance, support and comittment to meeting the highest standards of shareholder responsibility.

Thank you for your continued support.

Sincerely,

Harold McGraw III
February 22, 2008

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The McGraw-Hill Companies At-a-Glance

The McGraw-Hill Companies is an acknowledged leader in providing essential information and expertise to financial markets, educational institutions, businesses and consumers around the globe. The Corporation offers an array of market-leading brands in three core areas—financial services, education and business information—all sharing the same focus: to provide individuals, markets and societies with the resources they need to grow and prosper in a rapidly changing world.
www.mcgraw-hill.com

McGraw-Hill Financial Services

Standard & Poor’s (S&P) is the world’s premier provider of investment research, market indices and credit ratings. With offices and affiliates in more than two dozen countries—and with revenue generated across 118 nations and territories—S&P is highly valued by investors and financial decision-makers everywhere for its analytical independence, its market expertise and its incisive thought leadership.

The global leader in credit ratings, in 2007, S&P Ratings Services published more than 510,000 new and revised ratings, and has issued ratings on debt securities in more than 100 countries. The total amount of new debt S&P rated in 2007 was approximately $5.5 trillion.

S&P is also known for its world-famous benchmark portfolio indices—the S&P 500 in the United States and, globally, the S&P 1200. More than $1.5 trillion in assets around the world are directly tied to S&P indices, and more than $5.0 trillion in assets are benchmarked to them.

As one of the world’s largest producers of independent research, S&P licenses its research to over 1,000 institutions, including 19 of the top securities firms, 13 of the top banks, and 11 of the top life insurance companies.

S&P has grown over the past several decades to become an integral part of the global economic infrastructure, with operations that provide essential information to nearly every segment of the global financial community. This ensures a strong demand for S&P’s indices, ratings and research, as capital markets around the world continue to grow and become even more interconnected.

www.standardandpoors.com

McGraw-Hill Education

McGraw-Hill Education (MHE) is one of the world’s leading and most respected providers of educational information, with offices in 33 countries and learning materials published in more than 40 languages. MHE resources are delivered across a range of platforms to aid students at all levels of learning— from pre-K to postgraduate and professional studies.

The School Education Group combines traditional print materials with digital resources and multimedia options that engage and empower students while providing teachers with the tools they need to measure individual student progress and optimize classroom time. Key brands include Glencoe/McGraw-Hill, Macmillan/McGraw-Hill, SRA/McGraw-Hill and Wright Group/McGraw-Hill.

Our Assessment and Reporting Group, a recognized leader in summative and formative assessments, is advancing the transformation from paper-and-pencil to digital modes of testing. Its leading brands are CTB/McGraw-Hill and The Grow Network/McGraw-Hill.

The Higher Education Group is also a leading high-tech innovator, providing its trusted educational content to college students and professionals around the globe in a growing range of media— including more than 1,000 e-books, individualized Web tutorials, traditional print and custom publishing materials, and downloads to MP3 players and other hand-held wireless devices.

The Professional Group provides essential information and expert guidance over digital and wireless platforms to help medical staff, engineers, business-people and other professionals stay current with advances in their fields.

www.mheducation.com

	McGraw-Hill Information & Media
	McGraw-Hill Information & Media (I&M) consists of two groups that offer the latest news and information.
	The Business-to-Business Group provides market intelligence and solutions to professionals in industries where staying competitive means staying current.
»	Platts, a leading energy information provider, supplies news, pricing benchmarks and value-added services to the global oil, natural gas, electricity and commodity markets. www.platts.com
»	J.D. Power and Associates is a recognized leader in independent marketing and consumer information. J.D. Power’s trusted customer satisfaction surveys are valued by companies around the world. www.jdpower.com
»	BusinessWeek distributes news and valuable insights to the global business community via its flagship BusinessWeek magazine and the TV program BusinessWeek Weekend, through its Web portal BusinessWeek.com, and via digital downloads to mobile devices. www.businessweek.com
»	McGraw-Hill Construction connects people, projects and products across the $4.6 trillion global construction industry. www.construction.com
»	Aviation Week provides the latest news and workflow tools to the $2 trillion global aviation, aerospace and defense industries through multimedia products. www.aviationweek.com
	The Broadcasting Group operates four ABC-affiliated television stations in the markets of Bakersfield (KERO), Denver (KMGH), Indianapolis (WRTV) and San Diego (KGTV); and five Spanish-language stations affiliated with Azteca America in California and Colorado.

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22

One Company
One Commitment

As part of Global Volunteer Day, employees of The Grow Network/McGraw-Hill helped revitalize a New York City school library with a local organization, Partnership with Children (left). The 2007 Harold W. McGraw, Jr. Prize in Education winners celebrated its 20th anniversary with Chairman, President and CEO Harold McGraw III and Chairman Emeritus Harold W. McGraw, Jr. From left, standing: Vivien Stewart, Asia Society Vice President for Education; Reynauld Smith, Eastern Senior High School (Washington, D.C.) history teacher; Harold McGraw III; and Lois B. DeFleur, Binghamton University, State University of New York President. Seated: Harold W. McGraw, Jr. (center). As part of the Corporation’s work with Junior Achievement International-China, high school students in Beijing joined with our employees for an upclose look at how their education can translate into successful business careers (right).

A focus on corporate citizenship that helps individuals and communities reach their potential

At The McGraw-Hill Companies, we are committed to serving the needs of the communities in which we live and work by offering our time and our financial and intellectual capital. Much of our support focuses on economic empowerment. Our funding established the Financial Literacy for the 21st Century, a professional development online resource, to inform and encourage teachers to incorporate financial literacy into their curriculum. Through our partnership with the Grameen Foundation, we sponsored a forum in Bolivia that provided best practices for microfinance lenders, who provide impoverished people around the world with small business loans. In addition, we donated more than $2.1 million in 2007 to nonprofit organizations through the Corporation’s Employee Giving Campaign.

Our Global Volunteer Day inspired 3,000 employees in 15 countries and 48 cities to spend a day serving their communities. Activities included preparing meals for people with HIV/AIDS in California, creating environmental awareness campaigns for school children in India, and assisting immigrants in New York with their search for jobs.

We also launched “green teams,” a grass roots employee effort, to establish and promote environmentally friendly, energy-efficient initiatives at our facilities. Currently there are 11 active “green teams” with more on the way.

In recognition of our employee volunteer efforts, The McGraw-Hill Companies was honored with the prestigious Award for Excellence in Workplace Volunteer Programs by the Points of Light Foundation. In July, former President George H. W. Bush presented the award to our Chairman, President and CEO Harold McGraw III.

We also remain focused on public policy issues that advance and support the Corporation’s interests, including helping officials in the United States and Europe understand how our credit ratings and price indices promote transparency in the world’s financial markets. As part of our advocacy for global education, in 2007 we supported extension of the No Child Left Behind Act, and worked with officials to advance the Bologna Process for making academic degree standards more consistent and compatible across the European university system. We also continued our work to build global consensus in favor of the economic benefits of trade liberalization, and we supported efforts to promote privacy and protect intellectual property rights of copyrighted works on the Internet.

Financial Contents 24 Management’s Discussion and Analysis 53 Consolidated Statement of Income 54 Consolidated Balance Sheet 56 Consolidated Statement of Cash Flows 57 Consolidated Statement of Shareholders’ Equity 58 Notes to Consolidated Financial Statements 76 Report of Management 77 Reports of Independent Registered Public Accounting Firm 79 Supplemental Financial Information 80 Eleven-Year Financial Review 82 Shareholder Information 83 Directors and Principal Executives Financial Charts Operating Profit by Segment Revenue by Segment (dollars in millions) (dollars in millions) $64 $1,020 $1,359 $985 $50 $931 $3,046 $61 $1,202 $1,019 $2,746 $2,401 $2,672 $2,706 $2,524 $410 $400 $329 05 06 07 05 06 07 2007 operating profit includes the effect of 2006 revenue includes the negative impact of restructuring charges at all segments and the the Sweets transformation, favorable developments divestiture of a mutual fund data business at with respect to certain disputed billings and the Financial Services. first quarter revenue related to the acquisition of J.D.Power and Associates (“JDPA”) of Information 2006 operating profit includes the effect & Media, with no comparable revenue in the first of adopting SFAS No. 123(R), the elimination of quarter of 2005. the Company’s restoration stock option program for all segments and restructuring charges at McGraw-Hill Education and Information & Media. Information & Media’s 2006 operating profit also includes the negative impact of the Sweets transformation and favorable developments with respect to certain disputed billings. Capital Expenditures by Segment Information & Media (dollars in millions) Financial Services $30 McGraw-Hill Education $69 $440 $24 $30 $48 $27 $350 $333 05 06 07 Includes investments in prepublication costs, purchases of property and equipment and additions to technology projects.

Management’s Discussion and Analysis

This discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this annual report on
Form 10-K.

     Certain of the statements below are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, any projections of future results of operations and cash flows are subject to substantial uncertainty. See “Safe Harbor” Statements Under the Private Securities Litigation Reform Act of 1995 on page 52.

Overview

The Consolidated and Segment Review that follows is incorporated herein by reference.

The McGraw-Hill Companies is a leading global information services provider serving the financial services, education and business information markets with information products and services. Other markets include energy; construction; aerospace and defense; broadcasting; and marketing information services. The operations consist of three business segments: McGraw-Hill Education, Financial Services and Information & Media.

     The McGraw-Hill Education segment is one of the premier global educational publishers. This segment consists of two operating groups: the School Education Group (“SEG”), serving the elementary and high school (“el-hi”) markets, and the Higher Education, Professional and International (“HPI”) Group, serving the college, professional, international and adult education markets.

     The School Education Group and the industry it serves are influenced strongly by the size and timing of state adoption opportunities and the availability of funds. The total state new adoption market increased from approximately $685 million in 2006 to approximately $820 million in 2007. According to the Association of American Publishers (“AAP”) statistics through December 2007, strong basal sales in the adoption states coupled with minimal growth in open territory basal sales was partially offset by a decline in supplemental sales across the industry.

     Revenue at the HPI Group is affected by enrollments, higher education funding and the number of courses available to students. The current U.S. college enrollment is projected to rise by 17% to 20.4 million between 2005 and 2016, according to the National Center for Educational Statistics (“NCES”). On-line education enrollments continue to grow faster than traditional enrollments, although at a slower rate than in prior years. It is estimated that there are currently 1.5 million students, or approximately 8% of all U.S. college students, whose attendance is via fully online programs. Foreign student enrollment at American graduate schools increased for the second year in a row. This 7% increase is the largest since 2002. State appropriations for higher education increased again in 2007, growing by 7.1% nationwide to $72.2 billion in 2007, according to the Center for Higher Education at Illinois State University. Internationally, enrollments in postsecondary schools are also increasing significantly, particularly in India and China.

     The Financial Services segment operates under the Standard & Poor’s (“S&P”) brand. This segment provides services to investors, corporations, governments, financial institutions, investment managers and advisors globally. The segment and the markets it serves are impacted by interest rates, the state of global economies, credit quality and investor confidence. The Financial Services segment consists of two operating groups: Credit Market Services and Investment Services.

     Credit Market Services, which provides independent global credit ratings and risk evaluations, was favorably impacted during 2007 by the current trend of the disintermediation of banks and the increased use of securitization as a source of funding. During the first half of 2007, Credit Market Services was favorably impacted by the continued low interest rate environment, increased globalization of the capital markets and increased merger and acquisition activity. As a result, corporate debt issuance in 2007 was robust. Issuance of structured finance securities (i.e., collateralized debt obligations, and mortgage-backed securities for commercial and residential mortgages) were strong during the first half of 2007, but weakened significantly during the second half of the year. The outlook for 2008 is adversely impacted by the current conditions in the credit markets. The significant weakening of structured finance issuance experienced during the second half of 2007, particularly in the United States, is expected to continue into 2008. In addition, the slowing of merger and acquisition activity during the second half of 2007 may continue into 2008 and could adversely impact corporate bond issuance.

     Investment Services provides comprehensive value-added financial data, information, investment indices and research. During 2007, Investment Services was favorably impacted by increased customer demand for both company data and securities data. A record level of assets under management in exchange-traded funds based on S&P indices and heavy trading volume of derivative contracts based on S&P indices for which S&P is paid fees were strong contributors to growth in Investment Services. Investment Services is well positioned heading into 2008, as these favorable trends are expected to continue.

     The Information & Media segment includes business, professional and broadcast media, offering information, insight and analysis; and consists of two operating groups: the Business-to-Business Group (including such brands as BusinessWeek, J.D. Power and Associates, McGraw-Hill Construction, Platts and Aviation Week) and the Broadcasting Group, which operates nine television stations (four ABC affiliates and five Azteca America affiliated stations). The segment’s business is driven by the need for information and transparency in a variety of industries, and to a lesser extent, by advertising revenue, which is dependent on continued economic strength in the United States.

     Management analyzes the performance of the segments by using operating profit as a key measure, which is defined as income from operations before taxes on income, interest expense and corporate expense.

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     The following is a summary of significant financial items during 2007, which are discussed in more detail throughout this Management’s Discussion and Analysis:

• Revenue and income from operations increased 8.3% and 17.2%, respectively, in 2007. Results from operations improved on the strength of the Financial Services segment, primarily due to the performance of corporate (corporate finance and financial services) and government ratings, and data and information services, as well as the McGraw-Hill Education segment, driven by an increase in the state new adoption market and growth in U.S. and international sales of higher education titles, growth in professional and reference products and expansion internationally. Foreign exchange rates had a $78.3 million favorable impact on revenue but an immaterial impact on operating profit.

• Diluted earnings per share increased 22.5% to $2.94 from $2.40 in 2006. Diluted earnings per share in 2007 include the impact of restructuring charges, a gain on the sale of the Company’s mutual fund data business, as well as the impact of the Sweets transformation.

• In 2007, the Company began implementing a restructuring plan related to a limited number of business operations to enhance the Company’s long-term growth prospects and incurred a restructuring charge of $43.7 million pre-tax ($27.3 million after-tax, or $0.08 per diluted share). In 2006, the Company restructured a limited number of business operations to enhance the Company’s long-term growth prospects, incurring a 2006 restructuring charge of $31.5 million pre-tax ($19.8 million after-tax, or $0.06 per diluted share).

• On March 16, 2007, the Company sold its mutual fund data business, which was part of the Financial Services segment. The sale resulted in a $17.3 million pre-tax gain ($10.3 million after-tax, or $0.03 per diluted share), recorded as other income and had an immaterial impact on the comparison of the segment’s operating profit.

• During 2006, the Sweets building products transitioned from a primarily print catalog offering to an integrated online service. In 2006, revenue and operating profit of $23.8 million and $21.1 million, respectively, of the bundled product were deferred and recognized ratably over the service period, primarily 2007.

• As a result of the Financial Accounting Standards Board (“FASB”) Statement No. 123(R), “Share-Based Payment,” (“SFAS No. 123(R)”) in 2006, the Company incurred stock-based compensation expense of $136.2 million ($85.5 million after-tax, or $0.23 per diluted share), including a one-time charge of $23.8 million ($14.9 million after-tax, or $0.04 per diluted share) from the elimination of the Company’s restoration stock option program. The Company’s Board of Directors voted to terminate the restoration feature of its stock option program effective March 30, 2006.

• Cash flow provided from operations was $1.7 billion for 2007. Cash levels increased 12.1% from the prior period to $396.1 million. During 2007, the Company repurchased 37 million shares of common stock for $2.2 billion under its share repurchase program, paid dividends of $277.7 million and made capital

expenditures of $545.2 million. Capital expenditures include prepublication costs, property and equipment and additions to technology projects.

Outlook

In 2008, the McGraw-Hill Education segment revenue will be fueled by a robust state new adoption market which is expected to grow 10% to 15% to between $900 million and $950 million. Open territory sales, which have remained flat over the past two years, are expected to increase modestly owing to pent-up demand for new instructional materials. In the testing market, the Company expects continued growth driven by state-specific custom assessments as mandated by the No Child Left Behind Act which will continue intact. In the 2007-2008 school year, science joined reading and math as a tested subject. In addition, the Company expects continued growth in higher education both in the U.S. and abroad. The higher education space will continue to be influenced by the growth in online course programs. The McGraw-Hill Education segment will experience increased expense as additional investments are made in order to take advantage of the increased opportunities, particularly in the el-hi marketplace in 2008 and beyond, and to take advantage of the increased digital opportunities in the higher education space. In 2008, prepublication amortization expense is expected to increase as the Company makes investments to take advantage of the significant adoption and open territory opportunities in key states for 2008 and beyond. The McGraw-Hill Education segment will also realize efficiencies from the 2007 and 2006 restructuring initiatives to help mitigate the impact of these increased investments.

     The Financial Services segment faces challenging comparisons in the first half of 2008 as a result of the segment’s strong performance during the first half of 2007. Credit Market Services will be unfavorably impacted by the continued weakness in structured finance issuance that is expected to continue at least through the first half of 2008. Mitigating these impacts are the benefits from continued global expansion and product diversification as well as a favorable interest rate environment and increased capital spending. The growth in Investment Services revenue should continue in 2008.

     In 2008, the Information & Media segment will continue to transform itself, placing greater emphasis on Web-based delivery and digital asset management, which offer new opportunities to deliver premium services. J.D. Power and Associates will continue to expand its global automotive business into the rapidly growing Asia-Pacific markets. In the construction market, transformation of digital and Web-based products will continue in order to better serve customers in the commercial construction markets. The ongoing volatility of the oil and natural gas markets is expected to increase customer demand for news and pricing products. The segment will also continue to invest in BusinessWeek.com during 2008. The Broadcasting Group will continue to pursue digital revenue opportunities as well as growth in the Hispanic markets that it serves through its Azteca America affiliated stations. Higher political advertising revenues are expected from the presidential election year.

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Management’s Discussion and Analysis
Outlook (continued)

     In 2008, the Company plans to continue its focus on the following strategies:

• Leveraging existing capabilities to create new services.

• Continuing to make selective acquisitions that complement the Company’s existing business capabilities.

• Expanding and refining the use of technology in all segments to improve performance, market penetration and productivity.

     There can be no assurance that the Company will achieve success in implementing any one or more of these strategies. The following factors could unfavorably impact operating results in 2008:

• Lower educational funding as a result of budget concerns.

• Prolonged difficulties in the credit markets or a significant economic recession.

• A change in the regulatory environment affecting the Company’s businesses, including educational spending or the ratings process.

Disclosure Controls

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

     As of December 31, 2007, an evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934). Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2007.

Management’s Annual Report on Internal Control Over Financial Reporting

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) and as defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934, management is required to provide the following report on the Company’s internal control over financial reporting:

1.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

2.

The Company’s management has evaluated the system of internal control using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Management has selected the COSO framework for its evaluation as it is a control framework, recognized by the SEC and the Public Company Accounting Oversight Board, that is free from bias, permits reasonably consistent qualitative and quantitative measurement of the Company’s internal controls, is sufficiently

	complete so that relevant controls are not omitted and is relevant to an evaluation of internal controls over financial reporting.
3.	Based on management’s evaluation under this framework, management has concluded that the Company’s internal controls over financial reporting were effective as of December 31, 2007. There are no material weaknesses in the Company’s internal control over financial reporting that have been identified by management.
4.	The Company’s independent registered public accounting firm, Ernst & Young LLP, has audited the consolidated financial statements of the Company for the year ended December 31, 2007, and has issued its reports on the financial statements and the effectiveness of internal controls over financial reporting. These reports are located on pages 77 and 78 of the 2007 Annual Report to Shareholders.

Other Matters

There have been no changes in the Company’s internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.

     On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, allowance for doubtful accounts and sales returns, prepublication costs, valuation of inventories, valuation of long-lived assets, goodwill and other intangible assets, pension plans, income taxes and stock-based compensation. The Company bases its estimates on historical experience, current developments and on various other assumptions that it believes to be reasonable under these circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.

     Management considers an accounting estimate to be critical if it required assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates could have a material effect on the Company’s results of operations.

     Management has discussed the development and selection of the Company’s critical accounting estimates with the Audit Committee of the Company’s Board of Directors. The Audit Committee has reviewed the Company’s disclosure relating to them in this Management’s Discussion and Analysis.

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     The Company believes the following critical accounting policies require it to make significant judgments and estimates in the preparation of its consolidated financial statements:

     Revenue recognition. Revenue is recognized when goods are shipped to customers or services are rendered. Units whose revenue is principally from service contracts record revenue as earned. The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are performed, fees are fixed or determinable and collectibility is reasonably assured. Revenue relating to products that provide for more than one deliverable is recognized based upon the relative fair value to the customer of each deliverable as each deliverable is provided. Revenue relating to agreements that provide for more than one service is recognized based upon the relative fair value to the customer of each service component and as each component is earned. If the fair value to the customer for each service is not objectively determinable, revenue is recorded as unearned and recognized ratably over the service period. Fair value is determined for each service component through a bifurcation analysis that relies upon the pricing of similar cash arrangements that are not part of the multi-element arrangement. Advertising revenue is recognized when the page is run or the spot is aired. Subscription income is recognized over the related subscription period.

     Product revenue consists of the revenue from the McGraw-Hill Education and Information & Media segments, and represents educational products, primarily books, magazine circulation revenue and syndicated study products. Service revenue represents the revenue from the Financial Services segment; the remaining revenue of the Information & Media segment, primarily related to information-related services and advertising; and service assessment contracts for the McGraw-Hill Education segment.

     For the years ended December 31, 2007, 2006 and 2005, no significant changes have been made to the underlying assumptions related to estimates of revenue or the methodologies applied. These assumptions are not expected to significantly change in 2008.

     Allowance for doubtful accounts and sales returns. The accounts receivable reserve methodology is based on historical trends and a review of outstanding balances. The impact on operating profit for a one percentage point change in the allowance for doubtful accounts is $14.6 million. A significant estimate in the McGraw-Hill Education segment, and particularly within the Higher Education, Professional and International Group (“HPI”), is the allowance for sales returns, which is based on the historical rate of return and current market conditions. Should the estimate for the HPI Group vary by one percentage point, it would have an approximate $11.3 million impact on operating profit.

     For the years ended December 31, 2007, 2006 and 2005, management made no material changes in its assumptions regarding the determination of the allowance for doubtful accounts and sales returns. These assumptions are not expected to significantly change in 2008.

     Prepublication costs. Prepublication costs, principally outside preparation costs, are amortized from the year of publication over their estimated useful lives, one to five years, using either an

accelerated or straight-line method. The majority of the programs are amortized using an accelerated methodology. The Company periodically evaluates the amortization methods, rates, remaining lives and recoverability of such costs, which are sometimes dependent upon program acceptance by state adoption authorities, based on expected undiscounted cash flows.

     For the year ended December 31, 2007, prepublication amortization expense was $240.2 million, representing 9.5% of consolidated operating-related expenses and 10.4% of the McGraw-Hill Education segment’s total expenses. If the annual prepublication amortization varied by one percentage point, the consolidated amortization expense would have changed by approximately $2.4 million.

     For the years ended December 31, 2007, 2006 and 2005, no significant changes have been made to the amortization rates applied to prepublication costs, the underlying assumptions related to estimates of amortization or the methodology applied. These assumptions are not expected to significantly change in 2008.

     Valuation of inventories. Inventories are stated at the lower of cost (first-in, first-out) or market. A significant estimate in the McGraw-Hill Education segment is the reserve for inventory obsolescence. The reserve is based upon management’s assessment of the marketplace of products in demand as compared to the number of units currently on hand. Should the estimate for inventory obsolescence for the Company vary by one percentage point, it would have an approximate $4.6 million impact on operating profit.

     For the years ended December 31, 2007, 2006 and 2005, management made no material changes in its assumptions regarding the determination of the valuation of inventories. These assumptions are not expected to significantly change in 2008.

     Intangibles, goodwill and other long-lived assets. The Company reviews long-lived assets, including intangible assets, and goodwill for impairment annually, or sooner whenever events or changes in circumstances indicate the carrying amounts of such assets may not be recoverable. Upon such an occurrence, recoverability of these assets is determined as follows: Intangibles with indefinite lives are tested by comparing their carrying amounts to fair value. Impairment within goodwill is tested using a two-step method. The first step is to compare the fair value of the reporting unit to its book value, including goodwill. If the fair value of the unit is less than its book value, the second step is applied. The second step requires the Company to determine the implied fair value of goodwill by deducting the fair value of the reporting unit’s net assets from the fair value of the reporting unit. If the book value of goodwill is greater than its implied fair value, the Company writes down goodwill to its implied fair value. For long-lived assets that are held for use, the Company compares the forecasted undiscounted net cash flows to the carrying amount. If the long-lived asset is determined to be unable to recover the carrying amount, then it is written down to fair value. For long-lived assets held for sale, assets are written down to fair value less costs to sell.

27

Management’s Discussion and Analysis
Critical Accounting Policies and Estimates (continued)

     Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets. In estimating future cash flows for the Company’s businesses, internal budgets are used. The budgets are based on recent sales data for existing products, planned timing of new product launches or capital projects and customer commitments related to new and existing products. These budgets also include assumptions of future production volumes and pricing of products.

     The Company performed its impairment assessment on long-lived assets, including intangible assets and goodwill, in accordance with the methods prescribed above. The Company concluded that no impairment existed in 2007.

     Retirement plans and postretirement healthcare and other benefits. The Company’s pension plans and postretirement benefit plans are accounted for using actuarial valuations required by Statement of Financial Accounting Standards (“SFAS”) No. 87, “Employers’ Accounting for Pensions,” and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” The Company also applies the recognition and disclosure provisions of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of SFAS No. 87, 88, 106 and 132(R),” (“SFAS No. 158”), which requires the Company to recognize the funded status of its pension and other postretirement benefit plans in the consolidated balance sheet.

     The Company’s employee pension and other postretirement benefit costs and obligations are dependent on assumptions concerning the outcome of future events and circumstances, including compensation increases, long-term return on pension plan assets, healthcare cost trends, discount rates and other factors. In determining such assumptions, the Company consults with outside actuaries and other advisors where deemed appropriate. In accordance with relevant accounting standards, if actual results differ from the Company’s assumptions, such differences are deferred and amortized over the estimated future working life of the plan participants. While the Company believes that the assumptions used in these calculations are reasonable, differences in actual experience or changes in assumptions could affect the expense and liabilities related to the Company’s pension and other postretirement benefits.

     The following is a discussion of some significant assumptions that the Company makes in determining costs and obligations for pension and other postretirement benefits:

• Discount rate assumptions are based on current yields on high-grade corporate long-term bonds.

• Salary growth assumptions are based on the Company’s long-term actual experience and future outlook.

• Healthcare cost trend assumptions are based on historical market data, the near-term outlook and an assessment of likely long-term trends.

• Long-term return on pension plan assets is based on a calculated market-related value of assets, which recognizes changes in market value over five years.

     The Company’s discount rate and return on asset assumptions used to determine the net periodic pension cost on its U.S. retirement plans are as follows:

January 1	2008			2007			2006
Discount rate		6.25	%		5.90	%		5.65	%
Return on asset assumption		8.00	%		8.00	%		8.00	%

     Pension expense for 2007 decreased $2.2 million pre-tax primarily due to changes in assumptions and return on plan assets for both domestic and foreign pension plans. Effective January 1, 2008, the Company changed the discount rate for its qualified retirement plans. The effect of these changes on 2008 earnings per share is expected to be immaterial.

     The Company’s discount rate and initial health care cost trend rate used to determine the net periodic postretirement benefit cost on its U.S. retirement plans are as follows:

January 1	2008			2007			2006
Discount rate		6.00	%		5.75	%		5.50	%
Healthcare cost trend rate		8.50	%		9.00	%		9.00	%

     Income taxes. The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.

     Management’s judgment is required in determining the Company’s provision for income taxes and deferred tax assets and liabilities. In determining the need for a valuation allowance, the historical and projected financial performance of the operation that is recording a net deferred tax asset is considered along with any other pertinent information.

     During 2007, the Company’s annual effective tax rate increased from 37.2% to 37.5% due to minor increases in state taxes.

     The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions, and the Company is routinely under audit by many different tax authorities. Management believes that its accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. It is possible that examinations will be settled prior to December 31, 2008. If any of these tax audit settlements do occur within that period the Company would make any necessary adjustments to the accrual for unrecognized tax benefits. Until formal resolutions are reached between the Company and the tax authorities, the

28

determination of a possible audit settlement range with respect to the impact on unrecognized tax benefits is not practicable. On the basis of present information, it is the opinion of the Company’s management that any assessments resulting from the current audits will not have a material effect on the Company’s consolidated financial statements.

     Effective January 1, 2007, the Company adopted the provisions of the Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109,” (“FIN 48”). FIN 48 clarifies the accounting and reporting for uncertainties in income taxes and prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. As a result of the implementation of FIN 48, the Company recognized an increase in the liability for unrecognized tax benefits of approximately $5.2 million, which was accounted for as a reduction to the January 1, 2007 balance of retained income. The total amount of federal, state and local, and foreign unrecognized tax benefits as of December 31, 2007 and January 1, 2007 were $45.8 million and $75.1 million, respectively, exclusive of interest and penalties. Included in the balance at December 31, 2007 and January 1, 2007, are $3.9 million and $13.5 million, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. In addition to the unrecognized tax benefits, as of December 31, 2007 and January 1, 2007, the Company had $11.9 million and $12.4 million, respectively, of accrued interest and penalties associated with uncertain tax positions.

     For the years ended December 31, 2007, 2006 and 2005, management made no material changes in its assumptions regarding the determination of the provision for income taxes. However, certain events could occur that would materially affect the Company’s estimates and assumptions regarding deferred taxes. Changes in current tax laws and applicable enacted tax rates could affect the valuation of deferred tax assets and liabilities, thereby impacting the Company’s income tax provision.

     Stock-based Compensation. Effective January 1, 2006, the Company adopted SFAS No. 123(R), applying the modified prospective method, under which prior periods are not revised for comparative purposes. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period. Prior to the adoption of SFAS No. 123(R), the Company applied the provisions of the Accounting Principles Board Opinion

No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock-based awards and accordingly, recognized no compensation cost for its stock plans other than for its restricted stock performance and non-performance awards.

     Under the modified prospective method, SFAS No. 123(R) applies to new awards and to the unvested portion of awards that were outstanding as of December 31, 2005 as well as awards that were outstanding as of December 31, 2005 that are subsequently modified, repurchased or canceled. Compensation expense recognized during the years ended December 31, 2007 and 2006 includes the expense for all share-based payments granted prior to, but not yet vested as of December 31, 2005, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), and the expense for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No.123(R).

     Stock-based compensation expense for the years ended December 31, 2007, 2006 and 2005 was $124.7 million, $136.2 million and $51.1 million, respectively.

     In 2006, the Company incurred a one-time charge of $23.8 million ($14.9 million after-tax, or $0.04 per diluted share) from the elimination of the Company’s restoration stock option program. The Company’s Board of Directors voted to terminate the restoration feature of its stock option program effective March 30, 2006. Also included in stock-based compensation expense is restricted performance stock expense of $94.2 million ($58.8 million after-tax, or $0.17 per diluted share) in 2007, $66.0 million ($41.5 million after-tax, or $0.11 per diluted share) in 2006 and $51.1 million ($32.1 million after-tax, or $0.08 per diluted share) in 2005. The Company has reshaped its long-term incentive compensation program to emphasize the use of restricted performance stock over employee stock options (see Note 8 to the consolidated financial statements).

     The Company uses a lattice-based option-pricing model to estimate the fair value of options granted in 2007, 2006 and 2005. Options granted prior to January 1, 2005 were valued using the Black-Scholes model. The following assumptions were used in valuing the options granted during the years ended December 31, 2007, 2006 and 2005:

	2007			2006			2005
Risk-free average interest rate		3.60–6.28	%		4.14–6.07	%		1.99–4.64	%
Dividend yield		1.2–1.7	%		1.1–1.5	%		1.6	%
Volatility		14–22	%		12–22	%		16–24	%
Expected life (years)		7.0–7.2			6.7–7.1			0.5–6.8
Weighted-average grant- date fair value	$	15.80		$	14.15		$	8.90

     Because lattice-based option-pricing models incorporate ranges of assumptions, those ranges are disclosed. These assumptions are based on multiple factors, including historical exercise patterns,

29

Management’s Discussion and Analysis
Critical Accounting Policies and Estimates (continued)

post-vesting termination rates, expected future exercise patterns and the expected volatility of the Company’s stock price. The risk-free interest rate is the imputed forward rate based on the U.S. Treasury yield at the date of grant. The Company uses the historical volatility of the Company’s stock price over the expected term of the options to estimate the expected volatility. The expected term of options granted is derived from the output of the lattice model and represents the period of time that options granted are expected to be outstanding.

Results of Operations — Consolidated Review

Revenue and Operating Profit

(in millions)	2007(a)			2006(b)			2005(c)
Revenue	$	6,772.3		$	6,255.1		$	6,003.6
% increase		8.3	%		4.2	%		14.3	%
Operating profit*	$	1,822.9		$	1,581.3		$	1,490.0
% increase		15.3	%		6.1	%		14.7	%
% operating margin		27	%		25	%		25	%

*	Operating profit is income from operations before taxes on income, interest expense and corporate expense.
(a)	2007 operating profit includes pre-tax gains relating to divestitures and a pre-tax charge related to restructuring.
(b)	2006 operating profit includes a pre-tax charge related to the effect of adopting SFAS No. 123(R), the elimination of the Company’s restoration stock option program and a pre-tax charge related to restructuring.
(c)	2005 operating profit includes a pre-tax charge related to restructuring.

     The Segment Review that follows is incorporated herein by reference.

2007 Compared with 2006

In 2007 the Company achieved growth in revenue and operating profit of 8.3% and 15.3%, respectively. The increase in revenue is primarily attributable to growth in the Financial Services and McGraw-Hill Education segments. In 2007, foreign exchange rate fluctuations positively impacted revenue growth by $78.3 million but had an immaterial impact on operating profit growth. The Company generally has naturally hedged positions in most countries. However, in 2007, the Company generated a portion of its revenue in foreign countries in U.S. dollars, where most of the expenses are denominated in local currencies, which generally strengthened against the dollar. In 2006, foreign exchange contributed $12.7 million to revenue and had an immaterial impact on operating profit.

     Product revenue increased 6.6% in 2007, due primarily to a stronger state adoption year in K-12 for the McGraw-Hill Education segment as well as growth in U.S. and international higher education sales. The product margin increased to 17.6% in 2007 from 16.5% in 2006. Product revenue consists of revenue from the McGraw-Hill Education and Information & Media segments and represents educational products, primarily books, magazine circulation revenue and syndicated study product revenue.

     Service revenue increased 9.3% in 2007, due primarily to a 10.9% increase in the Financial Services segment despite challenging

market conditions in the second half of 2007 in the credit markets which adversely impacted structured finance. Service revenue consists of revenue of the Financial Services segment and the remaining revenue in Information & Media and McGraw-Hill Education’s service contracts for assessments. The revenue represents information-related services, advertising and service contracts for assessments. The Financial Services segment’s increase in revenue was driven by corporate (industrial and financial services) and government finance ratings and investment services. Strength in Investment Services was driven by demand for both the Capital IQ and index products. The service margin increased to 32.4% in 2007 from 30.9% in 2006. In Financial Services, issuance levels deteriorated across all asset classes and regions during the latter part of the year because of the current credit market conditions. The impact on U.S. residential mortgage-backed securities (“RMBS”) and U.S. collateralized debt obligations (“CDOs”) had the greatest impact on structured finance ratings. The Company expects the current market conditions and global issuance levels to persist through the first half of 2008 versus the prior year, primarily in structured finance. The outlook for U.S. RMBS and CDOs as well as other asset classes is dependent upon many factors including the general condition of the economy, interest rates, credit quality and spreads, and the level of liquidity in the financial markets.

     During 2007, no significant acquisitions were made.

     On March 16, 2007, the Company sold its mutual fund data business, which was part of the Financial Services segment. The sale resulted in a $17.3 million pre-tax gain ($10.3 million after-tax, or $0.03 per diluted share), recorded as other income. The divestiture of the mutual fund data business is consistent with the Financial Services segment’s strategy of directing resources to those businesses that have the best opportunities to achieve both significant financial growth and market leadership. The divestiture will enable the Financial Services segment to focus on its core business of providing independent research, ratings, data, indices and portfolio services. The impact of this divestiture on comparability of results is immaterial.

     During 2006, no significant acquisitions or divestitures were made.

     During 2006, the Sweets building products database was integrated into the McGraw-Hill Construction Network, providing architects, engineers and contractors a powerful new search function for finding, comparing, selecting and purchasing products. Although it was anticipated that Sweets would move from a primarily print catalog to an online service, customers contracted to purchase a bundled print and integrated online product. Historically, Sweets print catalog sales were recognized in the fourth quarter of each year, when catalogs were delivered to our customers. Online service revenue is recognized as service is provided. The impact of recognizing sales of the bundled product ratably over the service period negatively impacted 2006 revenue by $23.8 million and operating profit by $21.1 million, with the deferral recognized in 2007.

     In the fourth quarter of 2007, the Company restructured a limited number of business operations to enhance the Company’s

30

long-term growth prospects. The Company incurred a 2007 restructuring charge of $43.7 million pre-tax ($27.3 million after-tax, or $0.08 per diluted share), which consisted mostly of severance costs related to a workforce reduction of approximately 600 positions across the Company.

     In the third and fourth quarters of 2006, the Company also restructured a limited number of business operations to enhance the Company’s long-term growth prospects and incurred a 2006 restructuring charge of $31.5 million pre-tax ($19.8 million after-tax, or $0.06 per diluted share), which consisted primarily of vacant facilities and employee severance costs related to the reduction of approximately 700 positions in the McGraw-Hill Education segment, Information & Media segment and Corporate.

     In 2006, the Company incurred a one-time charge of $23.8 million pre-tax ($14.9 million after-tax or $0.04 per diluted share) from the elimination of the Company’s restoration stock option program. The Company’s Board of Directors voted to terminate the restoration feature of its stock option program effective March 30, 2006.

2006 Compared with 2005

In 2006, the Company achieved growth in revenue and income from operations. The results are primarily attributable to growth in the Financial Services segment and the impact of the April 1, 2005 acquisition of J.D. Power and Associates, which contributed $43.8 million in revenue in the first quarter of 2006 and had no material impact on operating profit. In 2006, foreign exchange rates contributed $12.7 million to revenue and had no material impact on operating profit. In 2005, foreign exchange rates contributed $6.0 million to revenue and had no material impact on operating profit.

     During 2006, the Sweets building products database was integrated into the McGraw-Hill Construction Network, providing architects, engineers and contractors a powerful new search function for finding, comparing, selecting and purchasing products. Although it was anticipated that Sweets would move from a primarily print catalog to an online service, customers contracted to purchase a bundled print and integrated online product. Historically, Sweets print catalog sales were recognized in the fourth quarter of each year, when catalogs were delivered to its customers. Online service revenue is recognized as service is provided. The impact of recognizing sales of the bundled product ratably over the service period negatively impacted 2006 revenue by $23.8 million and operating profit by $21.1 million with the deferred revenue and corresponding operating profit recognized in 2007.

     Effective January 2006, the Company adopted the provisions of, and accounts for stock-based compensation in accordance with, SFAS No. 123(R). The Company has applied the modified-prospective method, under which prior periods are not revised for comparability purposes. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period. The valuation provisions of SFAS No. 123(R)

apply to new grants and to the non-vested portions of grants that were outstanding as of the effective date as well as grants that were outstanding as of the effective date that are subsequently modified. Estimated compensation for grants that were outstanding as of the effective date are recognized over the remaining service period using the compensation cost estimated for the SFAS No. 123 pro forma disclosures. Prior to the adoption of SFAS No. 123(R), the Company applied the provisions prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock-based awards and, accordingly, recognized no compensation cost for its stock option plans other than for its restricted stock performance and non-performance awards.

     For the year ended 2006, the Company incurred stock-based compensation expense of $136.2 million pre-tax ($85.5 million after-tax, or $0.23 per diluted share), which is primarily related to the adoption of SFAS No. 123(R) and includes a one-time charge of $23.8 million pre-tax ($14.9 million after-tax, or $0.04 per diluted share) from the elimination of the Company’s restoration stock option program. The Company’s Board of Directors voted to terminate the restoration feature of its stock option program effective March 30, 2006. Also included in 2006 stock-based compensation expense is restricted performance stock expense of $66.0 million pre-tax ($41.5 million after-tax, or $0.11 per diluted share) compared with $51.1 million pre-tax ($32.1 million after-tax, or $0.08 per diluted share) in the same period of 2005. Additionally, the Company has reshaped its long-term incentive compensation program to emphasize the use of restricted performance stock over employee stock options.

     In the third and fourth quarters of 2006, the Company restructured a limited number of business operations to enhance the Company’s long-term growth prospects. The restructuring will strengthen key capabilities, lower costs and allow the Company to direct resources to areas with the greatest potential for continued growth in the years ahead. The Company incurred a 2006 restructuring charge of $31.5 million pre-tax ($19.8 million after-tax, or $0.06 per diluted share), which consisted primarily of vacant facilities and employee severance costs related to the reduction of approximately 700 positions in the McGraw-Hill Education segment, Information & Media segment and Corporate.

     During the fourth quarter of 2005, the Company recorded a restructuring charge of $23.2 million pre-tax, which consisted primarily of employee severance costs related to the reduction of positions across the Company.

     During 2006 no significant acquisitions or divestitures were made.

     During 2005, the Company made several acquisitions as follows:

• CRISIL Limited: The Company acquired majority ownership of CRISIL Limited (“CRISIL”), a leading provider of credit ratings, financial news and risk and policy advisory services in India on June 1, 2005. CRISIL is now part of the Financial Services segment.

31

Management’s Discussion and Analysis
Results of Operations — Consolidated Review (continued)

• Vista Research, Inc: The Company acquired Vista Research, Inc., a leading provider of primary research on April 1, 2005. Vista Research, Inc. is now part of the Financial Services segment.

• J.D. Power and Associates (“JDPA”): The Company acquired JDPA, a leading provider of marketing information services for the global automotive industry that has established a strong and growing presence in several other important industries, including finance and insurance, healthcare, home building, telecommunications and energy, on April 1, 2005. JDPA is now part of the Information & Media segment.

     In 2005, the Company sold its Healthcare Information Group, a unit of the Information & Media segment. The Healthcare Information Group consisted of several magazines including: The Physician and Sportsmedicine, Postgraduate Medicine and Healthcare Informatics, as well as a variety of healthcare information programs that serve the medical market. The Company recognized a pre-tax loss of $5.5 million ($3.3 million after-tax, or less than 1 cent per diluted share).

     In 2005, the Company sold its Corporate Value Consulting (“CVC”) business, the valuation services unit of the Financial Services segment. This business was selected for divestiture as it no longer fit with the Company’s strategic plans. The divestiture of CVC enabled the Financial Services segment to focus on its core business of providing independent research, ratings, data indices and portfolio services. The Company recognized a pre-tax gain of $6.8 million ($4.2 million after-tax, or $0.01 per diluted share).

     Revenue from McGraw-Hill Education’s service contracts for assessments of $214.4 million and $246.1 million in 2006 and 2005, respectively, have been reclassified from product to service as a result of the service component becoming more significant and inseparable from the deliverable.

     Product revenue decreased 3.7% in 2006, due to a weaker state new adoption market for the McGraw-Hill Education segment. Product revenue consists of the revenue from the McGraw-Hill Education and Information & Media segments and represents educational products, primarily books, magazine circulation revenue and syndicated study product revenue.

     Service revenue increased 10.0% in 2006, primarily due to increased revenue in the Financial Services segment, which increased 14.4% or $345.6 million. Financial Services revenue increased due to the strong performance of structured finance and corporate (industrial and financial services) and government ratings. The full year impact of the 2005 CRISIL Limited and Vista Research, Inc. acquisitions represented approximately 14.0% of the growth in the service revenue. Also contributing to growth was the acquisition of JDPA, which represented 10.6% of the growth in service revenue. Service revenue represents the revenue from the Financial Services segment; the remaining revenue of the Information & Media segment, primarily related to information-related services and advertising; and service assessment contracts for the McGraw-Hill Education segment.

Operating Profit and Margin

The following table sets forth information about the Company’s operating profit and operating margin by segment:

2007 Compared with 2006

	2007								2006
	Operating		%			%			Operating		%			%
(in millions)	Profit(a)		Total			Margin			Profit(b)		Total			Margin
McGraw-Hill Education	$	400.0		22	%		15	%	$	329.1		21	%		13	%
Financial Services		1,359.4		75	%		45	%		1,202.3		76	%		44	%
Information & Media		63.5		3	%		6	%		49.9		3	%		5	%
Total	$	1,822.9		100	%		27	%	$	1,581.3		100	%		25	%

(a)	2007 operating profit includes a pre-tax charge related to restructuring and a pre-tax gain on the sale of the Company’s mutual fund data business.
(b)	2006 operating profit includes a charge primarily related to the effect of adopting SFAS No. 123(R), the elimination of the Company’s restoration stock option program and a pre-tax charge related to restructuring.

     As demonstrated by the preceding table, operating margin percentages vary by operating segment and the percentage contribution to operating profit by each operating segment varies from year to year.

     The 2007 operating profit and operating margin percentages increased across all segments reflecting growing revenues and efficiency improvements.

     The McGraw-Hill Education (“MHE”) segment’s 2007 operating profit and margin increased by 21.5% and improved 1.7 percentage points, respectively, over 2006. These results were primarily due to the following items:

• Strong performance at the School Education Group (“SEG”) was driven by an increase in the total state new adoption market from approximately $685 million in 2006 to approximately $820 million in 2007. In 2007, SEG outperformed the industry in the state new adoption market with an estimated share of 32% in grades K-12.

• Growth at the Higher Education, Professional and International (“HPI”) Group was fueled by U.S. and international sales of higher education titles, growth in professional and reference products and expansion internationally.

• SEG’s testing revenue increased over the prior year due to custom contracts in Georgia, Indiana, Florida and Wisconsin and higher shelf revenue driven chiefly by sales of Acuity formative assessments. SEG continued to invest in technology to improve efficiencies in developing, delivering, and scoring custom assessments.

• Restructuring charges of $16.3 million and $16.0 million pre-tax affected the MHE segment operating profit for 2007 and 2006, respectively.

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     The Financial Services (“FS”) segment’s 2007 operating profit and margin grew by 13.1% and improved 1.0 percentage point, respectively, from 2006. These results were primarily due to the following items:

• Acquisition-related financing and share repurchasing activity drove growth in corporate issuance (industrial and financial institutions) in both the U.S. and globally.

• Robust public finance issuance was driven by requirements to raise new money to fund municipal projects and to refund existing debt.

• Strong demand for investment services products such as Capital IQ and securities information products such as RatingsXpress and RatingsDirect.

• Continued expansion in Standard & Poor’s indices, due to growth in assets under management for exchange traded funds.

• Positive returns earned by CRISIL Limited, India’s leading provider of credit ratings, financial news and risk and policy advisory services.

• Restructuring charges of $18.8 million pre-tax impacted the Financial Services segment’s operating profit for 2007.

• The sale of the segment’s mutual fund data business contributed $17.3 million pre-tax to operating profit for 2007 but did not materially impact the comparability of results.

     The Information & Media (“I&M”) segment’s 2007 operating profit and margin grew by 27.2% and improved 1.2 percentage points, respectively, from 2006. These results were primarily due to the following items:

• In the Business-to-Business Group, oil, natural gas and power news and pricing products experienced growth as a result of the increased demand for market information due to volatility in the price of crude oil and other commodities.

• Expansion of international research studies, growth domestically from new research studies and increased revenue from corporate communications positively influenced 2007 Business-to-Business Group results.

• The Sweets transformation in the Business-to-Business Group resulted in deferral of revenues of $23.8 million and operating profit of $21.1 million in 2006, with a corresponding benefit in 2007.

• Declines in BusinessWeek‘s advertising pages in the global edition for 2007 had an adverse impact on 2007 Business-to-Business Group results.

• In Broadcasting, comparisons to 2006 were adversely impacted by declines in political advertising as well as local and national advertising, particularly in the automotive and services sectors.

• Restructuring charges of $6.7 million and $8.7 million pre-tax impacted the I&M segment’s operating profit for 2007 and 2006, respectively.

• I&M’s 2006 operating profit includes a one-time stock-based compensation expense pre-tax charge of $2.7 million from the elimination of the Company’s restoration stock option program.

2006 Compared with 2005

	2006								2005
	Operating		%			%			Operating		%			%
(in millions)	Profit(a)		Total			Margin			Profit(b)		Total			Margin
McGraw-Hill Education	$	329.1		21	%		13	%	$	410.2		28	%		15	%
Financial Services		1,202.3		76	%		44	%		1,019.2		68	%		42	%
Information & Media		49.9		3	%		5	%		60.6		4	%		7	%
Total	$	1,581.3		100	%		25	%	$	1,490.0		100	%		25	%

(a)	2006 operating profit includes a charge primarily related to the effect of adopting SFAS No. 123(R), the elimination of the Company’s restoration stock option program and a pre-tax charge related to restructuring.
(b)	2005 operating profit includes a pre-tax charge relating to restructuring.

     As demonstrated by the preceding table, operating margins vary by operating segment and the percentage contribution to operating profit by each operating segment fluctuates from year to year.

     In 2006, operating profit increased as a result of the Financial Services segment. Impacting these results is stock-based compensation expense of $136.2 million pre-tax ($85.5 million after-tax, or $0.23 per diluted share) primarily related to the adoption of SFAS No. 123(R). This charge includes a one-time charge of $23.8 million pre-tax ($14.9 million after-tax, or $0.04 per diluted share) from the elimination of the Company’s restoration stock option program. Also included in 2006 stock-based compensation expense is restricted performance stock expense of $66.0 million pre-tax ($41.5 million after-tax, or $0.11 per diluted share) compared with $51.1 million pre-tax ($32.1 million after-tax, or $0.08 per diluted share) in 2005. During the third and fourth quarters of 2006, the Company restructured a limited number of business operations to enhance the Company’s long-term growth prospects. The Company incurred a 2006 restructuring charge of $31.5 million pre-tax, which consisted primarily of employee severance costs related to the headcount reduction of approximately 700 in the McGraw-Hill Education segment, Information & Media segment and Corporate. The total 2006 restructuring charge after-tax was $19.8 million and impacted diluted earnings per share by $0.06. The impact of the Sweets transformation within the Information & Media segment resulted in a decrease in operating profit of $21.1 million.

     The McGraw-Hill Education (“MHE”) segment’s 2006 operating profit and margin declined by 19.8% and a 2.3 percentage point change, respectively, from 2005. These results were primarily due to the following items:

• A weak performance at School Education Group (“SEG”) due to the decline in the state new adoption market from $950 million in 2005 to $685 million in 2006.

• Less successful performances than initially expected by SEG’s elementary programs in key adoptions in Florida and California for 2006.

• A decrease in volume and scope of custom assessments due in part to the non-renewal of low margin contracts.

33

Management’s Discussion and Analysis
Results of Operations — Consolidated Review (continued)

• Decreases in shelf assessment products as the states continue to migrate away from these products due to the impact of No Child Left Behind.

• Growth in the Higher Education, Professional and International Group driven by its strong science, engineering and mathematics lists.

• The stock-based compensation impact to MHE, in accordance with SFAS No. 123(R), of $31.6 million, which includes a charge of $4.2 million from the elimination of the Company’s restoration stock option program and $16.8 million of restricted performance stock expense. MHE’s restricted performance stock expense for 2005 was $12.0 million.

• Pre-tax restructuring charges of $16.0 million and $9.0 million affected the MHE segment’s operating profit for 2006 and 2005, respectively.

     The Financial Services (“FS”) segment’s 2006 operating profit and margin grew by 18.0% and a 1.3 percentage point change, respectively, from 2005. These results were primarily due to the following items:

• Growth in structured finance related to the continued strength in issuance of U.S. commercial mortgage-backed securities and collateralized debt obligations (“CDOs”) in 2006, primarily driven by strong investor demand for both asset classes, strong commercial real estate origination trends and new CDO structures and arbitraging opportunities.

• Growth in corporate finance ratings, which is attributable to increases in industrial issuance, driven primarily by the market’s favorable financing conditions, robust capital spending and healthy merger and acquisition activity.

• Strong demand for ratings and research products such as RatingsDirect and RatingsXpress.

• Continued expansion in Standard & Poor’s indices, due to growth in assets under management for exchange-traded funds and higher trading levels for futures and options based on S&P indices.

• The impact of stock-based compensation, in accordance with SFAS No. 123(R), of $38.3 million, which includes a charge to FS of $2.1 million from the elimination of the Company’s restoration stock option program and $20.2 million of restricted performance stock expense. FS’s restricted performance stock expense for 2005 was $8.4 million.

• The disposition of the Corporate Value Consulting business, which contributed $13.7 million to 2005 operating profit.

• A pre-tax restructuring charge of $1.2 million included in the FS segment’s operating profit for 2005.

     The Information & Media (“I&M”) segment’s 2006 operating profit and margin declined by 17.6% and a 1.4 percentage point change, respectively, from 2005. These results were primarily due to the following items:

• The Sweets transformation, which resulted in lower than anticipated revenues of $23.8 million and operating profit of $21.1 million.

• The impact of stock-based compensation, in accordance with SFAS No. 123(R), of $22.9 million, which includes a charge to

	I&M of $2.7 million from the elimination of the Company’s restoration stock option program and $12.1 million of restricted performance stock expense. I&M’s restricted performance stock expense for 2005 was $8.8 million.
•	Pre-tax restructuring charges of $8.7 million and $10.2 million in the I&M segment’s operating profit for 2006 and 2005, respectively.
•	The decline was partially offset by strength in oil pricing and information products.

Operating Costs and Expenses

(in millions)	2007			2006			2005
Operating-related expenses	$	2,527.6		$	2,387.2		$	2,316.3
% growth		5.9	%		3.1	%		13.2	%
Selling and general expenses		2,437.9			2,287.9			2,172.4
% growth		6.6	%		5.3	%		14.1	%
Other operating costs and expenses		161.0			161.6			151.0
% growth		—	%		7.0	%		21.1	%
Total expense	$	5,126.5		$	4,836.7		$	4,639.7
% growth		6.0	%		4.2	%		13.8	%

2007 Compared with 2006

Total expenses in 2007 increased 6.0% while total revenue in 2007 increased 8.3%. The growth in total expenses is attributed primarily to the growth in the Financial Services and McGraw-Hill Education segments.

     The Company implemented SFAS No. 123(R), “Share-Based Payment,” on January 1, 2006. Included in the 2006 stock-based compensation expense is a one-time charge of $23.8 million from the elimination of the Company’s restoration stock option program.

     Total product-related expenses increased 5.3% while product revenue increased 6.6%. Product operating-related expenses, which includes amortization of prepublication costs, increased $37.2 million or 3.4%, primarily due to the growth in expenses at McGraw-Hill Education. The growth in expenses is primarily due to increases in direct expenses relating to product development, partially offset by cost containment efforts. Amortization of pre-publication costs increased by $11.8 million or 5.2%, as compared with same period in 2006, as a result of product mix and adoption cycles. For 2007, combined printing, paper and distribution prices for manufacturing remained flat versus 2006. Printing prices decreased slightly versus 2006 due to successful negotiations with suppliers globally. Paper prices were limited to a slight increase due to successful negotiations and long-term agreements in place limiting increases for a majority of the Company’s paper purchases. Overall distribution prices increased 2.6% due to U.S. Postal Service, international postage and air-freight rate increases, offset by savings resulting from changes in distribution delivery methods and negotiations with ground carriers. In 2007, combined paper, printing and distribution expenses represented 23.2% of total operating-related expenses. Product-related selling and general expenses increased 7.4%, primarily due to increased

34

sales opportunities at McGraw-Hill Education. The product margin improved 1.0% mainly due to the increased state new adoption opportunities at McGraw-Hill Education and the effect of previous restructuring initiatives.

     Total service-related expenses increased 6.9%, while service revenue increased 9.3%. Service operating-related expenses increased 8.0% and service selling and general expenses increased 5.9%, while the service margin improved 1.5%, primarily due to revenue growth across all segments led by Financial Services.

     During 2007 and 2006, the Company restructured a limited number of business operations to enhance the Company’s long-term growth prospects. Included in selling and general expenses for 2007 are restructuring charges of $43.7 million pre-tax ($27.3 million after-tax, or $0.08 per diluted share), which consisted primarily of severance costs related to a workforce reduction of approximately 600 positions across the Company. Included in selling and general expenses for 2006 are restructuring charges of $31.5 million pre-tax ($19.8 million after-tax, or $0.06 per diluted share), which consisted primarily of employee severance costs related to the reduction of approximately 700 positions in the McGraw-Hill Education segment, Information & Media segment and Corporate.

     Other operating costs and expenses, which include depreciation and amortization of intangibles, were essentially flat.

Expense Outlook

Product-related expense growth is anticipated to accelerate in 2008 as the McGraw-Hill Education segment prepares for increased opportunities offered by the state adoption cycle in 2008 and beyond, with prepublication spending expected to increase to between $300 million to $310 million. It is anticipated that this level of spending will continue over the next few years. This increased investment will result in an increase in the amortization of pre-publication costs of approximately $45 million or 19% in 2008.

     Combined printing, paper, and distribution prices for product-related manufacturing, which typically represent 20% of total operating-related expenses, are expected to remain flat in 2008. The Company continues to take advantage of opportunities to lower manufacturing costs that will positively impact 2008 and beyond. This includes increased focus on more effective product assignments to lower-cost suppliers worldwide. Printing prices are expected to remain roughly flat in 2008. The Company’s overall paper price increase will be limited to approximately 4.0% due to negotiated price reductions, long-term agreements and short-term price caps. Overall distribution prices are expected to rise approximately 4.0% due to increases in U.S. Postal Service, international postage rates, and air-freight and trucking.

     In 2008, the Company will continue its efforts relating to its global resource management initiatives and business process improvements to further enhance operating efficiencies and leverage its buying power. The Company expects to generate expense savings from the restructurings implemented over the last few years.

     Merit increases for 2008 will be approximately 3.5%, unchanged from prior year. Minimal staff increases are expected at the McGraw-Hill Education and Information & Media segments.

Financial Services will increase positions in India to support growth at its CRISIL and Capital IQ divisions.

     In 2008, depreciation is expected to increase as a result of projected capital spending of approximately $170 million in 2008 and a full year of depreciation from 2007 capital expenditures, primarily related to investments in the Company’s information technology data centers and technology-related equipment. Intangible amortization is expected to remain flat in 2008.

2006 Compared with 2005

In 2006, total expenses increased 4.2% over the prior year, which is slightly higher than revenue growth.

     A significant portion of both operating-related and selling and general expenses is compensation expense, which increased approximately 9.4% in 2006, primarily as a result of stock-based compensation and an increase in the employee base, primarily as a result of international expansion. Effective January 1, 2006, the Company adopted SFAS No. 123(R), applying the modified prospective method, under which prior periods are not revised for comparative purposes. Prior to the adoption of SFAS No. 123(R), the Company applied the provisions of the Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for its stock-based awards and, accordingly, recognized no compensation cost for its stock plans other than for its restricted stock performance and non-performance awards.

     The Company’s 2006 operating-related and selling and general expenses include a stock-based compensation pre-tax charge of $32.0 million and $104.2 million, respectively, primarily as a result of the implementation of SFAS No. 123(R). This charge includes a one-time charge of $23.8 million in selling and general expenses from the elimination of the Company’s restoration stock option program. Also included in the 2006 stock-based compensation expense is restricted performance stock of $12.7 million in operating-related expenses and $53.3 million in selling and general expenses as compared with $51.1 million in selling and general expenses, respectively, in 2005.

     Also contributing to the increase in compensation expense is the increase in pension expense from the Company’s U.S. and U.K. qualified retirement plans. Effective January 1, 2006, the Company changed certain assumptions on its pension plans. The effect of these changes resulted in an increase in pension expense for 2006 of $12.7 million pre-tax.

     Beginning in the third quarter of 2006, the Company restructured a limited number of business operations to enhance the Company’s long-term growth prospects. The Company incurred a 2006 restructuring charge of $31.5 million pre-tax, all of which was charged to selling and general expenses. The restructuring consisted primarily of employee severance costs related to the reduction of approximately 700 positions in the McGraw-Hill Education segment, Information & Media segment and Corporate.

     During the fourth quarter of 2005, the Company recorded a restructuring charge of $23.2 million pre-tax, all of which was charged to selling and general expenses. The restructuring consisted primarily of employee severance costs related to the reduction of positions across the Company.

35

Management’s Discussion and Analysis
Results of Operations — Consolidated Review (continued)

     During 2005, the Company made several acquisitions, which are further discussed in Note 2 to the Company’s consolidated financial statements, as follows:

• CRISIL Limited: The Company acquired majority ownership of CRISIL Limited (“CRISIL”), a leading provider of credit ratings, financial news and risk and policy advisory services in India on June 1, 2005. CRISIL is now part of the Financial Services segment.

• Vista Research, Inc: The Company acquired Vista Research, Inc., a leading provider of primary research on April 1, 2005. Vista Research, Inc. is now part of the Financial Services segment.

• J.D. Power and Associates (“JDPA”): The Company acquired JDPA, a leading provider of marketing information services for the global automotive industry that has established a strong and growing presence in several other important industries, including finance and insurance, healthcare, home building, telecommunications and energy, on April 1, 2005. JDPA is now part of the Information & Media segment.

     In 2005, the Company sold its Healthcare Information Group, a unit of the Information & Media segment. The Healthcare Information Group consisted of several magazines including: The Physician and Sportsmedicine, Postgraduate Medicine and Healthcare Informatics, as well as a variety of healthcare information programs that serve the medical market. The Company recognized a pre-tax loss of $5.5 million ($3.3 million after-tax, or less than 1 cent per diluted share), which is included in other income.

     In 2005, the Company sold its Corporate Value Consulting (“CVC”) business, the valuation services unit of the Financial Services segment. This business was selected for divestiture as it no longer fit with the Company’s strategic plans. The divestiture of CVC enabled the Financial Services segment to focus on its core business of providing independent research, ratings, data indices and portfolio services. The Company recognized a pre-tax gain of $6.8 million ($4.2 million after-tax, or $0.01 per diluted share), which is included in other income.

     Operating-related and selling and general expenses from McGraw-Hill Education’s service contracts for assessments of $239.4 million and $246.5 million in 2006 and 2005, respectively, have been reclassified from product to service as a result of the service component becoming more significant and inseparable from the deliverable.

     Total product-related expenses declined by 1.8% in 2006 while product-related revenue declined by 3.7%. Product operating-related expenses, which include the amortization of prepublication costs, were flat as compared with the prior year, primarily due to the reduced volume from the weaker adoption calendar and cost saving measures at McGraw-Hill Education, offset by stock-based compensation charges and the impact of first quarter 2006 for JDPA. Amortization of prepublication costs decreased $5.9 million as compared with 2005, as a result of product mix and the adoption cycle. For 2006, combined printing, paper and distribution

prices for product-related manufacturing increased by approximately 1.3% or $6.3 million. Printing prices were held to a slight increase versus 2005 due to successful negotiations with suppliers globally. Paper prices were limited to a 2.4% increase due to successful negotiations and long-term agreements in place limiting increases for a majority of the Company’s paper purchases. Overall distribution prices increased by 4.9% due to the U.S. Postal Service rate increase combined with air-freight and trucking rate increases averaging 4.0%. In 2006, combined paper, printing and distribution expenses represented 20.8% of total operating-related expenses. Product-related selling and general expenses decreased 3.8% as a result of McGraw-Hill Education’s cost-saving measures offset by stock-based compensation charges and restructuring charges. Product selling and general expenses in 2006 included restructuring charges of $9.3 million and 2005 restructuring charges of $9.0 million. The product margin for 2006 decreased 1.6%.

     Total service-related expenses for 2006 increased 9.3% while service revenue increased 10.0%. The Financial Services segment expenses increased only 11.8% on a revenue growth of 14.4%. Service operating-related expenses increased by 5.8% due to growth in Financial Services, the impact of stock-based compensation including the impact of reloads and the impact of the first quarter of 2006 for JDPA. Service selling and general expenses for 2006 increased 12.9% due to stock-based compensation, restructuring and the impact of the first quarter of 2006 for JDPA. Service selling and general expense included $22.3 million related to 2006 restructuring and $14.2 million related to the 2005 restructuring. The service margin grew 0.4%.

     In 2006, depreciation expense increased 6.0% to $113.2 million as a result of 2005 acquisitions and increased depreciation of technology-related equipment. Amortization of intangibles increased 9.4% to $48.4 million as of December 31, 2006 due to 2005 acquisitions.

Other Income — net

(in millions)	2007		2006		2005
Other income — net	$	17.3	$	—	$	1.2
% growth		n/m		n/m		n/m

n/m — not meaningful

     In 2007, other income includes a gain on the sale of the Company’s mutual fund data business, which was part of the Financial Services segment. The sale resulted in a $17.3 million pre-tax gain ($10.3 million after-tax, or $0.03 per diluted share). In 2006, the Company did not have other income. In 2005, other income includes a $6.8 million pre-tax gain from the disposition of Corporate Value Consulting, which was mostly offset by a $5.5 million pre-tax loss on the disposition of the Healthcare Information Group.

36

Interest Expense — net

(in millions)	2007		2006		2005
Interest expense — net	$	40.6	$	13.6	$	5.2
% growth		n/m		n/m		(10.1	)%

n/m — not meaningful

     Interest expense increased to $40.6 million in 2007, compared with $13.6 million in 2006. This increase is due to higher average debt borrowings and higher interest rates in 2007. The higher level of borrowings was driven by cash requirements above our operating cash flow to execute our share repurchase program. In 2007, the Company repurchased 37 million shares at an average price of $59.80, as compared with 2006 repurchases of 28.4 million shares at an average price of $54.23.

     In November 2007, the Company issued $1.2 billion of senior notes as follows: $400 million of 5.375% senior notes due in 2012; $400 million of 5.900% senior notes due in 2017; and $400 million of 6.550% senior notes due in 2037. Included in 2007 is $11.7 million of interest and debt discount amortization related to the senior notes.

     Average total short-term borrowings consisted of commercial paper, extendible commercial notes (“ECNs”), and promissory note borrowings. Average short-term borrowings outstanding in 2007 were $674.8 million at an average interest rate of 5.4%. This compares with average total short-term borrowings consisting of commercial paper outstanding in 2006 of $223.1 million at an average interest rate of 5.2%. There were no ECNs or promissory note borrowings outstanding during 2006, and there were no commercial paper borrowings outstanding at December 31, 2007, 2006 and 2005.

     Interest expense in 2005 was $5.2 million. Average commercial paper outstanding during 2005 was $129.3 million and average interest rate on commercial paper borrowings in 2005 was 3.1 %. The increase in interest expense in 2006 compared with 2005 resulted from an increase in both average commercial paper borrowings and higher interest rates. Lower interest income earned on lower investment balances represents the remaining variance. The increase in average borrowings was required to help fund share repurchases of 28.4 million shares in 2006 compared with 14.3 million shares in 2005.

     Included in 2007, 2006 and 2005 was approximately $8.5 million, $8.9 million and $9.3 million, respectively, of non-cash interest expense related to the accounting for the sale-leaseback of the Company’s headquarters building in New York City.

     In 2008, interest expense is projected to increase as a result of the full year impact of increased borrowings to fund 2007 share repurchases as well as anticipated 2008 share repurchases under the current program, which has 28 million shares remaining.

Provision for Income Taxes

	2007			2006			2005
Provision for income taxes as
% of income from operations		37.5	%		37.2	%		37.9	%

     During 2007, the Company’s annual effective tax rate increased from 37.2% to 37.5% due to minor increases in state taxes.

     The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized an increase in the liability for unrecognized tax benefits of approximately $5.2 million, which was accounted for as a reduction to the January 1, 2007 balance of retained income. The total amount of federal, state and local, and foreign unrecognized tax benefits as of December 31, 2007 and January 1, 2007 were $45.8 million and $75.1 million, respectively, exclusive of interest and penalties. Included in the balance at December 31, 2007 and January 1, 2007, are $3.9 million and $13.5 million, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. In addition to the unrecognized tax benefits, as of December 31, 2007 and January 1, 2007, the Company had $11.9 million and $12.4 million, respectively, of accrued interest and penalties associated with uncertain tax positions.

     In 2007, the Company completed the U.S. federal tax audits for the years ended December 31, 2004, 2005 and 2006 and consequently has no open U.S. federal income tax examinations for years prior to 2007. In 2007, the Company completed various state and foreign tax audits and, with few exceptions, is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for the years before 2002. See Note 5 to the Company’s consolidated financial statements for reconciliation of the beginning and ending amount of unrecognized tax benefits.

     During 2006, the Company completed various federal, state and local, and foreign tax audits and accordingly removed approximately $17 million from its accrued income tax liability accounts. This amount was offset by additional requirements for taxes related to foreign subsidiaries. The effective tax rate for the year ended December 31, 2006 was 37.2%.

     During 2005, the Company repatriated $209.3 million of earnings from its foreign subsidiaries. The repatriation took advantage of the one-time incentive offered under the American Jobs Creation Act of 2004 and resulted in an incremental income tax of $10.0 million. The effective tax rate for the year ended December 31, 2005 was 37.9%.

37

Management’s Discussion and Analysis

Results of Operations - Consolidated Review (continued)

     The Company expects the 2008 effective tax rate to be approximately 37.5% absent the impact of numerous factors including intervening audit settlements, changes in federal, state or foreign law and changes in the locational mix of the Company’s income.

Net Income

(in millions)	2007			2006			2005
Net income	$	1,013.6		$	882.2		$	844.3
% growth		14.9	%		4.5	%		11.7	%

     Net income for 2007 increased 14.9% as compared with 2006 as a result of the strong performance in the Financial Services and McGraw-Hill Education segments. Included in net income is an after-tax charge of $27.3 million relating to restructuring and an after-tax gain of $10.3 million on the divestiture of the Company’s mutual fund data business.

     Net income for 2006 increased 4.5% as compared with 2005 primarily as a result of performance in the Financial Services segment. Included in net income is an after-tax charge of $19.8 million relating to restructuring and an after-tax charge of $85.5 million relating to stock-based compensation expense. The Sweets transformation from a primarily print catalog to an integrated online service resulted in an after-tax deferral of $13.3 million in the 2006 net income with a corresponding increase in 2007.

Diluted Earnings per Common Share

	2007			2006			2005
Diluted earnings per common share:
Net income	$	2.94		$	2.40		$	2.21
% growth		22.5	%		8.6	%		12.8	%

     Diluted earnings per share were $2.94 in 2007 as compared with $2.40 in 2006. Included in 2007 is a $0.03 after-tax benefit of the divestiture of the Financial Services’ mutual fund data business and a $0.08 after-tax restructuring charge.

     Included in the 2006 diluted earnings per share is a one-time charge of $0.04 after-tax from the elimination of the Company’s restoration stock option program, a $0.06 after-tax restructuring charge and $0.04 deferral of revenue relating to the Sweets transformation, which was recognized in 2007.

     In 2005, diluted earnings per share includes a restructuring charge of $0.04 and dilution from the increase in the income taxes on the repatriation of foreign earnings of $0.03.

     The increase in diluted earnings per share in 2007 as compared with 2006 and in 2006 as compared with 2005 was due to increases in net income, enhanced by share repurchases of 37 million, 28.4 million and 14.3 million in 2007, 2006 and 2005, respectively.

     The effect of repurchases of common stock resulted in an increase in diluted earnings per share of $0.04 in 2007, $0.03 in 2006 and $0.02 in 2005.

Segment Review

McGraw-Hill Education

(in millions)	2007(a)			2006(b)			2005(a)
Revenue	$	2,705.9		$	2,524.2		$	2,671.7
% increase/(decrease)		7.2	%		(5.5	)%		11.5	%
Operating profit	$	400.0		$	329.1		$	410.2
% increase/(decrease)		21.5	%		(19.8	)%		20.6	%
% operating margin		15	%		13	%		15	%

(a)	Operating profit includes a pre-tax charge relating to restructuring.
(b)	Operating profit includes the effect of adopting SFAS No. 123(R), the elimination of the Company’s restoration stock option program and a restructuring charge.

     The McGraw-Hill Education segment is one of the premier global educational publishers and is the largest U.S.-owned educational publisher serving the elementary and high school (“el-hi”), college and university, professional and international markets. The segment consists of two operating groups: the School Education Group (“SEG”) and the Higher Education, Professional and International (“HPI”) Group.

     In 2007, revenue for the McGraw-Hill Education segment increased 7.2% from the prior year. The increase in SEG’s revenue of 6.8% was driven by an increase in the total state new adoption market from approximately $685 million in 2006 to approximately $820 million in 2007. In 2007, SEG outperformed the industry in the state new adoption market with an estimated share of 32% in grades K-12. HPI’s revenue increased by 7.6% reflecting growth in U.S. and international sales of higher education titles, growth in professional and reference products and expansion internationally.

     In 2007, operating profit for the McGraw-Hill Education segment increased by $70.9 million or 21.5% as compared with 2006 driven by increased state new adoption opportunities in SEG and expansion across HPI, as well as cost containment efforts. The operating margin grew as a result of an increase in the total state new adoption market in 2007 and cost savings from various process efficiency initiatives, including the 2006 reorganization of the School Solutions Group. Foreign exchange rates benefited revenue by $23.6 million and did not have a material impact on operating profit.

     In 2007, the McGraw-Hill Education segment incurred restructuring charges totaling $16.3 million pre-tax. The pre-tax charge consists of employee severance costs related to a workforce reduction of approximately 300 positions across the segment and is included in selling and general expenses. These restructuring activities related primarily to reallocation of certain resources to support continued digital evolution and productivity initiatives at HPI and SEG.

     In 2006, the McGraw-Hill Education segment incurred restructuring charges totaling $16.0 million pre-tax. The restructuring included the integration of the Company’s elementary and secondary basal publishing businesses. The pre-tax charge consisted

38

of employee severance costs related to a workforce reduction of approximately 450 positions primarily at SEG and vacant facilities costs at SEG. The vacant facilities costs primarily relate to the shutdown of the Company’s Salinas, California facility.

     McGraw-Hill Education’s 2006 operating profit includes a one-time stock-based compensation expense pre-tax charge of $4.2 million from the elimination of the Company’s restoration stock option program.

     In 2008, overall industry growth in the el-hi market is projected to be 4% to 5%, again driven by a strong state adoption cycle. The state new adoption market will improve to between $900 million and $950 million, depending on the available state funding, versus approximately $820 million for 2007. The key adoption opportunities in 2008 are California K-8 Math, Florida K-5 Reading and Texas K-5 Math. Open territory sales, which have remained flat over the past two years, are projected to increase modestly owing to pent-up demand for new instructional materials. In 2008, open territory purchasing may be affected by limited increases in federal funding and pressures on local and state budgets as problems in the housing sector cause tax revenues to decline. In 2008, SEG expects growth in revenue for “off the shelf” tests, notably Acuity, TerraNova3 and TABE. SEG will continue to focus on winning additional custom testing contracts in key states during 2008 while also investing in the technology necessary for the ongoing development of summative and formative assessment products that can be offered online.

     HPI expects 2008 to be a good year in higher education in the United States and internationally. Growth is expected at all four imprints: Science, Engineering and Mathematics (“SEM”); Business and Economics (“B&E”); Humanities, Social Science and Languages (“HSSL”); and Career Education. The professional market revenue should be driven by the core print business with strong growth in the medical product line partially offset by a decline in sales of technical titles. Digital licensing and digital subscriptions should also contribute to revenue growth.

     Operating margins for 2008 are expected to decrease due to increased prepublication spending and ensuing amortization as well as technology investments required by the digital transformation in the education markets and costs related to the migration to our new data center. These increased costs will be partially mitigated by process efficiencies.

     In 2006, revenue for the McGraw-Hill Education segment decreased 5.5% as compared with 2005. The decrease in SEG’s revenue of 12.4% resulted from the total state new adoption market decreasing from approximately $950 million in 2005 to approximately $685 million in 2006. Additionally, open territory opportunities declined slightly in 2006 according to statistics reported by the Association of American Publishers (“AAP”). Also affecting SEG’s results was a reduction from 2005 levels in volume and scope of custom assessment contracts and the volume of norm-referenced tests. HPI’s revenue increased by 3.5%, reflecting growth in U.S. and international sales of higher education titles, growth in professional and reference products and expansion internationally.

     In 2006, operating profit decreased by $81.1 million as compared with 2005 due in part to the $31.6 million of stock-based compensation charges due to the initial adoption of SFAS No. 123(R) and $16.0 million in restructuring charges. The operating margin declined because of a decrease in the total state new adoption market in 2006 and the product mix, offset by improved margins at HPI. Foreign exchange rates benefited revenue by $6.6 million and positively affected operating results by $2.3 million.

School Education Group

(in millions)	2007			2006			2005
Revenue	$	1,416.8		$	1 ,326.6		$	1,515.0
% increase/(decrease)		6.8	%		(12.4	)%		18.5	%

     The SEG consists of several key brands, including SRA/ McGraw-Hill, specialized niche basal programs such as Open Court Reading for the elementary market; Wright Group/McGraw-Hill, innovative supplementary products for the early childhood, elementary and remedial markets; Macmillan/McGraw-Hill, core basal instructional programs for the elementary market; Glencoe/McGraw-Hill, basal and supplementary products for the secondary market; CTB/McGraw-Hill, customized and standardized testing materials and scoring services, online diagnostics and formative assessment products; and The Grow Network/ McGraw-Hill, assessment reporting and customized content.

     In 2007, revenue for SEG increased by $90.2 million or 6.8% as compared with 2006. SEG revenue reflects the total state new adoption market in 2007 of approximately $820 million as compared with approximately $685 million in 2006.

     Total U.S. PreK-12 enrollment for 2006-2007 is estimated at 55.0 million students, up 0.5% from 2005-2006, according to the National Center for Education Statistics (“NCES”). The total available state new adoption market in 2008 is estimated at between $900 million to $950 million.

     In the adoption market, revenue increases were driven by strong basal sales performance including K-8 science in California and South Carolina, 6-12 math in Texas and K-5 reading in Tennessee, Indiana and Oregon. Everyday Mathematics, SEG’s reform-based program, led the K-5 market in New Mexico.

     Growth in the open territory was limited by overall softness in the market, but SEG achieved strong sales in New York City with K-8 math and 6-8 science. The new, third edition of Everyday Mathematics also performed well throughout the open territory.

     Market conditions also limited growth in the supplementary market, although SEG experienced success with its reading and math intervention programs, particularly Number Worlds.

     According to statistics compiled by the AAP, total net basal and supplementary sales of elementary and secondary instructional materials were up by 2.7% for the year ended December 2007 compared to the prior year.

39

Management’s Discussion and Analysis
Segment Review (continued)

     SEG’s testing revenue increased over the prior year driven by custom contracts in Georgia, Indiana, Florida and Wisconsin and higher shelf revenue driven chiefly by sales of Acuity formative assessments. SEG continued to invest in technology to improve efficiencies in developing, delivering, and scoring custom assessments.

     New products that will contribute to growth in 2008 include:

• California Mathematics K-8 and Texas Mathematics K-5: Programs tailored for the adoptions in those states.

• Treasures: A balanced basal program for the largest segment of the reading market.

• Imagine It!: A revision of the highly successful skills-based program Open Court Reading.

• Everyday Mathematics, 3rd Edition: A revision of the leading program in the reform-based segment of the market.

     Balancing budgets for fiscal 2008-2009 will be challenging for many states due to declining tax revenues related to the problems in the housing market in 2007 and overall economic conditions. As a result, the outlook for funding of discretionary educational spending on items such as instructional materials may be constrained in some areas, particularly in open territory states where school districts rely heavily on local tax revenues. However, based on a very strong state adoption schedule through the end of the decade, SEG continues to project good growth in 2008 and beyond. In order to capitalize on these state adoption opportunities, in 2008, SEG will accordingly make substantial investments in new program development and major program revisions primarily in reading, math and science.

     The No Child Left Behind Act (“NCLB”) mandates annual statewide testing in reading and math in grades three through eight, and science testing at three grade levels is required beginning in the 2007-2008 school year. The law also requires statewide testing once in grades 10 through 12, as well as specialized assessments for English Language Learner (“ELL”) students. Because the NCLB tests must be aligned with the learning standards adopted by each state, customized criterion-referenced tests are replacing norm-referenced tests, or “shelf tests,” in the summative testing market. SEG holds strong positions in both the custom and the shelf testing markets. In general, customized, state-specific tests have lower margins than shelf tests.

     In 2008, SEG expects growth in customized test revenue, notably Acuity, TerraNova3 and TABE. SEG will continue to focus on winning additional custom contracts in key states during 2008 and will invest in the technology necessary for the ongoing development of summative and formative assessment products that can be offered online. Summative tests are high-stakes tests administered to measure achievement, such as NCLB accountability assessments. Formative tests are low-stakes tests administered to predict performance on summative tests, diagnose student learning needs, and inform future instruction.

     In 2006, revenue for SEG decreased by $188.4 million or 12.4% as compared with 2005. SEG revenue reflects the total state new adoption market in 2006 of $685 million compared with approximately $950 million in 2005, a decline that limited sales for the

K-12 publishing industry. In large part, SEG’s results reflected the negative comparisons to the large market share captured in 2005. 2006 key adoptions were in Florida and California, which purchased science and social studies, respectively. In Florida, SEG led the secondary portion of the market, which offered the highest dollar volume, but its K-5 program was less successful. In California, SEG’s performance in the elementary social studies market fell short of expectations. However, SEG captured the leading share of available secondary business with strong performances at both the middle school and high school levels. California’s high schools purchase on an open territory basis but tend to follow the adoption cycle as to subject area. In other state adoptions, SEG was very successful with secondary science in New Mexico, Oklahoma, and West Virginia, and with elementary music in Indiana and Oregon.

     For the 2006 open territory selling season, SEG introduced a new elementary basal reading program, Treasures, which was very well received and won the two largest open territory reading adoptions in 2006, in Wichita and Pittsburgh. SEG also achieved good year-over-year growth of its alternative basal program Everyday Mathematics. However, the volume of available open territory business was not sufficient to offset the reduction in the state new adoption markets. In fact, open territory opportunities declined slightly in 2006 according to the AAP According to statistics compiled by the AAP, the industry’s total net basal and supplementary sales of elementary and secondary instructional materials declined by 5.8% compared with the same period in 2005.

Higher Education, Professional and International Group

(in millions)	2007			2006			2005
Revenue	$	1,289.1		$	1,197.5		$	1,156.8
% increase		7.6	%		3.5	%		3.5	%

     The Higher Education, Professional and International (“HPI”) Group serves the college, professional, international and adult education markets.

     HPI revenue increased $91.6 million or 7.6% compared to the prior year.

     Revenues increased for the principal higher education imprints, Science, Engineering and Mathematics (“SEM”), Humanities, Social Science and Languages (“HSSL”) and Business and Economics (“B&E”) with growth largely driven by B&E’s frontlist and backlist titles along with key titles from the other imprints. New copyright titles contributing to growth included:

• McConnell, Economics, 17/e;

• Nickels, Understanding Business, 8/e;

• Garrison, Managerial Accounting, 12/e;

• Kamien, Music: An Appreciation, Brief Edition, 6/e;

• Bentley, Traditions and Encounters, 4/e;

• Getlein, Living with Art, 8/e; and

• Wild, Fundamental Accounting Principles, 18/e.

40

     Contributing to the performance of professional titles were McGraw-Hill Encyclopedia of Science & Technology, 10/e; Harrison’ s Principles of Internal Medicine, 16/e; Harrison’ s Manual of Medicine, Crucial Conversations; and Current Medical Diagnosis & Treatment.

     Internationally, strong performance was driven by increased professional sales in Australia, strong adoptions in India and increased higher education volume in Korea and China. HPI also benefited from increased higher education funding in Brazil and strong school sales in Spain.

     The HPI Group expects 2008 to be another good year in higher education both in the United States and internationally. In 2008, growth is expected to occur at SEM, B&E and HSSL, the three major higher education imprints, and at the newly organized Career imprint. Career expects growth fueled by its allied health and computer applications product lines. B&E is expected to grow with strength in the marketing and management categories. HSSL anticipates growth with strong titles in psychology and Spanish. SEM will grow based on increases in math and chemistry titles. Improving sales in India, Asia and Latin America are expected across the higher education imprints in 2008. Custom textbooks and online products should also have a positive impact in 2008.

     The U.S. college new textbook market is approximately $3.7 billion and is expected to grow about 3% to 4% annually through 2009. In 2008, the Company anticipates that its college product sales will outperform the industry. As technology continues to be the key trend in higher education for course management and content delivery, the HPI Group will aggressively pursue a variety of e-initiatives, including e-books, homework support for students and online faculty training and support.

     U.S. college enrollments are projected to rise by 17% to 20.4 million between 2005 and 2016, according to the National Center for Educational Statistics (“NCES”). On-line education enrollments continue to grow faster than traditional enrollments, although at a slower rate than in prior years. For-profit colleges and distance-learning institutions continue to report strong enrollment growth, with annual gains of 7.5% expected through 2010. Internationally, enrollments are also expected to increase significantly in India and China.

     2008 will see increased federal funding due to the U.S. government’s removal of the “50% rule.” Colleges will no longer be required to deliver at least half of their courses on campus, instead of online, to qualify for federal student aid. The fully online education market is expected to be split evenly between for-profit and not-for-profit schools in 2008. Negatively affecting the higher education market is the purchase of used books, which has grown as a percentage of total book sales from 27% in 2002 to 29% in 2005, according to Monument Information Resource. Piracy and textbook leakage also continue to plague the industry. Foreign governments are aiding in combating this trend, especially in China.

     In 2008, in the professional market, McGraw-Hill Education expects growth in revenue driven by its core printing business with strong growth in its medical product line partially offset by a decline in sales of technical titles. Digital licensing and digital subscriptions will also contribute to revenue growth.

     In 2006, HPI products performed well in both the United States and international markets, with increased revenue of $40.7 million or 3.5% compared to prior year. The Science, Engineering and Mathematics (“SEM”) higher education imprint achieved solid growth in 2006. However, sales results for Business and Economics (“B&E”), whose list was between major revision cycles, and Humanities, Social Science and Languages (“HSSL”) were flat with prior year. Key higher education titles contributing to 2006 performance included:

• Ober, Keyboarding, 10/e;

• Garrison, Managerial Accounting, 11/e;

• Terrell, Dos Mundos, 6/e;

• Lucas, The Art of Public Speaking, 9/e;

• Saladin, Anatomy and Physiology, 4/e; and

• Shier, Hole’s Human A&P, 11/e.

     The U.S. college new textbook market grew by 2.8% in 2006 compared to 2005, according to the AAP. In 2006, the higher education market was favorable as appropriations for higher education increased 7.0%, according to the Center for the Study of Education Policy at Illinois State University. Per the AAP, 90% of faculty required or recommended a textbook in 2006, a decrease from 94% in 2004.

     In the professional marketplace during 2006, both backlist and frontlist titles in the business category performed well, with five new titles appearing on national best-seller lists. Some softness was experienced in the medical market owing to the natural drop-off in sales of Harrison’s Principles of Internal Medicine, 16/e, which was published in 2004. The digital subscription-based program AccessMedicine experienced continued growth and surpassed 10 million content retrievals for the year.

     Special school funding in British Columbia and Ontario, Canada, benefited the HPI Group’s international growth, as did improved opportunities for school products in Latin America and higher education products in India.

     HPI experienced growth from products serving the business and medical professional markets and from college and school products internationally. HPI’s revenue also grew from the sale of U.S. college products, although at a slower rate.

Financial Services

(in millions)	2007(a)			2006(b)			2005(c)
Revenue	$	3,046.2		$	2,746.4		$	2,400.8
% increase		10.9	%		14.4	%		16.8	%
Operating profit	$	1,359.4		$	1,202.3		$	1,019.2
% increase		13.1	%		18.0	%		21.4	%
% operating margin		45	%		44	%		42	%

(a)	Operating profit includes a $17.3 million pre-tax gain on the sale of a mutual fund data business and a $18.8 million pre-tax restructuring charge.
(b)	Operating profit includes the effect of adopting SFAS No. 123(R) and includes the elimination of the Company’s restoration stock option program.
(c)	Operating profit includes $6.8 million pre-tax gain on the sale of the Corporate Value Consulting business.

41

Management’s Discussion and Analysis
Segment Review (continued)

     The Financial Services segment operates under the Standard & Poor’s brand. This segment provides services to investors, corporations, governments, financial institutions, investment managers and advisors globally. The segment consists of two operating groups: Credit Market Services and Investment Services. Credit Market Services includes independent global credit ratings, credit risk evaluations, and ratings-related information and products. Investment Services includes comprehensive value-added financial data, information, indices and research. The segment and the markets it serves are impacted by interest rates, the state of global economies, credit quality and investor confidence. The Financial Services segment continues to be favorably impacted by the global growth of financial markets, the disintermediation of banks and the increased use of securitization as a source of funding and managing risk. In 2007, Financial Services also benefited from the continued low interest rate environment, increased globalization of the capital markets and robust merger and acquisition activity during the first half of the year, which was partially offset by decreased new dollar volume issuance in the United States structured finance market in the second half of the year.

     Issuance volumes noted within the discussion that follows are based on the domicile of the issuer. Issuance volumes can be reported in two ways: by “domicile,” which is based on where an issuer is located or where the assets associated with an issue are located, or based on “marketplace,” which is where the bonds are sold.

     In 2007, Financial Services revenue and operating profit increased 10.9% and 13.1 %, respectively, over prior year results despite challenging market conditions in the second half of 2007 in the credit markets which adversely impacted structured finance. The Financial Services segment’s increase in revenue and operating profit was driven by the performance of corporate (industrial and financial institutions) and government ratings as well as data, information and index products. Acquisition-related financing, general refinancing and share repurchasing activity drove growth in corporate issuance in both industrial and financial institutions in the United States and globally. Public finance issuance was driven by requirements to raise new money to fund municipal projects and to refund existing debt. A flat yield curve and low long-term yields also encouraged municipal issuance. Strength in Investment Services was driven by demand for both the Capital IQ and index products. Foreign exchange positively impacted revenue growth by $53.0 million but did not materially impact operating profit growth.

     In 2007, the Financial Services segment incurred restructuring charges totaling $18.8 million pre-tax. The pre-tax charge consists of employee severance costs related to a workforce reduction of approximately 170 positions across the segment. The current business environment and the consolidation of several support functions drove these restructuring activities across the segment’s global operations. The segment’s restructuring actions affected both its Credit Market Services and Investment Services businesses.

     On March 16, 2007, the Company sold its mutual fund data business, which was part of the Financial Services segment. The sale resulted in a $17.3 million pre-tax gain ($10.3 million after-tax, or $0.03 per diluted share), recorded as other income, and had an immaterial impact on