McGraw Hill Financial Inc. (MHFI) named Douglas Peterson as president and chief executive officer, succeeding Harold “Terry” McGraw III, who will retain his role as chairman.
Peterson, 54, who was hired from Citigroup Inc. in 2011 to replace Deven Sharma as president of the Standard & Poor’s ratings unit, will start his new role Nov. 1, the New York-based company said today in a statement distributed by PR Newswire. Next month, McGraw turns 65, the company’s normal retirement age, according to regulatory filings.
Peterson’s hire comes as the 125-year-old company stakes its future on financial services after leaving its legacy publishing business. S&P, the world’s largest credit rater, accounts for about half of the company’s sales, after McGraw Hill sold its textbook business earlier this year. A search for a successor for Peterson, who was also named to the company’s board, is under way, according to the statement.
The U.S. Justice Department sued the company Feb. 4, alleging that it lied about its ratings being free of conflicts of interest because it downplayed credit risks to win more business from investment banks that paid S&P to rate mortgage-backed securities.
McGraw, who said the company will defend itself “vigorously” against the allegations, has been the company’s CEO since 1998. Over that time, he focused the company on financial services, moving away from its roots as a publishing company, which his great-grandfather started in 1888. He cast off publications from Chemical Engineering to Modern Plastics to Businessweek, which was bought by Bloomberg LP, the parent of Bloomberg News, in 2009.
After completing the sale of its education division for $2.4 billion to Apollo Global Management LLC (APO) in March, McGraw-Hill will be more reliant than ever on revenue from Wall Street and companies selling securities graded by S&P, according to data compiled by Bloomberg.
Prior to joining S&P in September 2011, Peterson was chief operating officer of Citibank NA. Peterson took over from Sharma after S&P cut the top credit rating of the U.S., a downgrade based on what the Treasury Department said was a $2 trillion error. S&P said in April 2012 there was no mistake and the discussion hinged on which baseline assumption should be used from the nonpartisan Congressional Budget Office.