Focusing on the faster-growing ratings business helped McGraw-Hill recover from the recession, sending its shares to a five-year high of $58.62 on Feb. 1. The shares have gained 139 percent since April 1998, compared with a 35 percent rise in the S&P 500 index, Bloomberg data show. Named chairman in 2000, McGraw earned $1.4 million in salary in 2011 and $8.7 million including stock options in total compensation for the year.

‘Rewarding Stock’

“I give Terry a high grade,” Peter Appert, an analyst for Piper Jaffray & Co., who’s been covering the company for at least 20 years, said in a telephone interview on Feb. 14. “Even acknowledging some of the volatility we’ve seen in the stock recently, this has been a very rewarding stock over the course of his tenure as CEO.”

After completing the sale of its education division for $2.5 billion to Apollo Global Management LLC., McGraw-Hill will be more reliant than ever on revenue from Wall Street and companies selling securities graded by S&P while leaving it with the most cash in six years, Bloomberg data show.

“With the education business going nowhere and acting as a drag on the company, he made what had to be a very tough decision because that was the family business.” Ed Atorino, a media analyst at Benchmark Co. in New York who forecasts McGraw- Hill stock will outperform its peers over the next six to 12 months, said in a telephone interview Feb. 14. “Under his leadership, McGraw-Hill has really moved forward.”

SEC’s Imprimatur

The moves also contributed to the company’s biggest challenge since the American Express takeover attempt as the Justice Department alleges S&P inflated grades on mortgage-backed securities to win business, helping trigger the worst financial crisis since the Great Depression.

The S&P unit’s designation as a Nationally Recognized Statistical Rating Organization by the SEC has benefited the company. Some investors are required to buy only securities rated by an NRSRO to meet regulatory requirements. S&P, Moody’s and Fitch were the first to obtain the license in 1975, and by 2011 provided 96 percent of all grades in the debt market, a November SEC report found.

That imprimatur became more valuable during the early and mid-2000s as easy credit led Wall Street firms to package record amounts of subprime mortgages and other assets into bonds, and companies ramped up borrowing.

Record Revenue