SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 2004
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
(212) 345-5000
Commission file number 1-5998
State of Incorporation: Delaware
I.R.S. Employer Identification No. 36-2668272
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. Yes X . NO___
As of October 31, 2004, there were outstanding 526,926,858 shares of common stock, par value $1.00 per share, of the registrant.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Marsh & McLennan Companies, Inc. and its subsidiaries ("MMC") and their representatives may from time to time make verbal or written statements (including certain statements contained in this report and other MMC filings with the Securities and Exchange Commission and in our reports to stockholders) relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, discussions concerning revenues, expenses, earnings, cash flow, elimination of market services agreements ("MSA"), capital structure, existing credit facilities, access to commercial paper markets, pension funding, the adverse consequences arising from market-timing issues at Putnam, including fines and restitution, the matters raised in the complaint filed by the New York Attorney General's Office stating a claim for, among other things, fraud and violations of New York State antitrust and securities laws, as well as market and industry conditions, premium rates, financial markets, interest rates, foreign exchange rates, contingencies, and matters relating to MMC's operations and income taxes. Such forward-looking statements are based on available current market and industry materials, experts' reports and opinions, and long-term trends, as well as management's expectations concerning future events impacting MMC. Forward-looking statements by their very nature involve risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by any forward-looking statements contained herein include, in the case of MMC's risk and insurance services business, changes in competitive conditions, the impact of litigation and other matters concerning the claims brought by the New York Attorney General's Office and state insurance regulators, loss of clients, inability to collect previously accrued MSA revenue, movements in premium rate levels, the conditions for the transfer of commercial risk and other changes in the global property and casualty insurance markets, natural catastrophes, mergers between client organizations, and insurance or reinsurance company insolvencies. Factors to be considered in the case of MMC's investment management business include changes in worldwide and national equity and fixed income markets, actual and relative investment performance, the level of sales and redemptions, and the ability to maintain investment management and administrative fees at historic levels; and with respect to all of MMC's activities, the ability to amend or replace MMC's existing credit facilities to provide long term support for commercial paper borrowings following the claims brought by the New York Attorney General, the continued strength of MMC's relationships with its employees and clients, the ability to successfully integrate acquired businesses and realize expected synergies, changes in general worldwide and national economic conditions, the impact of terrorist attacks, changes in the value of investments made in individual companies and investment funds, fluctuations in foreign currencies, actions of competitors or regulators, changes in interest rates or in the ability to access financial markets, developments relating to claims, lawsuits and contingencies, prospective and retrospective changes in the tax or accounting treatment of MMC's operations, and the impact of tax and other legislation and regulation in the jurisdictions in which MMC operates.
Forward-looking statements speak only as of the date on which they are made, and MMC undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. Please refer to Marsh & McLennan Companies' 2003 Annual Report on Form 10-K for "Information Concerning Forward-Looking Statements," its reports on Form 8-K, and quarterly reports on Form 10-Q.
MMC is committed to providing timely and materially accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, MMC and its operating companies use their websites to convey meaningful information about their businesses, including the anticipated release of quarterly financial results and the posting of updates of assets under management at Putnam. Monthly updates of total assets under management at Putnam will be posted to the MMC website the first business day following the end of each month. Putnam posts mutual fund and performance data to its website regularly. Assets for most Putnam retail mutual funds are posted approximately two weeks after each month-end. Mutual fund net asset value (NAV) is posted daily. Historical performance and Lipper rankings are also provided. Investors can link to MMC and its operating company websites through www.mmc.com.
PART I, FINANCIAL INFORMATION
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
-------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------------------------------------------------------
(In millions, except per share figures) 2004 2003 2004 2003
-------------------------------------------------------------------------------------------
Revenue:
Service revenue $2,931 $2,809 $9,072 $8,490
Investment income (loss) 38 28 143 64
--------------------------------------------------------------------------------------------
Operating revenue 2,969 2,837 9,215 8,554
--------------------------------------------------------------------------------------------
Expense:
Compensation and benefits 1,716 1,486 4,947 4,339
Other operating expenses 1,125 758 2,735 2,306
--------------------------------------------------------------------------------------------
Operating expenses 2,841 2,244 7,682 6,645
--------------------------------------------------------------------------------------------
Operating income 128 593 1,533 1,909
Interest income 6 6 15 19
Interest expense (55) (48) (153) (137)
--------------------------------------------------------------------------------------------
Income before income taxes
and minority interest 79 551 1,395 1,791
Income taxes 52 188 527 609
Minority interest, net of tax 6 6 12 17
--------------------------------------------------------------------------------------------
Net income $ 21 $ 357 $ 856 $1,165
--------------------------------------------------------------------------------------------
Basic net income per share $ .04 $ .67 $ 1.64 $2.18
--------------------------------------------------------------------------------------------
Diluted net income per share $ .04 $ .65 $ 1.60 $2.12
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Average number of shares outstanding-Basic 521 531 522 534
--------------------------------------------------------------------------------------------
Average number of shares outstanding-Diluted 533 550 536 550
--------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements.
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MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(In millions of dollars) 2004 2003
-------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 577 $ 665
-------------------------------------------------------------------------------
Receivables
Commissions and fees 2,608 2,388
Advanced premiums and claims 79 89
Other 427 342
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3,114 2,819
Less-allowance for doubtful
accounts and cancellations (135) (116)
-------------------------------------------------------------------------------
Net receivables 2,979 2,703
-------------------------------------------------------------------------------
Prepaid dealer commissions - current portion 98 150
Other current assets 360 330
Total current assets 4,014 3,848
Goodwill and intangible assets 7,816 5,797
Fixed assets, net 1,385 1,389
(net of accumulated depreciation and
amortization of $1,647 at September 30, 2004
and $1,448 at December 31, 2003)
Long-term investments 566 648
Prepaid dealer commissions 30 114
Prepaid pension 1,294 1,199
Other assets 1,970 2,058
-------------------------------------------------------------------------------
$17,075 $15,053
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The accompanying notes are an integral part of these consolidated statements.
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
-------------------------------------------------------------------------------
September 30, December 31,
(In millions of dollars) 2004 2003
--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,396 $ 447
Accounts payable and accrued liabilities 1,867 1,511
Accrued compensation and employee benefits 1,135 1,263
Accrued income taxes 391 272
Dividends payable 180 166
--------------------------------------------------------------------------------
Total current liabilities 4,969 3,659
--------------------------------------------------------------------------------
Fiduciary liabilities 4,068 4,228
Less - cash and investments held in
a fiduciary capacity (4,068) (4,228)
--------------------------------------------------------------------------------
- -
Long-term debt 3,458 2,910
--------------------------------------------------------------------------------
Other liabilities 2,990 3,033
--------------------------------------------------------------------------------
Commitments and contingencies
--------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $1 par value, authorized
6,000,000 shares, none issued - -
Common stock, $1 par value, authorized
1,600,000,000 shares, issued 560,641,640
shares at September 30, 2004 and December 31, 2003 561 561
Additional paid-in capital 1,244 1,301
Retained earnings 5,724 5,386
Accumulated other comprehensive loss (336) (279)
--------------------------------------------------------------------------------
7,193 6,969
Less - treasury shares, at cost,
34,541,597 shares at September 30, 2004 and
33,905,497 shares at December 31, 2003 (1,535) (1,518)
--------------------------------------------------------------------------------
Total stockholders' equity 5,658 5,451
--------------------------------------------------------------------------------
$17,075 $15,053
--------------------------------------------------------------------------------
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The accompanying notes are an integral part of these consolidated statements.
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
--------------------------------------------------------------------------------
For the Nine Months Ended September 30, 2004 2003
--------------------------------------------------------------------------------
(In millions of dollars)
--------------------------------------------------------------------------------
Operating cash flows:
Net income $ 856 $1,165
Adjustments to reconcile net income
to cash generated from (used for) operations:
Depreciation and amortization of fixed assets,
capitalized software and other intangible assets 334 292
Provision for deferred income taxes 96 34
(Gains) losses on investments (143) (64)
Changes in assets and liabilities:
Net receivables (277) (151)
Prepaid dealer commissions 136 181
Other current assets 60 32
Other assets 131 (122)
Accounts payable and accrued liabilities 421 53
Accrued compensation and employee benefits (128) (150)
Accrued income taxes 76 312
Other liabilities (125) (6)
Effect of exchange rate changes (7) 49
--------------------------------------------------------------------------------
Net cash generated from operations 1,430 1,625
--------------------------------------------------------------------------------
Financing cash flows:
Net increase/(decrease) in commercial paper 882 (1,057)
Proceeds from issuance of debt 1,213 798
Other repayments of debt (613) (49)
Purchase of treasury shares (522) (886)
Issuance of common stock 436 481
Dividends paid (502) (466)
--------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 894 (1,179)
--------------------------------------------------------------------------------
Investing cash flows:
Capital expenditures (281) (335)
Proceeds from sales related to fixed assets 9 12
Acquisitions (2,249) (99)
Other, net 106 89
--------------------------------------------------------------------------------
Net cash used for investing activities (2,415) (333)
--------------------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents 3 32
--------------------------------------------------------------------------------
(Decrease)/Increase in cash & cash equivalents (88) 145
Cash & cash equivalents at beginning of period 665 546
--------------------------------------------------------------------------------
Cash & cash equivalents at end of period $ 577 $ 691
--------------------------------------------------------------------------------
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The accompanying notes are an integral part of these consolidated statements.
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MMC, a professional services firm, is organized based on the different services that it offers. Under this organization structure, MMC operates in three principal business segments: risk and insurance services, investment management and consulting. The risk and insurance services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations and private clients. It also provides services principally in connection with originating, structuring and managing insurance, financial services and other industry-focused investments. The investment management segment primarily provides securities investment advisory and management services and administrative services for a group of publicly held investment companies and institutional accounts. The consulting segment provides advice and services to the managements of organizations primarily in the areas of retirement services, human capital, health care and group benefit programs, management consulting, organizational change and organizational design, economic consulting and corporate identity.
The consolidated financial statements included herein have been prepared by MMC pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations, although MMC believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in MMC's latest Annual Report on Form 10-K.
The financial information contained herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month and nine-month periods ended September 30, 2004 and 2003. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. The caption "Investment income (loss)" in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in current earnings. It includes other than temporary declines in the value of available for sale securities, the change in value of trading securities and the change in value of MMC's holdings in certain private equity funds. MMC's investments may include seed shares for funds, direct investments in insurance, consulting or investment management companies and investments in private equity funds.
In its capacity as an insurance broker or agent, MMC collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. MMC also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims are held in a fiduciary capacity. Interest income on these fiduciary funds, included in services revenue, amounted to $94 million and $91 million for the nine-month periods ended September 30, 2004 and 2003, respectively. Since fiduciary assets are not available for corporate use, they are shown in the balance sheet as an offset to fiduciary liabilities.
Net uncollected premiums and claims and the related payables amounted to $10.4 billion at September 30, 2004 and $11.5 billion at December 31, 2003, respectively. MMC is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of MMC and are not included in the accompanying Consolidated Balance Sheets.
Basic net income per share is calculated by dividing net income by the weighted average number of shares of MMC's common stock outstanding. Diluted net income per share is calculated by reducing net income for the potential minority interest associated with unvested shares granted under the Putnam Equity Partnership Plan and adding back dividend equivalent expense related to common stock equivalents. This result is then divided by the weighted average common shares outstanding, which have been adjusted for the dilutive effect of potentially issuable common shares.
The following reconciles net income to net income for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three- and nine-month periods ended September 30,2004 and 2003.
---------------------------------------------------------------------------
Three Months Ended Nine Months Ended
(In millions, except per share data) September 30, September 30,
2004 2003 2004 2003
----------------------------------------------------------------------------
Net income $ 21 $ 357 $856 $1,165
Increase for dividend equivalent
expense related to common stock
equivalents net of potential
minority interest associated with
the Putnam Class B Common Shares - - 2 -
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Net income for diluted earnings
per share $ 21 $357 $858 $1,165
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Basic weighted average common
shares outstanding 521 531 522 534
Dilutive effect of potentially
issuable common shares 12 19 14 16
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Diluted weighted average common
shares outstanding 533 550 536 550
---------------------------------------------------------------------------
Average stock price used to calculate
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The following schedule provides additional information concerning interest and income taxes paid for the nine-month periods ended September 30, 2004 and 2003.
-------------------------------------------------------------------------
In millions of dollars) 2004 2003
-------------------------------------------------------------------------
Interest paid $158 $123
Income taxes paid $293 $233
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The components of comprehensive income for the nine-month periods ended September 30, 2004 and 2003 are as follows:
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(In millions of dollars) 2004 2003
--------------------------------------------------------------------------------
Foreign currency translation adjustments $ 12 $ 159
Unrealized investment holding (losses) / gains,
net of income taxes (5) 55
Less: Reclassification adjustment for realized gains
included in net income, net of income taxes (63) (12)
Deferred loss on cash flow hedges,
net of income taxes (1) (2)
--------------------------------------------------------------------------------
Other comprehensive (loss)/income (57) 200
Net income 856 1,165
--------------------------------------------------------------------------------
Comprehensive income $ 799 $1,365
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In July 2004, MMC acquired Kroll Inc. ("Kroll"), the world's leading risk mitigation services firm in an all-cash $1.9 billion transaction in which Kroll shareholders received $37 for each outstanding share of Kroll common stock owned. The acquisition of Kroll broadens and deepens the capabilities of MMC's risk consulting and advisory businesses by adding services which clients need to reduce the impact of an adverse event. It expands MMC's capacity in several important sectors that complement existing businesses, such as corporate restructuring, business intelligence and investigations, security services, employee screening, and electronic evidence and litigation support. The estimated fair values of assets and liabilities are recorded in the financial statements as follows: net tangible assets of $148 million, identified intangible assets of $268 million; and goodwill of $1.5 billion. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when the purchase accounting is finalized.
In January 2004, MMC acquired Synhrgy HR Technologies, a leading provider of human resource technology and outsourcing services to Fortune 1000 companies, for a total cost of $115 million. Substantially all former employees of Synhrgy are now employees of MMC. Approximately $7 million of the purchase consideration is subject to continued employment of the selling shareholders and is being recorded as compensation expense over three years. In addition, MMC acquired Prentis Donegan for $57 million in cash in July of 2004, the Australia and New Zealand operations of Heath Lambert for $53 million in cash in March of 2004, and an additional 30% of the voting stock of PanAgora Asset Management (bringing its total to an 80% voting majority) for $3 million in cash in July of 2004.
The allocation of purchase consideration resulted in acquired goodwill of $1.7 billion in 2004. The acquisition of PanAgora added $8.2 billion to assets under management.
In April 2003, MMC acquired Oliver, Wyman & Company ("OWC") for $265 million comprising $159 million in cash, which will be paid over 4 years, and $106 million in MMC stock. Substantially all former employees of OWC are now employees of MMC. Approximately $35 million of the purchase consideration is subject to continued employment of the selling shareholders and is being recorded as compensation expense over four years.
Changes in the carrying amount of goodwill for the nine-month period ended September 30, 2004, are as follows:
------------------------------------------------------ (In millions of dollars) 2004 ------------------------------------------------------ Balance as of January 1, $5,533 Goodwill acquired 1,706 ----------------------------------------------------- Balance as of September 30, $7,239 ------------------------------------------------------ |
Subsequent to the filing of a Civil Complaint by the New York Attorney General (described in Note 13), MMC announced the suspension of market services agreements effective October 1, 2004. On October 26, 2004, MMC announced a number of reforms to its business model, including transparency to our clients of all fees and remuneration earned by Marsh and the permanent elimination of all market services agreements effective October 1, 2004. In addition, potential adverse client reaction to the allegations contained in the complaint may impact future levels of new business and renewals, particularly in the risk and insurance services segment. As a result of these changes in business conditions, MMC will conduct an interim goodwill impairment test during the fourth quarter of 2004.
Due to the timing of these events, and the need to fully assess the impact of the new business model on expected cash flows, completion of an interim goodwill impairment test was not practical prior to issuance of these financial statements. A preliminary analysis, based primarily on MMC's market capitalization movements since the last annual impairment test at June 30, 2004 does not indicate a goodwill impairment in any of MMC's reporting units. Goodwill allocable to each of MMC's reporting segments is as follows: Risk and Insurance Services $6,029 million; Investment Management $122 million; and Consulting $1,088 million.
The goodwill balance at September 30, 2004 and December 31, 2003 includes approximately $119 million and $121 million, respectively, of equity method goodwill.
Amortized intangible assets consist of the cost of client lists, client relationships and trade names acquired, and the rights to future revenue streams from certain existing private equity funds. MMC has no intangible assets with indefinite lives. The gross cost and accumulated amortization by major intangible asset class is as follows:
----------------------------------------------------------------------------------------------------------------------
September 30, 2004 December 31, 2003
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Net Net
Gross Accumulated Carrying Gross Cost Accumulated Carrying
(In millions of dollars) Cost Amortization Amount Amortization Amount
----------------------------------------------------------------------------------------------------------------------
Customer and marketing related $579 $105 $474 $222 $ 74 $148
Future revenue streams related to
existing private equity funds 199 104 95 199 92 107
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Total amortized intangibles $778 $209 $569 $421 $166 $255
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Aggregate amortization expense for the nine months ended September 30, 2004 and 2003 was $43 million and $30 million, respectively, and the estimated future aggregate amortization expense is as follows:
-------------------------------------- ------- -------------------------------- For the Years Ending December 31, Estimated (In millions of dollars) Expense -------------------------------------- ------- -------------------------------- 2004 $68 2005 $105 2006 $85 2007 $76 2008 $72 -------------------------------------- ------- -------------------------------- |
MMC has stock-based benefit plans under which employees are awarded grants of restricted stock, stock options and other forms of awards. As provided under SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") MMC has elected to continue to account for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has provided the required additional pro forma disclosures.
Pro Forma Information: In accordance with the intrinsic value method allowed by APB 25, no compensation cost has been recognized in the Consolidated Statements of Income for MMC's stock option and stock purchase plans and the stock options awarded under the Putnam Investments Equity Partnership Plan. If compensation cost for MMC's stock-based compensation plans had been determined consistent with the fair value method prescribed by SFAS No. 123, MMC's net income and net income per share for the three- and nine-month periods ended September 30, 2004 and 2003 would have been reduced to the pro forma amounts indicated in the table below.
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(In millions of dollars, Three Months Ended Nine Months Ended
except per share figures) September 30 September 30
2004 2003 2004 2003
--------------------------------------------------------------------------------
Net Income (loss):
As reported $ 21 $357 $856 $1,165
Adjustment for fair value method,
net of tax (33) (40) (117) (128)
--------------------------------------------------------------------------------
Pro forma net income (loss) $ (12) $317 $739 $1,037
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Net Income (loss) Per Share:
Basic:
As reported $ .04 $ .67 $1.64 $2.18
Pro forma $(.02) $ .60 $1.42 $1.94
Diluted:
As reported $ .04 $ .65 $1.60 $2.12
Pro forma $(.02) $ .58 $1.39 $1.90
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The pro forma information reflected above includes stock options issued under MMC Incentive and Stock Award plans and the Putnam Investments Equity Partnership Plan and stock issued under MMC stock purchase plans. Effective October 1, 2004, certain features in the MMC stock purchase plan were changed. Under these new features, the plan will purchase shares four times during the plan year (instead of one annual purchase on the last business day of the plan year as was done previously). Also, shares of MMC common stock will be purchased at a price that is 85% of the average market price of the stock on each quarterly purchase date. Previously, shares were purchased at a price based on 85% of the lower of the market price at the beginning or end of the plan year. The stock purchase plans represent approximately 20% of the adjustment from applying the fair value method in 2004 and 2003.
The majority of option grants under the stock benefit plans are made in the first quarter of each year. MMC granted 9.1 million and 15.9 million options in the nine months ended September 30, 2004 and 2003, respectively. A total of 17.2 million options were granted in the year ended December 31, 2003.
The estimated fair value of options granted was calculated using the Black-Scholes option pricing valuation model. The weighted average assumptions used in the valuation models are evaluated and revised, as necessary, to reflect market conditions and experience.
MMC maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible employees. MMC's policy for funding its tax qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth in the U.S. and international law.
The target asset allocation for the U.S. plans is 70% equities and 30% fixed income, and for the U.K. plans the target is 58% equities and 42% fixed income. As of September 30, 2004, the actual allocation of assets for the U.S. plan was 71% equities, 28% fixed income, and 1% cash. The allocation of plan assets for the U.K. plan was 57% equities, 42% fixed income and 1% cash.
Neither the U.S. nor the U.K. plan held any MMC securities.
The components of the net periodic benefit cost (income) for defined benefit and other postretirement plans are as follows:
Combined U.S. and significant non-U.S. Plans
------------------------------------------------------------------------------------------------
For the Three Months Ended September 30, Pension Benefits Postretirement Benefits
--------------------------- -----------------------
(In millions of dollars) 2004 2003 2004 2003
------------------------------------------------------------------------------------------------
Service cost $ 58 $ 47 $ 3 $ 2
Interest cost 105 90 4 5
Expected return on plan assets (154) (135) - -
Amortization of prior service credit (9) (9) (1) -
Amortization of transition asset (1) (1) - -
Recognized actuarial loss 22 6 - 1
------------------------------------------------------------------------------------------------
Net Periodic Benefit Cost (Income) 21 (2) 6 8
------------------------------------------------------------------------------------------------
Settlement loss - - - -
Special termination benefits 1 1 - -
------------------------------------------------------------------------------------------------
Total Expense (Income) $ 22 $ (1) $ 6 $ 8
------------------------------------------------------------------------------------------------
|
Combined U.S. and significant non-U.S. Plans
--------------------------------------------------------------------------------------------------
For the Nine Months Ended September 30, Pension Benefits Postretirement Benefits
--------------------------- -----------------------
(In millions of dollars) 2004 2003 2004 2003
------------------------------------------------------------------------------------------------
Service cost $173 $141 $ 8 $ 7
Interest cost 315 270 15 15
Expected return on plan assets (462) (405) - -
Amortization of prior service credit (28) (28) (1) (1)
Amortization of transition asset (3) (4) - -
Recognized actuarial loss 67 19 2 3
------------------------------------------------------------------------------------------------
Net Periodic Benefit Cost (Income) 62 (7) 24 24
------------------------------------------------------------------------------------------------
Settlement loss 1 - - -
Special termination benefits 2 3 - -
------------------------------------------------------------------------------------------------
Total Expense (Income) $ 65 $ (4) $ 24 $ 24
------------------------------------------------------------------------------------------------
|
U.S. Plans only
-----------------------------------------------------------------------------------------------
For the Three Months Ended September 30, Pension Benefits Postretirement Benefits
--------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
-----------------------------------------------------------------------------------------------
Service cost $ 20 $ 17 $3 $2
Interest cost 41 38 3 4
Expected return on plan assets (58) (57) - -
Amortization of prior service credit (9) (9) (1) -
Amortization of transition asset (1) (1) - -
Recognized actuarial loss 11 4 - 1
-----------------------------------------------------------------------------------------------
Net Periodic Benefit Cost (Income) $ 4 $ (8) $5 $7
--------------------------------------------------------------------------------------------------------
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U.S. Plans only
-----------------------------------------------------------------------------------------------
For the Nine Months Ended September 30, Pension Benefits Postretirement Benefits
-------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
-----------------------------------------------------------------------------------------------
Service cost $ 58 $ 49 $ 7 $ 6
Interest cost 123 115 13 13
Expected return on plan assets (173) (171) - -
Amortization of prior service credit (28) (28) (1) (1)
Amortization of transition asset (3) (4) - -
Recognized actuarial loss 34 13 2 3
-----------------------------------------------------------------------------------------------
Net Periodic Benefit Cost (Income) $ 11 $ (26) $21 $21
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In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("Act") became law. The net periodic benefit cost shown above includes the subsidy which did not have a material impact and reflects any changes in the third quarter of 2004. MMC will not change previously reported information.
Significant non-U.S. Plans only
----------------------------------------------------------------------------------------
For the Three Months Ended September 30, Pension Benefits Postretirement Benefits
------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
----------------------------------------------------------------------------------------
Service cost $38 $30 $ - $ -
Interest cost 64 52 1 1
Expected return on plan assets (96) (78) - -
Recognized actuarial loss 11 2 - -
---------------------------------------------------------------------- --------------
Net periodic benefit cost $17 $ 6 $1 $1
---------------------------------------------------------------------- --------------
Settlement loss - - - -
Special termination benefits 1 1 - -
---------------------------------------------------------------------- --------------
Total Expense $18 $ 7 $1 $1
---------------------------------------------------------------------- --------------
|
Significant non-U.S. Plans only
-----------------------------------------------------------------------------------------------
For the Nine Months Ended September 30, Pension Benefits Postretirement Benefits
----------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
-----------------------------------------------------------------------------------------------
Service cost $115 $ 92 $1 $1
Interest cost 192 155 2 2
Expected return on plan assets (289) (234) - -
Recognized actuarial loss 33 6 - -
-----------------------------------------------------------------------------------------------
Net periodic benefit cost $ 51 $19 $3 $3
-----------------------------------------------------------------------------------------------
Settlement loss 1 - - -
Special termination benefits 2 3 - -
-----------------------------------------------------------------------------------------------
Total Expense $54 $ 22 $3 $3
-----------------------------------------------------------------------------------------------
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The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:
Combined U.S. and significant non-U.S. Plans
----------------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
--------------------------- -- ----------------------------
2004 2003 2004 2003
------------------------------------------------- ------------ -- ------------ ---------------
Weighted average assumptions:
Expected return on plan assets 8.5% 8.5% - -
Discount rate 5.8% 6.1% 6.3% 6.6%
Rate of compensation increase 3.7% 3.8% - -
------------------------------------------------- ------------ -- ------------ ---------------
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11. Debt
----
MMC's outstanding debt is as follows:
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September 30, December 31,
(In millions of dollars) 2004 2003
---------------------------------------------------------------------------------------------------
Short-term:
Commercial paper $1,320 $ 440
Current portion of long-term debt 76 7
---------------------------------------------------------------------------------------------------
$1,396 $ 447
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Long-term:
Senior notes - 6.625% due 2004 $ - $ 599
Senior notes - 7.125% due 2009 399 399
Senior notes - 5.375% due 2007 (4.0% effective interest rate) (a) 516 520
Senior notes - 6.25% due 2012 (5.1% effective interest rate) (a) 267 269
Senior notes - 3.625% due 2008 249 248
Senior notes - 4.850% due 2013 249 249
Senior notes - 5.375% due 2014 646 -
Senior notes - 3 year floating note due 2007 (currently 1.74%) 499 -
Senior notes - 5.875% due 2033 295 295
Mortgage - 9.8% due 2009 200 200
Notes payable - 8.62% due 2005 66 69
Notes payable - 7.68% due 2006 61 61
Bank loans (non-U.S.) 71 -
Other 16 8
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3,534 2,917
Less current portion 76 7
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$3,458 $2,910
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(a) The effective interest rates result from unwinding fair value hedges, as discussed below.
The weighted average interest rates on MMC's outstanding short-term debt at September 30, 2004 and December 31, 2003 are 1.3% and 1.2%, respectively.
At September 30, 2004, MMC had the following revolving credit facilities:
$700 million which expires in June 2005, $355 million which expires in July
2005, $1.0 billion which expires in June 2007, and $700 million which
expires in June 2009. These facilities support MMC's commercial paper
borrowings. At September 30, 2004 no amounts were outstanding on any of the
facilities. Because of MMC's current inability to access the commercial
paper markets, MMC expects to need to use these facilities to refinance
substantially all of its outstanding commercial paper. As of September 30,
2004, MMC had $$1.3 billion and as of October 26, 2004 had approximately
$1.9 billion aggregate face amount of commercial paper outstanding,
substantially all of which matures before December 30, 2004.
The matters raised in the civil complaint filed by the Attorney General of the State of New York on October 14, 2004 (described in Note 13 to the consolidated financial statements) may have prohibited MMC from borrowing under the facilities, which contain standard representations as to no material adverse litigation and compliance with laws. The required lenders under each of the facilities agreed to waive the effect of such matters until December 30, 2004. In exchange, MMC agreed that the facilities will be used exclusively to support commercial paper borrowings, and that in order for MMC to borrow under the facilities, the aggregate face amount of outstanding commercial paper cannot exceed $1.9 billion. MMC also agreed not to repurchase its stock and not to permit any of its subsidiaries to incur debt other than under existing facilities during the waiver period.
MMC has commenced discussions with its lenders to amend or replace the facilities to provide longer-term liquidity. While MMC believes those discussions will achieve that goal before December 30, 2004, there is no assurance that they will be completed by such date. If the negotiations are unsuccessful, MMC will be in default under these facilities and has no other committed source to refinance the amounts expected to be outstanding under these facilities.
In July 2004 MMC purchased Kroll, Inc. in an all-cash transaction totaling approximately $1.9 billion. The purchase was initially funded with commercial paper borrowings. To support these borrowings, MMC negotiated a new $1.5 billion, one-year revolving credit facility. Following the acquisition, MMC issued $650 million of 5.375% Senior Notes due 2014 and $500 million of Floating Rate Notes due 2007. The proceeds from these notes were used to repay a portion of the commercial paper borrowings that had funded the Kroll purchase. Under the terms of the agreement of the above-mentioned credit facility, the amount of the facility was reduced by the proceeds from the issuance of the Senior Notes and Floating Rate Notes of approximately $1.15 billion. The available revolving credit facility now totals $355 million.
MMC repaid $600 million of long-term debt that matured in June, 2004 by issuing commercial paper.
In July 2003, MMC issued $300 million of 5.875% Senior Notes due in 2033. In February 2003, MMC issued $250 million of 3.625% Senior Notes due in 2008 and $250 million of 4.85% Senior Notes due in 2013 (the "2003 Notes"). The net proceeds from the 2003 Notes were used to pay down commercial paper borrowings.
During the third quarter of 2004, MMC did not repurchase any of its common stock. For the nine months ended September 30, 2004, MMC repurchased 11 million shares for $510 million, all of which was purchased in the first and second quarter. During October 2004, MMC repurchased .4 million shares for $14 million, under the terms of a pre-existing 10b5-1 plan. A 10b5-1 plan allows a company to purchase shares during a black-out period, provided the company communicates its share purchase instructions to the broker prior to the black-out period, pursuant to a written plan that may not be changed.
o On October 28, 2003, the Securities and Exchange Commission ("SEC") commenced a civil administrative and cease and desist proceeding against Putnam under the Investment Advisors Act of 1940 and the Investment Company Act of 1940. On November 13, 2003, pursuant to an agreement with Putnam, the SEC entered an order that made findings of certain facts, which Putnam neither admitted nor denied, and concluded that Putnam violated the Investment Advisors Act of 1940 and the Investment Company Act of 1940. The order imposed partial relief, including final censure, remedial undertakings, and a cease and desist order. The SEC's order found that since 1998 at least six of Putnam's investment management professionals engaged in excessive short-term trading of Putnam mutual funds in their personal accounts. The order also found that four of these employees engaged in trading in funds over which they had investment decision making responsibilities and access to non-public information regarding their funds' portfolios. The SEC further found that Putnam failed to disclose this potentially self-dealing securities trading to the boards or shareholders of the mutual funds it manages, failed to take adequate steps to detect and deter such trading activity through internal controls and failed in its supervision of these investment management professionals. Under the terms of the order, Putnam agreed to a number of remedial actions, including new employee trading restrictions, enhanced employee trading compliance, determination by an independent assessment consultant of the amount of restitution to be made by Putnam for losses attributable to excessive short-term trading by Putnam employees, the retention of an independent compliance consultant, the undertaking of periodic compliance reviews, and certification of compliance with the SEC. On April 8, 2004, Putnam entered into a final settlement of those charges under which Putnam is required to pay $5 million in disgorgement plus a civil monetary penalty of $50 million. In the event that the restitution calculated by the independent assessment consultant under the SEC order exceeds $10 million, Putnam will be responsible for paying any such excess. (The first $10 million would consist of the $5 million of disgorgement under the order and $5 million of the penalty). These amounts are to be distributed in accordance with the process established under the November 13, 2003 and April 8, 2004 SEC orders.
On October 28, 2003, the Massachusetts Secretary of the Commonwealth ("Massachusetts Securities Division") commenced a civil administrative proceeding against Putnam and two of its employees alleging violations of the state's securities law anti-fraud provisions. On April 8, 2004, simultaneously and in conjunction with the settlement of the above-referenced SEC proceeding, the Massachusetts Securities Division entered a Consent Order in final settlement of those charges. That Consent Order included a cease and desist order, and requires Putnam to pay $5 million in restitution and an administrative fine of $50 million. In the event that the restitution calculated by the independent assessment consultant under the Massachusetts order exceeds $15 million, Putnam will be responsible for paying any such excess. (The first $15 million would consist of the $5 million of restitution under the order and $10 million of the penalty). The restitution called for by the Consent Order will be determined and distributed by the same independent assessment consultant appointed pursuant to the November 13, 2003 and April 8, 2004 SEC orders.
The independent assessment consultant is currently engaged in the calculation of the amount of restitution that will be payable by Putnam under the SEC and Massachusetts orders. The Trustees of the Putnam funds may separately seek additional amounts from Putnam to assure that full restitution is made to Putnam fund shareholders.
In the fourth quarter of 2003, Putnam recorded a $10 million reserve for restitution. The $100 million in penalties was recorded in March 2004.
In a separate action, the SEC is seeking an injunction against two of the six investment management employees. All six are no longer employed by Putnam.
Additionally, Putnam has received document subpoenas and/or requests for information from the United States Attorney in Boston, the Florida Department of Financial Services, the Office of the Attorney General for the State of New York, Offices of the Secretary of State and the State Auditor for the State of West Virginia, the Vermont Securities Division, the NASD and the U.S. Department of Labor ("Department of Labor") inquiring into, among other things, matters that are the subject of the SEC and Massachusetts actions.
o Putnam has reached an agreement in principle with the staff of the Philadelphia office of the SEC to enter into a settlement of matters arising out of the SEC's investigation into Putnam's brokerage practices (as previously disclosed by MMC). The settlement would involve the alleged failure by Putnam to adequately disclosure its practices relating to the allocation of brokerage on portfolio transactions to broker-dealers who sold shares of Putnam mutual funds. Putnam ceased directing brokerage to broker-dealers in connection with the sale of fund shares as of January 1, 2004. Under the agreement in principle, Putnam would pay a civil penalty in the amount of $40 million and disgorgement in the amount of $1. The total amount of the payment would be paid to certain Putnam funds. As part of the settlement, Putnam would neither admit nor deny wrongdoing. The settlement remains subject to final documentation and approval by the Commissioners of the SEC.
o Putnam also has received document requests and subpoenas from the Massachusetts Securities Division, the Office of the Attorney General for the State of New York, the SEC, and the Department of Labor relating to plan expense reimbursement agreements between Putnam and certain multiemployer deferred compensation plans which are Putnam clients, and also relating to Putnam's relationships with consultants retained by multiemployer deferred compensation plans. The Massachusetts Securities Division has taken testimony from a number of Putnam employees relating to the same matters.
o Putnam also has received requests for information from the SEC's Boston Office, the Massachusetts Securities Division, and the Department of Labor relating to the correction of certain operational errors by Putnam Fiduciary Trust Company ("PFTC") in connection with the January 2001 transfer and investment of assets on behalf of a 401(k) defined contribution plan. These errors affected the plan and five of the Putnam mutual funds in which certain plan assets were invested. Putnam has made restitution to the plan and the affected funds. Putnam also has made a number of personnel changes, including senior managers, and has implemented changes in procedures.
Putnam also has received requests for information from the SEC's Boston Office and the Massachusetts Securities Division regarding the source and use of funds paid to a third-party vendor by PFTC in exchange for information consulting services. Putnam has re-processed the payment of these consulting expenses in accordance with Putnam's corporate expense payment procedures.
Putnam has learned that on or about September 9, 2004, the SEC issued a Formal Order directing a private investigation into the matters described above and designating officers to take testimony in furtherance of this investigation. In addition, on or about September 29, 2004, the Examination Staff of the SEC's Boston District Office communicated to Putnam and to the Board of Trustees of the Putnam mutual funds the Examination Staff's belief that Putnam and certain of its employees may have violated certain provisions of federal law in connection with these two matters. The Examination Staff has requested that Putnam provide to it additional information regarding these matters and a description of the step(s) Putnam has taken or intends to take with respect to these matters.
o Putnam has also recently received a request for information from the Department of Labor relating to investments by the Putnam Profit Sharing Plan and certain discretionary ERISA accounts in Putnam mutual funds that pay 12b-1 fees together with a preliminary indication from the Department of Labor that, in making such investments, Putman may have violated several provisions of ERISA. Putnam has also received requests for information from the Department of Labor regarding PFTC's treatment of gains generated by trading errors arising from securities trades effected by PFTC on behalf of its 401(k) defined contribution plan clients.
o The Fort Worth office of the SEC has raised issues about whether the current structure of the Putnam Research Fund's investment management fee, which includes a performance component in addition to a base fee, fully complies with SEC regulations concerning performance fees. Putnam is currently engaged in discussions with the Staff regarding possible adjustments to the fee structure. Retroactive application of such adjustments over the period since April 1, 1997 (the period during which the performance fee has been in effect) would result in a reduction in aggregate management fees for that period.
Putnam is fully cooperating with the regulatory authorities in connection with these matters.
"Market-Timing" Related Litigation. As of November 2, 2004, MMC and Putnam have received complaints in over 70 civil actions based on allegations of "market-timing" and "late trading" activities. These actions were filed in courts in New York, Massachusetts, California, Illinois, Connecticut, Delaware, Vermont, Kansas, and North Carolina. All of the actions except five have been transferred, along with actions against other mutual fund complexes, to the United States District Court for the District of Maryland for coordinated or consolidated pretrial proceedings. Plaintiffs who were appointed lead plaintiffs by the Court recently filed consolidated amended complaints in the actions. MMC and Putnam intend to move to dismiss the consolidated amended complaints pursuant to a schedule to be set by the Court.
The consolidated amended complaints are as follows:
o MMC and Putnam, along with certain of their current and former officers and directors, have been named in a consolidated amended class action complaint (the "MMC Class Action") purportedly brought on behalf of all purchasers of the publicly traded securities of MMC between January 3, 2000 and November 3, 2003 (the "Class Period"). In general, the MMC Class Action alleges that the defendants, including MMC, allowed certain mutual fund shareholders and fund managers to engage in market-timing in the Putnam family of funds. The complaint further alleges that this conduct was not disclosed until late 2003 in violation of the federal securities laws. The complaint alleges that, as a result of defendants' purportedly misleading statements or omissions, MMC's stock traded at inflated levels during the Class Period. The suit seeks unspecified damages and equitable relief.
o A consolidated amended complaint asserting shareholder derivative claims has been filed against members of MMC's Board of Directors, two of Putnam's former officers, and MMC as a nominal defendant (the "MMC Derivative Action"). The MMC Derivative Action generally alleges that the members of MMC's Board of Directors violated the fiduciary duties they owed to MMC and its shareholders by permitting, acquiescing in, and/or consciously disregarding the lack of formal controls regarding the oversight or monitoring of market-timing in Putnam mutual funds. The MMC Derivative Action alleges that, as a result of the alleged violation of defendants' fiduciary duties, MMC suffered damages. The suit seeks unspecified damages and equitable relief.
o MMC and Putnam have also been named as defendants in a consolidated amended complaint filed on behalf of a putative class of shareholders of certain Putnam funds, and in another consolidated amended complaint in which certain fund shareholders purport to assert derivative claims on behalf of all Putnam funds. These suits seek to recover unspecified damages allegedly suffered by the funds and their shareholders as a result of purported market- timing and late trading activity that allegedly occurred in certain Putnam funds. The derivative suit seeks additional relief, including termination of the investment advisory contracts between Putnam Investment Management and the funds, cancellation of the funds' 12b-1 plans and the return of all advisory and 12b-1 fees paid by the funds over a certain period of time. In addition to MMC and Putnam, the suits name as defendants various Putnam affiliates, certain trustees of Putnam funds, certain present and former Putnam officers and employees, and persons and entities that allegedly engaged in market- timing and/or late trading activities in Putnam funds. The complaints allege violations of the federal securities laws and state law. Putnam has also been named as a defendant in its capacity as a sub-advisor to a non-Putnam fund in a class action suit pending in the District of Maryland against another mutual fund complex.
o MMC, Putnam, and various of their officers, directors and employees have been named as defendants in two consolidated amended complaints that purportedly assert class action claims under ERISA (the "ERISA Actions"). The ERISA Actions, which have been brought by participants in MMC's Stock Investment Plan and Putnam's Profit Sharing Retirement Plan (collectively, the "Plans"), allege, among other things, that, in view of the market-timing trading activity that was allegedly allowed to occur at Putnam, the defendants knew or should have known that the investment of the Plans' funds in MMC's stock and Putnam's mutual fund shares was imprudent and that the defendants breached their fiduciary duties to the Plans' participants in making these investments. The ERISA actions seek unspecified damages, as well as equitable relief including the restoration to the Plans of all profits the defendants allegedly made through the use of the Plan's assets, an order compelling the defendants to make good to the Plans all losses to the Plans allegedly resulting from defendants' alleged breaches of their fiduciary duties, and the imposition of a constructive trust on any amounts by which any defendant allegedly was unjustly enriched at the expense of the Plans.
Putnam has agreed to indemnify the Putnam funds for any liabilities arising from market-timing activities, including those that could arise in the securities litigations, and MMC has agreed to guarantee Putnam's obligations in that regard.
Other Putnam Litigation. Putnam Investment Management, LLC and Putnam
Retail Management Limited Partnership have been sued in the United States
District Court for the District of Massachusetts for alleged violations of
Section 36(b) of the Investment Company Act of 1940 through the receipt of
purportedly excessive advisory and distribution fees paid by the mutual
funds in which plaintiffs purportedly owned shares. Plaintiffs seek, among
other things, to recover the compensation paid to defendants by the funds
for one year prior to the filing of the complaint, rescission of the
management and distribution agreements between defendants and the funds,
and a prospective reduction in fees. Defendants have filed a motion to
dismiss the complaint for failure to state a claim for relief.
The complaints in the above-referenced Putnam matters seek monetary damages and other forms of relief. At the present time, MMC's management is unable to estimate the impact that the outcome of the foregoing Putnam proceedings may have on MMC's consolidated results of operations, financial position or cash flows.
On October 14, 2004, the New York Attorney General's Office filed a civil complaint in state court against MMC and Marsh Inc. (collectively "Marsh") asserting claims under New York State law for fraudulent business practices, antitrust violations, securities fraud, unjust enrichment, and common law fraud. The complaint alleges that market services agreements and other similar agreements between Marsh and various insurance companies (the "Agreements"), created an incentive for Marsh to steer business to such insurance companies and to shield them from competition. The complaint further alleges that these Agreements were not adequately disclosed to Marsh's clients or to Marsh's investors. In addition, the complaint alleges that Marsh solicited fraudulent bids to create the appearance of competitive bidding, and that Marsh steered business away from insurers with less favorable Agreements and toward insurers with more favorable Agreements. The complaint seeks relief including an injunction prohibiting Marsh from engaging in the alleged wrongful conduct, disgorgement of all profits related to such conduct, restitution and unspecified damages, attorneys fees, and punitive damages. On October 25, 2004, the New York Attorney General's Office announced that the adoption by Marsh of dramatically new business procedures, installation of new leadership, a full examination of prior wrongdoing and a pledge of restitution to those harmed would make criminal prosecution of MMC unnecessary. MMC is assisting the New York Attorney General's Office's investigation of the allegations in the civil complaint and seeking to resolve the claims asserted therein.
Mercer Inc. ("Mercer") is not a defendant in the New York Attorney General's civil complaint against Marsh. However, the subpoena issued by the New York Attorney General's Office in connection with its investigation covers MMC and all of MMC's subsidiaries, including Mercer, and the New York Attorney General's Office has requested certain documents and information from Mercer. These requests for information and documents have primarily related to override payments earned by Mercer's health and group insurance consulting group. Mercer is cooperating fully with these requests for documents and information.
As of November 2, 2004, numerous private plaintiffs have filed civil actions against MMC, and its directors, officers and affiliates, alleging claims based on allegations that are similar or identical to those alleged in the New York Attorney General's Office's complaint as follows:
o United Policyholders, a not-for-profit organization, which is purporting to sue on behalf of the general public filed a complaint on August 3, 2004 in the Superior Court of California, San Diego County. The complaint alleges, among other things, that the Agreements themselves and the alleged failure to adequately disclose the Agreements constitute violations of the California Business Code provisions concerning unfair business practices and false advertising. The complaint seeks injunctive relief, restitution in an unspecified amount and attorneys fees.
o Three purported class actions alleging claims on behalf of a purported nationwide class of persons and entities who engaged MMC or its affiliates to provide insurance brokerage services during the purported class periods (the "purported client class actions") have been filed in United States District Courts for the Southern District of New York, the Eastern District of New York, and the District of New Jersey. The longest purported class period extends from August 26, 1994 to the date of the certification of the purported class, and the other two purported class periods extend from approximately October 1998 to October 2004. These complaints collectively include claims for violations of the Racketeering Influenced and Corrupt Organizations Act ("RICO"), federal and state antitrust violations, state unfair business practice violations, and common law claims including breach of contract, breach of fiduciary duty, breach of duty of loyalty, and unjust enrichment. The complaints seek unspecified damages, treble damages, disgorgement, restitution, injunctive relief and attorneys fees.
o Three purported class actions on behalf of individuals and entities who purchased or acquired MMC's publicly traded securities during the purported class periods (the "purported securities class actions") have been filed in the United States District Court for the Southern District of New York, and the purported class periods extend from approximately October 1999 to October 2004. These complaints allege, among other things, that MMC inflated its earnings during the class period by engaging in an unsustainable business practice which allegedly involved steering business to insurers with Agreements and shielding such insurers from competition. These complaints further allege, among other things, that defendants deceived the investing public regarding MMC's business, operations, management, and the intrinsic value of MMC's stock, and caused the plaintiffs and other members of the purported class to purchase MMC's securities at artificially inflated prices. These complaints include claims for violations of the federal securities laws based on the company's allegedly false or incomplete disclosures. The complaints seek unspecified compensatory damages and attorneys fees.
o Nine purported class actions alleging violations of the Employee Retirement Income Security Act ("ERISA") on behalf of participants in one or more MMC sponsored employee benefit plans (the "Plans") during the purported class periods (the "purported ERISA class actions") have been filed in the United States District Court for the Southern District of New York. The purported class periods vary, with the longest purposed class period extending from October 1, 1998 to the present. These complaints allege, among other things, that in view of the allegedly fraudulent bids and the receipt of contingent commissions pursuant to Agreements with insurers, the defendants knew or should have known that the investment of the Plans' funds in MMC stock was imprudent. These complaints assert claims for violations of ERISA based on, among other things, the alleged failure to properly manage the Plans' assets, the alleged failure to monitor the Plans' fiduciaries, the alleged failure to provide complete and accurate information to participants and beneficiaries of the Plans, and the alleged failure to avoid conflicts of interest and prohibited transactions. The complaints seek, among other things, unspecified compensatory damages, restitution, disgorgement, injunctive relief and attorneys fees.
o Seven derivative actions have been filed against MMC's directors and officers during the relevant time period (the "derivative actions") in the Court of Chancery of the State of Delaware and the United States District Court for the Southern District of New York. These derivative actions allege, among other things, that the directors and officers of MMC during the relevant time period breached their fiduciary duties by permitting or failing to take action to correct the alleged misconduct described in in the New York Attorney General's Office's complaint, are liable to MMC for damages arising from their breaches of fiduciary duty, and must contribute to or indemnify MMC for any damages MMC has suffered. MMC has also received demand letters asking the Board of Directors of MMC to take appropriate legal action against those directors and officers who are alleged to have caused damages to MMC based on the allegations contained in the New York Attorney General's Office's complaint.
Following the New York State Attorney General's investigation and civil complaint, MMC, Marsh Inc. and certain of their subsidiaries have become the subjects of insurance regulatory activity as follows:
On October 21, 2004, the New York Insurance Department issued a citation ordering MMC and a number of its affiliates which hold insurance licenses in New York State to appear at a November 23, 2004 hearing to show cause why regulatory action should not be taken against them. The citation charges that respondents have: (1) used fraudulent coercive and/or dishonest practices and has demonstrated untrustworthiness within the meaning of New York Insurance Law Section 2110(a)(4) (authorizing license nonrenewal, suspension, or revocation following notice and hearing); (2) violated New York General Business Law Section 340 (relating to contracts or agreements for monopoly or in restraint of trade); and (3) engaged in determined violations within the meaning of New York Insurance Law Section 2402(c) (relating to unfair methods of competition and unfair or deceptive acts or practices). The citation contemplates the following possible actions by the Department: (1) suspension or revocation of all licenses and denial of all pending licensing applications or renewals; (2) civil penalties authorized by New York Insurance Law Section 2127; (3) a report pursuant to New York Insurance Law Section 2405 charging determined violations; and (4) other punitive, remedial or preventive action, including restitution of all commissions and fees improperly received from insurers and/or insureds.
Marsh also has been contacted by insurance departments and attorneys general in a number of other states in which it is licensed to do business requesting information in various forms. Marsh is cooperating fully with each of these inquiries.
The complaints in the above-referenced Marsh Related Matters seek monetary damages and other forms of relief. At the present time, MMC's management is unable to estimate the ultimate impact that the outcome of the foregoing Marsh proceedings may have on MMC's consolidated results of operations, financial position or cash flows. MMC has recorded a reserve of $232 million in the third quarter of 2004 as the minimum potential liability in connection with these matters.
The SEC is examining the practices, compensation arrangements and disclosures of consultants that provide services to sponsors of pension plans or other market participants, including among other things, practices with respect to advice regarding the selection of investment advisors to manage plan assets. Mercer Investment Consulting, Inc. has received requests for information from the SEC in connection with this examination and is fully cooperating.
MMC, Putnam and Mercer have been advised by the Boston Office of the SEC that it is conducting an informal investigation of a program pursuant to which companies within the MMC group refer business to one another and receive compensation for such referrals. In connection with this investigation, MMC, Putnam and Mercer have received requests for information from the SEC and are fully cooperating.
MMC and its subsidiaries are subject to various other claims, lawsuits and proceedings consisting principally of alleged errors and omissions in connection with the placement of insurance or reinsurance and in rendering investment and consulting services. Some of these matters seek damages, including punitive damages, in amounts that could, if assessed, be significant. Insurance coverage applicable to such matters includes elements of both risk retention and risk transfer.
As part of the combination with Sedgwick, MMC acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited ("River Thames"), which was sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters by River Thames ("ILU Guarantee"). The policies covered by the ILU Guarantee are reinsured up to GBP 40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of September 30, 2004, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the ILU Guarantee. To the extent River Thames or the reinsurer is unable to meet their obligations under those policies, a claimant may seek to recover from MMC under the guarantee.
Although the ultimate outcome of these other matters cannot be ascertained and liabilities in indeterminate amounts may be imposed on MMC and its subsidiaries, on the basis of present information, it is the opinion of MMC's management that the disposition or ultimate determination of these claims, lawsuits or proceedings should not have a material adverse effect on MMC's consolidated financial position or cash flows, but may be material to MMC's operating results in any particular period.
MMC through Putnam, manages $3.7 billion in the form of Collateralized Debt Obligations ("CDO") and Collateralized Bond Obligations ("CBO"). Separate limited liability companies were established to issue the notes and to hold the underlying collateral, which consists of high-yield bonds and other securities. Putnam serves as the collateral manager for the CDOs and CBOs. The maximum loss exposure related to the CDOs and CBOs is limited to Putnam's investment totaling $7.7 million, reflected in Long-term investments in the Consolidated Balance Sheets at September 30, 2004. MMC has concluded it is not the primary beneficiary of these structures under FIN 46 "Consolidation of Variable Interest Entities."
MMC operates in three principal business segments based on the services provided. Segment performance is evaluated based on operating income, which is after deductions for directly related expenses and minority interest but before corporate expenses, charges, credits or insurance recoveries related to September 11, 2001, and charges or credits related to integration and restructuring reserves. The accounting policies of the segments are the same as those used for the consolidated financial statements.
Selected information about MMC's operating segments for the nine-month periods ended September 30, 2004 and 2003 follow:
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Segment Operating
(In millions of dollars) Revenue Income
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2004
Risk and Insurance Services $5,585 (a) $1,086
Investment Management 1,336 124
Consulting 2,294 308
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$9,215 $1,518
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2003
Risk and Insurance Services $5,093 (a) $1,351
Investment Management 1,447 364
Consulting 2,014 278
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$8,554 $1,993
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(a)Includes interest income on fiduciary funds ($94 million in 2004 and $91 million in 2003).
A reconciliation of the total segment operating income to income before income taxes and minority interest in the consolidated statements of income is as follows:
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(In millions of dollars) 2004 2003
--------------------------------------------------------------------------------
Total segment operating income $1,518 $1,993
Corporate income/(expense) 3 (101)
Reclassification of minority interest 12 17
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Operating income 1,533 1,909
Interest income 15 19
Interest expense (153) (137)
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Total income before income taxes and
minority interest $1,395 $1,791
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During the first quarter of 2004, MMC reached final settlement for insured losses totaling $278 million related to the World Trade Center. The replacement value of assets exceeded the book value by $105 million, which was recorded as a reduction of Corporate operating expenses.
Operating segment revenue by product for the nine-month periods ended September 30, 2004 and 2003 is as follows:
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(In millions of dollars) 2004 2003
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Risk & Insurance Services
Risk Management and Insurance Broking $3,725 $3,583
Reinsurance Broking and Services 688 646
Risk Consulting and Technology (a) 427 213
Related Insurance Services 745 651
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Total Risk and Insurance Services 5,585 5,093
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Investment Management 1,336 1,447
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Consulting
Retirement Services 1,022 906
Management and Organizational Change 420 315
Health Care & Group Benefits 310 300
Human Capital 305 281
Economic 123 109
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2,180 1,911
Reimbursed Expenses 114 103
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Total Consulting 2,294 2,014
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Total $9,215 $8,554
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(a) Includes the operations of Kroll, acquired in 2004; Marsh risk consulting, previously reported in Risk and Insurance broking; and claims management, previously reported in Related Insurance Services.
Commissions and Fees Receivable by operating segment at September 30, 2004 and December 31, 2003 are as follows:
-------------------------------------------------- ------------------------
(In millions of dollars) 2004 2003
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Risk and Insurance Services $1,480 $1,365
Investment Management 385 380
Consulting 743 642
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Total $2,608 $2,387
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Marsh & McLennan Companies, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations Third Quarter and Nine Months Ended September 30, 2004
General
Marsh & McLennan Companies, Inc. and Subsidiaries ("MMC") is a professional services firm. MMC subsidiaries include Marsh Inc. ("Marsh"), the world's largest risk and insurance services firm; Putnam Investments ("Putnam"), one of the largest investment management companies in the United States; and Mercer Inc. ("Mercer"), a major global provider of consulting services. Approximately 60,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries.
MMC operates in three principal business segments based on the services provided. Segment performance is evaluated based on operating income, which is after deductions for directly related expenses and minority interest but before corporate expenses, charges, credits or insurance recoveries related to September 11, 2001, and charges or credits related to integration and restructuring reserves.
For a description of critical accounting policies, including those which involve significant management judgment, see Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to the consolidated financial statements in MMC's Annual Report on Form 10-K ("2003 10-K") for the year ended December 31, 2003.
This Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain statements relating to future results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See "Information Concerning Forward-Looking Statements" on page two of this filing. This Form 10-Q should be read in conjunction with the 2003 10-K.
Recent Developments
The historical financial results presented below should be viewed in light of recent developments, which will significantly change the risk and insurance services business model in the future.
On October 14, 2004, the New York Attorney General's Office filed a Civil Complaint (the "Civil Complaint") in state court against MMC and Marsh, Inc. ("Marsh") asserting claims under New York State law for fraudulent business practices, antitrust violations, securities fraud, unjust enrichment and common law fraud. The Civil Complaint is discussed more fully in Note 13 to the consolidated financial statements.
MMC has launched an internal investigation of the issues raised in the Attorney General's complaint (reporting directly to MMC's Board of Directors). MMC is fully cooperating with the New York Attorney General's Office.
On October 15, 2004, MMC announced the suspension of all market services agreements effective October 1, 2004.
On October 25, 2004, Michael Cherkasky was named Chief Executive Officer of MMC and was elected to MMC's Board of Directors. Robert Erburu was named lead director of the MMC Board of Directors.
On October 26, 2004, MMC announced changes to its business model, focused on the following:
o Complete transparency to clients of all fees and remuneration to be received by Marsh for performing its services.
o Permanent elimination of market services agreements and similar agreements.
o A centralized placement process to provide purchasing power and industry expertise to our clients, which will also provide a clear and auditable trail of placements to ensure compliance with business practices.
On November 1, 2004, Marsh announced it is taking steps to collect all amounts owed to it by insurance companies under market services agreements that were in effect prior to October 15, 2004. Amounts collected will be placed into a segregated account to be used in connection with any agreement to compensate Marsh clients it may reach with the Attorney General of the State of New York.
MMC recorded a $232 million charge in the third quarter of 2004, which equals the recorded net accounts receivable related to market services agreements at September 30, 2004. MMC believes that in light of existing facts and circumstances, $232 million is the appropriate amount to reserve as the minimum potential liability in connection with these matters. The ultimate settlement may vary significantly from that amount. The liability will be reviewed at each quarterly reporting date, based on the facts and circumstances at that time as additional information becomes available and settlement negotiations progress. In the future, the amount accrued will not necessarily be equal to the amount of market services agreement revenue collected and/or accrued.
These recent developments result in a number of near-term issues that MMC must resolve and will impact the way MMC and Marsh conduct business.
Market services revenue declined to $46 million in the third quarter of 2004 from $177 million in the prior year. Due to the filing of the Attorney General's civil complaint, MMC was unable to complete the normal process to verify amounts earned or determine that collection of these amounts is reasonably assured for certain contracts. As a result, MMC did not accrue a significant portion of market services revenue related to placement activity in the third quarter of 2004. Almost all of the decline in market services revenue in the third quarter is due to the above factors and not a decline in the amount of business placed. Although some insurance companies have indicated they may delay payments until the issues concerning market services agreements are clarified, MMC intends to collect all market services revenue earned prior to October 1, 2004. Any such revenue not accrued at September 30, 2004 will be recognized as revenue when collected in the fourth quarter or in 2005. Market services revenues for the fourth quarter and year ended December 31, 2003 were $293 million and $845 million, respectively. No market services revenue will be earned for placements made after October 1, 2004.
The following table provides quarterly market services revenue for 2003 and 2004:
------------------------------------------------------------
Quarter Ended 2004 2003
------------------------------------------------------------
March 31 $211 $173
June 30 211 202
September 30 46 177
------------------------------------------------------------
Year to Date $468 552
------------------------------------------------------------
December 31 293
------------------------------------------------------------
Total $845
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|
Putnam has reached an agreement in principle with the staff of the Philadelphia office of the SEC to enter into a settlement of matters arising out of the SEC's investigation into Putnam's brokerage practices (as previously disclosed by MMC). The settlement would involve the alleged failure by Putnam to adequately disclosure its practices relating to the allocation of brokerage on portfolio transactions to broker-dealers who sold shares of Putnam mutual funds. Putnam ceased directing brokerage to broker-dealers in connection with the sale of fund shares as of January 1, 2004. Under the agreement in principle, Putnam would pay a civil penalty in the amount of $40 million and disgorgement in the amount of $1. The total amount of the payment would be paid to certain Putnam funds. As part of the settlement, Putnam would neither admit nor deny wrongdoing. The settlement remains subject to final documentation and approval by the Commissioners of the SEC.
Across all of its businesses, MMC must preserve its capabilities to serve clients and the capacity to support staff development. Retention of employees is critical to the organization. As a result, MMC is developing compensation programs to retain, motivate, and reward employees.
MMC is examining all parts of its cost structure to identify areas where expenses can be reduced appropriately. Discretionary expenses are under review as are ways to increase efficiencies through technology and other methods such as consolidating facilities. MMC's staff levels must also be adjusted based on the realities of the marketplace and MMC's current situation. On a global basis, MMC expects to reduce staff by 5% or approximately 3,000 positions, with three-quarters coming from risk and insurance services. This includes staff reductions associated with the previously announced combination of the defined contribution administration business of Putnam with Mercer's human resources outsourcing operations, as well as the integration of Kroll.
The actions discussed above are expected to result in pretax restructuring charges of approximately $325 million over the next six months. The of certain discretionary expenses and the effect of the restructuring should result in annual cost savings of approximately $400 million when fully implemented. These initiatives will allow MMC to continue to provide excellent service to clients, make the best use of its global capabilities, and establish a level of profitability that will contribute to maximizing long-term value for shareholders.
The uncertainty regarding the change in Marsh's business model, the impact of eliminating market services agreements and potential fines and/or penalties have resulted in credit rating downgrades, the inability to access commercial paper markets in the short term and the need to renegotiate MMC's revolving credit facilities.
At September 30, 2004 MMC had four revolving credit facilities aggregating $2.755 billion, in the following amounts: $700 million which expires in June 2005, $355 million which expires in July 2005, $1 billion which expires in June 2007 and $700 million which expires in June 2009. These facilities support MMC's commercial paper borrowings. On September 30, 2004, no amounts were outstanding under any of the facilities. Because of MMC's inability to access the commercial paper markets, MMC expects to need to use these facilities to refinance substantially all of its outstanding commercial paper. As of September 30, 2004, MMC had $1.3 billion and as of October 26, 2004 had approximately $1.9 billion aggregate face amount of commercial paper outstanding, substantially all of which matures before December 30, 2004.
The matters raised by the civil complaint filed by the Attorney General of the State of New York on October 14, 2004 and described in MMC's Current Report on Form 8-K filed on October 15, 2004 may have prohibited MMC from borrowing under the facilities, which contain standard representations as to no material adverse litigation and compliance with laws. The lenders under each of the facilities agreed to waive the effect of such matters until December 30, 2004. In exchange, MMC agreed that the facilities will be used exclusively to repay existing commercial paper borrowings, and that in order for MMC to borrow under the facilities, the aggregate face amount of outstanding commercial paper cannot exceed $1.9 billion. MMC also agreed not to repurchase its stock and not to permit any of its subsidiaries to incur debt other than under existing facilities during the waiver period.
MMC has commenced discussions with its lenders to amend or replace the facilities to provide longer-term liquidity. While MMC believes those discussions will achieve that goal before December 30, 2004, there is no assurance that they will be completed by such date. If the negotiations are unsuccessful, MMC will be in default under these facilities and has no other committed source to refinance the amounts expected to be outstanding under these facilities.
In October 2004, MMC's credit ratings were lowered by Standard & Poor's Corporation to "BBB-plus" and "A-2", for its senior debt and short term debt, respectively and remain on credit watch with negative implications. Moody's Investor Services also lowered MMC's ratings to Baa2 for its senior debt and to P-2 for its short term debt and remain under review for possible further downgrade. These downgrades will result in increased borrowing costs and limit MMC's access to the commercial paper markets.
Consolidated Results of Operations
------------------------------------------------------------------------------
Third Quarter Nine Months
(In millions of dollars) 2004 2003 2004 2003
----------------------------------------------------------------- ------------
Revenue:
Services Revenue $2,931 $2,809 $9,072 $8,490
Investment Income (Loss) 38 28 143 64
------------------------------------------------------------------------------
Operating Revenue 2,969 2,837 9,215 8,554
------------------------------------------------------------------------------
Expense:
Compensation and Benefits 1,716 1,486 4,947 4,339
Other Operating Expenses 1,125 758 2,735 2,306
------------------------------------------------------------------------------
Operating Expenses 2,841 2,244 7,682 6,645
-------------------------------------------------------- ----------------------
Operating Income $ 128 $ 593 $1,533 $1,909
------------------------------------------------------------------------------
Operating Income Margin 4.3% 20.9% 16.6% 22.3%
------------------------------------------------------------------------------
Diluted Earnings per Share $ .04 $ .65 $ 1.60 $ 2.12
----------------------------------------------------------------- ------------
|
Operating income in the third quarter of 2004 declined 78% to $128 million, reflecting decreases in risk and insurance services and investment management, partly offset by an increase in Consulting. Results in risk and insurance services reflect a $232 million charge related to any agreement to compensate Marsh clients it may reach with the New York Attorney General concerning market services agreements, and a $132 million decrease in revenue related to market services agreements, which declined to $46 million from $177 million in the prior year. Results at Putnam reflect a decline in revenue resulting from lower assets under management. The results also include a non-deductible charge of $40 million for an agreement in principle with the Philadelphia office of the SEC to settle Putnam's alleged failure to make adequate disclosures regarding certain brokerage allocation practices prior to 2004. Consulting results reflect growth in underlying revenue, with strong growth in management and organizational change consulting.
An analysis of MMC's operating revenue by segment, and the impact of foreign currency translation, acquisitions and dispositions is as follows:
------------------------------------------------------------------------------------------------------------------------------
Components of Revenue Change
--------------------------------------
Three Months Ended % Change Acquisitions/
September 30, GAAP Underlying Dispositions Currency
(In millions, except percentage figures) 2004 2003 Revenue Revenue (a) Impact Impact
--------------------------------------------------------------------------------------------------------------------------
Risk and Insurance Services
Risk Management and Insurance Broking $1,030 $1,134 (9)% (13)% 1% 3%
Reinsurance Broking and Services 206 209 (1)% (3)% - 2%
Risk Consulting and Technology (b) 272 73 268% 6% 262% -
Related Insurance Services (c) 266 224 18% 13% 4% 1%
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Total Risk and Insurance Services (d) 1,774 1,640 8% (7)% 13% 2%
-------------------------------------------------------------------------------------------------------------------------
Investment Management 429 507 (16)% (16)% - -
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Consulting
Retirement Services (d) 333 300 11% (1)% 5% 7%
Management and Organizational Change 145 117 24% 17% 2% 5%
Health Care and Group Benefits (d) 99 99 1% (2)% - 3%
Human Capital 108 100 9% 6% - 3%
Economic 42 38 9% 7% - 2%
--------------------------------------------------------------------------------------------------------------------------
727 654 11% 3% 3% 5%
Reimbursed Expenses 39 36
--------------------------------------------------------------------------------------------------------------------------
Total Consulting 766 690 11% 3% 3% 5%
--------------------------------------------------------------------------------------------------------------------------
Total Revenue $2,969 $2,837 5% (6)% 8% 3%
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|
-------------------------------------------------------------------------------------------------------------------------
Components of Revenue Change
-------------------------------------
Nine Months Ended % Change Acquisitions/
September 30, GAAP Underlying Dispositions Currency
(In millions, except percentage figures) 2004 2003 Revenue Revenue (a) Impact Impact
---------------------------------------------------------------------------------------------------------------------------
Risk and Insurance Services
Risk Management and Insurance Broking $3,725 $3,583 4% (1)% 1% 4%
Reinsurance Broking and Services 688 646 6% 4% - 2%
Risk Consulting and Technology (b) 427 213 100% 9% 91% -
Related Insurance Services (c) 745 651 14% 12% 1% 1%
--------------------------------------------------------------------------------------------------------------------------
Total Risk and Insurance Services (d) 5,585 5,093 10% 2% 5% 3%
--------------------------------------------------------------------------------------------------------------------------
Investment Management 1,336 1,447 (8)% (8)% - -
--------------------------------------------------------------------------------------------------------------------------
Consulting
Retirement Services (d) 1,022 906 13% - 5% 8%
Management and Organizational Change 420 315 33% 12% 16% 5%
Health Care and Group Benefits (d) 310 300 3% 1% - 2%
Human Capital 305 281 9% 3% - 6%
Economic 123 109 12% 10% - 2%
--------------------------------------------------------------------------------------------------------------------------
2,180 1,911 14% 3% 5% 6%
Reimbursed Expenses 114 103
--------------------------------------------------------------------------------------------------------------------------
Total Consulting 2,294 2,014 14% 3% 5% 6%
--------------------------------------------------------------------------------------------------------------------------
Total Revenue $9,215 $8,554 8% 1% 4% 3%
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|
(a) Underlying basis measures the change in revenue before the impact of
acquisitions and dispositions using constant currency exchange rates.
(b) Includes the operations of Kroll, acquired in 2004 and Marsh risk
consulting, previously reported in Risk and Insurance broking.
(c) Includes U.S. affinity, wholesale broking, underwriting management,
claims management and MMC Capital businesses.
(d) Certain reclassifications have been made to prior year amounts to
conform with current presentation. The table below provides an analysis of
revenue by quarter, which reflects the reclassification of previously
reported results.
--------------------------------------------------------------------------------------------------
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------------
2004
Risk and Insurance Services
Risk Management and Insurance Broking 1,411 1,284 1,030 -
Reinsurance Broking and Services 275 207 206 -
Risk Consulting and Technology 75 80 272 -
Related Insurance Services 233 246 266 -
--------------------------------------------------------------------------------------------
Total Risk and Insurance Services 1,994 1,817 1,774 -
--------------------------------------------------------------------------------------------
2003
Risk and Insurance Services
Risk Management and Insurance Broking 1,250 1,199 1,134 1,298
Reinsurance Broking and Services 243 194 209 151
Risk Consulting and Technology 70 70 73 87
Related Insurance Services 210 217 224 239
--------------------------------------------------------------------------------------------
Total Risk and Insurance Services 1,773 1,680 1,640 1,775
--------------------------------------------------------------------------------------------
|
Revenue, derived mainly from commissions and fees, increased 5% from the third quarter of 2003. The increase in revenue was primarily due to the impact of acquisitions and foreign exchange. Consolidated revenue decreased 6% on an underlying basis, which measures the change in revenue before the impact of acquisitions and dispositions and using constant currency exchange rates. Underlying revenue growth in consulting was more than offset by a decrease in investment management revenue and a decrease in market services revenue in risk and insurance services.
Revenue increased 8% in risk and insurance services. Acquisitions, including the acquisition of Kroll and Prentis Donegan in the third quarter, contributed 13% to the segment's revenue growth. Revenue in this segment declined 7% on an underlying basis in the third quarter of 2004 resulting primarily from the decline in market services revenues. The impact of declining insurance premium rates was largely offset by new business development within risk and insurance broking. Related insurance services reflects growth in claims management and higher investment income at MMC Capital. Consulting revenue grew 3% on an underlying basis. Higher demand for management advice generated an increase in management and organizational change consulting. Acquisitions contributed 3% to the revenue growth of consulting largely reflecting the acquisition of Synhrgy HR Technologies. Revenue decreased 16% in the investment management segment due to a decline in the amount of assets under management on which fees are earned, partially offset by transaction fees related to private equity funds. Average assets under management declined 23% in the third quarter compared with 2003.
Revenue in the first nine months of 2004 increased 8% from the same period last year primarily due to the impact of acquisitions and foreign exchange, while underlying revenue increased 1%. Underlying revenue grew 2% in the risk and insurance services segment during the first nine months of the year, due to growth in risk consulting, reinsurance broking, and related insurance services. Underlying revenue declined 1% for risk management and insurance broking primarily due to a decline in market services revenue. Acquisitions and foreign exchange contributed 5% and 3%, respectively, to revenue growth for the segment. Consulting revenue grew 3% on an underlying basis and acquisitions increased revenue by 5%. Revenue decreased 8% in the investment management segment due to lower fees resulting from the decline in assets under management, partially offset by higher investment income related to the sale of Putnam's interest in its Italian joint venture and related securities.
Future revenues in risk and insurance services will be impacted by the elimination of market services revenues and the implementation of a new business model, discussed in more detail in the risk and insurance services section of this MD&A.
Operating expenses increased 27% in the third quarter of 2004. The effect of acquisitions and foreign exchange and charges for potential compensation to Marsh clients and Putnam's regulatory settlements increased expenses by 13% and 12%, respectively. Underlying expenses excluding the charges for potential damages and settlements increased 2%, resulting from a 4% increase in compensation and benefits partly offset by a 3% decline in other operating expenses.
Operating expenses increased 16% in the first nine months of 2004, of which 8% was due to the effects of acquisition and foreign exchange. Expenses in 2004 also include a $232 million charge for any agreement to compensate Marsh clients related to market services agreements, regulatory fines of $140 million related to Putnam's settlement agreements with the Securities and Exchange Commission ("SEC") and the office of the Secretary of the Commonwealth of Massachusetts, and a credit of $105 million from the final settlements with insurers for claims related to the September 11, 2001 attack on the World Trade Center ("WTC"). Combined, these items increased expenses by 4%. Underlying expenses excluding these three items increased 3% due to higher compensation and benefits costs which includes severance and increased pension costs, and other costs related to regulatory issues. These increases were partially offset by a decrease in amortization expense for prepaid dealer commissions and a credit to compensation expense related to the settlement with Putnam's former chief executive officer.
Risk and Insurance Services
-------------------------------------------------------------------------------
Third Quarter Nine Months
-------------------------------------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
----------------------------------------------------------------- -------------
Revenue $1,774 $1,640 $5,585 $5,093
Expense 1,780 1,252 4,499 3,742
----------------------------------------------------------------- -------------
Operating Income $ (6) $ 388 $1,086 $1,351
----------------------------------------------------------------- -------------
Operating Income Margin (0.3)% 23.7% 19.4% 26.5%
----------------------------------------------------------------- -------------
|
Market services revenue declined to $46 million in the third quarter of 2004 from $177 million in the prior year. Due to the filing of the Attorney General's civil complaint, MMC was unable to complete the normal process to verify amounts earned or determine that collection of these amounts is reasonably assured for certain contracts. As a result, MMC did not accrue a significant portion of market services revenue related to placement activity in the third quarter. Almost all of the decline in market services revenue in the third quarter is due to the above factors and not a decline in the amount of business placed. Although some insurance companies have indicated they may delay payments until the issues concerning market services agreements are clarified, MMC intends to collect all market services revenue earned prior to October 1, 2004. Any such revenue not accrued at September 30, 2004 will be recognized in earnings when collected in the fourth quarter or in 2005. Market services revenues for the fourth quarter and year ended December 31, 2003 were $293 million and $845 million, respectively. No market services revenue will be earned for placements made after October 1, 2004. Revenue for the first nine months of 2004 grew 10% over the same period of 2003, reflecting the impact of acquisitions and foreign exchange and a higher volume of business. Underlying revenue growth of 2% for the nine months was negatively impacted by the reduction of market services revenues in the third quarter, and declining insurance premium rates. Revenue from market services agreements was $468 million and $552 million for the nine months in 2004 and 2003, respectively. Reinsurance broking and services grew 4% on an underlying basis primarily resulting from renewals and related insurance services grew 12% due to strong growth in claims management and higher investment income at MMC Capital. As discussed above, future revenue levels may be impacted by the implementation of a new business model in risk and insurance services and an increasingly competitive insurance marketplace.
Risk and insurance services expenses increased 42% over the third quarter of 2003. Approximately 18% of the increase is due to a $232 million charge for potential compensation to Marsh clients related to market services agreements. The effects of acquisitions and foreign exchange increased expenses by 19%. On an underlying basis expenses excluding the charge for compensation to Marsh clients increased 5%. Compensation and benefits increased by 7%, primarily due to increased pension and benefits costs, and other operating expenses increased 2%. For the nine months, operating expenses increased 20% over 2003. The effect of acquisitions and foreign exchange, and the charge for potential compensation to Marsh clients increased expenses by 10%, and 6%, respectively. Underlying expenses excluding the charge for compensation to Marsh clients increased 4%. On an underlying basis, compensation and benefits increased 6% and other operating expenses were flat.
Investment Management
-------------------------------------------------------------------------------
Third Quarter Nine Months
-------------------------------------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
-------------------------------------------------------------------------------
Revenue $429 $507 $1,336 $1,447
Expense 374 371 1,212 1,083
-------------------------------------------------------------------------------
Operating Income $55 $136 $124 $364
-------------------------------------------------------------------------------
Operating Income Margin 12.8% 26.8% 9.3% 25.2%
-------------------------------------------------------------------------------
|
Putnam receives service fees from the Putnam Mutual Funds for transfer agency, custody and other administrative services, as contracted by the Trustees of the Putnam Mutual Funds. In the third quarter of 2004, the contract for transfer agency services was converted from cost of service to a fixed rate per mutual fund shareholder account. As part of the change in the service fee contract, Putnam will incur certain expenses previously borne by the Putnam Mutual Funds. The change in the service fee calculation resulted in an increase in service fee revenue of $19 million for the third quarter of 2004. Expenses incurred under the contract increased third quarter expenses by $21 million. The change in the service fee contract is expected to have an immaterial impact on operating income in future quarters, but will reduce operating margins by approximately 100 basis points.
Putnam's revenue declined 8% in the first nine months of 2004 compared to the same period in 2003. The decrease is primarily driven by lower fees due to a decline in assets under management, partially offset by higher investment gains and higher equity income related to T.H.Lee.
At September 30, 2004, assets held in equity securities represented 68% of assets under management, compared with 74% at September 30, 2003, while investments in fixed income products represented 32%, compared with 26% at September 30, 2003.
Quarter-end and average assets under management are presented below:
-------------------------------------------------------------------------------
(In billions of dollars) 2004 2003
-------------------------------------------------------------------------------
Mutual Funds:
Growth Equity $37 $ 48
Value Equity 39 42
Blend Equity 27 36
Fixed Income 37 45
-------------------------------------------------------------------------------
140 171
-------------------------------------------------------------------------------
Institutional:
Equity 40 76
Fixed Income 29 25
-------------------------------------------------------------------------------
69 101
-------------------------------------------------------------------------------
Quarter-end Assets $209 $272
-------------------------------------------------------------------------------
Assets from Non-US Investors $ 36 $ 39
-------------------------------------------------------------------------------
Average Assets $209 $270
-------------------------------------------------------------------------------
Components of quarter-to-date change
in ending assets under management
-------------------------------------------------------------------------------
New Sales/(Redemptions)
including Dividends Reinvested $ (10.5) $(2.7)
-------------------------------------------------------------------------------
Impact of PanAgora acquisition 8.2 -
-------------------------------------------------------------------------------
Impact of Market/Performance (2.1) 7.4
-------------------------------------------------------------------------------
|
The categories of mutual fund assets reflect style designations aligned with each fund's prospectus. All prior year amounts have been reclassified to conform with the current investment mandate for each product.
Assets under management and revenue levels are particularly affected by fluctuations in domestic and international stock and bond market prices, the composition of assets under management and by the level of investments and withdrawals for current and new fund shareholders and clients. Items affecting revenue also include, but are not limited to, actual and relative investment performance, service to clients, the development and marketing of new investment products, the relative attractiveness of the investment style under prevailing market conditions, changes in the investment patterns of clients and the ability to maintain investment management and administrative fees at historic levels. Future revenue may be adversely affected by continued net redemptions and by limits on fund expense ratios and front end sales charges. Revenue levels are sensitive to all of the factors above, but in particular, to significant changes in stock and bond market valuations and net flows into or out of Putnam's funds.
Putnam's expenses increased 1% in the third quarter of 2004 from the same period of 2003. The increase was primarily due to a $40 million charge related to a settlement agreement in principle with the SEC and $13 million of legal and severance costs related to regulatory issues and repositioning Putnam, mostly offset by a decline in amortization expense for prepaid dealer commissions and lower compensation costs.
Expenses for the nine months ended September 30, 2004 increased 12% from the same period in 2003. Expenses in 2004 include a $140 million charge for Putnam's regulatory settlements with the SEC and the Secretary of the Commonwealth of the State of Massachusetts. Other significant items recorded in 2004 were severance of $57 million and incremental costs related to regulatory issues and repositioning Putnam, including legal and audit costs of $36 million, communications costs of $16 million and $5 million of other costs. These increases were partially offset by a decrease in amortization expense for prepaid dealer commissions and a $25 million credit to compensation expense associated with the settlement with Putnam's former chief executive officer.
Consulting
-----------------------------------------------------------------------------
Third Quarter Nine Months
-----------------------------------------------------------------------------
(In millions of dollars) 2004 2003 2004 2003
-----------------------------------------------------------------------------
Revenue $766 $ 690 $2,294 $2,014
Expense 660 594 1,986 1,736
-------------------------------------------------- --------------------------
Operating Income $106 $ 96 $ 308 $ 278
-----------------------------------------------------------------------------
Operating Income Margin 13.8% 13.9% 13.4% 13.8%
----------------------------------------------------------------------------
|
Consulting revenue for the first nine months of 2004 increased 14% over the same period in 2003. Acquisitions, which accounted for 5% of the revenue growth in 2004, include Oliver, Wyman & Company which closed on April 1, 2003 and Synhrgy HR Technologies which closed in January, 2004. On an underlying basis, revenue increased 3%. Underlying revenue grew 10% in economic consulting, 12% in management and organizational change, 1% in health care & group benefits and 3% in the human capital practices. Underlying revenue growth in retirement services was flat.
Corporate Expenses
Corporate expenses declined 1% in the third quarter of 2004 compared to the same period last year. Corporate expenses for the nine months ended September 30, 2004 include the impact of the final settlement for insured losses related to the WTC. The replacement value of the assets exceeded their book value by $105 million which was recorded in the first quarter as a reduction of other operating expenses.
Interest
Interest income earned on corporate funds in the third quarter amounted to
$6 million, which was unchanged from the third quarter of 2003. Interest
expense of $55 million in 2004 increased from $48 million in the third
quarter of 2003 due to an increase in the average outstanding debt.
Interest income on corporate funds amounted to $15 million in the first
nine months of 2004, a $4 million decrease from the same period in 2003.
Interest expense of $153 million increased from $137 million in the same
period of 2003 due to an increase in the average outstanding debt due to
the issuance of commercial paper and long term debt to fund the acquisition
of Kroll. Future borrowing costs will increase due to the credit downgrades
discussed in "Financing Cash Flows".
Income Taxes
MMC's consolidated effective tax rate was 65.8% of income before income
taxes and minority interest in the third quarter of 2004 compared with 34%
in the third quarter of 2003. The effective tax rate for the third quarter
of 2004 reflects the impact of Putnam's non-deductible settlement of $40
million, a 38% tax rate on the accrual for potential compensation to Marsh
clients of $232 million, and a 34.5% effective tax rate on ongoing
operating income excluding these items. The third quarter also reflects the
impact of adjusting the year-to-date effective tax rate on ongoing
operating income from 33.1% to 34.5%, resulting from changes in the
expected geographic mix of MMC's income following the termination of market
services agreements. The effective tax rate of 37.8% for the nine months of
2004 includes the impact of Putnam's non-deductible settlements of $140
million, a 40% tax rate on the WTC settlement gain of $105 million, and a
38% tax rate on the accrual of $232 million for potential compensation to
Marsh clients. Excluding these items, the effective tax rate applicable to
ongoing operations was 34.5% for the first nine months of 2004, compared to
34% for the same period in 2003.
The American Jobs Creation Act of 2004 was enacted on October 22, 2004, and includes an incentive for U.S. multinationals to repatriate foreign earnings that have previously been permanently reinvested outside the U.S. The elective incentive would allow a dividend received deduction for 85% of certain cash dividends paid in either 2004 or 2005. Management is analyzing this incentive and expects to utilize it to the extent it is beneficial to MMC.
At September 30, 2004 MMC had total cash and cash equivalents of $577 million, compared with $665 million at December 31, 2003. Historically, cash flows generated from operations have been sufficient to fund ongoing working capital requirements, and to fund dividends and capital expenditures. Historically, MMC has used commercial paper to manage its short term liquidity needs and has maintained revolving credit facilities to support its commercial paper borrowings. MMC's liquidity is currently affected by its current inability to access the commercial paper markets and restrictions on the use of its revolving credit facilities. The potential impact of the issues raised in the civil complaint on MMC's ability to use its revolving credit facilities is discussed in "Financing Cash Flows" below.
MMC generated $1.4 billion of cash from operations for the nine months ended September 30, 2004 compared with $1.6 billion for the same period in 2003. These amounts reflect the net income earned by MMC during those periods adjusted for non-cash charges and changes in working capital which relate, primarily, to the timing of payments for accrued liabilities or receipts of assets. The decrease in cash generated from operations compared with the prior year results primarily from higher tax payments in 2004, a higher amount of investment gains, which are included in investing cash flows, as well as normal fluctuations in the timing of payments and receipts of various working capital items. The increase in 2004 of cash outflows related to deferred compensation plans was largely offset by cash generated from the liquidation of assets related to these plans included in the change in other assets in the consolidated statements of cash flows.
In October 2004 MMC announced the elimination of market services agreements and similar agreements ("MSAs"), effective October 1, 2004. At September 30, 2004 accounts receivable related to accrued market services revenue was $232 million. Subsequent to the filing of the Attorney General's complaint, some insurance companies indicated they may delay payments until the issues concerning market services agreements are clarified. Given the current negative publicity related to MSAs, collection of previously accrued MSA revenue may occur more slowly than expected, or carriers may attempt to avoid payment of MSA fees that were earned by Marsh. On November 1, 2004, MMC announced its intention to collect the market services revenue earned prior October 1, 2004. MMC also announced its intention to place amounts collected into a segregated account to be used in connection with any agreement to compensate Marsh clients that it may reach with the Attorney General of the State of New York.
For the nine months ended September 30, 2004 and 2003, MSA revenue was $468 million and $552 million, respectively. MSA revenue in the fourth quarter 2003 was $293 million. As discussed earlier, MMC is revising its business model so that revenue for all services provided by MMC is negotiated directly with clients and has eliminated all market services agreements and similar agreements. The elimination of MSAs will negatively impact near-term revenue and operating income. Although MMC expects to be fairly and fully compensated for the services it provides, there is no assurance that revenues under the new model will be sufficient to achieve operating margins and cash flows that are comparable to historical levels. In addition, client revenue may also be reduced due to negative reaction to the issues raised in the complaint.
MMC's policy for funding its tax qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth in U.S. and international law. There are no current funding requirements for the U.S. plan for the remainder of 2004. MMC has funding requirements for the U.K. plans of approximately $28 million for the remainder of 2004 and $105 million for 2005.
Under generally accepted accounting principles, if the Accumulated Benefit Obligation of a plan exceeds the fair value of that plan's assets (an "ABO deficit"), an additional minimum liability is recorded. The additional minimum liability is equal to the ABO deficit plus the amount of prepaid pension cost recognized for that plan. The additional minimum liability is established through a charge to other comprehensive income (equity), net of applicable taxes. At September 30, 2004, MMC has prepaid pension costs of approximately $1.3 billion which relate primarily to the U.S. qualified plan and two U.K. plans, as well as some smaller plans in various countries. If one or more plans has an ABO deficit at the December 31, 2004 measurement date, some or all of the prepaid pension costs would be charged as a reduction of equity, in addition to the ABO deficit.
At September 30, 2004 MMC had four revolving credit facilities aggregating $2.755 billion, in the following amounts: $700 million which expires in June 2005, $355 million which expires in July 2005, $1 billion which expires in June 2007 and $700 million which expires in June 2009. These facilities support MMC's commercial paper borrowings. On September 30, 2004, no amounts were outstanding under any of the facilities. Because of MMC's inability to access the commercial paper markets, MMC expects to need to use these facilities to refinance substantially all of its outstanding commercial paper. As of September 30, 2004, MMC had approximately $1.3 billion and as of October 26, 2004 had approximately $1.9 billion aggregate face amount of commercial paper outstanding, substantially all of which matures before December 30, 2004.
The matters raised by the civil complaint filed by the Attorney General of the State of New York on October 14, 2004 and described in MMC's Current Report on Form 8-K filed on October 15, 2004 may have prohibited MMC from borrowing under the facilities, which contain standard representations as to no material adverse litigation and compliance with laws. The lenders under each of the facilities agreed to waive the effect of such matters until December 30, 2004. In exchange, MMC agreed that the facilities will be used exclusively to repay existing commercial paper borrowings, and that in order for MMC to borrow under the facilities, the aggregate face amount of outstanding commercial paper cannot exceed $1.9 billion. MMC also agreed not to repurchase its stock and not to permit any of its subsidiaries to incur debt other than under existing facilities during the waiver period.
MMC has commenced discussions with its lenders to amend or replace the facilities to provide longer-term liquidity. While MMC believes those discussions will achieve that goal before December 30, 2004, there is no assurance that they will be completed by such date. If the negotiations are unsuccessful, MMC will be in default under these facilities and has no other committed source to refinance the amounts expected to be outstanding under these facilities.
In October 2004, MMC's credit ratings were lowered by Standard & Poor's Corporation to "BBB-plus" and "A-2", for its senior debt and short term debt, respectively. The ratings remain on Credit Watch with negative implications. Moody's Investor Services also lowered MMC's ratings to Baa2 for its senior debt and to P-2 for its short term debt. These ratings remain under review for possible further downgrade. These downgrades will result in increased borrowing costs and limit MMC's access to the commercial paper markets.
During the third quarter of 2004, MMC did not repurchase any of its common stock. For the nine months ended September 30, 2004, MMC repurchased 11 million shares for $510 million, all of which was purchased in the first and second quarter. During October 2004, MMC repurchased .4 million shares for $14 million, under the terms of a pre-existing 10b5-1 plan. A 10b5-1 plan allows a company to purchase shares during a black-out period, provided the company communicates its share purchase instructions to the broker prior to the black-out period, pursuant to a written plan that may not be changed.
MMC paid dividends in the amount of approximately $176 million ($0.34 per share) in the third quarter of 2004. Year to date, MMC has paid dividends of approximately $502 million ($.96 per share). On September 14, 2004, MMC's Board of Directors declared a dividend of $0.34 per share, to be paid on November 15, 2004. MMC's Board will meet in the normal course of business to consider the level of future dividends.
In July 2004 MMC purchased Kroll, Inc. in an all-cash transaction totaling approximately $1.9 billion. The purchase was initially funded with commercial paper borrowings. To support these borrowings, MMC negotiated a new $1.5 billion, one-year revolving credit facility. Following the acquisition, MMC issued $650 million of 5.375% Senior Notes due 2014 and $500 million of Floating Rate Notes due 2007. The proceeds from these notes were used to repay the commercial paper borrowings. Under the terms of the above-mentioned credit facility, the amount of the facility was reduced by the proceeds from the notes issued. That facility now totals $355 million.
In July 2003, MMC issued $300 million of 5.875% Senior Notes due in 2033. In February 2003, MMC issued $250 million of 3.625% Senior Notes due in 2008 and $250 million of 4.85% Senior Notes due in 2013 (the "2003 Notes"). The net proceeds from the 2003 Notes were used to pay down commercial paper borrowings.
MMC's additions to fixed assets and capitalized software, which amounted to $281 million in the first nine months of 2004 and $335 million in the first nine months last year, primarily relate to computer equipment purchases and the refurbishing and modernizing of office facilities and software development costs.
The sale of Putnam's interest in its Italian joint venture and related securities along with sales of securities by MMC Capital, generated $174 million of cash during the first nine months of 2004. Securities sales during the same period last year generated $83 million. These sales are included in Other, net in the Consolidated Statements of Cash Flows.
MMC has committed to potential future investments of approximately $658 million in connection with various MMC Capital private equity funds and other MMC investments. Commitments of $276 million relate to Trident III, a private equity fund managed by MMC Capital, which was formed in 2003. The remaining commitments relate to other funds managed by MMC Capital (approximately $90 million) and by Putnam through T.H. Lee (approximately $292 million). Trident III closed in December 2003, and has an investment period of six years. While it is unknown when the actual capital calls will occur, typically, the investment period for funds of this type has been closer to four years, which would indicate an expected capital call of approximately $50-$75 million per year but actual capital calls may occur more quickly. The timing of capital calls is not controlled by MMC. The majority of the other investment commitments for funds managed by MMC Capital related to Trident II. The investment period for Trident II is closed for new investments. Any remaining capital calls would relate to follow on investments in existing portfolio companies or for management fees or other partnership expenses. Significant capital calls related to Trident II are not expected at this time. Although it is anticipated that Trident II will be harvesting its portfolio in 2005 and thereafter, the timing of any portfolio company sales and capital distributions is unknown and not controlled by MMC.
Putnam has investment commitments of $105 million for three active T.H. Lee funds, of which approximately $50 million is not expected to be called and funded. Putnam is authorized to commit to invest up to $187 million in future T.H. Lee investment funds, but is not required to do so. At September 30, 2004 none of the $187 million is committed.
Approximately $47 million was invested in the first nine months of 2004 related to all of the commitments discussed above.
Market Risk
Certain of MMC's revenues, expenses, assets and liabilities are exposed to
the impact of interest rate changes and fluctuations in foreign currency
exchange rates and equity markets.
Interest Rate Risk
MMC manages its net exposure to interest rate changes by utilizing a
mixture of variable and fixed rate borrowings to finance MMC's asset base.
Interest rate swaps are used on a limited basis to manage MMC's exposure to
interest rate movements on its cash and investments, as well as interest
expense on borrowings, and are only executed with counterparties of high
creditworthiness.
Foreign Currency Risk
The translated values of revenue and expense from MMC's international risk
and insurance services and consulting operations are subject to
fluctuations due to changes in currency exchange rates. Forward contracts
and options are periodically utilized by MMC to limit foreign currency
exchange rate exposure on net income and cash flows for specific, clearly
defined transactions arising in the ordinary course of its business.
Equity Price Risk
MMC holds investments in both public and private companies as well as
certain private equity funds managed by MMC Capital, including Trident II.
Publicly traded investments of $386 million are classified as available for
sale under SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". Non-publicly traded investments of $84 million and $338
million are accounted for under APB Opinion No. 18, "The Equity Method of
Accounting for Investments in Common Stock", using the cost method and the
equity method, respectively. Changes in value of trading securities are
recognized in income when they occur. The investments that are classified
as available for sale or that are not publicly traded are subject to risk
of changes in market value, which if determined to be other than temporary,
could result in realized impairment losses. MMC periodically reviews the
carrying value of such investments to determine if any valuation
adjustments are appropriate under the applicable accounting pronouncements.
Other
On October 14, 2004, the New York Attorney General's Office filed a Civil
Complaint (the "Civil Complaint") in state court against MMC and Marsh,
Inc. ("Marsh") asserting claims under New York State law for fraudulent
business practices, antitrust violations, securities fraud, unjust
enrichment and common law fraud. The Civil Complaint is discussed more
fully in Note 13 to the consolidated financial statements.
On November 1, 2004, Marsh announced it is taking steps to collect all amounts owed to it by insurance companies under market services agreements that were in effect prior to October 15, 2004. Amounts collected will be placed into a segregated account to be used in connection with any agreement to compensate Marsh clients it may reach with the Attorney General of the State of New York.
MMC recorded a $232 million charge in the third quarter of 2004, which equals the recorded net accounts receivable related to market services agreements at September 30, 2004. MMC believes that in light of existing facts and circumstances, $232 million is the appropriate amount to reserve as the minimum potential liability in connection with these matters. The ultimate settlement may vary significantly from that amount. The liability will be reviewed at each quarterly reporting date, based on the facts and circumstances at that time as additional information becomes available and settlement negotiations progress. In the future, the amount accrued will not necessarily be equal to the amount of market services agreement revenue collected and/or accrued.
Putnam has reached an agreement in principle with the staff of the Philadelphia office of the SEC to enter into a settlement concerning Putnam's alleged failure to make adequate disclosures regarding certain brokerage allocation practices prior to 2004. These practices involved the relationship between the direction of brokerage commissions to broker-dealers on portfolio transactions and the sales by those broker-dealers of shares of Putnam mutual funds. Under the agreement in principle, Putnam would pay a non-deductible civil penalty in the amount of $40 million and disgorgement in the amount of $1 which was recorded as a charge to earnings in the third quarter of 2004. The total amount of the payment would go to certain Putnam funds. Putnam would neither admit nor deny wrongdoing as part of the settlement. The settlement remains subject to the negotiation of final documentation and approval by the Commissioners of the SEC.
On June 9, 2004, MMC reached a final settlement of the previously disclosed arbitration proceeding with Lawrence J. Lasser, former president and chief executive officer of Putnam. The settlement represents approximately $25 million less than the company had accrued for compensation expense for Mr. Lasser in prior years. In addition, as further discussed in Note 13 to the consolidated financial statements, administrative proceedings and a number of lawsuits have commenced against Putnam and MMC.
The insurance coverage for potential liability resulting from alleged errors and omissions in the professional services provided by MMC, includes elements of both risk retention and risk transfer. MMC believes it has adequately reserved for the self-insurance portion of the contingencies. Payments related to the respective self-insured layers are made as legal fees are incurred and claims are resolved and generally extend over a considerable number of years. The amounts paid in that regard vary in relation to the severity of the claims and the number of claims active in any particular year. The long-term portion of this liability is included in Other liabilities in the consolidated balance sheets.
Part I - Item 4. Controls & Procedures
a. Evaluation of Disclosure Controls and Procedures Based on their evaluation, as of a date within 90 days of the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934) are effective in timely alerting them to material information relating to the Company required to be included in our reports filed under the Exchange Act.
b. Changes in Internal Controls There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
INFORMATION REQUIRED FOR FORM 10-Q QUARTERLY REPORT
September 30, 2004
Item 1. Legal Proceedings.
The information set forth in Note 13 to the financial statements provided in Part I, Item 1 of this Report, is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) The following table sets forth information regarding MMC's purchases of its common stock on a monthly basis during the third quarter of 2004. Share repurchases are recorded on a trade date basis.
Issuer Repurchases of Equity Securities
(a) (b) (c) (d)
Total Number of Maximum Number of
Total Number of Average Price Shares Purchased as Shares that May Yet
Shares Purchased Paid per Share Part of Publicly Be Purchased Under
Announced Plans or the Plans or
Period Programs (1) Programs
-----------------------------------------------------------------------------------------------------------
July 1, 2004 - 0 -- 0 50,309,636
July 31, 2004
August 1, 2004 - 0 -- 0 50,309,636
August 31, 2004
September 1, 2004 - 0 -- 0 50,309,636
September 30, 2004
------------------------------------------ ------------------- ----------------------- ---------------------
Total 0 -- 0 50,309,636
------------------------------------------------------------------------------------------------------------
|
(1) As set forth in its public filings, MMC has engaged in an ongoing share repurchase program. On March 18, 1999, MMC's board of directors authorized the repurchase of up to 40 million shares of MMC's common stock and on May 18, 2000 the board further authorized the repurchase of up to an additional 88 million shares. There is no expiration date specified under either of these authorizations and MMC may repurchase its shares under each of these authorizations in the future. MMC periodically purchases shares of its common stock, in the open market or otherwise, subject to market conditions, for treasury as well as to meet requirements for issuance of shares for its various stock compensation and benefit programs.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of MMC was held on May 20, 2004. Represented at the Meeting, at which stockholders took the following actions, were 444,596,374 shares or 85.82% of MMC's 518,157,649 shares of common stock outstanding and entitled to vote:
1. MMC's stockholders elected the six (6) director nominees named below, with each receiving the following votes:
Number of Shares Number of Shares
Voted For Voted to be Withheld
Lewis W. Bernard 412,328,078 32,268,296
Mathis Cabiallavetta 426,415,222 18,181,152
Zachary W. Carter 432,052,720 12,543,654
Robert F. Erburu 413,644,232 30,952,142
Oscar Fanjul 409,114,104 35,482,270
Ray J. Groves 423,002,664 21,593,710
|
2. Deloitte & Touche LLP was ratified as MMC's independent auditors for the year ending December 31, 2004 with a favorable vote of 429,716,651 of the shares represented (11,560,387 against and 3,319,335 abstaining).
Item 5. Other Information. [ Add current Form 8-K information to be
reported, if any]
Item 6. Exhibits.
3. MMC By-Laws, as amended on October 25, 2004.
10.1 Form of Awards under the 2000 Employee Incentive and Stock Award Plan
10.2 Form of Awards under the 2000 Senior Executive Incentive and Stock Award Plan
12. Statement Re: Computation of Ratio of Earnings to Fixed Charges.
31. Rule 13a-14(a)/15d-14(a) Certifications.
32. Section 1350 Certifications.
MARSH & McLENNAN COMPANIES, INC.
AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, MMC has duly caused this report to be signed this November 9, 2004 on its behalf by the undersigned, thereunto duly authorized and in the capacity indicated.
MARSH & McLENNAN COMPANIES, INC.
/s/ Sandra S. Wijnberg Senior Vice President and Chief Financial Officer |
Exhibit 3
BY-LAWS
OF
MARSH & McLENNAN COMPANIES, INC.
October 25, 2004
ARTICLE I
Offices...................................................................1
ARTICLE II
Meetings of the Stockholders..............................................1
ARTICLE III
Directors.................................................................6
ARTICLE IV
Officers..................................................................8
ARTICLE V
Committees...............................................................10
ARTICLE VI
Indemnification..........................................................12
ARTICLE VII
Checks, Contracts, Other Instruments.....................................15
ARTICLE VIII
Capital Stock............................................................16
ARTICLE IX
Miscellaneous............................................................18
ARTICLE X
Amendments...............................................................18
The principal office of the Corporation in Delaware shall be at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, in the State of Delaware, and The Corporation Trust Company shall be the resident agent of the Corporation in charge thereof. The Corporation may also have such other offices at such other places as the Board of Directors may from time to time designate or the business of the Corporation may require.
SECTION 1. Place of Meetings. Meetings of the stockholders may be held at such place as the Board of Directors may determine.
SECTION 2. Annual Meetings. The annual meeting of the stockholders shall be held on the third Thursday of May in each year, or such other day in May as may be determined from time to time by the Board of Directors, at such time and place as the Board of Directors may designate. At said meeting the stockholders shall elect a Board of Directors and transact any other business authorized or required to be transacted by the stockholders.
SECTION 3. Special Meetings. Special meetings of the stockholders, except as otherwise provided by law, shall be called by the Chairman of the Board or Lead Director, as the case may be, or whenever the Board of Directors shall so direct, the Secretary.
SECTION 4. Notice of Meetings. Except as otherwise provided by law, written or printed notice stating the place, day and hour of the meeting, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered personally or mailed, postage prepaid, at least ten (10) days but not more than sixty (60) days before such meeting to each stockholder at such address as appears on the stock books of the Corporation.
SECTION 5. Fixing of Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, and no more than sixty (60) days prior to any other action.
If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice of the meeting is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and such date for any other purpose shall be the date on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 6. Quorum. The holders of a majority of the stock issued and outstanding present in person or represented by proxy shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Restated Certificate of Incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders present in person or by proxy shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of stock shall be represented. At such adjourned meeting at which the requisite amount of stock shall be represented, any business may be transacted which might have been transacted at the meeting as originally called.
SECTION 7. Voting. Each stockholder entitled to vote in accordance with the terms of the Restated Certificate of Incorporation and in accordance with the provisions of these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. The vote for directors and, upon demand of any stockholder, the vote upon any question before the meeting shall be by ballot. All elections of directors shall be decided by plurality vote; all other questions shall be decided by a majority of the shares present in person or represented by proxy at the meeting of stockholders and entitled to vote on the subject matter, except as otherwise provided in the Restated Certificate of Incorporation or by law or regulation.
SECTION 8. Inspectors of Election. All elections of directors and
all votes where a ballot is required shall be conducted by two inspectors of
election who shall be appointed by the Board of Directors; but in the absence of
such appointment by the Board of Directors, the Chairman of the meeting shall
appoint such inspectors who shall not be directors or candidates for the office
of director.
SECTION 9. Voting List. The Secretary shall prepare and make, at
least ten days before every election of directors, a complete list of the
stockholders entitled to vote, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in his name.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 10. Stockholder Nominations of Directors. Only persons
who are nominated in accordance with the following procedures shall be eligible
for election as directors at a meeting of stockholders. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors, by any
person appointed by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 10. Such
nominations, other than those made by or at the direction of the Board of
Directors or by any person appointed by the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary, Marsh & McLennan
Companies, Inc. To
be timely, a stockholder's notice shall be delivered to or mailed and received
at the principal executive offices of the Corporation, in the case of an Annual
Meeting of Stockholders, not less than 90 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders; provided, however,
that in the event that the annual meeting is called for a date that is not
within 30 days before or after such anniversary date, notice by the Stockholder
in order to be timely must be so received not later than the close of business
on the 15th day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs; and in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the 15th day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs. Such stockholder's notice to
the Secretary shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the person and
(iv) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the stockholder giving the notice (i) the name and record address of the
stockholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
SECTION 11. Advance Notice of Stockholder Proposed Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary, Marsh & McLennan Companies, Inc. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no
business shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 11, provided, however, that nothing in this
Section 11 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted.
SECTION 1. Powers, Number, Tenure, Qualifications and Compensation. The business and affairs of the Corporation shall be managed by its Board of Directors which shall consist of the number of members set forth in Article FIFTH of the Restated Certificate of Incorporation, none of whom need be stockholders, and directors must retire at the annual meeting following attaining age 72, unless the person has been a non-executive director for less than 10 years, in which case they would retire at the annual meeting following the earlier of 10 years of service or attaining age 75. In addition to the powers and duties by these by-laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Restated Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders. The Board of Directors may provide for compensation of directors who are not otherwise compensated by the Corporation or any subsidiary thereof.
SECTION 2. Meetings and Notice. The Board shall, for the purposes of organization, the election and appointment of officers and the transaction of other business, hold a meeting as soon as convenient after the annual meeting of stockholders. Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the Board may be called by the Chairman of the Board or Lead Director, as the case may be, or, if the Chairman of the Board or Lead Director, as the case may be, is unable to act, by the Corporation's General Counsel or any member of the Executive Committee of the Board of Directors on at least twenty-four (24) hours notice to each director, personally or by mail, by telecopy, by e-mail or by telephone. Special meetings of the
Board shall also be called in like manner on the written request of any three
(3) directors delivered to the Corporation's Secretary. In the case of a meeting
of the Board of Directors not attended by the Chairman of the Board or Lead
Director, as the case may be, a Vice Chairman, determined in the order of their
election if two or more Vice Chairmen are present, shall call the meeting to
order and the first item of business shall be to appoint a director to preside
at the meeting. Notice of a special meeting of the Board may be waived by any
director, either before or after the meeting, by written assent, by telecopy or
by e-mail; provided that attendance at the meeting by a director shall
constitute waiver of such notice by such director. The attendance of a director
at any meeting shall dispense with notice to him of the meeting. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
SECTION 3. Offices, Books, Place of Meeting. The Board of Directors may have one or more offices and keep the books of the Corporation outside of Delaware, and may hold its meetings at such places as it may from time to time determine.
SECTION 4. Quorum. At all meetings of the Board of Directors one-third (1/3) of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Restated Certificate of Incorporation or by these by-laws.
SECTION 5. Informal Action. The Board of Directors shall, except as otherwise provided by law, have power to act in the following manner: A resolution in writing, signed by all of the members of the Board of Directors shall be deemed to be action by such Board to the effect therein expressed with the same force and effect as if the same had been duly passed at a duly convened meeting, and it shall be the duty of the Secretary of the Corporation to record any such resolution in the minute book of the Corporation, under its proper date.
SECTION 1. Election. The Board of Directors shall elect officers of the Corporation, including a Chairman of the Board or a Lead Director, one or more Vice Presidents, a Secretary, a Treasurer and a Controller. The Board of Directors may also elect one or more Vice Chairmen.
SECTION 2. Term and Removal. Each officer of the Corporation designated in SECTION 1 of this Article IV shall hold office until such officer's successor is elected and qualified or until such officer's earlier resignation or removal. Any officer may be removed at any time, with or without cause, by the Board of Directors. Any officer who may be elected or appointed by the Executive Committee may also be removed at any time, with or without cause by said Committee.
SECTION 3. Chairman of the Board/Lead Director. As the Board may determine from time to time, there shall be either a Chairman of the Board or a Lead Director. The Chairman of the Board or Lead Director may, but need not necessarily, also be the Chief Executive Officer of the Corporation. The Chairman of the Board or Lead Director, as the case may be, shall preside at all meetings of the stockholders and of the Board of Directors. At any meeting of the stockholders not attended by the Chairman of the Board or Lead Director, as the case may be, the Board shall appoint a director to preside at the meeting. The Chairman of the Board or Lead Director, as the case may be, shall review and recommend to the Board of Directors both short-term objectives and long-term planning for the business. The Chairman of the Board or Lead Director, as the case may be, shall also preside at meetings of any committee of which the Chairman of the Board or Lead Director, as the case may be, is a member which is not attended by the chairman of such committee. The Chairman of the Board or Lead Director, as the case may be, or an appointed delegate may take any action on behalf of the Corporation with respect to the shares owned by the Corporation in other corporations in such manner as they deem advisable unless otherwise directed by the Board of Directors. The Chairman of the Board or Lead Director, as the case may be, shall have full authority to take other action on behalf of the Corporation in respect of shares of stock in other corporations owned by the Corporation, directly or indirectly, including the obtaining of information and reports.
SECTION 4. Vice Chairman. A Vice Chairman, if any, shall, subject to the control of the Board of Directors and of the committees exercising functions of the Board of Directors, perform such duties as may from time to time be assigned to the Vice Chairman by the Chairman or Lead Director.
SECTION 5. Vice Presidents. A Vice President shall have such powers, duties, supplementary titles and other designations as the Board of Directors may from time to time determine.
SECTION 6. Secretary. The Secretary shall attend all meetings of the stockholders and the Board of Directors. The Secretary shall, at the invitation of the chair thereof, attend meetings of the committees elected by the Board or established by these by-laws. The Secretary shall record all votes and minutes of all proceedings which the Secretary attends and receive and maintain custody of all votes and minutes of all such proceedings. Votes and minutes of meetings of each committee shall be placed in the custody of the Secretary or as otherwise determined by the committee. The Secretary shall give or cause to be given notice of meetings of the stockholders, Board of Directors, and committees of the Board of Directors as provided by these By-Laws, and shall have such other powers and duties as may be prescribed by appropriate authority. The Secretary shall keep in safe custody the seal of the Corporation and shall affix the seal to any instrument requiring the same. The Assistant Secretaries shall have such powers and perform such duties as may be prescribed by appropriate authority.
SECTION 7. Treasurer. The Treasurer shall have such powers and perform such duties as are usually incident to the office of Treasurer or which may be assigned to the Treasurer by the Board of Directors or other appropriate authority. The Assistant Treasurers shall have such powers and perform such duties as may be prescribed by the chief financial officer or the Treasurer.
SECTION 8. Controller. The Controller shall be the chief accounting officer of the Corporation. The Controller shall keep or cause to be kept all books of account and accounting records of the Corporation and shall render to the Chairman, the chief financial officer and the Board of Directors whenever they may require it, a report of the financial condition of the Corporation. The Controller shall have such other powers and duties as shall be assigned to him by
appropriate authority. The Assistant Controllers shall have such powers and perform such duties as may be prescribed by the chief financial officer or the Controller.
SECTION 9. Bond. The Board of Directors may, or the Chairman may, require any officers, agents or employees of the Corporation to furnish bonds conditioned on the faithful performance of their respective duties with a surety company satisfactory to the Board of Directors or the Chairman as surety. The expenses of such bond shall be paid by the Corporation.
SECTION 1. Executive Committee. An Executive Committee, composed of the Chairman of the Board or Lead Director, as the case may be, and such other directors as the Board of Directors may determine from time to time shall be elected by the Board of Directors. Except as provided hereinafter or in resolutions of the Board of Directors, the Executive Committee shall have, and may exercise when the Board of Directors is not in session, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Executive Committee shall not, however, have power or authority in reference to (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the provisions of the General Corporation Law of Delaware to be submitted to stockholders for approval, (b) adopting, amending or repealing any by-laws of the Corporation, (c) electing or appointing the Chairman of the Board or Lead Director, as the case may be, of the Corporation, or (d) declaring a dividend.
SECTION 2. Compensation Committee. A Compensation Committee, including a chair, having such number of directors as the Board of Directors shall determine from time to time, shall be elected by the Board of Directors. The Compensation Committee shall have such duties as may be set forth in the Corporation's Compensation Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors.
SECTION 3. Audit Committee. An Audit Committee, including a chair, having such number of directors as the Board of Directors may determine from time to time, shall be
elected by the Board of Directors. The Audit Committee shall have such duties as may be set forth in the Corporation's Audit Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors.
SECTION 4. Directors and Governance Committee. A Directors and Governance Committee, including a chair, having such number of directors as the Board of Directors may determine from time to time, shall be elected by the Board of Directors. The Directors and Governance Committee shall have such duties as may be set forth in the Corporation's Directors and Governance Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors.
SECTION 5. Reports. The Executive Committee shall report to each
regular meeting and, if directed, to each special meeting of the Board of
Directors all action taken by such committee subsequent to the date of its last
report, and other committees shall report to the Board of Directors on a regular
basis.
SECTION 6. Other Committees. The Board of Directors may appoint
such other committee or committees as it deems desirable.
SECTION 7. Election and Term. The Chair and each member of every committee shall be a member of and, except as provided in Section 8 of this Article V, elected by the Board of Directors and shall serve until such person shall cease to be a member of the Board of Directors or such person's membership on the committee shall be terminated by the Board.
SECTION 8. Meetings, Quorum and Notice. The Chair of any committee shall be the presiding officer thereof. Any committee may meet at such time or times on notice to all the members thereof by the Chairman of this Corporation, by the committee chair or by a majority of the members or, when instructed to do so by any of the foregoing, by the Secretary of the Corporation or the secretary of such committee, and at such place or places as such notice may specify. At least twenty-four (24) hours' notice of the meeting shall be given but such notice may be waived. Such notice may be given by mail, by telecopy, by e-mail, by telephone or personally. Each committee shall cause minutes to be kept of its meetings which record all actions taken. Such minutes shall be placed in the custody of the Secretary of the Corporation or as otherwise
determined by the committee. Any committee may, except as otherwise provided by law, act in its discretion by a resolution or resolutions in writing signed by all the members of such committee with the same force and effect as if duly passed by a duly convened meeting. Any such resolution or resolutions shall be recorded with the minutes of the committee under the proper date thereof. Members of any committee may also participate in a meeting of such committee by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other and participation in the meeting pursuant to this provision shall constitute presence in person at such meeting. A majority of the members of each committee shall constitute a quorum. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board of Directors who is qualified to serve under the rules of the New York Stock Exchange to act at the meeting in the place of any such absent or disqualified member. The vote of the majority of the members present at a committee meeting at which a quorum is present shall be the act of the committee.
SECTION 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a "proceeding"), by reason of the fact that, on or after May 21, 1987, he or she is serving or had served as a director, officer or employee of the Corporation or, while serving as such director, officer or employee, is serving or had served at the request of the Corporation as a director, officer, employee or agent of, or in any other capacity with respect to, another corporation or a partnership, joint venture, trust or other entity or enterprise, including service with respect to employee benefit plans (hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer or
employee of the Corporation, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Delaware law, as the same exists or may hereafter be changed or amended (but, in the case of any such change or amendment, only to the extent that such change or amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) reasonably incurred or suffered by an indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer or employee of the Corporation and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that except as provided in Section 3 of this Article with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify an indemnitee in connection with a proceeding (or part thereof) initiated by the indemnitee only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right.
SECTION 2. Advancement of Expenses. An indemnitee who is a director or officer of the Corporation, and any other indemnitee to the extent authorized from time to time by the board of directors of the Corporation, shall have the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter, an "advancement of expenses"); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter, a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Article or otherwise.
SECTION 3. Right of Indemnitee to Bring Suit. If a claim under
Section 1 or Section 2 of this Article is not paid in full by the Corporation
within sixty days in the case of
Section 1 and twenty days in the case of Section 2 after a written claim has been received by the Corporation, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (other than a suit brought by the indemnitee to enforce a right to an advancement of expenses), it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to the action. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article or otherwise shall be on the Corporation.
SECTION 4. Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by its board of directors, grant rights to indemnification, and to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any agent of the Corporation to the fullest extent of the provisions of this
Article with respect to the indemnification of directors, officers and employees of the Corporation and advancement of expenses of directors and officers of the Corporation.
SECTION 5. Non-Exclusivity of Rights. The right to indemnification and to the advancement of expenses conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Restated Certificate of Incorporation, these by-laws, any agreement, vote of stockholders or disinterested directors, or otherwise.
SECTION 6. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.
SECTION 7. Survival of Prior Indemnification Provisions; Effect of Subsequent Change on Existing Rights. Nothing contained in this Article shall be construed as altering or eliminating the rights to indemnification existing, or based upon service by an indemnitee, prior to May 21, 1987. Any repeal or modification of this Article shall not adversely affect any right or protection of a director, officer or employee of the Corporation existing at the time of such repeal or modification.
SECTION 1. Documents, Instruments Not Requiring Seal. All checks, notes, drafts, acceptances, bills of exchange, orders for the payment of money, and all written contracts and instruments of every kind which do not require a seal shall be signed by such officer or officers, or person or persons as these by-laws, or the Board of Directors or Executive Committee by resolution, may from time to time prescribe.
SECTION 2. Documents, Instruments Requiring Seal. All bonds, deeds, mortgages, leases, written contracts and instruments of every kind which require the corporate seal of the
Corporation to be affixed thereto, shall be signed and attested by such officer or officers as these by-laws, or the Board of Directors or Executive Committee, by resolution, may from time to time prescribe.
SECTION 1. Stock Certificates. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with the Restated Certificate of Incorporation, as shall be approved by the Board of Directors. Each certificate shall be signed by the Chairman of the Board of Directors or Lead Director, as the case may be, or a Vice President and also by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, provided, however, that any such signature of an officer of the Corporation or of the Transfer Agent, Assistant Transfer Agent, Registrar or Assistant Registrar, or any of them, may be a facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued by the Corporation and be used and delivered as though the officer or officers who signed the said certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be said officer or officers of the Corporation. All certificates shall be consecutively numbered, shall bear the corporate seal and the names and addresses of all persons owning shares of capital stock of the Corporation with the number of shares owned by each; and, the date or dates of issue of the shares of stock held by each shall be entered in books kept for that purpose by the proper officers or agents of the Corporation.
SECTION 2. Recognition of Holders of Record. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it has actual or other notice thereof, save as expressly provided by the laws of the State of Delaware.
SECTION 3. Lost Certificates. Except in cases of lost or destroyed certificates, and in that case only after conforming to the requirements hereinafter provided, no new certificates shall be issued until the former certificate for the shares represented thereby shall have been surrendered and cancelled. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate or certificates to be lost or destroyed; and the Board of Directors may, in its discretion and as a condition precedent to the issuance of any such new certificate or certificates, require (i) that the owner of such lost or destroyed certificate or certificates, or his legal representative give the Corporation and its transfer agent or agents, registrar or registrars a bond in such form and amount as the Board of Directors may direct as indemnity against any claim that may be made against the Corporation and its transfer agent or agents, registrar or registrars, or (ii) that the person requesting such new certificate or certificates obtain a final order or decree of a court of competent jurisdiction as to his right to receive such new certificate or certificates.
SECTION 4. Transfer of Shares. Shares of stock shall be transferred on the books of the Corporation by the holder thereof or by his attorney thereunto duly authorized upon the surrender and cancellation of certificates for a like number of shares.
SECTION 5. Regulations Governing Transfer of Shares. The Board of Directors may make such regulations as it may deem expedient concerning the issue, transfer and registration of stock.
SECTION 6. Appointment of Transfer Agent, Registrar. The Board may appoint a Transfer Agent or Transfer Agents and Registrar or Registrars for transfers and may require all certificates to bear the signature of either or both.
SECTION 1. Inspection of Books. The Board of Directors or the
Executive Committee shall determine from time to time whether and, if allowed,
when and under what conditions and regulations the accounts and books of the
Corporation (except such as may by statute be specifically open to inspection),
or any of them shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
SECTION 2. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization, and
the words "Corporate Seal, Delaware".
SECTION 3. Fiscal Year. The fiscal year shall begin on the first day of January of each year.
SECTION 4. Waiver of Notice. Whenever by statute, the provisions of the Restated Certificate of Incorporation, or these by-laws, the stockholders, the Board of Directors or any committee established by the Board of Directors in accordance with these by-laws are authorized to take any action after notice, such notice may be waived, in writing, before or after the holding of the meeting at which such action is to be taken, by the person or persons entitled to such notice or, in the case of a stockholder, by his attorney thereunto authorized.
SECTION 1. By Stockholders. These by-laws, or any of them, may be amended, altered, changed, added to or repealed at any regular or special meeting of the stockholders, by the affirmative vote of a majority of the shares of stock then issued and outstanding.
SECTION 2. By the Board of Directors. The Board of Directors, by affirmative vote of a majority of its members, may, at any regular or special meeting, amend, alter, change, add to or repeal these by-laws, or any of them, but any by-laws made by the Directors may be amended, altered, changed, added to or repealed by the stockholders.
Exhibit 10.1
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
The award of Deferred Stock Units granted on [Grant Date] under the Marsh & McLennan Companies (the Company) 2000 Employee Incentive and Stock Award Plan (the Plan) is subject to the following terms and conditions:
You will receive dividend equivalent payments on the Deferred Stock Units. These payments will be included in your payroll checks. Unless and until both the vesting conditions of the award have been satisfied and you have received the shares of Company common stock in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock.
The award is scheduled to vest on the earlier of (1) [Vesting Date], or
(2) the later of your Normal or Deferred Retirement Date (as such terms
are defined in the Company's primary Retirement Plan applicable to you).
Once the award vests and is due for distribution (which will occur within
a reasonable time subsequent to the vesting date), you will receive one
share of Company common stock for each of your Deferred Stock Units.
The tax treatment associated with your award is as follows:
(1) The value of Deferred Stock Units is not taxable at grant.
(2) The receipt of dividend equivalents is taxable on a current basis as
additional compensation.
(3) Once the award vests and is distributed to you, the distribution will
be includable in your taxable income; at that time, an appropriate
number of shares will be withheld to satisfy your payroll tax
obligation from the distribution.
(4) For grant recipients who defer their distribution at least three
years (or until the year following retirement) and are granted a
supplemental award, such individuals will be subject to FICA
withholding on the value of the units attributable to the supplement
at the date of vesting.
If your employment with the Company or any of its subsidiaries or affiliates terminates, your right to the Deferred Stock Units shall be as follows:
If you die, the Deferred Stock Units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled, as determined under the Company's Long-Term Disability Plan applicable to you, the Deferred Stock Units will vest immediately.
If you retire on or after your Normal Retirement Date, the Deferred Stock Units will vest when you retire.
If you are terminated by the Company without Cause prior to your
Normal Retirement Date, the Deferred Stock Units will vest on a pro
rata basis. The portion of the Deferred Stock Units that vest is
equal to a fraction, the numerator of which is the number of days
from the date of grant to the date of termination, and the
denominator of which is the number of days from the date of grant to
[Vesting Date]. For purposes of these terms and conditions, Cause
shall mean misappropriation of assets of the Company or any of its
subsidiaries or affiliates; willful misconduct in the performance of
the employee's duties; continued failure after notice, or refusal, to
perform the duties of the employee; violation of a written code of
conduct applicable to the employee; willful violation of an important
policy of the Company or any of its subsidiaries or affiliates;
breach of fiduciary duty or breach of trust; conviction of a felony,
or of any other crime involving moral turpitude; imprisonment for any
crime; or any action likely to bring substantial discredit to the
Company or any of its subsidiaries or affiliates.
If you cease to be an active employee of the Company or any of its subsidiaries or affiliates before the end of the vesting period for any reason other than death, permanent disability, or normal or deferred retirement, or termination by the Company without Cause, your right to such Deferred Stock Units shall be forfeited, except to the extent that the Compensation Committee of the Company's Board of Directors (the Committee) may determine otherwise.
Upon the occurrence of a "change in control" of the Company, as defined in the Plan, or upon sale of the business unit in which you work, any unvested Deferred Stock Units will vest and the shares from the vested award will be delivered to you as soon as practicable thereafter.
Should you receive shares from the vesting of Deferred Stock Units that have been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, the Company will determine if the 20% federal excise tax is payable. If it is payable, the Company will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse the Company.
A. This award of Deferred Stock Units does not give you any right to continue to be employed by the Company or any of its subsidiaries or affiliates, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you upon the vesting of Deferred Stock Units which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of common stock of the Company, if counsel for the Company deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Deferred Stock Units are subject to these terms and conditions and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between the award terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The Deferred Stock Units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these Deferred Stock Units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Manager, Global Compensation at 212/948-3523. She can also be reached via internal electronic mail (Lotus Notes) or the internet at Kelly.gamble@mmc.com.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
Terms and Conditions for [Grant Date] Award of Deferred Stock Units
The award of Deferred Stock Units granted on [Grant Date] under the Marsh & McLennan Companies (the Company) 2000 Employee Incentive and Stock Award Plan (the Plan) is subject to the following terms and conditions:
You will receive dividend equivalent payments on the Deferred Stock Units. These payments will be included in your payroll checks. Unless and until both the vesting conditions of the award have been satisfied and you have received the shares of Company common stock in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock.
The award is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the later of your Normal or Deferred Retirement Date (as such terms are defined in the Company's primary Retirement Plan applicable to you). Once the award vests and is available for distribution (which will occur within a reasonable time subsequent to the vesting date), you will receive one share of Company common stock for each of your Deferred Stock Units.
The tax treatment associated with your award is as follows:
(1) The value of Deferred Stock Units generally is not taxable at grant.
(2) The receipt of dividend equivalents is taxable on a current
basis as additional compensation.
(3) At vesting, you will be given further information regarding the tax
consequences of your receipt of the shares; at that time, you also
will be required to satisfy any payroll tax obligation from the
distribution.
If your employment with the Company or any of its subsidiaries or affiliates terminates, your right to the Deferred Stock Units shall be as follows:
If you die, the Deferred Stock Units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled, as determined under the Company's Long-Term Disability Plan applicable to you, the Deferred Stock Units will vest immediately.
If you retire on or after your Normal Retirement Date, the Deferred Stock Units will vest when you retire.
If you are terminated by the Company without Cause prior to your
Normal Retirement Date, the Deferred Stock Units will vest on a pro
rata basis. The portion of the Deferred Stock Units that vest is
equal to a fraction, the numerator of which is the number of days
from the date of grant to the date of termination, and the
denominator of which is the number of days from the date of grant to
[Vesting Date]. For purposes of these terms and conditions, Cause
shall mean misappropriation of assets of the Company or any of its
subsidiaries or affiliates; willful misconduct in the performance of
the employee's duties; continued failure after notice, or refusal, to
perform the duties of the employee; violation of a written code of
conduct applicable to the employee; willful violation of an important
policy of the Company or any of its subsidiaries or affiliates;
breach of fiduciary duty or breach of trust; conviction of a felony,
or of any other crime involving moral turpitude; imprisonment for any
crime; or any action likely to bring substantial discredit to the
Company or any of its subsidiaries or affiliates.
If you cease to be an active employee of the Company or any of its subsidiaries or affiliates before the end of the vesting period for any reason other than death, permanent disability, or normal or deferred retirement, or termination by the Company without Cause, your right to such Deferred Stock Units shall be forfeited, except to the extent that the Compensation Committee of the Company's Board of Directors (the Committee) may determine otherwise.
Upon the occurrence of a "change in control" of the Company, as defined in the Plan, or upon sale of the business unit in which you work, sale of a business unit in which you work, any unvested Deferred Stock Units will vest and the shares from the vested award will be delivered to you as soon as practicable thereafter.
A. This award of Deferred Stock Units does not give you any right to continue to be employed by the Company or any of its subsidiaries or affiliates, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you upon the vesting of Deferred Stock Units which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of common stock of the Company, if counsel for the Company deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Deferred Stock Units are subject to these terms and conditions and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between the award terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The Deferred Stock Units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these Deferred Stock Units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Manager, Global Compensation at 212/948-3523. She can also be reached via internal electronic mail (Lotus Notes) or the internet at Kelly.gamble@mmc.com.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
The award of Stock Bonus Units granted on [Grant Date] under the Marsh & McLennan Companies (the "Company") 2000 Employee Incentive and Stock Award Plan (the "Plan") is subject to the following terms and conditions:
You will receive dividend equivalent payments on the Stock Bonus Units. These payments will be included in your payroll checks. Unless and until both the vesting conditions of the award have been satisfied and you have received the shares of Company common stock in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock.
The award is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the date of your retirement (i.e., your Normal or Deferred Retirement Date or, subject to the provisions of Section IV-D, your Early Retirement Date, as such terms are defined in the Company's primary Retirement Plan applicable to you). Once the award vests and is available for distribution (which will occur within a reasonable time subsequent to the vesting date), you will receive one share of Company common stock for each of your Stock Bonus Units.
The tax treatment associated with your award is as follows:
(1) The value of Stock Bonus Units is not taxable at grant.
(2) The receipt of dividend equivalents is taxable on a current basis as
additional compensation.
(3) Once the award vests and is distributed to you, the distribution will
be includable in your taxable income; at that time, an appropriate
number of shares will be withheld to satisfy your payroll tax
obligation from the distribution.
(4) For grant recipients who defer their distribution at least three
years (or until the year following retirement) and are granted a
supplemental award, such individuals will be subject to FICA
withholding on the value of the units attributable to the supplement
at the date of vesting.
If your employment with the Company or any of its subsidiaries or affiliates terminates, your right to the Stock Bonus Units shall be as follows:
If you die, the Stock Bonus Units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled, as determined under the Company's Long-Term Disability Plan applicable to you, the Stock Bonus Units will vest immediately.
If you retire on or after your Normal Retirement Date, the Stock Bonus Units will vest when you retire.
If you retire before your Normal Retirement Date, the Stock Bonus Units will vest when you retire, provided that you execute the attached Non-Solicitation Agreement for Early Retirees, and in fact do comply with said Non-Solicitation Agreement for a period commencing with your Early Retirement Date and ending at the earlier of (i) three years thereafter or (ii) [Vesting Date], it being understood that failure to comply with said Non-Solicitation Agreement will cause your early retirement to be governed by the provisions of "F. All Other Employment Terminations", below.
If you are terminated by the Company without Cause, the Stock Bonus Units will vest upon your date of termination. For purposes of these terms and conditions, Cause shall mean misappropriation of assets of the Company or any of its subsidiaries or affiliates; willful misconduct in the performance of the employee's duties; continued failure after notice, or refusal, to perform the duties of the employee; violation of a written code of conduct applicable to the employee; willful violation of an important policy of the Company or any of its subsidiaries or affiliates; breach of fiduciary duty or breach of trust; conviction of a felony, or of any other crime involving moral turpitude; imprisonment for any crime; or any other action likely to bring substantial discredit to the Company or any of its subsidiaries or affiliates.
If you cease to be an active employee of the Company or any of its subsidiaries or affiliates before the end of the vesting period for any reason other than death, permanent disability, retirement (exclusive of early retirement if you fail to enter into the Non-Solicitation Agreement for Early Retirees), or termination without Cause, your right to such Stock Bonus Units shall be forfeited, except to the extent that the Compensation Committee of the Company's Board of Directors (the "Committee") may determine otherwise.
Upon the occurrence of a "change in control" of the Company, as defined in the Plan, or upon the sale of the business unit in which you work, any unvested Stock Bonus Units will vest and the shares from the vested award will be delivered to you as soon as practicable thereafter.
Should you receive shares from the vesting of Stock Bonus Units that have been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, the Company will determine if the 20% federal excise tax is payable. If it is payable, the Company will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse the Company.
A. This award of Stock Bonus Units does not give you any right to continue to be employed by the Company or any of its subsidiaries or affiliates, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you upon the vesting of Stock Bonus Units which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of common stock of the Company, if counsel for the Company deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Stock Bonus Units are subject to these terms and conditions and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between the award terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to the Senior Vice President of Human Resources and Administration of the Company.
D. The Stock Bonus Units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these Stock Bonus Units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Manager, Global Compensation at 212/948-3523. She can also be reached via internal electronic mail (Lotus Notes) or the internet at Kelly.gamble@mmc.com.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
Terms and Conditions for [Grant Date] Award of Stock Bonus Units (Non-U.S.)
The award of Stock Bonus Units granted on [Grant Date] under the Marsh & McLennan Companies (the "Company") 2000 Employee Incentive and Stock Award Plan (the "Plan") is subject to the following terms and conditions:
You will receive dividend equivalent payments on the Stock Bonus Units. These payments will be included in your payroll checks. Unless and until both the vesting conditions of the award have been satisfied and you have received the shares of Company common stock in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock.
The award is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the date of your retirement (i.e., your Normal or Deferred Retirement Date or, subject to the provisions of Section IV-D, your Early Retirement Date, as such terms are defined in the Company's primary Retirement Plan applicable to you). Once the award vests and is available for distribution (which will occur within a reasonable time subsequent to the vesting date), you will receive one share of Company common stock for each of your Stock Bonus Units.
The tax treatment associated with your award is as follows:
(1) The value of Stock Bonus Units generally is not taxable at grant.
(2) The receipt of dividend equivalents is taxable on a current basis as
additional compensation.
(3) At vesting, you will be given further information regarding the tax
consequences of your receipt of the shares; at that time, you also
will be required to satisfy any payroll tax obligation from the
distribution.
If your employment with the Company or any of its subsidiaries or affiliates terminates, your right to the Stock Bonus Units shall be as follows:
If you die, the Stock Bonus Units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution. |
If you become totally and permanently disabled, as determined under the Company's Long-Term Disability Plan applicable to you, the Stock Bonus Units will vest immediately.
If you retire on or after your Normal Retirement Date, the Stock Bonus Units will vest when you retire.
If you retire before your Normal Retirement Date, the Stock Bonus Units will vest when you retire, provided that you execute the attached Non-Solicitation Agreement for Early Retirees, and in fact do comply with said Non-Solicitation Agreement for a period commencing with your Early Retirement Date and ending at the earlier of (i) three years thereafter or (ii) [Vesting Date], it being understood that failure to comply with said Non-Solicitation Agreement will cause your early retirement to be governed by the provisions of "F. All Other Employment Terminations", below.
If you are terminated by the Company without Cause, the Stock Bonus Units will vest upon your date of termination. For purposes of these terms and conditions, Cause shall mean misappropriation of assets of the Company or any of its subsidiaries or affiliates; willful misconduct in the performance of the employee's duties; continued failure after notice, or refusal, to perform the duties of the employee; violation of a written code of conduct applicable to the employee; willful violation of an important policy of the Company or any of its subsidiaries or affiliates; breach of fiduciary duty or breach of trust; conviction of a felony, or of any other crime involving moral turpitude; imprisonment for any crime; or any other action likely to bring substantial discredit to the Company or any of its subsidiaries or affiliates.
F. All Other Employment Terminations
If you cease to be an active employee of the Company or any of its subsidiaries or affiliates before the end of the vesting period for any reason other than death, permanent disability, retirement (exclusive of early retirement if you fail to enter into the Non-Solicitation Agreement for Early Retirees), or termination without Cause, your right to such Stock Bonus Units shall be forfeited, except to the extent that the Compensation Committee of the Company's Board of Directors (the "Committee") may determine otherwise.
Upon the occurrence of a "change in control" of the Company, as defined in the Plan, or upon the sale of the business unit in which you work, any unvested Stock Bonus Units will vest and the shares from the vested award will be delivered to you as soon as practicable thereafter.
A. This award of Stock Bonus Units does not give you any right to continue to be employed by the Company or any of its subsidiaries or affiliates, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you upon the vesting of Stock Bonus Units which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of common stock of the Company, if counsel for the Company deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Stock Bonus Units are subject to these terms and conditions and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between the award terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to the Senior Vice President of Human Resources and Administration of the Company.
D. The Stock Bonus Units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these Stock Bonus Units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Manager, Global Compensation at 212/948-3523. She can also be reached via internal electronic mail (Lotus Notes) or the internet at Kelly.gamble@mmc.com.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
The award of Stock Bonus Units granted on [Grant Date] under the Marsh & McLennan Companies (the Company) 2000 Employee Incentive and Stock Award Plan (the "Plan") is subject to the following terms and conditions:
You will receive dividend equivalent payments on the Stock Bonus Units. These payments will be included in your payroll checks. Unless and until both the vesting conditions of the award have been satisfied and you have received the shares of Company common stock in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock.
The award is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the date of your retirement (i.e., your Normal or Deferred Retirement Date or, subject to the provisions of Section IV-D, your Early Retirement Date, as such terms are defined in the Company's primary Retirement Plan applicable to you). Once the award vests and is available for distribution (which will occur within a reasonable time subsequent to the vesting date), you will receive one share of Company common stock for each of your Stock Bonus Units.
The tax treatment associated with your award is as follows:
(1) The value of Stock Bonus Units generally is not taxable at grant.
(2) The receipt of dividend equivalents is taxable on a current basis as
additional compensation.
(3) At vesting, you will be given further information regarding the tax
consequences of your receipt of the shares; at that time, you also
will be required to satisfy any payroll tax obligation from the
distribution.
If your employment with the Company or any of its subsidiaries or affiliates terminates, your right to the Stock Bonus Units shall be as follows:
If you die, the Stock Bonus Units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled, as determined under the Company's Long-Term Disability Plan applicable to you, the Stock Bonus Units will vest immediately.
If you retire on or after your Normal Retirement Date, the Stock Bonus Units will vest when you retire.
If you retire before your Normal Retirement Date, the Stock Bonus Units will vest when you retire, provided that you execute the attached Non-Solicitation Agreement for Early Retirees, and in fact do comply with said Non-Solicitation Agreement for a period commencing with your Early Retirement Date and ending at the earlier of (i) three years thereafter or (ii) [Vesting Date], it being understood that failure to comply with said Non-Solicitation Agreement will cause your early retirement to be governed by the provisions of "F. All Other Employment Terminations", below.
If you are terminated by the Company without Cause, the Stock Bonus Units will vest upon your date of termination. For purposes of these terms and conditions, Cause shall mean misappropriation of assets of the Company or any of its subsidiaries or affiliates; willful misconduct in the performance of the employee's duties; continued failure after notice, or refusal, to perform the duties of the employee; violation of a written code of conduct applicable to the employee; willful violation of an important policy of the Company or any of its subsidiaries or affiliates; breach of fiduciary duty or breach of trust; conviction of a felony, or of any other crime involving moral turpitude; imprisonment for any crime; or any other action likely to bring substantial discredit to the Company or any of its subsidiaries or affiliates.
If you cease to be an active employee of the Company or any of its subsidiaries or affiliates before the end of the vesting period for any reason other than death, permanent disability, retirement (exclusive of early retirement if you fail to enter into the Non-Solicitation Agreement for Early Retirees), or termination without Cause, your right to such Stock Bonus Units shall be forfeited, except to the extent that the Compensation Committee of the Company's Board of Directors (the "Committee") may determine otherwise.
Upon the occurrence of a "change in control" of the Company, as defined in the Plan, or upon the sale of the business unit in which you work, any unvested Stock Bonus Units will vest and the shares from the vested award will be delivered to you as soon as practicable thereafter.
A. This award of Stock Bonus Units does not give you any right to continue to be employed by the Company or any of its subsidiaries or affiliates, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you upon the vesting of Stock Bonus Units which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of common stock of the Company, if counsel for the Company deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Stock Bonus Units are subject to these terms and conditions and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between the award terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to the Senior Vice President of Human Resources and Administration of the Company.
D. The Stock Bonus Units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these Stock Bonus Units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Manager, Global Compensation at 212/948-3523. She can also be reached via internal electronic mail (Lotus Notes) or the internet at Kelly.gamble@mmc.com.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933. The Marsh & McLennan Companies, Inc. 2000 Employee Incentive And Stock Award Plan Is Not Subject To Any Of The Provisions Of The Employee Retirement Income Security Act Of 1974.
Terms and Conditions of Deferred Stock Units Granted to U.S. Employees in [Grant Date]
This award of Deferred Stock Units ("the Supplemental Award") is being granted to you under the Marsh & McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan (the "2000 Employee Plan"). The Supplemental Award is equal to 15% (with any fractional unit to be replaced with a whole unit) of the number of stock units (the "Covered Units") (excluding units vesting as a result of your retirement and any granted in connection with a prior deferral under the Restricted Shares Voluntary Deferral Program) which were scheduled to vest on a specified future date (the "Scheduled Vesting Date") and which you have irrevocably elected to defer, provided, that such elected number is in an increment of 50 and cannot be more than 75% or less than the greater of 25% or 100 of the number of Covered Units which were scheduled to vest on the Scheduled Vesting Date, to a date on or after the vesting date specified in Section I A. The Supplemental Award is subject to the following terms and conditions:
Subject to Section IV D, the Supplemental Award shall vest on the earlier of (a) January 1 of the year of the third anniversary of the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
Unless forfeited pursuant to Section IV D or unless Section V A.2
applies, shares of Common Stock (the "Shares") of Marsh & McLennan
Companies, Inc. ("MMC") shall be registered in your name on each
distribution date based on your irrevocable election. The number of
Shares so registered to you on each distribution date shall be based
upon a distribution in substantially equal installments over the
period during which you have irrevocably elected to receive such
Shares; provided, however, that in the case of termination of your
employment by reason of your death or permanent disability, or in
the case of a payment under Section V A.1, the number of Shares so
registered shall equal the number of stock units with respect to
which distribution had not previously been made. Once the
Supplemental Award vests, you have an unalienable right to receive
the Shares (or cash or other property, as described in Section V
A.2) payable in connection therewith, in accordance with the terms
hereof.
Notwithstanding the irrevocability of the elections described in this Section I B, you shall have the right to delay the beginning date of distribution or to increase the number of installments to be made as provided in Section I C, and you have the right to accelerate distribution of the shares as provided in Section I D.
At any time up to one full calendar year prior to the beginning date of the scheduled distribution of Shares pursuant to Section I B, you may elect to defer the beginning date of distribution or to increase the number of installments, or both, as theretofore elected by you, subject to specific terms and conditions determined by the Compensation Committee of the MMC Board of Directors (the "Compensation Committee"). Such elections under this Section I C shall be treated as if made under Section I B for all purposes under the provisions hereof, including the right to make further elections under this Section I C.
You may elect to accelerate the distribution of all or a portion of the Shares for any reason prior to the completion of the elected deferral period, subject to the imposition of a significant penalty in accordance with applicable tax rules. The penalty shall be a forfeiture equal to (i) 6% of the amount that you elect to have distributed and (ii) 100% of any unvested Supplemental Award, as provided in the first paragraph of these terms and conditions, that you elect to have distributed. Amounts distributed to you will be subject to applicable tax withholding, but amounts forfeited will not be subject to tax.
You will receive dividend equivalent payments on the Supplemental Award. Unless and until the vesting conditions of the Supplemental Award have been satisfied and you have received the Shares in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such Shares (e.g., units cannot be used as payment for stock option exercises).
The value of your Supplemental Award is not includible in gross income until distribution, but is subject to FICA on the date of vesting. When the Shares (or, in the event Section V A.2 is applicable, cash or other property) are received by you free and clear of all restrictions on each distribution date, the then value of the distribution is includible in gross income and you will be required to pay the withholding taxes required by law. At that time, you will be given detailed information regarding the tax consequences of your receipt of the Shares (or cash or other property). The receipt of dividend equivalents is taxable on a current basis as additional compensation and is subject to FICA.
If your employment with MMC or any of its subsidiaries or affiliates (collectively with MMC, the "Company") terminates, your right to the Supplemental Award and to the distribution of Shares shall be as follows:
If you die during employment, any unvested portion of the Supplemental Award will vest immediately. In such event, or in the event of your death prior to complete distribution in respect of your Supplemental Award, distribution of Shares in respect of your undistributed Supplemental Award shall be made in the form of a lump sum payable as soon as practicable thereafter, with Shares being distributed to the person or persons to whom your rights shall pass by will or the law of descent and distribution.
If you terminate employment as a result of Total Disability (as such term is defined in the Company's Basic Long-Term Disability Plan), any unvested portion of the Supplemental Award will vest immediately. Distribution of Shares in respect of the Supplemental Award shall be in the form of a lump sum payable as soon as practicable thereafter.
If the later of your Normal or Deferred Retirement Date (as such terms are defined in the Company's primary retirement plan applicable to you) is prior to January 1 of the year of the third anniversary of the Scheduled Vesting Date, the Supplemental Award shall vest on your retirement date. Distribution of Shares in respect of the Supplemental Award shall be made at the time and in the form irrevocably elected by you on your election form but, subject to the succeeding sentence, distribution shall commence no later than January of the year following retirement. In no event, however, shall distribution commence before January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If you cease to be an employee of the Company before January 1 of the year of the third anniversary of the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Supplemental Award shall be forfeited.
2. If you cease to be an employee of the Company after the Scheduled Vesting Date but before all vested Shares have been distributed, any remaining vested Shares shall be distributed in a lump sum as soon as practicable following termination.
Upon the occurrence of a Change in Control, as defined in the 2000 Employee Plan, any outstanding but unvested portion of the Supplemental Award will vest on the date of the Change in Control and payment will be made thereafter in accordance with paragraph 1 or 2 below, whichever is applicable.
1. Except as provided in paragraph 2 below, Shares shall be registered in your name and delivered to you as soon as practicable following the Change in Control. The number of Shares so registered to you shall be equal to your undistributed Supplemental Award.
2. If, in the Change in Control transaction, shareholders of MMC receive consideration consisting of cash or other property (including securities of a successor or parent corporation), there shall be delivered to you as soon as practicable thereafter the consideration which you would have received in such transaction had you been, immediately prior to such transaction, a holder of that number of Shares equal to your undistributed Supplemental Award.
Should you receive Shares (or cash or other property) from the vesting of the Supplemental Award which was accelerated because of a Change in Control, all or part of the value of those Shares (or the cash or other property) on the date of vesting (the "Accelerated Supplemental Award") may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Supplemental Award (plus any other payments which are determined to be contingent on a Change in Control) is more than 2.999 times the average of your last five year's W-2 earnings.
If a Change in Control occurs and the vesting of your Supplemental Award is accelerated, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the "Additional Payment") equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income and other federal taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC.
The Company shall provide you with an annual statement detailing the number and vesting date of your stock units, as well as the expected date for commencement of distributions (subject to the provisions herein) and the distribution schedule for your Supplemental Award.
A. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer, of any Shares due to you in connection with the Supplemental Award which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer the Shares, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such Shares.
B. The Supplemental Award is subject to these terms and conditions and to the terms and conditions of the 2000 Employee Plan, and your acceptance hereof shall constitute your agreement to all such terms and conditions and to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the 2000 Employee Plan, the provisions of the latter shall prevail. Your acceptance of this Supplemental Award constitutes your agreement that the Shares subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Supplemental Award is granted in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the 2000 Employee Plan shall be conclusive and binding.
D. During your lifetime, no right hereunder related to this Supplemental Award shall be transferable except by will or the laws of descent and distribution.
E. The Supplemental Award does not give you any right to continue to be employed by the Company, or restrict, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
F. Awards relating to not more than eighty million (80,000,000) shares of MMC common stock, plus such number of shares authorized and reserved for awards pursuant to certain preexisting share resolutions adopted by MMC's Board of Directors, may be made over the life of the 2000 Employee Plan. Employees of the Company will be eligible for awards under the 2000 Employee Plan.
G. You may obtain a copy of the 2000 Employee Plan by making a request to:
Mr. William L. Rosoff Senior Vice President & General Counsel Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036-2774 (212) 345-7631
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC`s Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Mr. William L. Rosoff, Senior Vice President and General Counsel of MMC as indicated above.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933. The Marsh & McLennan Companies, Inc. 2000 Employee Incentive And Stock Award Plan Is Not Subject To Any Of The Provisions Of The Employee Retirement Income Security Act Of 1974.
Terms and Conditions of Restricted Stock Units Granted To U.S. Employees in [Grant Date]
This award (the "Award") of Restricted Stock Units is being granted to you under the Marsh & McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan (the "2000 Employee Incentive Plan"). The Award consists of (1) a replacement award (the "Replacement Award") of Restricted Stock Units equal in number to the number of shares (the "Covered Shares") (excluding shares vesting as a result of your retirement and any granted in connection with a prior deferral under the Restricted Shares Voluntary Deferral Program) of Restricted Stock or Restricted Stock Units granted to you under the 2000 Employee Incentive and Stock Award Plan or any predecessor plan which were scheduled to vest on a specified future date (the "Scheduled Vesting Date") and which you have irrevocably elected to surrender and have cancelled in exchange for this Award, provided, that such elected number is in an increment of 100 and cannot be more than 75% or less than 25% of the number of Covered Shares of Restricted Stock, or Restricted Stock Units which were scheduled to vest on the Scheduled Vesting Date, plus (2) if you elect to defer distribution of the Award to a date on or after the vesting date specified in Section I A.2, an additional award (the "Supplemental Award") of Restricted Stock Units equal in number to 15% of the Replacement Award. The Award is subject to the following terms and conditions:
1. Subject to Section IV D, the Replacement Award shall vest on the earlier of (a) the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
2. Subject to Section IV D, the Supplemental Award shall vest on the earlier of (a) January 1 of the year of the third anniversary of the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
Unless forfeited pursuant to Section IV D, or unless Section V A.2
applies, and in any event subject to Section I E, shares of Common
Stock (the "Shares") of Marsh & McLennan Companies, Inc. ("MMC")
shall be registered in your name on each distribution date based on
your irrevocable election. The number of Shares so registered to you
on each distribution date shall be based upon a distribution in
substantially equal installments over the period during which you
have irrevocably elected to receive such Shares; provided, however,
that in the case of termination of your employment by reason of your
death or permanent disability, or in the case of a payment under
Section V A.1, the number of Shares so registered shall equal the
number of Restricted Stock Units with respect to which distribution
had not previously been made. Once the Award vests, you have an
unalienable right to receive the Shares (or cash or other property,
as described in Section V A.2) payable in connection therewith, in
accordance with the terms hereof. Notwithstanding the irrevocability
of the elections described in this Section I B, you shall have the
right to delay the beginning date of distribution or to increase the
number of installments to be made as provided in Section I C, and
you have the right to accelerate distribution of the shares as
provided in Section I D.
At any time up to one full calendar year prior to the beginning date of the scheduled distribution of Shares pursuant to Section I B, you may elect to defer the beginning date of distribution or to increase the number of installments, or both, as theretofore elected by you, subject to specific terms and conditions determined by the Compensation Committee of the MMC Board of Directors (the "Compensation Committee"). Such elections under this Section I C shall be treated as if made under Section I B for all purposes under the provisions hereof, including the right to make further elections under this Section I C.
You may elect to accelerate the distribution of all or a portion of the Shares (unless Section I E applies and a special deferral is made) for any reason prior to the completion of the elected deferral period, subject to the imposition of a significant penalty in accordance with applicable tax rules. The penalty shall be a forfeiture equal to (i) 6% of the amount that you elect to have distributed and (ii) 100% of any unvested Supplemental Award, as provided in item (2) of the first paragraph of these terms and conditions, that you elect to have distributed. Amounts distributed to you will be subject to applicable tax withholding, but amounts forfeited will not be subject to tax.
Notwithstanding anything to the contrary contained herein (other
than Section V), the Committee shall have the discretion to defer
any distribution otherwise scheduled to be made hereunder to the
extent necessary (in the Committee's judgment) to avoid all or any
portion of such distribution being nondeductible to the Company by
reason of Section 162(m) of the Internal Revenue Code of 1986, as
amended, or any successor provision thereto. Employees covered under
Section 162(m), according the proposed regulations issued by the
Internal Revenue Service, include (i) the chief executive officer of
MMC as of the last day of the year of distribution and (ii) the four
highest paid executive officers of MMC, other than the chief
executive officer, who are employed on the last day of the year of
distribution.
You will receive dividend equivalent payments on the Restricted Stock Units. Unless and until the vesting conditions of the Award have been satisfied and you have received the Shares in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such Shares (e.g., units cannot be used as payment for stock option exercises).
The value of your Award is not includible in gross income until distribution, but is subject to FICA on the date of vesting. When the Shares (or, in the event Section V A.2 is applicable, cash or other property) are received by you free and clear of all restrictions on each distribution date, the value of such distribution is includible in gross income and you will be required to pay the withholding taxes required by law. At that time, you will be given detailed information regarding the tax consequences of your receipt of the Shares (or cash or other property). The receipt of dividend equivalents is taxable on a current basis as additional compensation and is subject to FICA.
If your employment with MMC or any of its subsidiaries or affiliates (collectively with MMC, the "Company") terminates, your right to the Award and to the distribution of Shares shall be as follows:
If you die during employment, any unvested portion of the Award will vest immediately. In such event, or in the event of your death prior to complete distribution in respect of your Award, distribution of Shares in respect of your undistributed Award shall be made in the form of a lump sum payable as soon as practicable thereafter, with Shares being distributed to the person or persons to whom your rights shall pass by will or the law of descent and distribution.
If you terminate employment as a result of Total Disability (as such term is defined in the Company's Basic Long-Term Disability Plan), any unvested portion of the Award will vest immediately. Distribution of Shares in respect of the Replacement Award shall be in the form of a lump sum payable on January 1 of the year following such termination. Distribution of Shares in respect of the Supplemental Award shall be in the form of a lump sum payable on the later of (1) January 1 of the year following termination or (2) January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If the later of your Normal or Deferred Retirement Date (as such terms are defined in the Company's primary retirement plan applicable to you) is prior to the Scheduled Vesting Date, the Replacement Award shall vest on your retirement date. Distribution of Shares in respect of the Replacement Award shall be made at the time and in the form irrevocably elected by you on your election form, but shall commence no later than January of the year following retirement.
2. If the later of your Normal or Deferred Retirement Date is prior to January 1 of the year of the third anniversary of the Scheduled Vesting Date, the Supplemental Award shall vest on your retirement date. Distribution of Shares in respect of the Supplemental Award shall be made at the time and in the form irrevocably elected by you on your election form but, subject to the succeeding sentence, distribution shall commence no later than January of the year following retirement. In no event, however, shall distribution commence before January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If you cease to be an employee of the Company before the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Replacement Award shall be forfeited.
2. If you cease to be an employee of the Company before January 1 of the year of the third anniversary of the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Supplemental Award shall be forfeited.
3. If you cease to be an employee of the Company after the Scheduled Vesting Date but before all vested Shares have been distributed, any remaining vested Shares shall be distributed in a lump sum in January of the year following termination.
Upon the occurrence of a Change in Control, as defined in the 2000 Employee Incentive and Stock Award Plan, any outstanding but unvested portion of the Award will vest on the date of the Change in Control and payment will be made thereafter in accordance with paragraph 1 or 2 below, whichever is applicable.
1. Except as provided in paragraph 2 below, Shares shall be registered in your name and delivered to you as soon as practicable following the Change in Control. The number of Shares so registered to you shall be equal to your undistributed Award.
2. If, in the Change in Control transaction, shareholders of MMC receive consideration consisting of cash or other property (including securities of a successor or parent corporation), there shall be delivered to you as soon as practicable thereafter the consideration which you would have received in such transaction had you been, immediately prior to such transaction, a holder of that number of Shares equal to your undistributed Award.
Should you receive Shares (or cash or other property) from the vesting of the Award which was accelerated because of a Change in Control, all or part of the value of those Shares (or the cash or other property) on the date of vesting (the "Accelerated Award") may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Award (plus any other payments which are determined to be contingent on a Change in Control) is more than 2.999 times the average of your last five years W-2 earnings.
If a Change in Control occurs and the vesting of your Award is accelerated, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the "Additional Payment") equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income and other federal taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC.
The Company shall provide you with an annual statement detailing the number and vesting date of your Restricted Stock Units, as well as the expected date for commencement of distributions (subject to the provisions herein) and the distribution schedule for your Award.
A. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer, of any Shares due to you in connection with the Award which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer the Shares, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such Shares.
B. The Award is subject to these terms and conditions and to the terms and conditions of the 2000 Employee Incentive and Stock Award Plan, and your acceptance hereof shall constitute your agreement to all such terms and conditions and to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the 2000 Employee Incentive and Stock Award Plan, the provisions of the latter shall prevail. Your acceptance of this Award constitutes your agreement that the Shares subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Award is granted in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the 2000 Employee Incentive and Stock Award Plan shall be conclusive and binding.
D. During your lifetime, no right hereunder related to this Award shall be transferable except by will or the laws of descent and distribution.
E. The Award does not give you any right to continue to be employed by the Company, or restrict, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
F. Awards relating to not more than eighty million (80,000,000) shares of MMC common stock, plus such number of shares remaining unused under pre-existing share resolutions adopted by MMC's Board of Directors, may be made over the life of the 2000 Employee Incentive and Stock Award Plan. Senior employees of the Company will be eligible for awards under the 2000 Employee Incentive and Stock Award Plan.
G. You may obtain a copy of the 2000 Employee Incentive and Stock Award Plan by making a request to:
Mr. William L. Rosoff Senior Vice President Human Resources & Administration Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036-2774 (212) 345-7631
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Mr. William L. Rosoff, Senior Vice President - Human Resources & Administration of MMC as indicated above.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Employee Incentive and Stock Award Plan (the "Plan"), is subject to the following terms and conditions:
Subject to your continued employment, your award of restricted stock units
is scheduled to vest as follows: 25% of the units will vest on [First
Anniversary of Grant Date], a second 25% of the units will vest on [Second
Anniversary of Grant Date], a third 25% of the units will vest on [Third
Anniversary of Grant Date] and the remaining 25% of the units will vest on
[Fourth Anniversary of Grant Date]. If you cease to be an employee before
any of the applicable vesting dates, the provisions of Section IV below
will apply. The shares will be delivered to you as soon as practicable
after the date of vesting, free of restriction.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If, prior to the vesting of all restricted stock units as provided above, you should cease to be employed by MMC or any of its subsidiaries or affiliates (the "Company"), all restricted stock units shall, except as provided in the next succeeding paragraph, forthwith vest in you or, in the event of your death, to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
You shall not be entitled to receive any restricted stock units not theretofore vested, and all rights pertaining to any such unvested restricted stock units shall cease, should your employment be terminated under any of the following conditions:
A. Termination by your employer for any of the following reasons:
misappropriation of the assets of the Company; willful misconduct in
the performance of your duties; your refusal to perform the duties
of your position; or your conviction of a felony.
B. Your resignation, except:
(1) upon total disability, as defined in the Company's long-term disability program; or
(2) upon retirement within the meaning of the Company's retirement program; or
(3) for Good Reason (as defined below) if the Company fails to cure the circumstances giving rise to such Good Reason within 30 days. "Good Reason" means:
(a) termination of your present position in the Company or of any position subsequently held;
(b) reduction in your annual base salary as in effect from time to time, except for across-the-board salary reductions similarly and generally affecting a recognized group of senior executives that includes you;
(c) relocation of your office to a place not within the Boston metropolitan area; or
(d) the discontinuance or reduction in level of your participation (exclusive of an ad hoc reduction conforming to the general principles under which a plan is administered) in any compensation plan in which you have been participating, provided that other senior executives constituting a recognized group that includes you are not also and similarly affected.
Any resignation pursuant to Section IV.B.(3) must be submitted in writing and delivered to the Senior Vice President, Human Resources and Administration of MMC within 60 days of your becoming aware of any circumstances set forth in (a), (b), (c) or (d) above. Such notice of resignation must specify which of the circumstances set forth above you are relying on, and your resignation must be effective no later than 90 days, but no earlier than 30 days, from your delivery of the written notice.
It is understood that any future agreement between you and the Company may include provisions that vary from the terms contained herein and, if so, the provisions of such future agreement shall govern.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
B. Additional Payment
Should you receive shares from the vesting of restricted stock units that have been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer of any shares of common stock due to you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Compensation Committee of the MMC Board of Directors (the "Committee"). In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to the Senior Vice President, Human Resources and Administration of MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation at (212) 948-3523.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
The award of nonqualified stock options granted on [Grant Date] under the Marsh & McLennan Companies (MMC) 2000 Employee Incentive and Stock Award Plan (the Plan) is subject to the following terms and conditions:
Subject to your continued employment, twenty-five percent (25%) of the aggregate number of shares covered by these options will vest and become exercisable each [Anniversary Date] beginning [First Anniversary of Grant Date]. Subject to the provisions of Section V herein, in the event of your Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested options will vest at such termination and become exercisable. For all other terminations of employment, unvested options will not vest and vested options will cease to be exercisable as of the date of such termination.
When you decide to exercise a stock option, you must follow the steps set forth below. Your option exercise will be effective the date on which we receive your stock option exercise letter (the Notice of Exercise of Option Letter), option exercise payment and Non-Solicitation Agreement or, if received on different days, the later of those dates.
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of one
of the attached sample letters. Your letter must set forth the
following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes: cash payment
or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form;
include company name, contact person, Depository Trust Company
(DTC) number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from the Stock Purchase
Plan, a stock option exercise or a stock award vesting) which you
have owned for at least six months prior to the exercise date,
having a value equal to or greater than the aggregate exercise
price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name
indicated on the face of the certificate. The signature of
endorsement must be guaranteed by a commercial bank or
stockbroker. Attached is a sample of an endorsed stock
certificate. [Note: If the certificate is mailed, you might
consider making the endorsement on a stock power (2 above), and
then mailing it separately.]
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market
Value of MMC common stock. Fair Market Value on a given date
means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on the
immediately preceding date (or, if the New York Stock Exchange
was not open that day, the next preceding day that the NYSE was
open for trading and the stock was traded) as reported for such
date in the table entitled "NYSE Composite Transactions",
contained in The Wall Street Journal or an equivalent successor
table. For example, for a stock option exercise on April 5th,
the Fair Market Value of shares tendered, on a per share basis,
would be the average of the high and low selling prices of MMC
common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of
your stock option exercise will be valued at the Fair Market Value
of MMC common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the aggregate exercise price
exceeds the value of the tendered shares. Failure to pay the full
purchase price within five days of the date of exercise may void the
Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise
the [Grant Date] stock option, unless you are exercising the
option after taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you.
We recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
Payment of withholding taxes (including FICA) is required by law when a
nonqualified stock option is exercised. An election to satisfy all
applicable withholding taxes, either (1) by check or (2) by having a
sufficient number of the shares resulting from the option exercise
retained by MMC, must be made on or before the exercise date (see sample
letters). If such an election is not made by that time then, by default,
shares will be retained to satisfy the tax withholding obligation. The
election to have shares withheld is irrevocable but is subject to
disapproval by the Compensation Committee of the MMC Board of Directors
(the Committee). Such shares will be valued at the Fair Market Value of
MMC common stock.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in
your name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be
registered in your name (or you and your spouse as joint tenants, at
your request) as of the date of exercise, and you will receive the
quarterly dividend so long as you remain a registered shareholder on
the dividend record date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
Company) terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the
option shall pass by will or the laws of descent and distribution
shall be entitled to exercise such option within one year after the
date of death, but in no event shall the option be exercised beyond
the expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option
will vest at such termination and become exercisable. In the case of
your Retirement Date being an Early Retirement Date, any then vested
option shares shall continue to be exercisable for five years from
your Early Retirement Date, but in no event beyond the expiration
date of the grant, provided that you execute the attached
Non-Solicitation Agreement for Early Retirees, and in fact do,
comply with said Non-Solicitation Agreement, for a period of three
years commencing with your Early Retirement Date, or such lessor
period as may be applicable, it being understood that failure to
comply with said Non-Solicitation Agreement will cause your early
retirement to be governed by the provisions of "F. All Other
Employment Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company's
primary retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
All option shares will cease to be exercisable on the date of
termination due to termination for any other reason than specified
above, except to the extent that the Committee may determine
otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
A. Change in Control
-----------------
Upon the occurrence of a "change in control" of MMC, as defined in
the Plan, all stock options you hold will become fully exercisable
and vested, and any restrictions contained in the terms and
conditions of the option grants shall lapse.
B. Additional Payment
------------------
If you exercise option shares that have become exercisable because
of a change in control, all or a portion of the gain (the total
market price for the shares on the date of exercise minus the total
exercise price) on those shares may be subject to a 20% federal
excise tax. The excise tax is imposed when the gain (plus any other
payments, which are determined to be contingent on a change in
control) is more than 2.999 times the average of your last five
years W-2 earnings.
If a change in control occurs and you exercise stock options whose
vesting has been accelerated, MMC will determine if the excise tax
is payable. If it is payable, MMC will pay to you, within five days
of making the computation, an amount of money (the Additional
Payment) equal to the excise tax plus additional amounts for
federal, state and local taxes so that the excise tax and income
taxes on the excise tax payment will not cost you any money. If the
Additional Payment is later determined to be less than the amount of
taxes you owe, a further payment will be made to you. If the
Additional Payment is more than the amount you owe, you will be
required to reimburse MMC for the difference.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts,
in any way, the right of your employer to terminate your employment
at any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you,
and no right thereunder shall be transferable except by will or the
laws of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder
with respect to the shares of MMC common stock subject to an option,
unless, and until, you have exercised the option, paid the full
price thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or nontransfer or any delay
in the issuance or transfer of any shares of MMC common stock
subject to an option or otherwise pursuant to the Plan which results
from the inability of MMC to obtain, or in any delay in obtaining,
from each regulatory body having jurisdiction, all requisite
authority to issue or transfer shares of MMC common stock, if
counsel for MMC deems such authority necessary for the lawful
issuance or transfer of any such shares.
-6-
|
E. An award is subject to all of the terms and conditions of the Plan
and your acceptance of an award shall constitute your agreement to
the terms and conditions of the Plan and the administrative
regulations of the Committee. Your acceptance of an award
constitutes your agreement that the shares of MMC common stock
acquired hereunder will not be sold or otherwise disposed of by you
in violation of any applicable securities laws or regulations. In
the event of any conflict between the Plan and the terms and
conditions of the Plan, the Plan shall prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the
Committee may from time to time adopt. All decisions of the
Committee upon any questions arising under the Plan or under these
terms and conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at (212) 948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at (212) 345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the Exchange Act), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Employee Incentive and
Stock Award Plan, the Marsh & McLennan Companies 2000 Employee Incentive and
Stock Award Plan, or any successor plan thereto (collectively, the Plan), as
each may be amended from time to time, I, the undersigned, agree that if my
employment with Marsh & McLennan Companies, Inc. or one of its subsidiaries (the
Company) terminates for any reason other than death or total disability within
three (3) years after exercising the option granted to me on __________________
under the Plan, I will not, for a period of two (2) years from date of
termination, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation except for the benefit of the Company:
(a) solicit or accept business of the type offered by the Company during
my term of employment with the Company, or perform or supervise the performance
of any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): SS#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Employee Incentive and Stock Award Plan, the
Marsh & McLennan Companies 2000 Employee Incentive and Stock Award Plan, or any
successor plan thereto (collectively, the Plan), as each may be amended from
time to time, beyond (early retirement date), his Early Retirement Date at
(employer), to the earlier of (expiration date) or the original expiration date
of the applicable grant, Participant agrees that until (non-solicitation date)
he will not, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation:
(a) solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the Company) during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): SS#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Sample Notice of Exercise of Option Letter
Payment with Cash by U.S. Employees
-----------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID #: _______________________
-----------------------------------------
Address:
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ----------------------------
Contact: Tele. #:
----------------------------------------- ----------------------------
Fax #:
----------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
-------------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U.S. Employees
----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share. Therefore, the cost of
this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for at least
six months) of which I am using ________* shares to be valued at U.S.$_____________/share* (the Fair Market
Value of MMC common stock on ______________*), for a total market value of U.S.$_____________*. I understand
that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID #: _________________________
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ----------------------------
Contact: Tele. #:
----------------------------------------- ----------------------------
Fax #:
----------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until you have received the tax payment.
(My office telephone number is ____________.)
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That Have
Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN
--------------------------------------------
Terms and Conditions for [Grant Date] Award of Stock Options
The award of nonqualified stock options granted on [Grant Date] under the Marsh
& McLennan Companies (MMC) 2000 Employee Incentive and Stock Award Plan (the
Plan) is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions of Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement,
unvested options will vest at such termination and become exercisable. For
all other terminations of employment, unvested options will not vest and
vested options will cease to be exercisable as of the date of such
termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the Notice of Exercise of
Option Letter), option exercise payment and Non-Solicitation Agreement or,
if received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of
one of the attached sample letters. Your letter must set forth the
following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of share distribution:
a. For shares distributed electronically in book entry form;
include company name, contact person, Depository Trust Company
(DTC) number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
[xxx-x-xxxxxx] (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from the Stock Purchase
Plan, a stock option exercise or a stock award vesting) which you
have owned for at least six months prior to the exercise date,
having a value equal to or greater than the aggregate exercise
price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(1) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated
on the face of the certificate. The signature of endorsement must be
guaranteed by a commercial bank or stockbroker. Attached is a sample
of an endorsed stock certificate. [Note: If the certificate is
mailed, you might consider making the endorsement on a stock power
(2 above), and then mailing it separately.]
In some countries, the tax consequences of the tender of shares may
be onerous. You should read any tax information provided to you by
MMC, and consult your local tax advisor for more specific
information.
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market
Value of MMC common stock. Fair Market Value on a given date
means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on
the immediately preceding date (or, if the New York Stock
Exchange was not open that day, the next preceding day that
the NYSE was open for trading and the stock was traded) as
reported for such date in the table entitled "NYSE Composite
Transactions", contained in The Wall Street Journal or an
equivalent successor table. For example, for a stock option
exercise on April 5th, the Fair Market Value of shares
tendered, on a per share basis, would be the average of the
high and low selling prices of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment
of your stock option exercise will be valued at the Fair Market
Value of MMC common stock. Once the value of the shares tendered
has been determined, you will owe MMC a check if the aggregate
exercise price exceeds the value of the tendered shares. Failure
to pay the full purchase price within five days of the date of
exercise may void the Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you.
We recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. TAX CONSEQUENCES
----------------
Any tax memorandum accompanying this package will explain the tax
consequences of a stock option exercise.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in
your name or that of you and your spouse as joint tenants.
B. When you exercise your stock option, you will receive written
confirmation of the transaction.
C. Shares received upon your exercise of a stock option will be
registered in your name (or you and your spouse as joint tenants, at
your request) as of the date of exercise, and you will receive the
quarterly dividend so long as you remain a registered shareholder on
the dividend record date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
Company) terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the
option shall pass by will or the laws of descent and distribution
shall be entitled to exercise such option within one year after the
date of death, but in no event shall the option be exercised beyond
the expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested
option shares shall continue to be exercisable for five years from
your Early Retirement Date, but in no event beyond the expiration
date of the grant, provided that you execute the attached
Non-Solicitation Agreement for Early Retirees, and in fact do, comply
with said Non-Solicitation Agreement, for a period of three years
commencing with your Early Retirement Date, or such lessor period as
may be applicable, it being understood that failure to comply with
said Non-Solicitation Agreement will cause your early retirement to
be governed by the provisions of "F. All Other Employment
Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company's
primary retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
All option shares will cease to be exercisable on the date of
termination due to termination for any other reason than specified
above, except to the extent that the Committee may determine
otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
Upon the occurrence of a "change in control" of MMC, as defined in the
Plan, all stock options you hold will become fully exercisable and vested,
and any restrictions contained in the terms and conditions of the option
grants shall lapse.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts, in
any way, the right of your employer to terminate your employment at
any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and
no right thereunder shall be transferable except by will or the laws
of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder
with respect to the shares of MMC common stock subject to an option,
unless, and until, you have exercised the option, paid the full price
thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or nontransfer or any delay in
the issuance or transfer of any shares of MMC common stock subject to
an option or otherwise pursuant to the Plan which results from the
inability of MMC to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction, all requisite authority to issue
or transfer shares of MMC common stock, if counsel for MMC deems such
authority necessary for the lawful issuance or transfer of any such
shares.
E. An award is subject to all of the terms and conditions of the Plan
and your acceptance of an award shall constitute your agreement to
the terms and conditions of the Plan and the administrative
regulations of the Committee. Your acceptance of an award constitutes
your agreement that the shares of MMC common stock acquired hereunder
will not be sold or otherwise disposed of by you in violation of any
applicable securities laws or regulations. In the event of any
conflict between the Plan and the terms and conditions of the Plan,
the Plan shall prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the
Committee may from time to time adopt. All decisions of the Committee
upon any questions arising under the Plan or under these terms and
conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at (212) 948-3523, or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at (212) 345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
-6-
|
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the Exchange Act), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated on the previous page.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum (for some countries)
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Employee Incentive and
Stock Award Plan, the Marsh & McLennan Companies 2000 Employee Incentive and
Stock Award Plan, or any successor plan thereto (collectively, the Plan), as
each may be amended from time to time, I, the undersigned, agree that if my
employment with Marsh & McLennan Companies, Inc. or one of its subsidiaries (the
Company) terminates for any reason other than death or total disability within
three (3) years after exercising the option granted to me on __________________
under the Plan, I will not, for a period of two (2) years from date of
termination, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation except for the benefit of the Company:
(a) solicit or accept business of the type offered by the Company during
my term of employment with the Company, or perform or supervise the performance
of any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): ID#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Employee Incentive and Stock Award Plan, the
Marsh & McLennan Companies 2000 Employee Incentive and Stock Award Plan, or any
successor plan thereto (collectively, the Plan), as each may be amended from
time to time, beyond (early retirement date), his Early Retirement Date at
(employer), to the earlier of (expiration date) or the original expiration date
of the applicable grant, Participant agrees that until (non-solicitation date)
he will not, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation:
(a) solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the Company) during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): ID#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Sample Notice of Exercise of Option Letter
Payment with Cash by Non-U.S. Employees
---------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID #: ______________________
------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ---------------------------
Contact: Tele. #:
----------------------------------------- ---------------------------
Fax #:
---------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
-------------------------------------
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by Non-U.S. Employees
--------------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share. Therefore, the cost of
this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for at least
six months) of which I am using ________* shares to be valued at U.S.$_____________/share* (the Fair Market
Value of MMC common stock on ______________*), for a total market value of U.S.$_____________*. I understand
that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID #: ______________________
-----------------------------------------
Address:
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ---------------------------
Contact: Tele. #:
----------------------------------------- ---------------------------
Fax #:
---------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That Have
Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN
--------------------------------------------
Terms and Conditions for [Grant Date] Award of Nonqualified Stock Options
to Putnam Investments, LLC Employees
------------------------------------
The award of nonqualified stock options granted on [Grant Date] under the Marsh
& McLennan Companies ("MMC") 2000 Employee Incentive and Stock Award Plan (the
"Plan") is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions of Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement,
unvested options will vest at such termination and become exercisable. For
all other terminations of employment, unvested options will not vest and
vested options will cease to be exercisable as of the date of such
termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the "Notice of Exercise of
Option Letter"), option exercise payment and Non-Solicitation Agreement
or, if received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, NY 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of
one of the attached sample letters. Your letter must set forth the
following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes: cash payment
or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form; include
company name, contact person, Depository Trust Company ("DTC")
number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common
stock as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from the Stock Purchase Plan,
a stock option exercise or a stock award vesting) which you have
owned for at least six months prior to the exercise date, having a
value equal to or greater than the aggregate exercise price, as
follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(1) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name
indicated on the face of the certificate. The signature of
endorsement must be guaranteed by a commercial bank or
stockbroker. Attached is a sample of an endorsed stock
certificate. [Note: If the certificate is mailed, you might
consider making the endorsement on a stock power (2 above), and
then mailing it separately.]
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market
Value of MMC common stock. Fair Market Value on a given date
means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on the
immediately preceding date (or, if the New York Stock Exchange
was not open that day, the next preceding day that the NYSE was
open for trading and the stock was traded) as reported for such
date in the table entitled "NYSE Composite Transactions",
contained in The Wall Street Journal or an equivalent successor
table. For example, for a stock option exercise on April 5th, the
Fair Market Value of shares tendered, on a per share basis, would
be the average of the high and low selling prices of MMC common
stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of
your stock option exercise will be valued at the Fair Market Value of
MMC common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the aggregate exercise price
exceeds the value of the tendered shares. Failure to pay the full
purchase price within five days of the date of exercise may void the
Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you. We
recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
Payment of withholding taxes (including FICA) is required by law when a
nonqualified stock option is exercised. An election to satisfy all
applicable withholding taxes, either (1) by check or (2) by having a
sufficient number of the shares resulting from the option exercise
retained by MMC, must be made on or before the exercise date (see sample
letters). If such an election is not made by that time then, by default,
shares will be retained to satisfy the tax withholding obligation. The
election to have shares withheld is irrevocable but is subject to
disapproval by the Compensation Committee of the MMC Board of Directors
(the "Committee"). Such shares will be valued at the Fair Market Value of
MMC common stock.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in your
name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be registered
in your name (or you and your spouse as joint tenants, at your request)
as of the date of exercise, and you will receive the quarterly dividend
so long as you remain a registered shareholder on the dividend record
date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
"Company") terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the
option shall pass by will or the laws of descent and distribution
shall be entitled to exercise such option within one year after the
date of death, but in no event shall the option be exercised beyond
the expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested
option shares shall continue to be exercisable for five years from
your Early Retirement Date, but in no event beyond the expiration
date of the grant, provided that you execute the attached
Non-Solicitation Agreement for Early Retirees, and in fact do, comply
with said Non-Solicitation Agreement, for a period of three years
commencing with your Early Retirement Date, or such lessor period as
may be applicable, it being understood that failure to comply with
said Non-Solicitation Agreement will cause your early retirement to
be governed by the provisions of "F. All Other Employment
Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company's
primary retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will
not vest and vested option shares will cease to be exercisable on the
date of termination, except to the extent that the Committee may
determine otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
A. Change in Control
-----------------
Upon the occurrence of a "change in control" of MMC, as defined in
the Plan, all stock options you hold will become fully exercisable
and vested, and any restrictions contained in the terms and
conditions of the option grants shall lapse.
B. Additional Payment
------------------
If you exercise option shares that have become exercisable because of
a change in control, all or a portion of the gain (the total market
price for the shares on the date of exercise minus the total exercise
price) on those shares may be subject to a 20% federal excise tax.
The excise tax is imposed when the gain (plus any other payments,
which are determined to be contingent on a change in control) is more
than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you exercise stock options whose
vesting has been accelerated, MMC will determine if the excise tax is
payable. If it is payable, MMC will pay to you, within five days of
making the computation, an amount of money (the Additional Payment)
equal to the excise tax plus additional amounts for federal, state
and local taxes so that the excise tax and income taxes on the excise
tax payment will not cost you any money. If the Additional Payment is
later determined to be less than the amount of taxes you owe, a
further payment will be made to you. If the Additional Payment is
more than the amount you owe, you will be required to reimburse MMC
for the difference.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts, in
any way, the right of your employer to terminate your employment at
any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and
no right thereunder shall be transferable except by will or the laws
of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder
with respect to the shares of MMC common stock subject to an option,
unless, and until, you have exercised the option, paid the full price
thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or nontransfer or any delay in
the issuance or transfer of any shares of MMC common stock subject to
an option or otherwise pursuant to the Plan which results from the
inability of MMC to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction, all requisite authority to issue
or transfer shares of MMC common stock, if counsel for MMC deems such
authority necessary for the lawful issuance or transfer of any such
shares.
E. An award is subject to all of the terms and conditions of the Plan
and your acceptance of an award shall constitute your agreement to
the terms and conditions of the Plan and the administrative
regulations of the Committee. Your acceptance of an award constitutes
your agreement that the shares of MMC common stock acquired hereunder
will not be sold or otherwise disposed of by you in violation of any
applicable securities laws or regulations. In the event of any
conflict between the Plan and the terms and conditions of the Plan,
the Plan shall prevail.
-6-
|
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the
Committee may from time to time adopt. All decisions of the Committee
upon any questions arising under the Plan or under these terms and
conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Sample Notice of Exercise of Option Letter
Payment with Cash by U.S. Employees
-----------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#:_______________________
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ---------------------------
Contact: Tele. #:
----------------------------------------- ---------------------------
Fax #:
---------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understandthat the shares will not be released until the tax payment has been received by you.
(My office telephone number is ____________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U.S. Employees
----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share. Therefore, the cost of
this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for at least
six months) of which I am using ________* shares to be valued at U.S.$_____________/share* (the Fair Market
Value of MMC common stock on ______________*), for a total market value of U.S.$_____________*. I understand
that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also, enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#:_________________________
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
----------------------------------------- ---------------------------
Contact: Tele. #:
----------------------------------------- ---------------------------
Fax #:
---------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------------
Address:
-------------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until you have received the tax payment.
(My office telephone number is ____________.)
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That Have
Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN
--------------------------------------------
Terms and Conditions for [Grant Date] Award of Stock Options
for U.K. Grant Recipients
-------------------------
The award of MMC stock options granted on [Grant Date] under the Marsh &
McLennan Companies (MMC) 2000 Employee Incentive and Stock Award Plan (the Plan)
is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions in Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement,
unvested options will vest at such termination and become exercisable. For
all other terminations of employment, unvested options will not vest and
vested options will cease to be exercisable as of the date of such
termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the Notice of Exercise of
Option Letter), option exercise payment and Non-Solicitation Agreement or,
if received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation Administrator
Marsh & McLennan Companies, Inc Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of
one of the attached sample letters. Your letter must set forth the
following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes: cash payment
or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form; include
company name, contact person, Depository Trust Company (DTC)
number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common
stock as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or
wire transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New
York. Wire transfers are not considered "received" until the date
on which Chase confirms that the funds have been transferred to
our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of
MMC common stock (including shares acquired from a stock option
exercise or stock award vesting) which you have owned for at
least six months prior to the exercise date, having a value equal
to or greater than the aggregate exercise price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name
indicated on the face of the certificate. The signature of
endorsement must be guaranteed by a commercial bank or
stockbroker. Attached is a sample of an endorsed stock
certificate. [Note: If the certificate is mailed, you might
consider making the endorsement on a stock power (2 above),
and then mailing it separately.]
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market
Value of MMC common stock. Fair Market Value on a given date
means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on the
immediately preceding date (or, if the New York Stock Exchange
was not open that day, the next preceding day that the NYSE was
open for trading and the stock was traded) as reported for such
date in the table entitled "NYSE Composite Transactions",
contained in The Wall Street Journal or an equivalent successor
table. For example, for a stock option exercise on April 5th, the
Fair Market Value of shares tendered, on a per share basis, would
be the average of the high and low selling prices of MMC common
stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of
your stock option exercise will be valued at the Fair Market Value of
MMC common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the value of the tendered
shares is less than the aggregate exercise price. Failure to pay the
full purchase price within five days of the date of exercise may void
the Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of
Exercise of Option Letter. The Agreement must follow the form of
the sample Agreement attached in this package and be signed and
dated by you. We recommend you retain a copy of the Agreement for
your records and consult an attorney before signing the
Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a
vested option from expiring. A sample Agreement is attached for
your use if you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
Payment of withholding taxes is required by law when a stock option is
exercised. An election to satisfy all applicable withholding taxes, either
(1) by check or (2) by having a sufficient number of the shares resulting
from the option exercise retained by MMC, must be made on or before the
exercise date (see sample letters). If such an election is not made by
that time then, by default, shares will be retained to satisfy the tax
withholding obligation. The election to have shares withheld is
irrevocable but is subject to disapproval by the Compensation Committee of
the MMC Board of Directors (the Committee). Such shares will be valued at
the Fair Market Value of MMC common stock.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in
your name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be
registered in your name (or you and your spouse as joint tenants, at
your request) as of the date of exercise, and you will receive the
quarterly dividend so long as you remain a registered shareholder on
the dividend record date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
Company) terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the
option shall pass by will or the laws of descent and distribution
shall be entitled to exercise such option within one year after the
date of death, but in no event shall the option be exercised beyond
the expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested
option shares shall continue to be exercisable for five years from
your Early Retirement Date, but in no event beyond the expiration
date of the grant, provided that you execute the attached
Non-Solicitation Agreement for Early Retirees, and in fact do, comply
with said Non-Solicitation Agreement, for a period of three years
commencing with your Early Retirement Date, or such lessor period as
may be applicable, it being understood that failure to comply with
said Non-Solicitation Agreement will cause your early retirement to
be governed by the provisions of "F. All Other Employment
Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company's
primary retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will
not vest and vested option shares will cease to be exercisable on the
date of termination, except to the extent that the Committee may
determine otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
Upon the occurrence of a "change in control" of MMC, as defined in the
Plan, all stock options you hold will become fully exercisable and vested,
and any restrictions contained in the terms and conditions of the option
grants shall lapse.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts,
in any way, the right of your employer to terminate your employment
at any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you,
and no right thereunder shall be transferable except by will or the
laws of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder
with respect to the shares of MMC common stock subject to an option,
unless, and until, you have exercised the option, paid the full
price thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or nontransfer or any delay
in the issuance or transfer of any shares of MMC common stock
subject to an option or otherwise pursuant to the Plan which results
from the inability of MMC to obtain, or in any delay in obtaining,
from each regulatory body having jurisdiction, all requisite
authority to issue or transfer shares of MMC common stock, if
counsel for MMC deems such authority necessary for the lawful
issuance or transfer of any such shares.
E. An award is subject to all of the terms and conditions of the Plan
and your acceptance of an award shall constitute your agreement to
the terms and conditions of the Plan and the administrative
regulations of the Committee. Your acceptance of an award
constitutes your agreement that the shares of MMC common stock
acquired hereunder will not be sold or otherwise disposed of by you
in violation of any applicable securities laws or regulations. In
the event of any conflict between the Plan and the terms and
conditions of the Plan, the Plan shall prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the
Committee may from time to time adopt. All decisions of the
Committee upon any questions arising under the Plan or under these
terms and conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at (212) 948-3523, or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at (212) 345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
-6-
|
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the Exchange Act), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Mr. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated on the previous page.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Employee Incentive and
Stock Award Plan, the Marsh & McLennan Companies 2000 Employee Incentive and
Stock Award Plan, or any successor plan thereto (collectively, the Plan), as
each may be amended from time to time, I, the undersigned, agree that if my
employment with Marsh & McLennan Companies, Inc. or one of its subsidiaries (the
Company) terminates for any reason other than death or total disability within
three (3) years after exercising the option granted to me on __________________
under the Plan, I will not, for a period of two (2) years from date of
termination, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation except for the benefit of the Company:
(a) solicit or accept business of the type offered by the Company during
my term of employment with the Company, or perform or supervise the performance
of any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): ID#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Employee Incentive and Stock Award Plan, the
Marsh & McLennan Companies 2000 Employee Incentive and Stock Award Plan, or any
successor plan thereto (collectively, the Plan), as each may be amended from
time to time, beyond (early retirement date), his Early Retirement Date at
(employer), to the earlier of (expiration date) or the original expiration date
of the applicable grant, Participant agrees that until (early retirement date +
3 years) he will not, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any person, firm or
corporation:
(a) solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the Company) during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b) solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): ID#:
------------------------------ -----------------------------
Signature: Date:
------------------------------ -----------------------------
|
Sample Notice of Exercise of Option Letter
Payment with Cash by U. K. Employees
------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on _________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at $____________________ per share. Enclosed is a
check for $_____________________ representing the full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID#
----------------------------------------- ---------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the following sentences.)
Please distribute the shares via book entry form as follows:
(Book entry may be selected only if you elect to pay taxes by share withholding - see below.)
Company: DTC #:
----------------------------------------- ---------------------------
Contact: Tele. #:
----------------------------------------- ---------------------------
Fax #:
---------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the following sentences for stock options granted after November 27, 1996)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
or
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received by you.
(My office telephone number is (__________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U. K. Employees
-----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on _________________ to acquire _________ shares of
Marsh & McLennan Companies, Inc. common stock at $____________________ per share. Therefore, the cost of
this option exercise is $___________________.
In payment for this exercise, enclosed are ____________ shares of MMC common stock (which I have owned for at
least six months) of which I am using ___________* shares to be valued at $_________________*/share (the Fair
Market Value of MMC common stock on _____________*), for a total market value of $_______________*. I understand
that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: Empl. ID#
----------------------------------------- ---------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the following sentences)
Please distribute the shares via book entry form as follows:
(Book entry may be selected only if you elect to pay taxes by share withholding - see below.)
Company: DTC #:
----------------------------------------- --------------------------------
Contact: Tele. #:
----------------------------------------- --------------------------------
Fax #:
--------------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
(Include one of the following sentences for stock options granted after November 27, 1996)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
or
I agree to remit a check for all applicable payroll taxes upon the Company's request and understand
that the shares will not be released until the tax payment has been received by you.
(My office telephone number is ____________.)
Sincerely,
|
Exhibit 10.2
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan"), is subject to the following terms and conditions:
Your award of restricted stock is scheduled to vest on the earlier of
(1) [Vesting Date] or (2) the later of your Normal or Deferred
Retirement Date (as such terms are defined in MMC's primary retirement
plan applicable to you).
The shares will be distributed as soon as practicable after the vesting, except for employees expected to be covered under Section 162(m)(3) of the U.S. Internal Revenue Code of 1986, as amended. For covered employees, MMC may exchange the restricted stock for restricted stock units prior to vesting and defer distribution until the date that would result from applying clause (2) from Section IA herein, or such earlier date pursuant to Sections IVA, IVB or VA herein.
Employees covered under 162(m)(3), according to U.S. Internal Revenue Service regulations, include (1) the chief executive officer of MMC as of the last day of the year of distribution and (2) the four highest-paid executive officers of MMC, other than the chief executive officer, who are employed on the last day of the year of distribution.
You will receive dividends on the restricted stock, and you can vote your shares. The shares may not be transferred or assigned by you unless and until the restriction period has ended and the shares have been registered to you.
The value of restricted stock generally is not taxable on the date of grant. During the restriction period, the receipt of dividends on the shares is taxable as additional compensation and reported on a current basis as W-2 income. When the shares vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares, and you must pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If your employment with MMC or any of its subsidiaries or affiliates (the "Company") terminates, your right to the restricted stock shall be as follows:
If you die, the restricted stock will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled as determined under MMC's long-term disability program, the restricted stock will vest immediately.
As stated in Section IA, if the shares are restricted until your retirement, then the restricted stock will vest on the later of your Normal or Deferred Retirement Date.
If you cease to be an active employee of the Company before the end of the restriction period for any reason other than death, permanent disability, or normal or deferred retirement, or you fail to perform any condition precedent in a manner satisfactory to the Compensation Committee of the MMC Board of Directors (the "Committee"), all of your rights, title and interest in and to the restricted stock shall be forfeited.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
Should you receive shares from the vesting of restricted stock that has been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. This award of restricted stock does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock is awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to the restricted stock shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation, at 212/948-3523 or via internal electronic mail (Lotus Notes) or the internet (kelly.gamble@mmc.com).
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan"), is subject to the following terms and conditions:
Your award of restricted stock units is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the later of your Normal or Deferred Retirement Date (as such terms are defined in MMC's primary retirement plan applicable to you).
The shares will be distributed as soon as practicable after the vesting, except for employees expected to be covered under Section 162(m)(3) of the U.S. Internal Revenue Code of 1986, as amended. For covered employees, MMC may defer distribution until the date that would result from applying clause (2) from Section IA herein, or such earlier date pursuant to Sections IVA, IVB or V herein.
Employees covered under 162(m)(3), according to U.S. Internal Revenue Service regulations, include (1) the chief executive officer of MMC as of the last day of the year of distribution and (2) the four highest-paid executive officers of MMC, other than the chief executive officer, who are employed on the last day of the year of distribution.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If your employment with MMC or any of its subsidiaries or affiliates (the "Company") terminates, your right to the restricted stock units shall be as follows:
If you die, the restricted stock units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled as determined under MMC's long-term disability program, the restricted stock units will vest immediately.
As stated in Section IA, if the shares are restricted until your retirement, then the restricted stock units will vest on the later of your Normal or Deferred Retirement Date.
If you cease to be an active employee of the Company before the end of the restriction period for any reason other than death, permanent disability, or normal or deferred retirement, or you fail to perform any condition precedent in a manner satisfactory to the Compensation Committee of the MMC Board of Directors (the "Committee"), all of your rights, title and interest in and to the restricted stock units shall be forfeited.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to the restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation, at 212/948-3523 or via internal electronic mail (Lotus Notes) or the internet (kelly.gamble@mmc.com).
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan"), is subject to the terms and conditions below. This award is intended to serve as recognition of your potential for future contributions to the success of MMC and to provide an appropriate additional incentive to remain with the Company so as to influence future outcomes in carrying out your professional and executive responsibilities.
Your award of restricted stock is scheduled to vest on the earlier of
(1) [Vesting Date] or (2) the later of your Normal or Deferred
Retirement Date (as such terms are defined in MMC's primary retirement
plan applicable to you).
The shares will be distributed as soon as practicable after the vesting, except for employees expected to be covered under Section 162(m)(3) of the U.S. Internal Revenue Code of 1986, as amended. For covered employees, MMC may exchange the restricted stock for restricted stock units prior to vesting and defer distribution until the date that would result from applying clause (2) from Section IA herein, or such earlier date pursuant to Sections IVA, IVB or VA herein.
Employees covered under 162(m)(3), according to U.S. Internal Revenue Service regulations, include (1) the chief executive officer of MMC as of the last day of the year of distribution and (2) the four highest-paid executive officers of MMC, other than the chief executive officer, who are employed on the last day of the year of distribution.
You will receive dividends on the restricted stock, and you can vote your shares. The shares may not be transferred or assigned by you unless and until the restriction period has ended and the shares have been registered to you.
The value of restricted stock generally is not taxable on the date of grant. During the restriction period, the receipt of dividends on the shares is taxable as additional compensation and reported on a current basis as W-2 income. When the shares vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares, and you must pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If your employment with MMC or any of its subsidiaries or affiliates (the "Company") terminates, your right to the restricted stock shall be as follows:
If you die, the restricted stock will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled as determined under MMC's long-term disability program, the restricted stock will vest immediately.
As stated in Section IA, if the shares are restricted until your retirement, then the restricted stock will vest on the later of your Normal or Deferred Retirement Date.
If you cease to be an active employee of the Company before the end of the restriction period for any reason other than death, permanent disability, or normal or deferred retirement, or you fail to perform any condition precedent in a manner satisfactory to the Compensation Committee of the MMC Board of Directors (the "Committee"), all of your rights, title and interest in and to the restricted stock shall be forfeited.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
Should you receive shares from the vesting of restricted stock that has been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. This award of restricted stock does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock is awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to the restricted stock shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation, at 212/948-3523 or via internal electronic mail (Lotus Notes) or the internet (kelly.gamble@mmc.com).
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan"), is subject to the terms and conditions below. This award is intended to serve as recognition of your potential for future contributions to the success of MMC and to provide an appropriate additional incentive to remain with the Company so as to influence future outcomes in carrying out your professional and executive responsibilities.
Your award of restricted stock units is scheduled to vest on the earlier of (1) [Vesting Date] or (2) the later of your Normal or Deferred Retirement Date (as such terms are defined in MMC's primary retirement plan applicable to you).
The shares will be distributed as soon as practicable after the vesting, except for employees expected to be covered under Section 162(m)(3) of the U.S. Internal Revenue Code of 1986, as amended. For covered employees, MMC may defer distribution until the date that would result from applying clause (2) from Section IA herein, or such earlier date pursuant to Sections IVA, IVB or V herein.
Employees covered under 162(m)(3), according to U.S. Internal Revenue Service regulations, include (1) the chief executive officer of MMC as of the last day of the year of distribution and (2) the four highest-paid executive officers of MMC, other than the chief executive officer, who are employed on the last day of the year of distribution.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If your employment with MMC or any of its subsidiaries or affiliates (the "Company") terminates, your right to the restricted stock units shall be as follows:
If you die, the restricted stock units will vest immediately to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
If you become totally and permanently disabled as determined under MMC's long-term disability program, the restricted stock units will vest immediately.
As stated in Section IA, if the shares are restricted until your retirement, then the restricted stock units will vest on the later of your Normal or Deferred Retirement Date.
If you cease to be an active employee of the Company before the end of the restriction period for any reason other than death, permanent disability, or normal or deferred retirement, or you fail to perform any condition precedent in a manner satisfactory to the Compensation Committee of the MMC Board of Directors (the "Committee"), all of your rights, title and interest in and to the restricted stock units shall be forfeited.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to the restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation, at 212/948-3523 or via internal electronic mail (Lotus Notes) or the internet (kelly.gamble@mmc.com).
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies (MMC) 2000 Senior Executive Incentive and Stock Award Plan (the Plan), is subject to the following terms and conditions:
Your award of restricted stock units is scheduled to vest on the earlier of (1) [Vesting Date] or (2) such other date as may be applicable pursuant to the provisions of Section IV below. The shares will be delivered to you as soon as practicable after the date of vesting, free of restriction.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If, prior to the vesting of all restricted stock units as provided above, you should cease to be employed by MMC or any of its subsidiaries or affiliates (the Company), all restricted stock units shall, except as provided in the next succeeding paragraph, forthwith vest in you or, in the event of your death, to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
You shall not be entitled to receive any restricted stock units not theretofore vested, and all rights pertaining to any such unvested restricted stock units shall cease, should your employment be terminated under any of the following conditions:
A. Termination by your employer for any of the following reasons:
misappropriation of the assets of the Company; willful misconduct in
the performance of your duties; your refusal to perform the duties
of your position; or your conviction of a felony.
B. Your resignation, except:
(1) upon total disability, as defined in the Company's long-term disability program; or
(2) upon retirement within the meaning of the Company's retirement program; or
(3) for Good Reason (as defined below) if the Company fails to cure the circumstances giving rise to such Good Reason within 30 days. "Good Reason" means:
(a) termination of your present position in the Company or of any position subsequently held;
(b) reduction in your annual base salary as in effect from time to time, except for across-the-board salary reductions similarly and generally affecting a recognized group of senior executives that includes you;
(c) relocation of your office to a place not within the New York City metropolitan area; or
(d) the discontinuance or reduction in level of your participation (exclusive of an ad hoc reduction conforming to the general principles under which a plan is administered) in any compensation plan in which you have been participating, provided that other senior executives constituting a recognized group that includes you are not also and similarly affected.
Any resignation pursuant to Section IV.B.(3) must be submitted in writing and delivered to the Senior Vice President, Human Resources and Administration of MMC within 60 days of your becoming aware of any circumstances set forth in (a), (b), (c) or (d) above. Such notice of resignation must specify which of the circumstances set forth above you are relying on, and your resignation must be effective no later than 90 days, but no earlier than 30 days, from your delivery of the written notice.
It is understood that any future agreement between you and the Company may include provisions that vary from the terms contained herein and, if so, the provisions of such future agreement shall govern.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
Should you receive shares from the vesting of restricted stock units that have been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due to you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Compensation Committee of the MMC Board of Directors (the Committee). In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Kelly Gamble, Manager, Executive Compensation at (212) 948-3523.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
MARSH & McLENNAN COMPANIES
2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies (MMC) 2000 Senior Executive Incentive and Stock Award Plan (the Plan), is subject to the following terms and conditions:
Your award of restricted stock units is scheduled to vest on the earlier of (1) [Vesting Date] or (2) such other date as may be applicable pursuant to the provisions of Section IV below. The shares will be delivered to you as soon as practicable after the date of vesting, free of restriction.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If, prior to the vesting of all restricted stock units as provided above, you should cease to be employed by MMC or any of its subsidiaries or affiliates (the Company), all restricted stock units shall, except as provided in the next succeeding paragraph, forthwith vest in you or, in the event of your death, to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
You shall not be entitled to receive any restricted stock units not theretofore vested, and all rights pertaining to any such unvested restricted stock units shall cease, should your employment be terminated under any of the following conditions:
A. Termination by your employer for any of the following reasons:
misappropriation of the assets of the Company; willful misconduct in
the performance of your duties; your refusal to perform the duties
of your position; or your conviction of a felony.
B. Your resignation, except:
(1) upon total disability, as defined in the Company's long-term disability program; or
(2) upon retirement within the meaning of the Company's retirement program; or
(3) for Good Reason (as defined below) if the Company fails to cure the circumstances giving rise to such Good Reason within 30 days. "Good Reason" means:
(a) termination of your present position in the Company or of any position subsequently held;
(b) reduction in your annual base salary as in effect from time to time, except for across-the-board salary reductions similarly and generally affecting a recognized group of senior executives that includes you;
(c) relocation of your office to a place not within the New York City metropolitan area; or
(d) the discontinuance or reduction in level of your participation (exclusive of an ad hoc reduction conforming to the general principles under which a plan is administered) in any compensation plan in which you have been participating, provided that other senior executives constituting a recognized group that includes you are not also and similarly affected.
Any resignation pursuant to Section IV.B.(3) must be submitted in writing and delivered to the Senior Vice President, Human Resources and Administration of MMC within 60 days of your becoming aware of any circumstances set forth in (a), (b), (c) or (d) above. Such notice of resignation must specify which of the circumstances set forth above you are relying on, and your resignation must be effective no later than 90 days, but no earlier than 30 days, from your delivery of the written notice.
It is understood that any future agreement between you and the Company may include provisions that vary from the terms contained herein and, if so, the provisions of such future agreement shall govern.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due to you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Compensation Committee of the MMC Board of Directors (the Committee). In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Kelly Gamble, Manager, Executive Compensation at (212) 948-3523.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act of 1933.
This award of restricted stock units, granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan"), is subject to the following terms and conditions:
Subject to your continued employment, your award of restricted stock units
is scheduled to vest as follows: 25% of the units will vest on [First
Anniversary of Grant Date], a second 25% of the units will vest on [Second
Anniversary of Grant Date], a third 25% of the units will vest on [Third
Anniversary of Grant Date] and the remaining 25% of the units will vest on
[Fourth Anniversary of Grant Date]. If you cease to be an employee before
any of the applicable vesting dates, the provisions of Section IV below
will apply. The shares will be delivered to you as soon as practicable
after the date of vesting, free of restriction.
You will receive dividend equivalent payments on the restricted stock units. Unless and until both the vesting conditions of the award have been satisfied and the shares have been registered to you in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such shares of stock (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).
The value of restricted stock units generally is not taxable on the date of grant. During the restriction period, the receipt of dividend equivalents is taxable on a current basis as additional compensation and will be included in your payroll checks. When the units vest and are distributed, you will be given further information regarding the tax consequences of your receipt of the shares; at that time you will be required to pay all withholding taxes required by law. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the award.
If, prior to the vesting of all restricted stock units as provided above, you should cease to be employed by MMC or any of its subsidiaries or affiliates (the "Company"), all restricted stock units shall, except as provided in the next succeeding paragraph, forthwith vest in you or, in the event of your death, to the person or persons to whom your rights shall pass by will or the laws of descent and distribution.
You shall not be entitled to receive any restricted stock units not theretofore vested, and all rights pertaining to any such unvested restricted stock units shall cease, should your employment be terminated under any of the following conditions:
A. Termination by your employer for any of the following reasons:
misappropriation of the assets of the Company; willful misconduct in
the performance of your duties; your refusal to perform the duties
of your position; or your conviction of a felony.
B. Your resignation, except:
(1) upon total disability, as defined in the Company's long-term disability program; or
(2) upon retirement within the meaning of the Company's retirement program; or
(3) for Good Reason (as defined below) if the Company fails to cure the circumstances giving rise to such Good Reason within 30 days. "Good Reason" means:
(a) termination of your present position in the Company or of any position subsequently held;
(b) reduction in your annual base salary as in effect from time to time, except for across-the-board salary reductions similarly and generally affecting a recognized group of senior executives that includes you;
(c) relocation of your office to a place not within the Boston metropolitan area; or
(d) the discontinuance or reduction in level of your participation (exclusive of an ad hoc reduction conforming to the general principles under which a plan is administered) in any compensation plan in which you have been participating, provided that other senior executives constituting a recognized group that includes you are not also and similarly affected.
Any resignation pursuant to Section IV.B.(3) must be submitted in writing and delivered to the Senior Vice President, Human Resources and Administration of MMC within 60 days of your becoming aware of any circumstances set forth in (a), (b), (c) or (d) above. Such notice of resignation must specify which of the circumstances set forth above you are relying on, and your resignation must be effective no later than 90 days, but no earlier than 30 days, from your delivery of the written notice.
It is understood that any future agreement between you and the Company may include provisions that vary from the terms contained herein and, if so, the provisions of such future agreement shall govern.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, the restricted stock units will vest on the date of the change in control, and the shares will be distributed to you as soon as practicable thereafter.
Should you receive shares from the vesting of restricted stock units that have been accelerated because of a change in control, all or part of the value (the total market price of the shares on the date of vesting) of those shares (the Accelerated Shares) may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Shares (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you receive Accelerated Shares, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. This award of restricted stock units does not give you any right to continue to be employed by the Company, or limit, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
B. MMC is not liable for the non-issuance or non-transfer, nor for any delay in the issuance or transfer of any shares of common stock due to you, which results from the inability of MMC to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares. Your acceptance of this award constitutes your agreement that the shares of common stock subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. This award is subject to all of the terms and conditions herein and the provisions of the Plan, and your acceptance hereof shall constitute your agreement to the administrative regulations of the Compensation Committee of the MMC Board of Directors (the "Committee"). In the event of any inconsistency between these terms and conditions and the provisions of the Plan, the provisions of the Plan shall prevail. You may obtain a copy of the Plan by making a request to the Senior Vice President, Human Resources and Administration of MMC.
D. The restricted stock units are awarded in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the Plan shall be conclusive and binding.
E. During your lifetime, no right hereunder related to these restricted stock units shall be transferable except by will or the laws of descent and distribution.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble, Senior Manager, Global Compensation at (212) 948-3523.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933. The Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive And Stock Award Plan Is Not Subject To Any Of The Provisions Of The Employee Retirement Income Security Act Of 1974.
Terms and Conditions of Restricted Stock Units Granted To U.S. Employees in [Grant Date]
This award (the "Award") of Restricted Stock Units is being granted to you under the Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan (the "2000 Senior Executive Plan"). The Award consists of (1) a replacement award (the "Replacement Award") of Restricted Stock Units equal in number to the number of shares (the "Covered Shares") (excluding shares vesting as a result of your retirement and any granted in connection with a prior deferral under the Restricted Shares Voluntary Deferral Program) of Restricted Stock or Restricted Stock Units granted to you under the 2000 Senior Executive Plan or any predecessor plan which were scheduled to vest on a specified future date (the "Scheduled Vesting Date") and which you have irrevocably elected to surrender and have cancelled in exchange for this Award, provided, that such elected number is in an increment of 100 and cannot be more than 75% or less than 25% of the number of Covered Shares of Restricted Stock, or Restricted Stock Units which were scheduled to vest on the Scheduled Vesting Date, plus (2) if you elect to defer distribution of the Award to a date on or after the vesting date specified in Section I A.2, an additional award (the "Supplemental Award") of Restricted Stock Units equal in number to 15% of the Replacement Award. The Award is subject to the following terms and conditions:
1. Subject to Section IV D, the Replacement Award shall vest on the earlier of (a) the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
2. Subject to Section IV D, the Supplemental Award shall vest on the earlier of (a) January 1 of the year of the third anniversary of the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
Unless forfeited pursuant to Section IV D, or unless Section V A.2
applies, and in any event subject to Section I E, shares of Common
Stock (the "Shares") of Marsh & McLennan Companies, Inc. ("MMC")
shall be registered in your name on each distribution date based on
your irrevocable election. The number of Shares so registered to you
on each distribution date shall be based upon a distribution in
substantially equal installments over the period during which you
have irrevocably elected to receive such Shares; provided, however,
that in the case of termination of your employment by reason of your
death or permanent disability, or in the case of a payment under
Section V A.1, the number of Shares so registered shall equal the
number of Restricted Stock Units with respect to which distribution
had not previously been made. Once the Award vests, you have an
unalienable right to receive the Shares (or cash or other property,
as described in Section V A.2) payable in connection therewith, in
accordance with the terms hereof. Notwithstanding the irrevocability
of the elections described in this Section I B, you shall have the
right to delay the beginning date of distribution or to increase the
number of installments to be made as provided in Section I C, and
you have the right to accelerate distribution of the shares as
provided in Section I D.
At any time up to one full calendar year prior to the beginning date of the scheduled distribution of Shares pursuant to Section I B, you may elect to defer the beginning date of distribution or to increase the number of installments, or both, as theretofore elected by you, subject to specific terms and conditions determined by the Compensation Committee of the MMC Board of Directors (the "Compensation Committee"). Such elections under this Section I C shall be treated as if made under Section I B for all purposes under the provisions hereof, including the right to make further elections under this Section I C.
You may elect to accelerate the distribution of all or a portion of the Shares (unless Section I E applies and a special deferral is made) for any reason prior to the completion of the elected deferral period, subject to the imposition of a significant penalty in accordance with applicable tax rules. The penalty shall be a forfeiture equal to (i) 6% of the amount that you elect to have distributed and (ii) 100% of any unvested Supplemental Award, as provided in item (2) of the first paragraph of these terms and conditions, that you elect to have distributed. Amounts distributed to you will be subject to applicable tax withholding, but amounts forfeited will not be subject to tax.
Notwithstanding anything to the contrary contained herein (other
than Section V), the Committee shall have the discretion to defer
any distribution otherwise scheduled to be made hereunder to the
extent necessary (in the Committee's judgment) to avoid all or any
portion of such distribution being nondeductible to the Company by
reason of Section 162(m) of the Internal Revenue Code of 1986, as
amended, or any successor provision thereto. Employees covered under
Section 162(m), according the proposed regulations issued by the
Internal Revenue Service, include (i) the chief executive officer of
MMC as of the last day of the year of distribution and (ii) the four
highest paid executive officers of MMC, other than the chief
executive officer, who are employed on the last day of the year of
distribution.
You will receive dividend equivalent payments on the Restricted Stock Units. Unless and until the vesting conditions of the Award have been satisfied and you have received the Shares in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such Shares (e.g., units cannot be used as payment for stock option exercises).
The value of your Award is not includible in gross income until distribution, but is subject to FICA on the date of vesting. When the Shares (or, in the event Section V A.2 is applicable, cash or other property) are received by you free and clear of all restrictions on each distribution date, the value of such distribution is includible in gross income and you will be required to pay the withholding taxes required by law. At that time, you will be given detailed information regarding the tax consequences of your receipt of the Shares (or cash or other property). The receipt of dividend equivalents is taxable on a current basis as additional compensation and is subject to FICA.
If your employment with MMC or any of its subsidiaries or affiliates (collectively with MMC, the "Company") terminates, your right to the Award and to the distribution of Shares shall be as follows:
If you die during employment, any unvested portion of the Award will vest immediately. In such event, or in the event of your death prior to complete distribution in respect of your Award, distribution of Shares in respect of your undistributed Award shall be made in the form of a lump sum payable as soon as practicable thereafter, with Shares being distributed to the person or persons to whom your rights shall pass by will or the law of descent and distribution.
If you terminate employment as a result of Total Disability (as such term is defined in the Company's Basic Long-Term Disability Plan), any unvested portion of the Award will vest immediately. Distribution of Shares in respect of the Replacement Award shall be in the form of a lump sum payable on January 1 of the year following such termination. Distribution of Shares in respect of the Supplemental Award shall be in the form of a lump sum payable on the later of (1) January 1 of the year following termination or (2) January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If the later of your Normal or Deferred Retirement Date (as such terms are defined in the Company's primary retirement plan applicable to you) is prior to the Scheduled Vesting Date, the Replacement Award shall vest on your retirement date. Distribution of Shares in respect of the Replacement Award shall be made at the time and in the form irrevocably elected by you on your election form, but shall commence no later than January of the year following retirement.
2. If the later of your Normal or Deferred Retirement Date is prior to January 1 of the year of the third anniversary of the Scheduled Vesting Date, the Supplemental Award shall vest on your retirement date. Distribution of Shares in respect of the Supplemental Award shall be made at the time and in the form irrevocably elected by you on your election form but, subject to the succeeding sentence, distribution shall commence no later than January of the year following retirement. In no event, however, shall distribution commence before January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If you cease to be an employee of the Company before the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Replacement Award shall be forfeited.
2. If you cease to be an employee of the Company before January 1 of the year of the third anniversary of the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Supplemental Award shall be forfeited.
3. If you cease to be an employee of the Company after the Scheduled Vesting Date but before all vested Shares have been distributed, any remaining vested Shares shall be distributed in a lump sum in January of the year following termination.
Upon the occurrence of a Change in Control, as defined in the 2000 Senior Executive Plan, any outstanding but unvested portion of the Award will vest on the date of the Change in Control and payment will be made thereafter in accordance with paragraph 1 or 2 below, whichever is applicable.
1. Except as provided in paragraph 2 below, Shares shall be registered in your name and delivered to you as soon as practicable following the Change in Control. The number of Shares so registered to you shall be equal to your undistributed Award.
2. If, in the Change in Control transaction, shareholders of MMC receive consideration consisting of cash or other property (including securities of a successor or parent corporation), there shall be delivered to you as soon as practicable thereafter the consideration which you would have received in such transaction had you been, immediately prior to such transaction, a holder of that number of Shares equal to your undistributed Award.
Should you receive Shares (or cash or other property) from the vesting of the Award which was accelerated because of a Change in Control, all or part of the value of those Shares (or the cash or other property) on the date of vesting (the "Accelerated Award") may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Award (plus any other payments which are determined to be contingent on a Change in Control) is more than 2.999 times the average of your last five years W-2 earnings.
If a Change in Control occurs and the vesting of your Award is accelerated, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the "Additional Payment") equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income and other federal taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC.
The Company shall provide you with an annual statement detailing the number and vesting date of your Restricted Stock Units, as well as the expected date for commencement of distributions (subject to the provisions herein) and the distribution schedule for your Award.
A. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer, of any Shares due to you in connection with the Award which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer the Shares, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such Shares.
B. The Award is subject to these terms and conditions and to the terms and conditions of the 2000 Senior Executive Plan, and your acceptance hereof shall constitute your agreement to all such terms and conditions and to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the 2000 Senior Executive Plan, the provisions of the latter shall prevail. Your acceptance of this Award constitutes your agreement that the Shares subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Award is granted in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the 2000 Senior Executive Plan shall be conclusive and binding.
D. During your lifetime, no right hereunder related to this Award shall be transferable except by will or the laws of descent and distribution.
E. The Award does not give you any right to continue to be employed by the Company, or restrict, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
F. Awards relating to not more than eight million (8,000,000) shares of MMC common stock, plus such number of shares remaining unused under pre-existing stock plans approved by MMC's stockholders, may be made over the life of the 2000 Senior Executive Plan. Senior executives of the Company will be eligible for awards under the 2000 Senior Executive Plan.
G. You may obtain a copy of the 2000 Senior Executive Plan by making a request to:
Mr. William L. Rosoff Senior Vice President Human Resources & Administration Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036-2774 (212) 345-7631
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Mr. William L. Rosoff, Senior Vice President - Human Resources & Administration of MMC as indicated above.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933. The Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive And Stock Award Plan Is Not Subject To Any Of The Provisions Of The Employee Retirement Income Security Act Of 1974.
Terms and Conditions of Deferred Stock Units Granted to U.S. Employees in [Grant Date]
This award of Deferred Stock Units ("the Supplemental Award") is being granted to you under the Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan (the "2000 Senior Executive Plan"). The Supplemental Award is equal to 15% (with any fractional unit to be replaced with a whole unit) of the number of stock units (the "Covered Units") (excluding units vesting as a result of your retirement and any granted in connection with a prior deferral under the Restricted Shares Voluntary Deferral Program) which were scheduled to vest on a specified future date (the "Scheduled Vesting Date") and which you have irrevocably elected to defer, provided, that such elected number is in an increment of 50 and cannot be more than 75% or less than the greater of 25% or 100 of the number of Covered Units which were scheduled to vest on the Scheduled Vesting Date, to a date on or after the vesting date specified in Section I A. The Supplemental Award is subject to the following terms and conditions:
Subject to Section IV D, the Supplemental Award shall vest on the earlier of (a) January 1 of the year of the third anniversary of the Scheduled Vesting Date or (b) such other date as may be applicable pursuant to the provisions of Sections IV and V.
Unless forfeited pursuant to Section IV D or unless Section V A.2
applies, shares of Common Stock (the "Shares") of Marsh & McLennan
Companies, Inc. ("MMC") shall be registered in your name on each
distribution date based on your irrevocable election. The number of
Shares so registered to you on each distribution date shall be based
upon a distribution in substantially equal installments over the
period during which you have irrevocably elected to receive such
Shares; provided, however, that in the case of termination of your
employment by reason of your death or permanent disability, or in
the case of a payment under Section V A.1, the number of Shares so
registered shall equal the number of stock units with respect to
which distribution had not previously been made. Once the
Supplemental Award vests, you have an unalienable right to receive
the Shares (or cash or other property, as described in Section V
A.2) payable in connection therewith, in accordance with the terms
hereof.
Notwithstanding the irrevocability of the elections described in this Section I B, you shall have the right to delay the beginning date of distribution or to increase the number of installments to be made as provided in Section I C, and you have the right to accelerate distribution of the shares as provided in Section I D.
At any time up to one full calendar year prior to the beginning date of the scheduled distribution of Shares pursuant to Section I B, you may elect to defer the beginning date of distribution or to increase the number of installments, or both, as theretofore elected by you, subject to specific terms and conditions determined by the Compensation Committee of the MMC Board of Directors (the "Compensation Committee"). Such elections under this Section I C shall be treated as if made under Section I B for all purposes under the provisions hereof, including the right to make further elections under this Section I C.
You may elect to accelerate the distribution of all or a portion of the Shares for any reason prior to the completion of the elected deferral period, subject to the imposition of a significant penalty in accordance with applicable tax rules. The penalty shall be a forfeiture equal to (i) 6% of the amount that you elect to have distributed and (ii) 100% of any unvested Supplemental Award, as provided in the first paragraph of these terms and conditions, that you elect to have distributed. Amounts distributed to you will be subject to applicable tax withholding, but amounts forfeited will not be subject to tax.
You will receive dividend equivalent payments on the Supplemental Award. Unless and until the vesting conditions of the Supplemental Award have been satisfied and you have received the Shares in accordance with the terms and conditions described herein, you have none of the attributes of ownership to such Shares (e.g., units cannot be used as payment for stock option exercises).
The value of your Supplemental Award is not includible in gross income until distribution, but is subject to FICA on the date of vesting. When the Shares (or, in the event Section V A.2 is applicable, cash or other property) are received by you free and clear of all restrictions on each distribution date, the then value of the distribution is includible in gross income and you will be required to pay the withholding taxes required by law. At that time, you will be given detailed information regarding the tax consequences of your receipt of the Shares (or cash or other property). The receipt of dividend equivalents is taxable on a current basis as additional compensation and is subject to FICA.
If your employment with MMC or any of its subsidiaries or affiliates (collectively with MMC, the "Company") terminates, your right to the Supplemental Award and to the distribution of Shares shall be as follows:
If you die during employment, any unvested portion of the Supplemental Award will vest immediately. In such event, or in the event of your death prior to complete distribution in respect of your Supplemental Award, distribution of Shares in respect of your undistributed Supplemental Award shall be made in the form of a lump sum payable as soon as practicable thereafter, with Shares being distributed to the person or persons to whom your rights shall pass by will or the law of descent and distribution.
If you terminate employment as a result of Total Disability (as such term is defined in the Company's Basic Long-Term Disability Plan), any unvested portion of the Supplemental Award will vest immediately. Distribution of Shares in respect of the Supplemental Award shall be in the form of a lump sum payable as soon as practicable thereafter.
If the later of your Normal or Deferred Retirement Date (as such terms are defined in the Company's primary retirement plan applicable to you) is prior to January 1 of the year of the third anniversary of the Scheduled Vesting Date, the Supplemental Award shall vest on your retirement date. Distribution of Shares in respect of the Supplemental Award shall be made at the time and in the form irrevocably elected by you on your election form but, subject to the succeeding sentence, distribution shall commence no later than January of the year following retirement. In no event, however, shall distribution commence before January 1 of the year of the third anniversary of the Scheduled Vesting Date.
1. If you cease to be an employee of the Company before January 1 of the year of the third anniversary of the Scheduled Vesting Date for any reason other than death, Total Disability, or normal or deferred retirement, your right to any unvested portion of the Supplemental Award shall be forfeited.
2. If you cease to be an employee of the Company after the Scheduled Vesting Date but before all vested Shares have been distributed, any remaining vested Shares shall be distributed in a lump sum as soon as practicable following termination.
Upon the occurrence of a Change in Control, as defined in the 2000 Senior Executive Plan, any outstanding but unvested portion of the Supplemental Award will vest on the date of the Change in Control and payment will be made thereafter in accordance with paragraph 1 or 2 below, whichever is applicable.
1. Except as provided in paragraph 2 below, Shares shall be registered in your name and delivered to you as soon as practicable following the Change in Control. The number of Shares so registered to you shall be equal to your undistributed Supplemental Award.
2. If, in the Change in Control transaction, shareholders of MMC receive consideration consisting of cash or other property (including securities of a successor or parent corporation), there shall be delivered to you as soon as practicable thereafter the consideration which you would have received in such transaction had you been, immediately prior to such transaction, a holder of that number of Shares equal to your undistributed Supplemental Award.
Should you receive Shares (or cash or other property) from the vesting of the Supplemental Award which was accelerated because of a Change in Control, all or part of the value of those Shares (or the cash or other property) on the date of vesting (the "Accelerated Supplemental Award") may be subject to a 20% federal excise tax. The excise tax is imposed when the value of the Accelerated Supplemental Award (plus any other payments which are determined to be contingent on a Change in Control) is more than 2.999 times the average of your last five year's W-2 earnings.
If a Change in Control occurs and the vesting of your Supplemental Award is accelerated, MMC will determine if the 20% federal excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the "Additional Payment") equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income and other federal taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC.
The Company shall provide you with an annual statement detailing the number and vesting date of your stock units, as well as the expected date for commencement of distributions (subject to the provisions herein) and the distribution schedule for your Supplemental Award.
A. The Company is not liable for the non-issuance or nontransfer, nor for any delay in the issuance or transfer, of any Shares due to you in connection with the Supplemental Award which results from the inability of the Company to obtain, from each regulatory body having jurisdiction, all requisite authority to issue or transfer the Shares, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such Shares.
B. The Supplemental Award is subject to these terms and conditions and to the terms and conditions of the 2000 Senior Executive Plan, and your acceptance hereof shall constitute your agreement to all such terms and conditions and to the administrative regulations of the Committee. In the event of any inconsistency between these terms and conditions and the provisions of the 2000 Senior Executive Plan, the provisions of the latter shall prevail. Your acceptance of this Supplemental Award constitutes your agreement that the Shares subsequently acquired hereunder, if any, will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations.
C. The Supplemental Award is granted in accordance with such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under these terms and conditions or the 2000 Senior Executive Plan shall be conclusive and binding.
D. During your lifetime, no right hereunder related to this Supplemental Award shall be transferable except by will or the laws of descent and distribution.
E. The Supplemental Award does not give you any right to continue to be employed by the Company, or restrict, in any way, the right of your employer to terminate your employment, at any time, for any reason not specifically prohibited by law.
F. Awards relating to not more than eight million (8,000,000) shares of MMC common stock, plus such number of shares remaining unused under pre-existing stock plans approved by MMC shareholders, may be made over the life of the 2000 Senior Executive Plan. Senior executives of the Company will be eligible for awards under the 2000 Senior Executive Plan.
G. You may obtain a copy of the 2000 Senior Executive Plan by making a request to:
Mr. William L. Rosoff Senior Vice President & General Counsel Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036-2774 (212) 345-7631
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC`s Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the Exchange Act), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Mr. William L. Rosoff, Senior Vice President & General Counsel of MMC as indicated above.
This Document Constitutes Part Of A Prospectus Covering Securities That Have Been Registered Under The Securities Act Of 1933.
The award of nonqualified stock options granted on [Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan (the "Plan") is subject to the following terms and conditions:
Subject to your continued employment, twenty-five percent (25%) of the aggregate number of shares covered by these options will vest and become exercisable each [Anniversary Date] beginning [First Anniversary of Grant Date]. Subject to the provisions of Section V herein, in the event of your Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested options will vest at such termination and become exercisable. For all other terminations of employment, unvested options will not vest and vested options will cease to be exercisable as of the date of such termination.
When you decide to exercise a stock option, you must follow the steps set forth below. Your option exercise will be effective the date on which we receive your stock option exercise letter (the "Notice of Exercise of Option Letter"), option exercise payment and Non-Solicitation Agreement or, if received on different days, the later of those dates.
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ---------------------------- Kelly Gamble Emmanuel C. Victorino Senior Manager, Global Compensation Senior Executive Compensation Administrator Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas 1166 Avenue of the Americas New York, New York l0036-2774 New York, New York 10036-2774 Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767 |
The Notice of Exercise of Option Letter should follow the format of one of the sample letters enclosed in this package. Your letter must set forth the following information:
l. The number of shares that you wish to acquire through your option exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC common stock, or a combination of U.S. dollars and MMC common stock; and
3. The method of payment for applicable withholding taxes: cash payment or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form; include company name, contact person, Depository Trust Company ("DTC") number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the number of certificates to be prepared, the address to which they should be distributed, and (if different) the address to which other shareholder communications and dividends (with respect to these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must purchase a minimum of 200 shares (unless acquiring all vested shares from the option grant).
Notice of Exercise of Option Letters will not be processed until we receive payment. Payment may be made with (l) U.S. dollars, (2) MMC common stock or (3) a combination of U.S. dollars and MMC common stock as follows:
Send a certified or bank check, payable to Marsh & McLennan Companies, Inc., for the full amount of the exercise price, or wire transfer the full amount in U.S. dollars to account number xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York. Wire transfers are not considered "received" until the date on which Chase confirms that the funds have been transferred to our account.
You may pay for the exercise of an option by tendering shares of MMC common stock (including shares acquired from a stock option exercise or stock award vesting) which you have owned for at least six months prior to the exercise date, having a value equal to or greater than the exercise price, as follows:
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated on the face of the certificate. The signature of endorsement must be guaranteed by a commercial bank or stockbroker. Enclosed is a sample of an endorsed stock certificate. [Note: If the certificate is mailed, you might consider making the endorsement on a stock power (2 above), and then mailing it separately.]
Any shares delivered as either partial or full payment of the exercise price of an option will be valued at the Fair Market Value of MMC common stock. Fair Market Value on a given date means the per share value of stock as determined by using the average of the high and low selling prices of such stock on the immediately preceding date (or, if the New York Stock Exchange was not open that day, the next preceding day that the NYSE was open for trading and the stock was traded) as reported for such date in the table entitled "NYSE Composite Transactions", contained in The Wall Street Journal or an equivalent successor table. For example, for a stock option exercise on April 5th, the Fair Market Value of shares tendered, on a per share basis, would be the average of the high and low selling prices of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares required, the excess shares will be returned to you.
As noted in "Valuation of Shares" above, shares used in payment of your stock option exercise will be valued at the Fair Market Value of MMC common stock. Once the value of the shares tendered has been determined, you will owe MMC a check if the value of the tendered shares is less than the aggregate exercise price. Failure to pay the full purchase price within five days of the date of exercise may void the Notice of Exercise of Option Letter.
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
A Non-Solicitation Agreement must accompany your Notice of Exercise of Option Letter. The Agreement must follow the form of the sample Agreement attached in this package and be signed and dated by you. We recommend you retain a copy of the Agreement for your records and consult an attorney before signing the Agreement.
If you take early retirement, you must sign the Non-Solicitation Agreement that is described in Section V in order to keep a vested option from expiring. A sample Agreement is attached for your use if you take early retirement and have a vested option.
Payment of withholding taxes (including FICA) is required by law when a nonqualified stock option is exercised. An election to satisfy all applicable withholding taxes, either (1) by check or (2) by having a sufficient number of the shares resulting from the option exercise retained by MMC, must be made on or before the exercise date (see sample letters). If such an election is not made by that time then, by default, shares will be retained to satisfy the tax withholding obligation. The election to have shares withheld is irrevocable but is subject to disapproval by the Compensation Committee of the MMC Board of Directors (the "Committee"). Such shares will be valued at the Fair Market Value of MMC common stock.
A. The shares from your stock option exercise will be registered as specified in your Notice of Exercise of Option Letter, after you have fully paid for your exercise. The shares may be registered only in your name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as specified in your Notice of Exercise of Option Letter, after you have satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be registered in your name (or you and your spouse as joint tenants, at your request) as of the date of exercise, and you will receive the quarterly dividend so long as you remain a registered shareholder on the dividend record date.
If your employment with MMC or any of its subsidiaries or affiliates (the "Company") terminates, the following shall apply:
In the event of your death, any unvested option will vest and become exercisable. The person or persons to whom your rights under the option shall pass by will or the laws of descent and distribution shall be entitled to exercise such option within one year after the date of death, but in no event shall the option be exercised beyond the expiration date of the grant.
Should you terminate due to total and permanent disability as determined under MMC's long-term disability program, any unvested option will vest at such termination and become exercisable. Vested option shares shall be exercisable after your termination of employment, but in no event beyond the expiration date of the grant.
In the event of retirement from the Company, any unvested option will vest at such termination and become exercisable. Vested option shares shall be exercisable after your Retirement Date (whether such Retirement Date is a Normal Retirement Date or Deferred Retirement Date), but in no event beyond the expiration date of the grant.
In the event of retirement from the Company, any unvested option will vest at such termination and become exercisable. In the case of your Retirement Date being an Early Retirement Date, any then vested option shares shall continue to be exercisable for five years from your Early Retirement Date, but in no event beyond the expiration date of the grant, provided that you execute the attached Non-Solicitation Agreement for Early Retirees, and in fact do, comply with said Non-Solicitation Agreement, for a period of three years commencing with your Early Retirement Date, or such lessor period as may be applicable, it being understood that failure to comply with said Non-Solicitation Agreement will cause your early retirement to be governed by the provisions of "F. All Other Employment Terminations", below.
As used in Section V. C. and D., the terms Retirement Date, Normal Retirement Date, Deferred Retirement Date and Early Retirement Date shall have the respective meanings given such terms (or any comparable substitute terms or concepts) set forth in the Company's primary retirement plan applicable to you upon your retirement.
For all other terminations of employment, any unvested option will not vest and vested option shares will cease to be exercisable on the date of termination, except to the extent that the Committee may determine otherwise.
Upon the occurrence of a "change in control" of MMC, as defined in the Plan, all stock options you hold will become fully exercisable and vested, and any restrictions contained in the terms and conditions of the option grants shall lapse.
If you exercise option shares that have become exercisable because of a change in control, all or a portion of the gain (the total market price for the shares on the date of exercise minus the total exercise price) on those shares may be subject to a 20% federal excise tax. The excise tax is imposed when the gain (plus any other payments which are determined to be contingent on a change in control) is more than 2.999 times the average of your last five years W-2 earnings.
If a change in control occurs and you exercise stock options whose vesting has been accelerated, MMC will determine if the excise tax is payable. If it is payable, MMC will pay to you, within five days of making the computation, an amount of money (the Additional Payment) equal to the excise tax plus additional amounts for federal, state and local taxes so that the excise tax and income taxes on the excise tax payment will not cost you any money. If the Additional Payment is later determined to be less than the amount of taxes you owe, a further payment will be made to you. If the Additional Payment is more than the amount you owe, you will be required to reimburse MMC for the difference.
A. Neither the granting of an award nor any exercise thereof gives you any right to continue to be employed by the Company, or restricts, in any way, the right of your employer to terminate your employment at any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and no right thereunder shall be transferable except by will or the laws of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the event of your death shall have any of the rights of a stockholder with respect to the shares of MMC common stock subject to an option, unless, and until, you have exercised the option, paid the full price thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or non-transfer or any delay in the issuance or transfer of any shares of MMC common stock subject to an option or otherwise pursuant to the Plan which results from the inability of MMC to obtain, or in any delay in obtaining, from each regulatory body having jurisdiction, all requisite authority to issue or transfer shares of MMC common stock, if counsel for MMC deems such authority necessary for the lawful issuance or transfer of any such shares.
E. An award is subject to all of the terms and conditions of the Plan and your acceptance of an award shall constitute your agreement to the terms and conditions of the Plan and the administrative regulations of the Committee. Your acceptance of an award constitutes your agreement that the shares of MMC common stock acquired hereunder will not be sold or otherwise disposed of by you in violation of any applicable securities laws or regulations. In the event of any conflict between the Plan and the terms and conditions of the Plan, the Plan shall prevail.
F. An option shall be exercised in accordance with, and awards shall be subject to, such additional administrative regulations as the Committee may from time to time adopt. All decisions of the Committee upon any questions arising under the Plan or under these terms and conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards thereunder, and the obligations of MMC and employees under the Plan, shall be subject to all applicable governmental laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required, including, but not limited to, tax and securities regulations. This provision takes precedence over all aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble, Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C. Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both also can be reached via internal electronic mail (Lotus Notes) or the internet (kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's Registration Statement on Form 8 dated February 3, 1987, describing MMC common stock, including any amendment or reports filed for the purpose of updating such description, and MMC's Registration Statement on Form 8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights attached to the common stock, including any further amendment or reports filed for the purpose of updating such description, which have been filed by MMC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of any of the documents incorporated herein by reference and any other documents that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr. Emmanuel C. Victorino as indicated above.
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988 Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive and Stock Award Plan, the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award Plan, the Marsh & McLennan Companies 2000 Senior Executive Incentive and Stock Award Plan or any successor plan thereto (collectively, the "Plan"), as each may be amended from time to time, I, the undersigned, agree that if my employment with Marsh & McLennan Companies, Inc. or one of its subsidiaries (the "Company") terminates for any reason other than death or total disability within three (3) years after exercising the option granted to me on __________________ under the Plan, I will not, for a period of two (2) years from date of termination, directly or indirectly, as a sole proprietor, member of a partnership, or stockholder, investor, officer or director of a corporation, or as an employee, agent, associate or consultant of any person, firm or corporation except for the benefit of the Company:
(a)solicit or accept business of the type offered by the Company during my term of employment with the Company, or perform or supervise the performance of any services related to such type of business, from or for (i) clients or prospects of the Company or its affiliates who were solicited or serviced directly by me or where I supervised, directly or indirectly, in whole or in part, the solicitation or servicing activities related to such clients or prospects; or (ii) any former client of the Company or its affiliates who was such within two (2) years prior to my termination of employment and who was solicited or serviced directly by me or where I supervised, directly or indirectly, in whole or in part, the solicitation or servicing activities related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or indirectly to terminate his employment with the Company for the purpose of competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or proprietary information, including such trade secrets or information as may exist from time to time, are valuable, special and unique assets of the Company's business, access to and knowledge of which were essential to the performance of my duties while in the employ of the Company. I will not, during or after the term hereof, in whole or in part, disclose such secrets or confidential or proprietary information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall I make use of any such property for my own purposes or for the benefit of any person, firm, corporation or other entity (except the Company) under any circumstances, during or after the term hereof, provided that after the term hereof, these restrictions shall not apply to such secrets or information which are then in the public domain (provided that I was not responsible, directly or indirectly, for such secrets or information entering the public domain without the Company's consent).
Without limiting any other remedies which may be available to it under applicable law, the Company shall be entitled to monetary damages under this agreement, which may include, but not be limited to, the gain on exercise of the option computed as the difference between the option price and the market price on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and does not take precedence over or affect other non-solicitation agreements that I may have with the Company.
This agreement shall be construed in accordance with the laws of the State of New York.
Name (Print): SS#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
|
In order to extend the expiration date of Participant's stock option granted on (grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan, the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award Plan, the Marsh & McLennan Companies 2000 Senior Executive Incentive and Stock Award Plan or any successor plan thereto (collectively, the "Plan"), as each may be amended from time to time, beyond (early retirement date), his Early Retirement Date at (employer), to the earlier of (expiration date) or the original expiration date of the applicable grant, Participant agrees that until (early retirement date + 3 years) he will not, directly or indirectly, as a sole proprietor, member of a partnership, or stockholder, investor, officer or director of a corporation, or as an employee, agent, associate or consultant of any person, firm or corporation:
(a)solicit or accept business of the type offered by Marsh & McLennan Companies, Inc. or one of its subsidiaries (the "Company") during my term of employment with the Company, or perform or supervise the performance of any services related to such type of business, from or for (i) clients or prospects of the Company who were solicited or serviced directly by me or where I supervised, directly or indirectly, in whole or in part, the solicitation or servicing activities related to such clients or prospects; or (ii) any former client of the Company or its affiliates who was such within two (2) years prior to my termination of employment and who was solicited or serviced directly by me or where I supervised, directly or indirectly, in whole or in part, the solicitation or servicing activities related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or indirectly to terminate his employment with the Company for the purpose of competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and confidential or proprietary information, including such trade secrets or information as may exist from time to time, are valuable, special and unique assets of the Company's business, access to and knowledge of which are essential to the performance of the duties of Participant hereunder. Participant will not, during or after the term hereof, in whole or in part, disclose such secrets or confidential or proprietary information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall Participant make use of any such property for his own purposes or for the benefit to any person, firm, corporation or other entity (except the Company) under any circumstances, during or after the term hereof, provided that after the term hereof these restrictions shall not apply to such secrets or information which are then in the public domain (provided that he was not responsible, directly or indirectly, for such secrets or information entering the public domain without the Company's consent).
Name (Print): SS#:
------------------------------ --------------------------
Signature: Date:
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|
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _______________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would otherwise be
due to receive as a result of this option exercise, in order to cover all applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and understand
that the shares will not be released until the tax payment has been received by you.
(My office telephone number is ____________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U.S. Employees
----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share. Therefore, the cost of this
option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for at least
six months) of which I am using ________* shares to be valued at U.S.$_____________/share* (the Fair Market
Value of MMC common stock on ______________*), for a total market value of U.S.$_____________*. I understand
that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _________________________
----------------------------------
Address:
----------------------------------
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- -------------------------
Contact: Tele. #:
---------------------------------- -------------------------
Fax #:
-------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would otherwise be
due to receive as a result of this option exercise, in order to cover all applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and understand
that the shares will not be released until the tax payment has been received by you. (My office
telephone number is ____________.)
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That
Have Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
----------------------------------------------------
Terms and Conditions for [Grant Date] Award of Stock Options
The award of MMC stock options granted on [Grant Date] under the Marsh &
McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan
(the "Plan") is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions of Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested
options will vest at such termination and become exercisable. For all other
terminations of employment, unvested options will not vest and vested
options will cease to be exercisable as of the date of such termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the "Notice of Exercise of Option
Letter"), option exercise payment and signed Non-Solicitation Agreement or,
if received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation
Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of one
of the attached sample letters. Your letter must set forth the
following information:
-1-
|
1. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of share distribution:
a. For shares distributed electronically in book entry form;
include company name, contact person, Depository Trust Company
("DTC") number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from a stock option exercise
or stock award vesting) which you have owned for at least six months
prior to the exercise date, having a value equal to or greater than
the aggregate exercise price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated
on the face of the certificate. The signature of endorsement must be
guaranteed by a commercial bank or stockbroker. Attached is a sample
of an endorsed stock certificate. [Note: If the certificate is
mailed, you might consider making the endorsement on a stock power
(2 above), and then mailing it separately.]
In some countries, the tax consequences of the tender of shares may
be onerous. You should read any tax information provided to you by
MMC, and consult your local tax advisor for more specific
information.
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market Value
of MMC common stock. Fair Market Value on a given date means the per
share value of stock as determined by using the average of the high
and low selling prices of such stock on the immediately preceding
date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock
was traded) as reported for such date in the table entitled "NYSE
Composite Transactions", contained in The Wall Street Journal or an
equivalent successor table. For example, for a stock option exercise
on April 5th, the Fair Market Value of shares tendered, on a per
share basis, would be the average of the high and low selling prices
of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of your
stock option exercise will be valued at the Fair Market Value of MMC
common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the value of the tendered
shares is less than the aggregate exercise price. Failure to pay the
full purchase price within five days of the date of exercise may void
the Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you.
We recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. TAX CONSEQUENCES
----------------
Any tax memorandum accompanying this package will explain the tax
consequences of a stock option exercise.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in your
name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be registered
in your name (or you and your spouse as joint tenants, at your request)
as of the date of exercise, and you will receive the quarterly dividend
so long as you remain a registered shareholder on the dividend record
date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
"Company") terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the option
shall pass by will or the laws of descent and distribution shall be
entitled to exercise such option within one year after the date of
death, but in no event shall the option be exercised beyond the
expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested option
shares shall continue to be exercisable for five years from your Early
Retirement Date, but in no event beyond the expiration date of the
grant, provided that you execute the attached Non-Solicitation
Agreement for Early Retirees, and in fact do, comply with said
Non-Solicitation Agreement, for a period of three years commencing with
your Early Retirement Date, or such lessor period as may be applicable,
it being understood that failure to comply with said Non-Solicitation
Agreement will cause your early retirement to be governed by the
provisions of "F. All Other Employment Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any comparable
substitute terms or concepts) set forth in the Company's primary
retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will not
vest and vested option shares will cease to be exercisable on the date
of termination, except to the extent that the Committee may determine
otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
Upon the occurrence of a "change in control" of MMC, as defined in the Plan,
all stock options you hold will become fully exercisable and vested, and any
restrictions contained in the terms and conditions of the option grants
shall lapse.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you any
right to continue to be employed by the Company, or restricts, in any
way, the right of your employer to terminate your employment at any
time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and
no right thereunder shall be transferable except by will or the laws of
descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder with
respect to the shares of MMC common stock subject to an option, unless,
and until, you have exercised the option, paid the full price thereof,
and have received the shares so acquired.
D. MMC is not liable for the non-issuance or non-transfer or any delay in
the issuance or transfer of any shares of MMC common stock subject to
an option or otherwise pursuant to the Plan which results from the
inability of MMC to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction, all requisite authority to issue
or transfer shares of MMC common stock, if counsel for MMC deems such
authority necessary for the lawful issuance or transfer of any such
shares.
E. An award is subject to all of the terms and conditions of the Plan and
your acceptance of an award shall constitute your agreement to the
terms and conditions of the Plan and the administrative regulations of
the Committee. Your acceptance of an award constitutes your agreement
that the shares of MMC common stock acquired hereunder will not be sold
or otherwise disposed of by you in violation of any applicable
securities laws or regulations. In the event of any conflict between
the Plan and the terms and conditions of the Plan, the Plan shall
prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the Committee
may from time to time adopt. All decisions of the Committee upon any
questions arising under the Plan or under these terms and conditions
shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
-6-
|
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum (for some countries)
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Senior Executive
Incentive and Stock Award Plan, the Marsh & McLennan Companies 2000 Senior
Executive Incentive and Stock Award Plan or any successor plan thereto
(collectively, the "Plan"), as each may be amended from time to time, I, the
undersigned, agree that if my employment with Marsh & McLennan Companies, Inc.
or one of its subsidiaries (the "Company") terminates for any reason other than
death or total disability within three (3) years after exercising the option
granted to me on __________________ under the Plan, I will not, for a period of
two (2) years from date of termination, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation except for the benefit of the Company:
(a)solicit or accept business of the type offered by the Company during my
term of employment with the Company, or perform or supervise the performance of
any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): ID#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award
Plan, the Marsh & McLennan Companies 2000 Senior Executive Incentive and Stock
Award Plan or any successor plan thereto (collectively, the "Plan), as each may
be amended from time to time, beyond (early retirement date), his Early
Retirement Date at (employer), to the earlier of (expiration date) or the
original expiration date of the applicable grant, Participant agrees that until
(early retirement date + 3 years) he will not, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation:
(a)solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the "Company") during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): ID#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
|
Sample Notice of Exercise of Option Letter
Payment with Cash
-----------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares of
Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: ID #: _______________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
I agree to promptly remit payment for any applicable taxes upon the Company's request.
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash
----------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire
_________ shares of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share.
Therefore, the cost of this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for
at least six months) of which I am using ________* shares to be valued at U.S.$_____________/share*
(the Fair Market Value of MMC common stock on ______________*), for a total market value of
U.S.$_____________*. I understand that I must send you a check for the balance of the exercise cost
within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: ID #: ________________________
----------------------------------
Address:
----------------------------------
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
I agree to promptly remit payment for any applicable taxes upon the Company's request.
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That
Have Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
----------------------------------------------------
Terms and Conditions for [Grant Date] Award of Stock Options
to U.K. Grant Recipients
------------------------
The award of MMC stock options granted on [Grant Date] under the Marsh &
McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award Plan
(the "Plan") is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions in Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested
options will vest at such termination and become exercisable. For all other
terminations of employment, unvested options will not vest and vested
options will cease to be exercisable as of the date of such termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the "Notice of Exercise of Option
Letter"), option exercise payment and Non-Solicitation Agreement or, if
received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation
Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of one
of the attached sample letters. Your letter must set forth the
following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes: cash payment
or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form; include
company name, contact person, Depository Trust Company ("DTC")
number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the number
of certificates to be prepared, the address to which they should be
distributed, and (if different) the address to which other
shareholder communications and dividends (with respect to these
certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares from
the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from a stock option exercise
or stock award vesting) which you have owned for at least six months
prior to the exercise date, having a value equal to or greater than
the aggregate exercise price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated
on the face of the certificate. The signature of endorsement must be
guaranteed by a commercial bank or stockbroker. Attached is a sample
of an endorsed stock certificate. [Note: If the certificate is
mailed, you might consider making the endorsement on a stock power
(2 above), and then mailing it separately.]
In some countries, the tax consequences of the tender of shares may
be onerous. You should read any tax information provided to you by
MMC, and consult your local tax advisor for more specific
information.
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market Value
of MMC common stock. Fair Market Value on a given date means the per
share value of stock as determined by using the average of the high
and low selling prices of such stock on the immediately preceding
date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock
was traded) as reported for such date in the table entitled "NYSE
Composite Transactions", contained in The Wall Street Journal or an
equivalent successor table. For example, for a stock option exercise
on April 5th, the Fair Market Value of shares tendered, on a per
share basis, would be the average of the high and low selling prices
of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of your
stock option exercise will be valued at the Fair Market Value of MMC
common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the value of the tendered
shares is less than the aggregate exercise price. Failure to pay the
full purchase price within five days of the date of exercise may void
the Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you.
We recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
Payment of withholding taxes is required by law when a stock option is
exercised. An election to satisfy all applicable withholding taxes, either
(1) by check or (2) by having a sufficient number of the shares resulting
from the option exercise retained by MMC, must be made on or before the
exercise date (see sample letters). If such an election is not made by
that time then, by default, shares will be retained to satisfy the tax
withholding obligation. The election to have shares withheld is
irrevocable but is subject to disapproval by the Compensation Committee of
the MMC Board of Directors (the Committee). Such shares will be valued at
the Fair Market Value of MMC common stock.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you
have fully paid for your exercise. The shares may be registered only
in your name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you
have satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be
registered in your name (or you and your spouse as joint tenants, at
your request) as of the date of exercise, and you will receive the
quarterly dividend so long as you remain a registered shareholder on
the dividend record date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
"Company") terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the option
shall pass by will or the laws of descent and distribution shall be
entitled to exercise such option within one year after the date of
death, but in no event shall the option be exercised beyond the
expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested option
shares shall continue to be exercisable for five years from your Early
Retirement Date, but in no event beyond the expiration date of the
grant, provided that you execute the attached Non-Solicitation
Agreement for Early Retirees, and in fact do, comply with said
Non-Solicitation Agreement, for a period of three years commencing with
your Early Retirement Date, or such lessor period as may be applicable,
it being understood that failure to comply with said Non-Solicitation
Agreement will cause your early retirement to be governed by the
provisions of "F. All Other Employment Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any comparable
substitute terms or concepts) set forth in the Company's primary
retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will not
vest and vested option shares will cease to be exercisable on the date
of termination, except to the extent that the Committee may determine
otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
Upon the occurrence of a "change in control" of MMC, as defined in the
Plan, all stock options you hold will become fully exercisable and vested,
and any restrictions contained in the terms and conditions of the option
grants shall lapse.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts,
in any way, the right of your employer to terminate your employment
at any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you,
and no right thereunder shall be transferable except by will or the
laws of descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder
with respect to the shares of MMC common stock subject to an option,
unless, and until, you have exercised the option, paid the full
price thereof, and have received the shares so acquired.
D. MMC is not liable for the non-issuance or non-transfer or any delay
in the issuance or transfer of any shares of MMC common stock
subject to an option or otherwise pursuant to the Plan which results
from the inability of MMC to obtain, or in any delay in obtaining,
from each regulatory body having jurisdiction, all requisite
authority to issue or transfer shares of MMC common stock, if
counsel for MMC deems such authority necessary for the lawful
issuance or transfer of any such shares.
E. An award is subject to all of the terms and conditions of the Plan
and your acceptance of an award shall constitute your agreement to
the terms and conditions of the Plan and the administrative
regulations of the Committee. Your acceptance of an award
constitutes your agreement that the shares of MMC common stock
acquired hereunder will not be sold or otherwise disposed of by you
in violation of any applicable securities laws or regulations. In
the event of any conflict between the Plan and the terms and
conditions of the Plan, the Plan shall prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the
Committee may from time to time adopt. All decisions of the
Committee upon any questions arising under the Plan or under these
terms and conditions shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
-6-
|
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Senior Executive
Incentive and Stock Award Plan, the Marsh & McLennan Companies 2000 Senior
Executive Incentive and Stock Award Plan or any successor plan thereto
(collectively, the "Plan"), as each may be amended from time to time, I, the
undersigned, agree that if my employment with Marsh & McLennan Companies, Inc.
or one of its subsidiaries (the "Company") terminates for any reason other than
death or total disability within three (3) years after exercising the option
granted to me on __________________ under the Plan, I will not, for a period of
two (2) years from date of termination, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation except for the benefit of the Company:
(a)solicit or accept business of the type offered by the Company during my
term of employment with the Company, or perform or supervise the performance of
any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): ID#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award
Plan, the Marsh & McLennan Companies 2000 Senior Executive Incentive and Stock
Award Plan or any successor plan thereto (collectively, the "Plan"), as each may
be amended from time to time, beyond (early retirement date), his Early
Retirement Date at (employer), to the earlier of (expiration date) or the
original expiration date of the applicable grant, Participant agrees that until
(early retirement date + 3 years) he will not, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation:
(a)solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the "Company") during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): ID#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
|
Sample Notice of Exercise of Option Letter
Payment with Cash by U. K. Employees
------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on _________________ to acquire _________ shares of
Marsh & McLennan Companies, Inc. common stock at $____________________ per share. Enclosed is a check
for $_____________________ representing the full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: ID #: ________________________
----------------------------------
Address:
----------------------------------
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for stock options granted after November 27, 1996)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
or
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is (__________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U. K. Employees
-----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller)
should Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on _________________ to acquire _________ shares of
Marsh & McLennan Companies, Inc. common stock at $____________________ per share. Therefore, the cost of
this option exercise is $-------------------.
In payment for this exercise, enclosed are ____________ shares of MMC common stock (which I have owned for
at least six months) of which I am using ___________* shares to be valued at $_________________*/share
(the Fair Market Value of MMC common stock on _____________*), for a total market value of $_______________*.
I understand that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: ID #:
---------------------------------- ----------------------
Address: Tel#:
---------------------------------- ----------------------
(Include one of the following sentences)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for stock options granted after November 27, 1996)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
or
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That
Have Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
----------------------------------------------------
Terms and Conditions for [Grant Date] Award of Nonqualified Stock Options
to Putnam Investments, LLC Employees
------------------------------------
The award of nonqualified stock options granted on [Grant Date] under the Marsh
& McLennan Companies ("MMC") 2000 Senior Executive Incentive and Stock Award
Plan (the "Plan") is subject to the following terms and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions of Section V herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested
options will vest at such termination and become exercisable. For all other
terminations of employment, unvested options will not vest and vested
options will cease to be exercisable as of the date of such termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the "Notice of Exercise of Option
Letter"), option exercise payment and Non-Solicitation Agreement or, if
received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation
Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, NY 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of one
of the sample letters enclosed in this package. Your letter must set
forth the following information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option; and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes: cash payment
or share withholding; and
4. The method of share distribution:
a. For shares distributed electronically in book entry form; include
company name, contact person, Depository Trust Company ("DTC")
number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which they
should be distributed, and (if different) the address to which
other shareholder communications and dividends (with respect to
these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock
---------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from a stock option exercise
or stock award vesting) which you have owned for at least six months
prior to the exercise date, having a value equal to or greater than
the exercise price, as follows:
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(l) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated
on the face of the certificate. The signature of endorsement must be
guaranteed by a commercial bank or stockbroker. Enclosed is a sample
of an endorsed stock certificate. [Note: If the certificate is
mailed, you might consider making the endorsement on a stock power
(2 above), and then mailing it separately.]
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market Value
of MMC common stock. Fair Market Value on a given date means the per
share value of stock as determined by using the average of the high
and low selling prices of such stock on the immediately preceding
date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock
was traded) as reported for such date in the table entitled "NYSE
Composite Transactions", contained in The Wall Street Journal or an
equivalent successor table. For example, for a stock option exercise
on April 5th, the Fair Market Value of shares tendered, on a per
share basis, would be the average of the high and low selling prices
of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of your
stock option exercise will be valued at the Fair Market Value of MMC
common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the value of the tendered
shares is less than the aggregate exercise price. Failure to pay the
full purchase price within five days of the date of exercise may void
the Notice of Exercise of Option Letter.
-3-
|
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you.
We recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section V in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
Payment of withholding taxes (including FICA) is required by law when a
nonqualified stock option is exercised. An election to satisfy all
applicable withholding taxes, either (1) by check or (2) by having a
sufficient number of the shares resulting from the option exercise retained
by MMC, must be made on or before the exercise date (see sample letters). If
such an election is not made by that time then, by default, shares will be
retained to satisfy the tax withholding obligation. The election to have
shares withheld is irrevocable but is subject to disapproval by the
Compensation Committee of the MMC Board of Directors (the "Committee"). Such
shares will be valued at the Fair Market Value of MMC common stock.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you have
fully paid for your exercise. The shares may be registered only in your
name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be registered
in your name (or you and your spouse as joint tenants, at your request)
as of the date of exercise, and you will receive the quarterly dividend
so long as you remain a registered shareholder on the dividend record
date.
-4-
|
V. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
"Company") terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the option
shall pass by will or the laws of descent and distribution shall be
entitled to exercise such option within one year after the date of
death, but in no event shall the option be exercised beyond the
expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested option
shares shall continue to be exercisable for five years from your Early
Retirement Date, but in no event beyond the expiration date of the
grant, provided that you execute the attached Non-Solicitation
Agreement for Early Retirees, and in fact do, comply with said
Non-Solicitation Agreement, for a period of three years commencing with
your Early Retirement Date, or such lessor period as may be applicable,
it being understood that failure to comply with said Non-Solicitation
Agreement will cause your early retirement to be governed by the
provisions of "F. All Other Employment Terminations", below.
E. Definitions
-----------
As used in Section V. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any comparable
substitute terms or concepts) set forth in the Company's primary
retirement plan applicable to you upon your retirement.
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will not
vest and vested option shares will cease to be exercisable on the date
of termination, except to the extent that the Committee may determine
otherwise.
-5-
|
VI. CHANGE IN CONTROL PROVISIONS
----------------------------
A. Change in Control
-----------------
Upon the occurrence of a "change in control" of MMC, as defined in the
Plan, all stock options you hold will become fully exercisable and
vested, and any restrictions contained in the terms and conditions of
the option grants shall lapse.
B. Additional Payment
------------------
If you exercise option shares that have become exercisable because of a
change in control, all or a portion of the gain (the total market price
for the shares on the date of exercise minus the total exercise price)
on those shares may be subject to a 20% federal excise tax. The excise
tax is imposed when the gain (plus any other payments which are
determined to be contingent on a change in control) is more than 2.999
times the average of your last five years W-2 earnings.
If a change in control occurs and you exercise stock options whose
vesting has been accelerated, MMC will determine if the excise tax is
payable. If it is payable, MMC will pay to you, within five days of
making the computation, an amount of money (the Additional Payment)
equal to the excise tax plus additional amounts for federal, state and
local taxes so that the excise tax and income taxes on the excise tax
payment will not cost you any money. If the Additional Payment is later
determined to be less than the amount of taxes you owe, a further
payment will be made to you. If the Additional Payment is more than the
amount you owe, you will be required to reimburse MMC for the
difference.
VII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you any
right to continue to be employed by the Company, or restricts, in any
way, the right of your employer to terminate your employment at any
time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and
no right thereunder shall be transferable except by will or the laws of
descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder with
respect to the shares of MMC common stock subject to an option, unless,
and until, you have exercised the option, paid the full price thereof,
and have received the shares so acquired.
D. MMC is not liable for the non-issuance or non-transfer or any delay in
the issuance or transfer of any shares of MMC common stock subject to
an option or otherwise pursuant to the Plan which results from the
inability of MMC to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction, all requisite authority to issue
or transfer shares of MMC common stock, if counsel for MMC deems such
authority necessary for the lawful issuance or transfer of any such
shares.
E. An award is subject to all of the terms and conditions of the Plan and
your acceptance of an award shall constitute your agreement to the
terms and conditions of the Plan and the administrative regulations of
the Committee. Your acceptance of an award constitutes your agreement
that the shares of MMC common stock acquired hereunder will not be sold
or otherwise disposed of by you in violation of any applicable
securities laws or regulations. In the event of any conflict between
the Plan and the terms and conditions of the Plan, the Plan shall
prevail.
-6-
|
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the Committee
may from time to time adopt. All decisions of the Committee upon any
questions arising under the Plan or under these terms and conditions
shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Sample Notice of Exercise of Option Letter
Payment with Cash by U.S. Employees
-----------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on __________________ to acquire __________ shares of
Marsh & McLennan Companies, Inc. common stock at U.S.$_______________ per share. Enclosed is a check for
U.S.$_______________ representing the full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _______________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U.S. Employees
----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the stock option granted to me on ____________________ to acquire _________ shares
of Marsh & McLennan Companies, Inc. common stock at U.S.$_____________ per share. Therefore, the cost
of this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned for at
least six months) of which I am using ________* shares to be valued at U.S.$_____________/share* (the
Fair Market Value of MMC common stock on ______________*), for a total market value of U.S.$_____________*.
I understand that I must send you a check for the balance of the exercise cost within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _________________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
This Document Constitutes Part Of A Prospectus Covering Securities That
Have Been Registered Under The Securities Act Of 1933.
MARSH & McLENNAN COMPANIES
2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
----------------------------------------------------
Terms and Conditions for [Grant Date] Award of Incentive and Nonqualified Stock Options
to U.S. Grant Recipients
------------------------
The award of incentive stock options (as such term is defined under Section 422
of the Internal Revenue Code of 1986) and nonqualified stock options granted on
[Grant Date] under the Marsh & McLennan Companies ("MMC") 2000 Senior Executive
Incentive and Stock Award Plan (the "Plan") is subject to the following terms
and conditions:
I. VESTING OF OPTION
-----------------
Subject to your continued employment, twenty-five percent (25%) of the
aggregate number of shares covered by these options will vest and become
exercisable each [Anniversary Date] beginning [First Anniversary of Grant
Date]. Subject to the provisions in Section VI herein, in the event of your
Death, Permanent Disability, Early, Normal or Deferred Retirement, unvested
options will vest at such termination and become exercisable. For all other
terminations of employment, unvested options will not vest and vested
options will cease to be exercisable as of the date of such termination.
II. METHOD OF EXERCISE
------------------
When you decide to exercise a stock option, you must follow the steps set
forth below. Your option exercise will be effective the date on which we
receive your stock option exercise letter (the "Notice of Exercise of Option
Letter"), option exercise payment and Non-Solicitation Agreement or, if
received on different days, the later of those dates.
A. Notice of Exercise of Option Letter
-----------------------------------
Send your Notice of Exercise of Option Letter to:
For MMC Insiders (i.e.,
MMC Executive Officer, MMC Controller) For All Other Option Holders
-------------------------------------- ----------------------------
Kelly Gamble Emmanuel C. Victorino
Senior Manager, Global Compensation Senior Executive Compensation
Administrator
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas 1166 Avenue of the Americas
New York, New York l0036-2774 New York, New York 10036-2774
Facsimile Number: (212) 345-4767 Facsimile Number: (212) 345-4767
The Notice of Exercise of Option Letter should follow the format of one
of the attached sample letters. Your letter must set forth the following
information:
-1-
|
l. The number of shares that you wish to acquire through your option
exercise, the grant date of the option and the type of option you
are exercising (incentive stock option or nonqualified stock
option); and
2. The method of payment for exercising the option: U.S. dollars, MMC
common stock, or a combination of U.S. dollars and MMC common stock;
and
3. The method of payment for applicable withholding taxes (for
nonqualified stock option only): cash payment or share withholding;
and
4. The method of share distribution:
a. For shares distributed electronically in book entry form;
include company name, contact person, Depository Trust Company
("DTC") number, telephone and facsimile number.
b. For shares distributed in stock certificate form; include the
number of certificates to be prepared, the address to which
they should be distributed, and (if different) the address to
which other shareholder communications and dividends (with
respect to these certificates) should be directed.
We will not accept oral notices of exercise of options, and you must
purchase a minimum of 200 shares (unless acquiring all vested shares
from the option grant).
B. Payment
-------
Notice of Exercise of Option Letters will not be processed until we
receive payment. Payment may be made with (l) U.S. dollars, (2) MMC
common stock or (3) a combination of U.S. dollars and MMC common stock
as follows:
l. Payment with U.S. Dollars
-------------------------
Send a certified or bank check, payable to Marsh & McLennan
Companies, Inc., for the full amount of the exercise price, or wire
transfer the full amount in U.S. dollars to account number
xxx-x-xxxxxx (ABA #xxxxxxxxx) at Chase Manhattan Bank in New York.
Wire transfers are not considered "received" until the date on which
Chase confirms that the funds have been transferred to our account.
2. Payment with Shares of MMC Common Stock*
----------------------------------------
You may pay for the exercise of an option by tendering shares of MMC
common stock (including shares acquired from a stock option exercise
or stock award vesting) which you have owned for at least six months
prior to the exercise date, having a value equal to or greater than
the aggregate exercise price, as follows:
--------------------------------------------------------------------------------
* Shares acquired through the exercise of an incentive stock option will result
in a disqualifying disposition unless those shares have been held for at least
two years from the date of grant and one year from the date of exercise.
-2-
|
a. Delivery of Stock Certificate(s)
--------------------------------
The stock certificate(s) must be delivered to MMC
(1) endorsed to Marsh & McLennan Companies, Inc. (the assignee)
- or -
(2) accompanied by a stock power endorsed to Marsh & McLennan
Companies, Inc.
The endorsement must be identical to the registrant's name indicated
on the face of the certificate. The signature of endorsement must be
guaranteed by a commercial bank or stockbroker. Attached is a sample
of an endorsed stock certificate. [Note: If the certificate is
mailed, you might consider making the endorsement on a stock power
(2 above), and then mailing it separately.]
b. Valuation of Shares
-------------------
Any shares delivered as either partial or full payment of the
exercise price of an option will be valued at the Fair Market Value
of MMC common stock. Fair Market Value on a given date means the per
share value of stock as determined by using the average of the high
and low selling prices of such stock on the immediately preceding
date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock
was traded) as reported for such date in the table entitled "NYSE
Composite Transactions", contained in The Wall Street Journal or an
equivalent successor table. For example, for a stock option exercise
on April 5th, the Fair Market Value of shares tendered, on a per
share basis, would be the average of the high and low selling prices
of MMC common stock on April 4th.
If the stock submitted for payment exceeds the number of shares
required, the excess shares will be returned to you.
3. Payment with a Combination of U.S. Dollars and MMC Common Stock
---------------------------------------------------------------
As noted in "Valuation of Shares" above, shares used in payment of
your stock option exercise will be valued at the Fair Market Value of
MMC common stock. Once the value of the shares tendered has been
determined, you will owe MMC a check if the value of the tendered
shares is less than the aggregate exercise price. Failure to pay the
full purchase price within five days of the date of exercise may void
the Notice of Exercise of Option Letter.
C. Non-Solicitation Agreement
--------------------------
You must sign a Non-Solicitation Agreement in order to exercise the
[Grant Date] stock option, unless you are exercising the option after
taking Normal or Deferred Retirement.
l. While Employed
--------------
A Non-Solicitation Agreement must accompany your Notice of Exercise
of Option Letter. The Agreement must follow the form of the sample
Agreement attached in this package and be signed and dated by you. We
recommend you retain a copy of the Agreement for your records and
consult an attorney before signing the Agreement.
-3-
|
2. Upon Early Retirement
---------------------
If you take early retirement, you must sign the Non-Solicitation
Agreement that is described in Section VI in order to keep a vested
option from expiring. A sample Agreement is attached for your use if
you take early retirement and have a vested option.
III. WITHHOLDING TAXES
-----------------
A. Nonqualified Stock Options
--------------------------
Payment of withholding taxes (including FICA) is required by law when a
nonqualified stock option is exercised. An election to satisfy all
applicable withholding taxes, either (1) by check or (2) by having a
sufficient number of the shares resulting from the option exercise
retained by MMC, must be made on or before the exercise date (see sample
letters). If such an election is not made by that time then, by default,
shares will be retained to satisfy the tax withholding obligation. The
election to have shares withheld is irrevocable but is subject to
disapproval by the Compensation Committee of the MMC Board of Directors
(the "Committee"). Such shares will be valued at the Fair Market Value
of MMC common stock.
B. Incentive Stock Options
-----------------------
There are no applicable withholding taxes required on the exercise of an
incentive stock option or on the disqualifying disposition of shares
received pursuant to such an exercise.
IV. REGISTRATION AND DISTRIBUTION OF SHARES
---------------------------------------
A. The shares from your stock option exercise will be registered as
specified in your Notice of Exercise of Option Letter, after you
have fully paid for your exercise. The shares may be registered only
in your name or that of you and your spouse as joint tenants.
B. The shares from your stock option exercise will be distributed as
specified in your Notice of Exercise of Option Letter, after you have
satisfied your payroll tax obligation.
C. When you exercise your stock option, you will receive written
confirmation of the transaction.
D. Shares received upon your exercise of a stock option will be registered
in your name (or you and your spouse as joint tenants, at your request)
as of the date of exercise, and you will receive the quarterly dividend
so long as you remain a registered shareholder on the dividend record
date.
V. DISQUALIFYING DISPOSITION
-------------------------
If you sell, exchange or transfer title, in any way, of the shares of MMC
common stock acquired through an incentive stock option exercise within one
year after the acquisition of such shares or two years from the date of
grant, you should notify MMC of the disposition and amount realized. The
ordinary income resulting from the disposition must be reported by MMC on
Form W-2, although the income is not subject to tax withholding.
-4-
|
VI. TERMINATION OF EMPLOYMENT
-------------------------
If your employment with MMC or any of its subsidiaries or affiliates (the
Company) terminates, the following shall apply:
A. Death
-----
In the event of your death, any unvested option will vest and become
exercisable. The person or persons to whom your rights under the option
shall pass by will or the laws of descent and distribution shall be
entitled to exercise such option within one year after the date of
death, but in no event shall the option be exercised beyond the
expiration date of the grant.
B. Permanent Disability
--------------------
Should you terminate due to total and permanent disability as
determined under MMC's long-term disability program, any unvested
option will vest at such termination and become exercisable. Vested
option shares shall be exercisable after your termination of
employment, but in no event beyond the expiration date of the grant.
The exercise of an incentive stock option more than one year after
permanent disability will result in the loss of favorable tax
treatment, and the award will be taxed as a nonqualified stock option.
C. Normal or Deferred Retirement
-----------------------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. Vested option shares
shall be exercisable after your Retirement Date (whether such
Retirement Date is a Normal Retirement Date or Deferred Retirement
Date), but in no event beyond the expiration date of the grant. The
exercise of an incentive stock option more than 90 days after normal or
deferred retirement will result in the loss of favorable tax treatment,
and the award will be taxed as a nonqualified stock option.
D. Early Retirement
----------------
In the event of retirement from the Company, any unvested option will
vest at such termination and become exercisable. In the case of your
Retirement Date being an Early Retirement Date, any then vested option
shares shall continue to be exercisable for five years from your Early
Retirement Date, but in no event beyond the expiration date of the
grant, provided that you execute the attached Non-Solicitation
Agreement for Early Retirees, and in fact do, comply with said
Non-Solicitation Agreement, for a period of three years commencing with
your Early Retirement Date, or such lessor period as may be applicable,
it being understood that failure to comply with said Non-Solicitation
Agreement will cause your early retirement to be governed by the
provisions of "F. All Other Employment Terminations", below. The
exercise of an incentive stock option more than 90 days after early
retirement will result in the loss of favorable tax treatment, and the
award will be taxed as a nonqualified stock option.
E. Definitions
-----------
As used in Section VI. C. and D., the terms Retirement Date, Normal
Retirement Date, Deferred Retirement Date and Early Retirement Date
shall have the respective meanings given such terms (or any comparable
substitute terms or concepts) set forth in the Company's primary
retirement plan applicable to you upon your retirement.
-5-
|
F. All Other Employment Terminations
---------------------------------
For all other terminations of employment, any unvested option will not
vest and vested option shares will cease to be exercisable on the date
of termination, except to the extent that the Committee may determine
otherwise.
VII. CHANGE IN CONTROL PROVISIONS
----------------------------
A. Change in Control
-----------------
Upon the occurrence of a "change in control" of MMC, as defined in the
Plan, all stock options you hold will become fully exercisable and
vested, and any restrictions contained in the terms and conditions of
the option grants shall lapse.
B. Additional Payment
------------------
If you exercise option shares that have become exercisable because of a
change in control, all or a portion of the gain (the total market price
for the shares on the date of exercise minus the total exercise price)
on those shares may be subject to a 20% federal excise tax. The excise
tax is imposed when the gain (plus any other payments which are
determined to be contingent on a change in control) is more than 2.999
times the average of your last five years W-2 earnings.
If a change in control occurs and you exercise stock options whose
vesting has been accelerated, MMC will determine if the excise tax is
payable. If it is payable, MMC will pay to you, within five days of
making the computation, an amount of money (the Additional Payment)
equal to the excise tax plus additional amounts for federal, state and
local taxes so that the excise tax and income taxes on the excise tax
payment will not cost you any money. If the Additional Payment is later
determined to be less than the amount of taxes you owe, a further
payment will be made to you. If the Additional Payment is more than the
amount you owe, you will be required to reimburse MMC for the
difference.
VIII. OTHER PROVISIONS
----------------
A. Neither the granting of an award nor any exercise thereof gives you
any right to continue to be employed by the Company, or restricts,
in any way, the right of your employer to terminate your employment
at any time for any reason not specifically prohibited by law.
B. During your lifetime, an option shall be exercisable only by you, and
no right thereunder shall be transferable except by will or the laws of
descent and distribution.
C. Neither you nor any person entitled to exercise your rights in the
event of your death shall have any of the rights of a stockholder with
respect to the shares of MMC common stock subject to an option, unless,
and until, you have exercised the option, paid the full price thereof,
and have received the shares so acquired.
D. MMC is not liable for the non-issuance or non-transfer or any delay in
the issuance or transfer of any shares of MMC common stock subject to
an option or otherwise pursuant to the Plan which results from the
inability of MMC to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction, all requisite authority to issue
or transfer shares of MMC common stock, if counsel for MMC deems such
authority necessary for the lawful issuance or transfer of any such
shares.
-6-
|
E. An award is subject to all of the terms and conditions of the Plan and
your acceptance of an award shall constitute your agreement to the
terms and conditions of the Plan and the administrative regulations of
the Committee. Your acceptance of an award constitutes your agreement
that the shares of MMC common stock acquired hereunder will not be sold
or otherwise disposed of by you in violation of any applicable
securities laws or regulations. In the event of any conflict between
the Plan and the terms and conditions of the Plan, the Plan shall
prevail.
F. An option shall be exercised in accordance with, and awards shall be
subject to, such additional administrative regulations as the Committee
may from time to time adopt. All decisions of the Committee upon any
questions arising under the Plan or under these terms and conditions
shall be conclusive and binding.
G. The Plan, and the granting and exercising of options or awards
thereunder, and the obligations of MMC and employees under the Plan,
shall be subject to all applicable governmental laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required, including, but not limited to, tax and
securities regulations. This provision takes precedence over all
aforementioned terms and conditions.
Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant, please contact Ms. Kelly Gamble,
Senior Manager, Global Compensation, at 212/948-3523 or Mr. Emmanuel C.
Victorino, Senior Executive Compensation Administrator, at 212/345-3543. Both
also can be reached via internal electronic mail (Lotus Notes) or the internet
(kelly.gamble@mmc.com; emmanuel.c.victorino@mmc.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of MMC for its last fiscal year, MMC's
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference herein.
All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC's last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting Ms. Kelly Gamble or Mr.
Emmanuel C. Victorino as indicated above.
Attachments
-----------
Non-Solicitation Agreements
Notice of Exercise of Option Letters
Sample Endorsement of Stock Certificate
Tax Information Memorandum
-7-
|
Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Exercise of Stock Options
--------------------------------------------------------
In order to receive the benefits afforded by the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies l992 Incentive
and Stock Award Plan, the Marsh & McLennan Companies 1997 Senior Executive
Incentive and Stock Award Plan, the Marsh & McLennan Companies 2000 Senior
Executive Incentive and Stock Award Plan or any successor plan thereto
(collectively, the "Plan"), as each may be amended from time to time, I, the
undersigned, agree that if my employment with Marsh & McLennan Companies, Inc.
or one of its subsidiaries (the "Company") terminates for any reason other than
death or total disability within three (3) years after exercising the option
granted to me on __________________ under the Plan, I will not, for a period of
two (2) years from date of termination, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation except for the benefit of the Company:
(a)solicit or accept business of the type offered by the Company during my
term of employment with the Company, or perform or supervise the performance of
any services related to such type of business, from or for (i) clients or
prospects of the Company or its affiliates who were solicited or serviced
directly by me or where I supervised, directly or indirectly, in whole or in
part, the solicitation or servicing activities related to such clients or
prospects; or (ii) any former client of the Company or its affiliates who was
such within two (2) years prior to my termination of employment and who was
solicited or serviced directly by me or where I supervised, directly or
indirectly, in whole or in part, the solicitation or servicing activities
related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
I recognize and acknowledge that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which were essential to the
performance of my duties while in the employ of the Company. I will not, during
or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall I
make use of any such property for my own purposes or for the benefit of any
person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof, these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that I was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the Company's consent).
Without limiting any other remedies which may be available to it under
applicable law, the Company shall be entitled to monetary damages under this
agreement, which may include, but not be limited to, the gain on exercise of the
option computed as the difference between the option price and the market price
on the date of exercise multiplied by the number of shares exercised.
I understand that the agreement applies only to this particular option grant and
does not take precedence over or affect other non-solicitation agreements that I
may have with the Company.
This agreement shall be construed in accordance with the laws of the State of
New York.
Name (Print): SS#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
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Marsh & McLennan Companies, Inc.
Non-Solicitation Agreement for Early Retirees
---------------------------------------------
In order to extend the expiration date of Participant's stock option granted on
(grant date(s)) under the Marsh & McLennan Companies 1988 Incentive and Stock
Award Plan, the Marsh & McLennan Companies 1992 Incentive and Stock Award Plan,
the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award
Plan, the Marsh & McLennan Companies 2000 Senior Executive Incentive and Stock
Award Plan or any successor plan thereto (collectively, the "Plan"), as each may
be amended from time to time, beyond (early retirement date), his Early
Retirement Date at (employer), to the earlier of (expiration date) or the
original expiration date of the applicable grant, Participant agrees that until
(early retirement date + 3 years) he will not, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation:
(a)solicit or accept business of the type offered by Marsh & McLennan
Companies, Inc. or one of its subsidiaries (the "Company") during my term of
employment with the Company, or perform or supervise the performance of any
services related to such type of business, from or for (i) clients or prospects
of the Company who were solicited or serviced directly by me or where I
supervised, directly or indirectly, in whole or in part, the solicitation or
servicing activities related to such clients or prospects; or (ii) any former
client of the Company or its affiliates who was such within two (2) years prior
to my termination of employment and who was solicited or serviced directly by me
or where I supervised, directly or indirectly, in whole or in part, the
solicitation or servicing activities related to such former clients; or
(b)solicit any employee of the Company who reported to me directly or
indirectly to terminate his employment with the Company for the purpose of
competing with the Company.
Participant recognizes and acknowledges that the Company's trade secrets and
confidential or proprietary information, including such trade secrets or
information as may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the duties of Participant hereunder. Participant will not,
during or after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Participant make use of any such property for his own purposes or for the
benefit to any person, firm, corporation or other entity (except the Company)
under any circumstances, during or after the term hereof, provided that after
the term hereof these restrictions shall not apply to such secrets or
information which are then in the public domain (provided that he was not
responsible, directly or indirectly, for such secrets or information entering
the public domain without the Company's consent).
Name (Print): SS#:
------------------------------ --------------------------
Signature: Date:
------------------------------ --------------------------
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Sample Notice of Exercise of Option Letter
Payment with Cash by U.S. Employees
-----------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the (indicate incentive or nonqualified) stock option granted to me on
__________________ to acquire __________ shares of Marsh & McLennan Companies, Inc. common stock
at U.S.$_______________ per share. Enclosed is a check for U.S.$_______________ representing the
full payment for this option exercise.
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _______________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
Sample Notice of Exercise of Option Letter
Payment with Shares and Cash by U.S. Employees
----------------------------------------------
Date
Mr. Emmanuel C. Victorino [Note: Those employees who are insiders
Senior Executive Compensation Administrator (i.e., MMC Executive Officer or MMC Controller) should
Marsh & McLennan Companies, Inc. direct their correspondence to Ms. Kelly Gamble, Senior Manager,
1166 Avenue of the Americas Global Compensation.]
New York, NY 10036-2774
Dear Manny:
I would like to exercise the (indicate incentive or nonqualified) stock option granted to me on
____________________ to acquire _________ shares of Marsh & McLennan Companies, Inc. common stock
at U.S.$_____________ per share. Therefore, the cost of this option exercise is U.S.$______________.
In payment for this exercise, enclosed are ________ shares of MMC common stock (which I have owned
for at least six months) of which I am using ________* shares to be valued at U.S.$_____________/share*
(the Fair Market Value of MMC common stock on ______________*), for a total market value of
U.S.$_____________*. I understand that I must send you a check for the balance of the exercise cost
within five business days.
*[Note: To be filled in by the Company upon receipt of letter.]
Also enclosed is a non-solicitation agreement signed by me.
Please register the shares as follows:
Name: SS#: _________________________
----------------------------------
Address:
----------------------------------
(Include one of the two following sentences.)
Please distribute the shares via book entry form as follows:
Company: DTC #:
---------------------------------- ------------------------
Contact: Tele. #:
---------------------------------- ------------------------
Fax #:
------------------------
Please distribute the shares in stock certificate form as follows:
_______ certificates for _______ shares each and 1 certificate for _______ shares to:
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
(Include one of the following sentences for nonqualified stock option exercises only.)
I authorize the Company to withhold a sufficient number of shares from the amount I would
otherwise be due to receive as a result of this option exercise, in order to cover all
applicable payroll taxes.
I agree to remit a check for all applicable payroll taxes upon the Company's request and
understand that the shares will not be released until the tax payment has been received
by you. (My office telephone number is ____________.)
Sincerely,
|
Exhibit 12.1
Marsh & McLennan Companies, Inc. and Subsidiaries
Ratio of Earnings to Fixed Charges
(In millions, except ratios)
Nine
Months
Ended
September 30, Years Ended December 31,
2004 -------------------------------------------------------
(Unaudited) 2003 2002 2001 2000 1999
Earnings
Income before income taxes and minority
interest* $1,395 $2,335 $2,133 $1,590 $1,955 $1,255
Interest expense 153 185 160 196 247 233
Portion of rents representative of
the interest factor 122 156 132 122 120 121
Amortization of capitalized interest - - - - - 1
-------------------------------------------------------------------------------------------------------------------
$1,670 $2,676 $2,425 $1,908 $2,322 $1,610
-------------------------------------------------------------------------------------------------------------------
Fixed Charges
Interest expense $153 $ 185 $ 160 $ 196 $ 247 $ 233
Portion of rents representative of
the interest factor 122 156 132 122 120 121
-------------------------------------------------------------------------------------------------------------------
$ 275 $ 341 $ 292 $ 318 $ 367 $ 354
-------------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges 6.1 7.8 8.3 6.0 6.3 4.5
-------------------------------------------------------------------------------------------------------------------
|
* Minority interest has been reclassified in 1999 to conform to the current year presentation.
EXHIBIT 31
CERTIFICATIONS
I, Michael G. Cherkasky, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [Omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 9, 2004 /s/ Michael G. Cherkasky
--------------------------
Michael G. Cherkasky
Chief Executive Officer
|
CERTIFICATIONS
I, Sandra S. Wijnberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [Omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 9, 2004 /s/ Sandra S. Wijnberg
-----------------------
Sandra S. Wijnberg
Chief Financial Officer
|
EXHIBIT 32
Certification of Chief Executive and Chief Financial Officers
The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 (the "Report") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Michael G. Cherkasky, the Chief Executive Officer and Sandra S. Wijnberg, the Chief Financial Officer of Marsh & McLennan Companies, Inc. each certifies that, to the best of his or her knowledge:
1. the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Marsh & McLennan Companies, Inc.
Dated: November 9, 2004 /s/ Michael G. Cherkasky
---------------------------
Name: Michael G. Cherkasky
Chief Executive Officer
Dated: November 9, 2004 /s/ Sandra S. Wijnberg
--------------------------
Name: Sandra S. Wijnberg
Chief Financial Officer
|