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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MARSH & McLENNAN COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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[LOGO]
1997
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
<PAGE>
[LOGO]
Dear Marsh & McLennan Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Marsh & McLennan Companies, Inc., which will be held at 10:00 a.m. on
Wednesday, May 21, 1997 in the auditorium on the second floor at 1221 Avenue of
the Americas, New York, New York.
The major items of business, as outlined in the following Notice of Annual
Meeting of Stockholders and Proxy Statement, will be the election of five
persons to serve as Class III directors, an amendment to the Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock, the approval of the Marsh & McLennan Companies 1997 Senior
Executive Incentive and Stock Award Plan and the ratification of the appointment
of Deloitte & Touche LLP as independent public accountants for 1997.
Whether you plan to come to the Annual Meeting or not, your representation
and vote are important and your shares should be voted. Please complete, date,
sign and return the enclosed proxy card promptly.
We look forward to seeing you at the meeting.
Very truly yours,
[LOGO]
Chairman of the Board March 31, 1997
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
OF
MARSH & MCLENNAN COMPANIES, INC.
1166 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036-2774
The Annual Meeting of Stockholders of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, May 21, 1997 at
10:00 a.m. (local time) in the second floor auditorium at 1221 Avenue of the
Americas, New York, New York for the following purposes:
(1) To elect five persons to serve as Class III directors;
(2) To adopt an amendment to the Company's Restated Certificate of
Incorporation increasing the number of authorized shares of common stock;
(3) To approve the Marsh & McLennan Companies 1997 Senior Executive
Incentive and Stock Award Plan;
(4) To ratify the appointment of Deloitte & Touche LLP as independent
public accountants for the Company for its fiscal year ending December 31,
1997; and
(5) To transact such other business as may properly be brought before
the meeting.
Only stockholders of record at the close of business on March 24, 1997 are
entitled to vote at the Annual Meeting or any adjournment thereof. As of that
date, 72,560,257 shares of common stock were outstanding and entitled to one
vote each on all matters submitted to stockholders. A list of stockholders will
be available for inspection for at least ten days prior to the Annual Meeting at
the principal executive offices of the Company at 1166 Avenue of the Americas,
New York, New York.
This proxy solicitation material is being mailed on or about March 31, 1997
to stockholders as of the record date with a copy of the Company's 1996 Annual
Report to Stockholders, which includes financial statements for the period ended
December 31, 1996.
The matters to be acted upon are described in this Notice of Annual Meeting
of Stockholders and Proxy Statement. Proxies will be voted at the Annual
Meeting, or at any adjournment thereof, at which a quorum is present, in
accordance with the directions on the proxy card. The holders of a majority of
the Company's common stock outstanding and entitled to vote who are present
either in person or represented by proxy constitute a quorum for the Annual
Meeting.
Unless otherwise directed in the proxy, the persons named therein will vote
FOR the election of the director nominees listed below, FOR the adoption of the
amendment to the Restated Certificate of Incorporation increasing the number of
authorized shares of common stock, FOR the approval of
<PAGE>
the Marsh & McLennan Companies 1997 Senior Executive Incentive and Stock Award
Plan and FOR the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for its fiscal year ending December 31,
1997.
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast "For" are
elected as directors up to the maximum number of directors to be chosen at the
Annual Meeting. Consequently, any shares not voted "For" a particular director
(whether as a result of a direction to withhold or a broker nonvote) will not be
counted in such director's favor. A broker nonvote is a proxy submitted by a
broker in which the broker fails to vote on behalf of a client on a particular
matter for lack of instruction when such instruction is required by the New York
Stock Exchange.
Adoption of the proposal to amend the Restated Certificate of Incorporation
requires the affirmative vote of a majority of the outstanding shares of the
Company's common stock. Accordingly, abstentions and broker nonvotes will have
the effect of a negative vote on the proposal.
All other matters to be acted on at the Annual Meeting require the
affirmative vote of a majority of the shares present and entitled to vote at the
meeting to constitute the action of the stockholders. In accordance with
Delaware law, abstentions will, while broker nonvotes will not, be treated as
present and entitled to vote for purposes of the preceding sentence.
As of the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting. If other
business shall properly come before the Annual Meeting, including any proposal
submitted by a stockholder which was omitted from this Proxy Statement in
accordance with applicable provisions of the federal securities laws, the
persons named in the proxy will vote according to their best judgment.
DIRECTORS
The Board of Directors is divided into three classes. The regular terms of
office for the Class III, Class I and Class II directors expire at the 1997,
1998 and 1999 annual meetings of stockholders, respectively. Five persons are to
be elected at the Annual Meeting to hold office as Class III directors for a
term of three years and until their respective successors are elected and
qualified. The Class I and Class II directors will not be elected at the Annual
Meeting as their respective terms will continue.
Each director has served as a director of the Company since the year
indicated. Mr. R. J. Ventres, a Class III director, is retiring from the Board
and is not standing for re-election.
It is intended that shares represented by the proxies will be voted for the
election of all of the Class III nominees listed below. In the unexpected event
that any nominee should become unavailable to serve as a director prior to the
Annual Meeting for any reason, the persons designated as proxies reserve full
discretion to cast their votes for another person whom the Board of Directors of
the Company might designate in substitution.
2
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<TABLE>
<S> <C>
NOMINEES FOR CLASS III DIRECTORS
(TERMS EXPIRING IN 2000)
PETER COSTER DIRECTOR SINCE 1988
[PHOTO] Mr. Coster, age 57, is President of Mercer Consulting Group, Inc., a
subsidiary of the Company. He joined Mercer in 1984 upon its
acquisition of a U.K. benefits consulting firm that Mr. Coster had
joined in 1962.
LAWRENCE J. LASSER DIRECTOR SINCE 1987
[PHOTO] Mr. Lasser, age 54, is President and Chief Executive Officer of
Putnam Investments, Inc., a subsidiary of the Company. He joined
Putnam in 1969. Mr. Lasser is a trustee of the various mutual funds
managed by Putnam Investment Management, Inc., a subsidiary of the
Company. He is a member of the Board of Governors and Executive
Committee of the Investment Company Institute, a member of the Board
of Overseers of the Museum of Fine Arts (Boston), a Trustee of Beth
Israel/Deaconess Medical Center in Boston, a member of the Council
on Foreign Relations, and a member of the Board of Directors of the
United Way of Massachusetts Bay.
RICHARD M. MORROW* ** DIRECTOR SINCE 1991
[PHOTO] Mr. Morrow, age 71, served as Chairman of the Board of Westinghouse
Electric Corporation during part of 1993. He retired as Chairman and
Chief Executive Officer of Amoco Corporation in 1991. Mr. Morrow is
a director of Potlatch Corporation and Seagull Energy Corporation.
He is also a trustee of the University of Chicago and
Rush-Presbyterian-St. Lukes Medical Center in Chicago.
</TABLE>
3
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<TABLE>
<S> <C>
JOHN T. SINNOTT DIRECTOR SINCE 1992
[PHOTO] Mr. Sinnott, age 57, became President and Chief Executive Officer of
Marsh & McLennan, Incorporated, a subsidiary of the Company, in
1995, having previously served as President from 1990 and Co-Chief
Executive from 1992. He joined Marsh & McLennan, Incorporated in
1963. Mr. Sinnott is a trustee of the Insurance Institute of
America.
FRANK J. TASCO* ** DIRECTOR SINCE 1979
[PHOTO] Mr. Tasco, age 69, retired in 1992 as Chairman of the Board and
Chief Executive Officer of the Company, a position he had held since
1986. From December 1993 to December 1994, he served as Chairman of
Borden, Inc. Mr. Tasco is Chairman of Angram, Inc. and a director of
The Travelers Corporation, Travelers/Aetna Property & Casualty
Corp., Mid Ocean Limited, New York Telephone Company, and New
England Telephone and Telegraph Company.
</TABLE>
4
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<TABLE>
<S> <C>
CONTINUING CLASS I DIRECTORS
(TERMS EXPIRING IN 1998)
LEWIS W. BERNARD*** DIRECTOR SINCE 1992
[PHOTO] Mr. Bernard, age 55, is Chairman of Classroom, Inc., a non-profit
educational corporation. He retired in 1991 from Morgan Stanley &
Co., Inc. where for almost 30 years he held numerous positions, most
recently as chief administrative and financial officer. Mr. Bernard
is a trustee or director of the American Museum of Natural History,
The Commonwealth Fund, the Harvard Management Company, and the John
and Mary R. Markle Foundation.
RICHARD H. BLUM DIRECTOR SINCE 1985
[PHOTO] Mr. Blum, age 58, served as Chairman and Chief Executive Officer of
Guy Carpenter & Company, Inc., a subsidiary of the Company, from
1990 until January 1996, when he became an executive of the Company.
He joined Guy Carpenter in 1958. Mr. Blum is a trustee of The
College of Insurance.
FRANK J. BORELLI DIRECTOR SINCE 1988
[PHOTO] Mr. Borelli, age 61, has been Senior Vice President and Chief
Financial Officer of the Company since 1984. He is a director of The
Interpublic Group of Companies, Inc., Mid Ocean Limited and United
Water Resources, Inc. Mr. Borelli is Chairman and a director of the
Financial Executives Institute, a director of the Private Sector
Council, and a trustee of the New York City Chapter of the National
Multiple Sclerosis Society and the Nyack Hospital.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
ROBERT F. ERBURU** DIRECTOR SINCE 1996
[PHOTO] Mr. Erburu, age 66, retired as Chairman of the Board of The Times
Mirror Company, a Los Angeles-based news and information company, on
January 1, 1996, a position he had held since 1986. Mr. Erburu
served as Chief Executive Officer of The Times Mirror Company from
1981 to 1995. Mr. Erburu is a director of The Times Mirror Company,
the Tejon Ranch Company, Cox Communications, Inc., the Pacific
Council on International Policy, the Tomas Rivera Center, the Los
Angeles Annenberg Metropolitan Project and the Skirball Institute of
American Values. He is Chairman of the Board of Trustees of The
Huntington Library, Art Collections and Botanical Gardens and of the
J. Paul Getty Trust, as well as a trustee of the National Gallery of
Art, The Flora and William Hewlett Foundation and The Ahmanson
Foundation, and a Fellow of the American Academy of Arts and
Sciences. Mr. Erburu is also a member of the Business Council.
RAY J. GROVES*** DIRECTOR SINCE 1994
[PHOTO] Mr. Groves, age 61, is Chairman of Legg Mason Merchant Banking, Inc.
He retired in 1994 from Ernst & Young where he had held numerous
positions for 37 years, including the last 17 years as Chairman and
Chief Executive Officer. He is a director of Consolidated Natural
Gas Company, Electronic Data Systems Corporation and RJR Nabisco,
Inc. Mr. Groves is a member of the Board of Trustees of the Business
Council of the United Nations and of the New York Public Policy
Institute. He is also a managing director and treasurer of the
Metropolitan Opera Association and a trustee of the Ohio State
University Foundation.
GEORGE PUTNAM DIRECTOR SINCE 1987
[PHOTO] Mr. Putnam, age 70, is Chairman of Putnam Investment Management,
Inc., a subsidiary of the Company, and is Chairman of the Board of
Trustees and President of the various mutual funds managed by
Putnam. He is a director of The Boston Company, Inc., The Boston
Safe Deposit & Trust Company, Freeport-McMoRan, Inc., Houghton
Mifflin Company, McMoRan Oil & Gas Inc. and Copper & Gold, Inc. Mr.
Putnam is also Chairman of the WGBH Educational Foundation, a
trustee of the Museum of Fine Arts (Boston), McLean Hospital,
Massachusetts General Hospital, Trustees of Reservations and New
England Aquarium, and an overseer of the Boston Museum of Science
and Northeastern University.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
CONTINUING CLASS II DIRECTORS
(TERMS EXPIRING IN 1999)
ROBERT CLEMENTS DIRECTOR SINCE 1981
[PHOTO] Mr. Clements, age 64, is Chairman of Risk Capital Holdings, Inc., a
public company, and a director of its subsidiary Risk Capital
Reinsurance Company. In 1996 he retired as Chairman and Chief
Executive Officer of Marsh & McLennan Risk Capital Corp., a
subsidiary of the Company, a position he had held since 1994, and
presently serves as an advisor to that corporation and a member of
its Board of Directors. From 1992 to 1994 he served as President of
the Company. Mr. Clements joined Marsh & McLennan, Ltd., a Canadian
subsidiary of the Company, in 1959. Mr. Clements is a director of
EXEL Limited and Hiscox plc. He is also Chairman of the Board of
Trustees of The College of Insurance in New York City and a member
of Rand Corp. President's Council.
JEFFREY W. GREENBERG DIRECTOR SINCE 1996
[PHOTO] Mr. Greenberg, age 45, became Chairman and Chief Executive Officer
of Marsh & McLennan Risk Capital Corp., a subsidiary of the Company,
in April 1996, having served as an executive since 1995. From 1978
to 1995, he was employed by American International Group, Inc.,
including serving from 1991 as executive vice president with
responsibility for its domestic brokerage group. Mr. Greenberg is a
director of ACE Limited and a trustee of Brown University, the
Spence School in New York City and the Children's Oncology Society
of New York.
RICHARD S. HICKOK** DIRECTOR SINCE 1983
[PHOTO] Mr. Hickok, age 71, retired in 1983 from KMG Main Hurdman, Certified
Public Accountants, where he had been Chairman. Mr. Hickok is a
director of Alpine Lace Brands, Inc., Comstock Resources Inc.,
Projectavision, Inc. and Marcam Corporation.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
DAVID D. HOLBROOK DIRECTOR SINCE 1992
[PHOTO] Mr. Holbrook, age 58, became Chairman of Marsh & McLennan,
Incorporated, a subsidiary of the Company, in 1995, having served as
its President from 1988 and its Co-Chief Executive Officer from 1992
to 1994. He joined Marsh & McLennan in 1960. Mr. Holbrook is
Chairman of the Board of Directors of The Theatre Development Fund
in New York City and a director of Security Equity Life Insurance
Company, Security Mutual Life Insurance Company and World Insurance
Network, Ltd. He is also a trustee of The Millbrook School,
Millbrook, N.Y., St.Luke's/Roosevelt Hospital Center in New York
City and the Business Council for the United Nations, and an Advisor
to Outward Bound, U.S.A.
ADELE SMITH SIMMONS* ** DIRECTOR SINCE 1978
[PHOTO] Mrs. Simmons, age 55, has been President of the John D. and
Catherine T. MacArthur Foundation since 1989. She is a director of
First Chicago/NBD Corporation, the Synergos Institute and the Union
of Concerned Scientists.
A. J. C. SMITH* DIRECTOR SINCE 1977
[PHOTO] Mr. Smith, age 62, has been Chairman of the Board and Chief
Executive Officer of the Company since 1992. He served as President
from 1986 to 1992. He joined William M. Mercer Limited, a Canadian
subsidiary of the Company, in 1961. Mr. Smith is a trustee of the
various mutual funds managed by Putnam Investment Management, Inc.,
a subsidiary of the Company. He is also Vice Chairman of the Central
Park Conservancy and a member of the Board of Trustees of The
Carnegie Hall Society, Inc. and the Educational Broadcasting
Corporation in New York City.
</TABLE>
- ------------------------
* Member of the Executive Committee, of which Mr. Smith is Chairman.
** Member of the Audit Committee, of which Mr. Hickok is Chairman.
*** Member of the Compensation Committee, of which Mr. Bernard is Chairman. Mr.
Ventres, a director who is retiring at the Annual Meeting, also has been a
member.
8
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INFORMATION REGARDING CERTAIN FUTURE DIRECTORS
On March 27, 1997, the Company and Johnson & Higgins ("J&H") consumated the
recently announced transaction to combine their businesses. In connection with
this transaction, the Company has agreed to increase the size of the Company's
Board of Directors and to take all actions necessary to elect as directors of
the Company three current directors of J&H and a fourth person to be designated
who is not affiliated with J&H. Such persons will not become directors of the
Company until after the Annual Meeting of the Company. Information regarding the
three current directors of J&H is set forth below.
DAVID A. OLSEN
Mr. Olsen, age 59, is Chairman and Chief Executive Officer of J&H, which he
joined in 1966. Mr. Olsen was named President and Chief Operating Officer of J&H
in 1987, Chief Executive Officer in 1990 and Chairman in 1991. Upon his election
as a director of the Company, Mr. Olsen is expected to retire as an employee and
to serve the combined organization as the Company's Vice Chairman until December
31, 1997. Mr. Olsen is a member of the Board of Trustees of Bowdoin College, a
director of the New York City Partnership, a trustee and member of the executive
committee of the United States Council for International Business, a trustee of
The College of Insurance, and a member of the Board and Executive Committee of
the American Institute for Chartered Property Casualty Underwriters and the
Insurance Institute of America. He is also a member of the boards of U.S. Trust
Corporation, GCR Holdings Limited, United Way of New York City and India House,
and he serves as Vice Chairman of New York's South Street Seaport Museum,
Chairman of its Development Committee and Co-Chairman of the New York Botanical
Gardens Business Council.
RICHARD A. NIELSEN
Mr. Nielsen, age 59, is Vice Chairman of the Board of Directors and Chief
Operating Officer of J&H, which he joined in 1965. In addition, he has overall
responsibility for global retail brokerage operations, Johnson & Higgins
Financial Services, Management Information Systems and benefit consulting
activities. Mr. Nielsen was named President and Chief Operating Officer of J&H
in 1993 and became Vice Chairman in 1996.
NORMAN BARHAM
Mr. Barham, age 55, is President of J&H, which he joined in 1975, and has
overall responsibility for J&H's practice offices and its reinsurance, wholesale
and captive management operations. He is a member of its Executive Committee and
also serves on the J&H Retail Operating Committee. Mr. Barham was selected to
lead the Johnson & Higgins Global Business Group in 1992 and was elected an
Executive Vice President of J&H in 1995 and President in 1996. Mr. Barham is on
the boards of New York Downtown Hospital and the New York City Outward Bound
Program.
9
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BOARD COMMITTEES AND MEETINGS
The Executive Committee has all the powers of the Board of Directors, when
it is not in session, in the management of the business and affairs of the
Company, except as otherwise provided in the Company's by-laws or in resolutions
of the Board of Directors and under applicable law. The Executive Committee held
two meetings during 1996.
The Audit Committee submits recommendations to the Board of Directors with
respect to the selection of the Company's independent public accountants and on
any other matters it deems appropriate. It reviews the annual financial
statements of the Company with the Company's independent public accountants, the
practices and procedures adopted by the Company in the preparation of such
statements, and the independent public accountants' annual scope of audit. The
Audit Committee is required to meet at least annually with such accountants and
at any time when considered appropriate by the Audit Committee or such
accountants. The Audit Committee held six meetings during 1996.
The Compensation Committee determines the compensation of the Company's
Chief Executive Officer, approves the compensation of other senior executives of
the Company and approves the retention by the Company of consultants, as may be
required, on matters relating to the compensation of the Chief Executive Officer
and senior executives of the Company. In addition, the Compensation Committee
oversees general compensation policies and practices and administers the
Company's stock-based award plans. Pursuant to the Company's by-laws, no member
of the Compensation Committee may be an employee of the Company or be eligible
to receive grants under any plan that the Compensation Committee administers.
The Compensation Committee held six meetings during 1996.
The Board of Directors conducted six meetings during 1996. The average
attendance by directors at the meetings of the Board of Directors and committees
thereof was 97% and all directors attended at least 75% of the meetings of the
Board of Directors and committees on which they served. The full Board of
Directors acts in lieu of a nominating committee.
DIRECTORS' COMPENSATION
As compensation for their services, Messrs. Bernard, Erburu, Groves, Hickok,
Morrow, Putnam, Tasco and Ventres, and Mrs. Simmons, each receive a basic
retainer of $40,000 per year. These directors also receive a fee of $1,000, and
reimbursement of related expenses for each meeting of the Board of Directors or
a committee thereof they attend. The chairman of each committee (other than Mr.
Smith as Chairman of the Executive Committee) receives an additional retainer of
$5,000 per year; other members of committees receive an additional retainer of
$2,000 per year.
Under the terms of the Company's Directors Stock Compensation Plan, the
directors receive twenty-five percent of the basic retainer in shares of the
Company's stock at the fair market value
10
<PAGE>
thereof on each June 1. The balance of their compensation (including attendance
fees and committee retainers) is paid in shares of the Company's stock or cash
as the director elects. The directors may defer receipt of all or a portion of
their compensation to be paid in shares until the year following either their
date of retirement from the Board or a specified earlier date. Upon retirement
from the Board, these directors become advisory directors, available for
consultation with management, and receive until age 80 an annual amount equal to
their Board retainer at the time of retirement.
The remaining directors receive no specific compensation for their services
as directors or members of any committee.
EMPLOYMENT AND CONSULTING AGREEMENTS
Marsh & McLennan Risk Capital Corp. ("MMRCC"), a wholly-owned subsidiary of
the Company, has an employment agreement with Mr. Jeffrey W. Greenberg, its
Chairman and Chief Executive Officer (the "Greenberg Agreement"), and a
consulting agreement with Mr. Robert Clements, its former Chairman and Chief
Executive Officer (the "Clements Agreement"). The Company has guaranteed MMRCC's
obligations under these agreements.
Under the Greenberg Agreement, the term of which expires on September 30,
2000 (and, unless notice is given not later than October 1 of the preceding
year, will be extended for annual periods), Mr. Greenberg receives an annual
salary of at least $750,000 per year and is eligible to participate in the
Company's Senior Management Incentive Compensation Plan. He also is entitled to
receive annual awards of restricted stock or restricted stock units of the
Company with an aggregate value equal to 65% of his salary and options to
acquire 20,000 shares of Company stock. In addition, Mr. Greenberg may receive
certain contingent performance payments based on the extent of the Company's
investment return and fees from The Trident Partnership, L.P., a Cayman Islands
limited partnership ("Trident") for which MMRCC is an investment advisor,
relating to the period from October 1, 1995 until he no longer is Chairman and
Chief Executive Officer of MMRCC.
If Mr. Greenberg's employment is terminated by MMRCC (other than for cause
or disability) or if he terminates his employment for "Good Reason" (as defined
below), Mr. Greenberg will be entitled to receive his base salary for a period
of two years after the termination of employment, as well as bonuses (at the
annual rate of not less than $750,000), continuation of benefits during such
period, and the vesting of unvested stock awards and the contingent performance
payments described above.
Mr. Clements was employed by MMRCC as Chairman and Chief Executive Officer
through March 1996. Pursuant to his employment agreement with MMRCC, Mr.
Clements received an aggregate salary and bonus for the three-month period ended
March 31, 1996 of $400,000. Effective April 1, 1996, the employment agreement
was amended and superseded by the Clements Agreement, which provides that Mr.
Clements or an entity employing him will be an investment advisor to
11
<PAGE>
MMRCC through September 30, 1997 for a fee at the rate of $2,250,000 per year.
Thereafter, for the two-year period ending September 30, 1999, Mr. Clements or
such entity is to provide consulting services to MMRCC, the fee for the first
year of such period to be $1,000,000 and for the second year to be as agreed to
by the parties in good faith reflecting business conditions at the time. In
addition, Mr. Clements is entitled, as he was under his employment agreement, to
certain performance payments based on the extent to which the Company's annual
rate of return on its investment in Trident exceeds 15%.
The Clements Agreement provides that if Mr. Clements' position is terminated
by MMRCC (other than for cause or disability) or by Mr. Clements for "Good
Reason" (as defined below), he or such entity will be entitled to receive the
fees that would have been received had the termination not occurred, as well as
the Trident performance payments described above.
"Good Reason" is defined in each of the Agreements generally to include a
reduction in compensation; the failure to continue the individual in his
positions during the employment or advisory period; a change in duties
materially inconsistent with the status of those positions; a change in control
of the Company (as described in footnote 2 to the "Summary Compensation Table"
below) or of MMRCC (defined to mean that the Company no longer owns at least 50%
of MMRCC); and, under the Greenberg Agreement, Mr. Greenberg's voluntary
termination in 1999 under specified circumstances (in which case, he would
receive, in lieu of his base salary and bonus for two years as described above,
a cash lump sum of $500,000).
Pursuant to a separate agreement among Mr. Clements, MMRCC and Marsh &
McLennan Risk Capital Holdings, Ltd. ("MMRCH"), a wholly owned subsidiary of the
Company, and in recognition of the services provided by Mr. Clements while
employed by MMRCC relating to its becoming an advisor to Risk Capital
Reinsurance Company and to MMRCH investing in Risk Capital Holdings, Inc., MMRCH
transferred to Mr. Clements in September 1996 a warrant to purchase 200,000
shares of common stock of Risk Capital Holdings, Inc. ("Risk Capital Holdings
Shares") and placed in escrow an additional warrant to purchase 150,000 Risk
Capital Holdings Shares to be transferred to Mr. Clements if the market price of
the Risk Capital Holdings Shares should reach a specified threshold. The
agreement also provides that Mr. Clements will receive performance payments if
revenues received by MMRCC in the years 1998 and 2000 from fees generated by the
advisory agreements MMRCC has with each of Risk Capital Holdings, Inc. and Risk
Capital Reinsurance Company reach certain levels. The maximum amounts payable to
Mr. Clements under these agreements are $750,000 with respect to 1998 and
$1,500,000 with respect to 2000.
12
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SECURITY OWNERSHIP
The following table reflects as of February 28, 1997 (except with respect to
interests in the Company's Stock Investment Plan and Stock Investment
Supplemental Plan, which are as of December 31, 1996) the number of shares of
common stock which each director and each named executive officer has reported
as owning beneficially or otherwise having a pecuniary interest in, and which
all directors, nominees and executive officers of the Company have reported as
owning beneficially as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
------------------------------------------------
OTHER THAN
SOLE VOTING SOLE VOTING SUBJECT TO
AND AND EXERCISABLE
INVESTMENT INVESTMENT STOCK
NAME POWER POWER(2) OPTIONS TOTAL
- --------------------------------------------------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Lewis W. Bernard......................................... 1,000 2,732 -- 3,732
Richard H. Blum.......................................... -- 109,771 76,500 186,271
Frank J. Borelli......................................... 27,551 42,373 77,500 147,424
Robert Clements.......................................... 9,432 4,700 145,000 159,132
Peter Coster............................................. 3,758 37,864 93,750 135,372
Robert F. Erburu......................................... -- 423 -- 423
Jeffrey W. Greenberg..................................... 2,344 19,465 17,500 39,309
Ray J. Groves............................................ -- 2,293 -- 2,293
Richard S. Hickok........................................ 900 3,366 -- 4,266
David D. Holbrook........................................ 20,980 40,614 77,500 139,094
Lawrence J. Lasser....................................... -- 70,500 88,750 159,250
Richard M. Morrow........................................ 1,000 4,078 -- 5,078
George Putnam............................................ 152,452 28,873 -- 181,325
Adele Smith Simmons...................................... 61,606 48,685 -- 110,291
John T. Sinnott.......................................... 9,271 50,077 67,500 126,848
A.J.C. Smith............................................. 102,697 113,514 239,000 455,211
Frank J. Tasco........................................... 73,177 37,355 180,000 290,532
R.J. Ventres............................................. 5,232 -- -- 5,232
All directors and executive officers as a group,
including the above (20 individuals)................... 489,854 646,330 1,122,500 2,258,684
</TABLE>
13
<PAGE>
- ------------------------
(1) As of February 28, 1997, no director or named executive officer beneficially
owned more than 1% of the outstanding common stock, and all directors and
executive officers as a group beneficially owned approximately 2.80% of the
outstanding common stock.
(2) Includes the number of shares of common stock: (i) that are held in the form
of shares of restricted stock that may in the future vest to such
individuals; (ii) that are held indirectly for the benefit of such
individuals or jointly, or directly or indirectly for certain members of
such individuals' families, with respect to which beneficial ownership in
certain cases may be disclaimed; (iii) that represent such individuals'
interests in the Company's Stock Investment Plan; and (iv) that are subject
to issuance in the future with respect to the Director Stock Compensation
Plan, the Stock Investment Supplemental Plan or restricted stock units in
the following aggregate amounts: Mr. Bernard, 2,732 shares, Mr. Blum, 22,377
shares, Mr. Borelli, 16,839 shares, Mr. Clements, 3,450 shares, Mr. Coster,
10,504 shares, Mr. Erburu, 423 shares, Mr. Greenberg, 6,315 shares, Mr.
Groves, 1,772 shares, Mr. Hickok, 3,266 shares, Mr. Holbrook, 9,980 shares,
Mr. Lasser, 19,140 shares, Mr. Morrow, 3,578 shares, Mr. Putnam, 5,873
shares, Mr. Sinnott, 14,074 shares, Mr. Smith, 60,932 shares, Mr. Tasco,
2,697 shares, and all directors and executive officers as a group, 189,176
shares.
The following table reflects the number of shares of common stock
beneficially owned by persons known to the Company to own more than 5% of the
outstanding shares:
<TABLE>
<CAPTION>
AMOUNT PERCENT OF COMMON
BENEFICIALLY STOCK OUTSTANDING AT
NAME AND ADDRESS OWNED DECEMBER 31, 1996
- -------------------------------------------------------------------------- ----------- -----------------------
<S> <C> <C>
Marsh & McLennan Companies Stock Investment Plan(1)....................... 4,452,671 6.16%
1166 Avenue of the Americas
New York, New York 10036
Invesco PLC(2)............................................................ 4,485,654 6.20%
</TABLE>
- ------------------------
(1) Under the provisions of the Stock Investment Plan, voting rights are passed
through to the employees in proportion to their interests. Unvoted shares
will generally be voted by the trustee in proportion to the shares voted.
Shares held in the Plan are registered in the name of the Plan's trustee and
not in the names of the individual participants. Of the 4,452,671 shares
held in the Plan at December 31, 1996, 19,371 or 0.4% were held for
directors and executive officers of the Company and are included in the
security ownership table above.
(2) Based upon the number of shares listed in a Schedule 13G filed by Invesco
PLC, dated February 10, 1997, on behalf of itself and affiliated entities.
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth cash and other compensation paid or accrued
for services rendered in 1996, 1995 and 1994 to the Chief Executive Officer and
each of the other four most highly compensated executive officers of the Company
whose cash compensation exceeded $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ----------------------
---------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) (#) ($)(3)
- --------------------------- --------- --------- --------- ------------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
A.J.C. Smith 1996 1,200,000 850,000 375,420 1,687,766 50,000 48,000
Chairman and Chief 1995 1,125,000 775,000 337,348 1,339,208 50,000 45,000
Executive Officer 1994 1,050,000 775,000 276,406 1,149,659 -- 42,000
Marsh & McLennan
Companies, Inc.
Lawrence J. Lasser 1996 870,000 9,500,000 -- 389,756 20,000 130,500
President 1995 820,000 5,500,000* -- 4,537,125 15,000 123,000
Putnam Investments, Inc. 1994 820,000 10,500,000 -- 368,438 -- 123,000
Jeffrey W. Greenberg 1996 862,500 600,000 -- 43,791 20,000 7,500
Chairman
Marsh & McLennan
Risk Capital Corp.
Peter Coster 1996 675,000 400,000 214,598 509,498 20,000 27,000
President 1995 625,000 350,000 130,037 422,780 15,000 25,000
Mercer Consulting 1994 595,000 280,000 149,822 375,244 -- 23,800
Group, Inc.
John T. Sinnott 1996 590,000 400,000 163,983 467,488 15,000 23,600
President 1995 560,000 350,000 191,468 289,946 15,000 22,400
Marsh & McLennan, 1994 525,000 315,000 138,501 237,438 -- 21,000
Incorporated
</TABLE>
- --------------------------
(*) Mr. Lasser's reported bonus for 1995 reflects an additional $500,000 from
the amount reported in 1996, due to his subsequent withdrawal from
participation in an insurance program offered by the Company.
15
<PAGE>
(1) Represents the amount of payments in applicable years to the affected
individuals to cover tax liabilities arising from the funding of annuities
under the Benefit Equalization and Supplemental Retirement Programs, which
are part of the United States retirement program.
(2) At December 31, 1996, each individual in the Summary Compensation Table had
outstanding shares of restricted stock and restricted stock units with an
aggregate value as follows: Mr. Smith, 56,827 shares and 40,743 units worth
$5,910,008 and $4,237,272, respectively; Mr. Lasser, 60,780 shares and
25,520 units worth $6,321,120 and $2,654,080, respectively; Mr. Greenberg,
13,000 shares and 3,450 units worth $1,352,000 and $358,800, respectively;
Mr. Coster, 27,825 shares and 6,770 units worth $2,893,800 and $704,080,
respectively; and Mr. Sinnott, 26,600 shares and 8,359 units worth
$2,766,400 and $869,336, respectively. Holders of shares of restricted stock
receive the same dividends as those paid on the outstanding shares of common
stock and such shares generally vest on the January 1 next following the
tenth anniversary of the date of grant. Holders of restricted stock units
receive dividend equivalents that are equal in value to dividends paid on
the outstanding shares of common stock and such units generally vest three
years from the date of grant. Vesting of shares of restricted stock and
restricted stock units may be accelerated upon a change in control. "Change
in Control" of the Company means generally any "person" owning securities
with 50% or more of the voting power of the Company; within a two-year
period (with certain exceptions) a change in directors constituting a
majority of the Board of Directors; a merger or consolidation of the Company
resulting in the Company's stockholders not owning securities with 50% or
more of the voting power of the surviving entity; or an agreement for the
sale or disposition of all or substantially all of the Company's assets.
Under the Special Severance Pay Plan, holders of restricted stock or awards
in lieu of restricted stock with at least 10 years of service will receive
payment in shares of stock upon forfeiture of their award if their
employment with the Company terminates. The amount of such payment is based
on years of service, with the individual receiving up to a maximum of 90% of
the value of the restricted shares after 25 years of service, and is subject
to execution of a non-solicitation agreement.
(3) Represents for 1996 (a) Company matching contributions under the Stock
Investment Plan of $6,000 each for Messrs. Greenberg and Coster and $4,750
for Mr. Sinnott, and under the Stock Investment Supplemental Plan of $48,000
for Mr. Smith, $1,500 for Mr. Greenberg, $21,000 for Mr. Coster and $18,850
for Mr. Sinnott and (b) contributions by Putnam Investments, Inc. of $22,500
to the Putnam Profit Sharing Retirement Plan and $108,000 to the Putnam
Executive Deferred Compensation Plan for Mr. Lasser.
16
<PAGE>
STOCK OPTION GRANTS IN 1996
The following table sets forth certain information concerning stock options
granted during 1996 by the Company to the Chief Executive Officer and each of
the other four most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------
NAME GRANTED IN 1996 ($/SH) DATE 5% ($) 10% ($)
- --------------------------------- ----------- ------------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
A.J.C. Smith..................... 50,000 3.6% 95.0625 3/20/06 2,989,215 7,575,257
Lawrence J. Lasser............... 20,000 1.5% 95.0625 3/20/06 1,195,686 3,030,103
Jeffrey W. Greenberg............. 20,000 1.5% 95.0625 3/20/06 1,195,686 3,030,103
Peter Coster..................... 20,000 1.5% 95.0625 3/20/06 1,195,686 3,030,103
John T. Sinnott.................. 15,000 1.1% 95.0625 3/20/06 896,764 2,272,577
MMC Stockholders(3).............. 4,323,518,821 10,956,645,564
</TABLE>
- ------------------------
(1) The options described above are non-qualified options that become
exercisable 25% a year beginning one year from March 21, 1996, the date of
grant. The exercise price of these options may be paid in cash or in shares
of common stock, including shares of restricted stock. In the event of a
change in control of the Company (as described in footnote 2 to the "Summary
Compensation Table" above), all stock options will become fully exercisable
and vested, and any restrictions contained in the terms and conditions of
the option grants shall lapse. If any payments made in connection with a
change in control are subject to the excise tax imposed under the Federal
tax laws, the Company will increase the option holder's payment as necessary
to restore such option holder to the same after-tax position had the excise
tax not been imposed.
(2) The dollar amounts are the result of calculations at the 5% and 10% growth
rates set by the Securities and Exchange Commission ("SEC"); the rates are
not intended to be a forecast of future stock price appreciation. A zero
percent stock price growth rate will result in a zero gain for optionees.
(3) The dollar amounts reflected herein are included for comparative purposes to
show the gain that would be achieved by the holders of the outstanding
common stock at the assumed stock price appreciation rates at the end of the
10-year term of the options granted in 1996 at an exercise price of
$95.0625.
17
<PAGE>
AGGREGATED STOCK OPTION EXERCISES IN 1996 AND
STOCK OPTION VALUE AT DECEMBER 31, 1996
The following table sets forth certain information concerning stock options
exercised during 1996 by the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company and the number and
value of specified unexercised options at December 31, 1996. The value of
unexercised in-the-money stock options at December 31, 1996 shown below is
presented pursuant to SEC rules and is based on the December 31, 1996 closing
price of the common stock on the New York Stock Exchange of $104.00 per share.
The actual amount, if any, realized upon exercise of stock options will depend
upon the market price of the common stock relative to the exercise price per
share at the time the stock option is exercised. There is no assurance that the
values of unexercised in-the-money stock options reflected in this table will be
realized.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996
ACQUIRED ON VALUE -------------------------- ------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- --------------------------------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
A.J.C. Smith..................... 16,375 544,469 201,500 112,500 4,225,844 1,660,156
Lawrence J. Lasser............... 15,000 637,500 71,250 43,750 1,225,078 594,609
Jeffrey W. Greenberg............. -- -- 12,500 57,500 214,063 820,938
Peter Coster..................... 3,000 103,875 78,750 41,250 1,599,141 568,672
John T. Sinnott.................. 13,000 461,188 55,000 35,000 1,012,109 511,016
</TABLE>
18
<PAGE>
UNITED STATES RETIREMENT PROGRAM
The Company maintains a United States retirement program consisting of the
Marsh & McLennan Companies Retirement Plan, a non-qualified Benefit Equalization
Program and a non-qualified Supplemental Retirement Program.
The following table shows the estimated annual straight-life annuity benefit
payable (or in the case of those covered by the Benefit Equalization and
Supplemental Retirement Programs, the before-tax equivalents of the after-tax
benefits received) under these retirement programs to employees with the
specified Maximum Average Salary (average salary over the 60 consecutive months
of employment that produces the highest average) and specified years of service
upon retirement at age 65, after giving effect to adjustments for Social
Security benefits:
<TABLE>
<CAPTION>
YEARS OF SERVICE
MAXIMUM -----------------------------------------------------
AVERAGE SALARY 5 10 20 30 40
- --------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 600,000................................................ 56,818 113,635 227,270 332,088 392,088
$ 700,000................................................ 66,818 133,635 267,270 390,088 460,088
$ 800,000................................................ 76,818 153,635 307,270 448,088 528,088
$ 900,000................................................ 86,818 173,635 347,270 506,088 596,088
$1,000,000............................................... 96,818 193,635 387,270 564,088 664,088
$1,100,000............................................... 106,818 213,635 427,270 622,088 732,088
$1,200,000............................................... 116,818 233,635 467,270 680,088 800,088
$1,300,000............................................... 126,818 253,635 507,270 738,088 868,088
$1,400,000............................................... 136,818 273,635 547,270 796,088 936,088
</TABLE>
The compensation of participants used to calculate the retirement benefit
consists of regular salary as disclosed in the "Salary" column of the Summary
Compensation Table and excludes bonuses and other forms of compensation not
regularly received. For the five individuals named above, other than Mr. Lasser
who participates in the Putnam Profit Sharing and related plans and not in the
Company's U.S. retirement program, the 1996 compensation used to calculate the
Maximum Average Salary and the number of years of credited service are as
follows: Mr. Smith, $1,200,000, 34 years; Mr. Greenberg, $862,500, 1 year; Mr.
Coster, $675,000, 35 years; and Mr. Sinnott, $590,000, 34 years.
19
<PAGE>
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY, POLICIES AND PLANS FOR EXECUTIVE OFFICERS
The Company is a professional services firm with businesses having distinct
economic characteristics, marketplaces and operating conditions. The leadership
position attained over time by the Company's operating subsidiaries in their
respective businesses in terms of services rendered, market share, revenue,
profitability and rate of growth has been earned largely through the selection,
training and development of top caliber executive, managerial and professional
talent. Ongoing investment in the firm's human capital has produced favorable
long-term returns to Company stockholders. Therefore, it is critical to the
ongoing success of the Company that its executives continue to be among the most
highly qualified and talented available in their respective businesses to lead
the organization in the creation of stockholder value.
The Compensation Committee of the Board of Directors, all of whose members
are disinterested outside directors, is charged by the Company's by-laws with
ensuring that the Company's compensation philosophy and policies, which are
intended to attract, retain and motivate highly capable and productive
employees, are in the Company's best interests. To that end, the Company's
executive compensation program is designed to reinforce business strategies,
reflect marketplace practices and dynamics, and provide cost and tax effective
forms of remuneration. The Committee reviews the program regularly to consider
and implement any changes necessary to achieve these ongoing objectives. The
Company's pay-for-performance philosophy is implemented through compensation
policies and plans intended to enhance financial performance in a highly
competitive marketplace, which includes competition from privately-held firms
offering attractive equity ownership opportunities. In terms of compensation
data, the Committee periodically reviews the levels of executive compensation
from a number of general survey sources, with a focus on available pay data
relating to professional talent in the Company's businesses. In addition, the
Committee periodically evaluates chief executive officer compensation by
comparing it to data developed from a selected group of 25-30 major corporations
in professional services, diversified financial, banking and insurance sectors.
This selective grouping is broader than the peer grouping in the Comparison of
Cumulative Total Shareholder Return in order to obtain a meaningful
representation of competitive compensation practices and levels for senior
executive positions.
The Chief Executive Officer of the Company heads a group of senior
management officers, most of whom are executives of the Company's operating
subsidiaries. These senior officers participate in various compensation plans
and are paid in accordance with award guidelines and performance criteria that
reflect overall Company and individual operating unit performance. The plans,
which include short-term and long-term elements, are intended to be
retrospective, reflecting prior individual and organizational performance, as
well as prospective, providing motivation and rewards for achieving future
success. Such compensation is designed to reflect the combined annual and long-
20
<PAGE>
term performance of the Company, the operating subsidiary and the employee.
Moreover, individual contributions by these executives are assessed in the
context of a top management team that views itself as a professional
partnership.
SHORT-TERM COMPENSATION (SALARY AND ANNUAL INCENTIVE AWARDS)
With regard to short-term compensation, salaries are reviewed annually and
increases are granted by the Committee on a discretionary basis in consideration
of current individual and organizational performance, length of service,
affordability and marketplace practices. Organizational performance refers to
the business unit's success in achieving business objectives and addressing
conditions affecting long-term growth and profits. For participants in the
senior management compensation program, salaries are compared to the top
quartile of the relevant marketplace, with aggregate annual cash compensation
adjusted to reflect Company performance. Salaries accounted for 36% of total
compensation (excluding stock options) in 1996 for this group.
The size of the incentive award pool for senior management cash bonuses is
based on profit and reflects the Company's net operating income growth. However,
the Committee may, in its sole discretion, authorize a payout of less than the
full bonus pool, as it did for 1996. In this regard, a specific target level is
not established for the award pool, nor, absent contractual obligations, are
minimum award levels guaranteed for bonus recipients. With respect to individual
award determinations, such assessments by the Committee are largely judgmental,
not formulaic, and reflect the executive's managerial and professional role
within the organization, relative contribution (compared with the internal peer
group) to the firm's earnings growth, and marketplace compensation levels. For
1996, bonus awards at Putnam Investments, Inc. reflected continued exceptional
financial performance of that business, while awards to executives in the
Company's other businesses were, on average, four percentage points above 1995
(as a percentage of salary). For the Company's senior management group,
individual bonuses constituted 44% of total compensation (excluding stock
options) for 1996.
LONG-TERM COMPENSATION (RESTRICTED STOCK, RESTRICTED STOCK UNIT AND STOCK OPTION
AWARDS)
It is the Committee's strong belief that the continuing success of the
Company is dependent on the effective retention and motivation of its
executives. Accordingly, long-term compensation is designed to recognize the
individual's past and potential contributions to the organization, and to link
the executive's financial interests with those of the Company's stockholders by
fostering Company stock ownership. Such equity ownership opportunities for
Company executives are made available through stockholder-approved plans that
provide for restricted stock, restricted stock unit and stock option grants.
Moreover, in order to help promote retention of key talent through stock
ownership that is at risk, ownership rights to restricted stock, restricted
stock units and stock options are acquired over time. In addition, under a
voluntary deferral program, a supplemental equity award with vesting
requirements may be granted as an incentive for long-term stock ownership.
21
<PAGE>
Within this framework, absent a contractual obligation, the size of each
executive's equity grants is determined at the sole discretion of the Committee.
Such determinations include consideration of the Company's future profit
performance expectations and the individual's organizational role, current
performance and potential to contribute to the long-term success of the Company,
as well as a review of competitive practices on which award guidelines are
based. These considerations, and not prior stock-based awards or Company stock
ownership targets, determine the size of stock grants to individuals.
Most members of the senior management group are eligible to receive annual
discretionary restricted stock grants on the basis described above. In 1996,
such awards for this group accounted for 16% (including supplemental equity
awards as described above) of total compensation (excluding stock options).
A select number of participants from the executive group are also eligible
for an annual discretionary grant of restricted stock units, which are deferred
stock-based awards. The awards reflect the Company's earnings and growth, with
individual grants based on the subjective factors outlined above including each
executive's organizational level and performance. Historically, the grant value
of individual awards has ranged from approximately 50% to 150% of the
executive's cash bonus. Units earned are distributable in shares and generally
vest after completion of three years of service from the date of grant. The
restricted stock units granted in 1996 made up 4% of total compensation
(excluding stock options) for the year.
Stock options are another element of senior management compensation. Options
were generally granted on a three year cycle until 1995 when annual grants were
instituted. Award size guidelines were adjusted proportionately to reflect more
frequent grants. Such grants are made without reference to present holdings of
unexercised options or appreciation thereon. The size of an individual grant
reflects the factors discussed above including organizational level, performance
and marketplace practices.
TAX CONSIDERATIONS
As noted above, the Company's executive compensation program is designed to
be cost and tax effective. The Committee's policy is to take actions that it
deems to be in the best interest of the Company and its stockholders,
recognizing, however, that payment of compensation may not in all instances
qualify for tax deductibility because of the restrictions set forth in Section
162(m) of the Internal Revenue Code.
BASIS FOR CEO COMPENSATION
Both the quantitative and qualitative criteria referenced above are applied
in assessing the performance and determining the compensation of the Chairman
and Chief Executive Officer of the
22
<PAGE>
Company, A.J.C. Smith. The current and long-term financial performance of the
Company-- information which is available to all Company stockholders--are major
factors in arriving at the compensation determinations made by the Committee
relative to Mr. Smith. Consideration is also given to his leadership and impact
on the long-term health and performance of the Company.
On January 1, 1996, Mr. Smith's annual base salary was increased by $75,000,
or 6.7%, from its previous level of $1,125,000, as part of the Company's annual
consideration of merit increases. With regard to cash bonus, Mr. Smith
participates in the same Company annual incentive plan as other senior
management officers. His 1996 award under the plan was $850,000. Based on the
previously referenced review of chief executive officer compensation for 1995
(latest data available), Mr. Smith's 1996 cash compensation was positioned at
about the 45th percentile of the 1995 market survey group.
In connection with long-term compensation, Mr. Smith was granted 5,700
shares of restricted stock in 1996 under terms previously described. In
addition, Mr. Smith was granted 11,500 restricted stock units in connection with
his 1995 cash bonus award. He also was granted 1,650 restricted stock units for
deferring receipt of vested shares of restricted stock. The combined value of
his restricted stock and restricted stock unit grants was $1,687,766. Based on
the data regarding chief executive officers described above, Mr. Smith's 1996
long-term compensation (including any long-term incentive plan payouts but
excluding stock options) was at about the 65th percentile of the 1995 survey
market. Mr. Smith was granted 50,000 stock options during 1996, and the size of
this grant approximated the 70th percentile of the 1995 survey market.
Total compensation for Mr. Smith, which includes all elements of pay from
the Summary Compensation Table except stock option grants, was $4,161,186 in
1996. Based on the data from the comparison group referenced above, such
compensation for Mr. Smith was at about the 55th percentile of the 1995 survey
market.
Lewis W. Bernard Ray J. Groves R. J. Ventres
23
<PAGE>
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph compares the Company's cumulative total stockholder
return on its common stock (assuming reinvestment of dividends) with the
cumulative total return on the published Standard & Poor's 500 Stock Index and
the cumulative total return on two Company-constructed composite industry
indices, consisting of (i) Alexander & Alexander Services Inc., Aon Corporation,
Arthur J. Gallagher & Co., Sedgwick Group PLC and Willis Corroon Group PLC,
(collectively, "Peer 1"), and (ii) all of the companies in the Peer 1 index plus
two publicly traded investment management companies, Franklin Resources, Inc.
and T. Rowe Price Associates, Inc. (collectively, "Peer 2"), over the five-year
period from December 31, 1991 through December 31, 1996. The Peer 1 index, which
has heretofore been used by the Company, is being superseded by the Peer 2 index
in recognition of the increased contribution being made by the Company's
investment management business to the overall performance of the Company. In
accordance with SEC requirements, this year's graph includes both the superseded
Peer 1 index and the new Peer 2 index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Company $100 $116 $106 $107 $124 $151
S&P 500 $100 $108 $118 $120 $165 $203
Peer 1 $100 $103 $112 $104 $150 $204
Peer 2 $100 $108 $127 $114 $166 $239
Assumes $100 invested on December 31, 1991 with dividends
reinvested
</TABLE>
24
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS; OTHER INFORMATION
During 1996, subsidiaries of the Company employed in the ordinary course of
business individuals related to executive officers and directors of the Company.
In addition, corporations and other entities with which directors are or were
associated had insurance or other transactions with the Company and certain of
its subsidiaries and affiliates in the ordinary course of business, all of which
transactions were on substantially the same terms as those prevailing at the
time for comparable transactions with others. None of such insurance or other
transactions involved during 1996, or is expected to involve in 1997, payments
to the Company and its subsidiaries and affiliates for property or services in
excess of 5% of the Company's consolidated gross revenue during 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the common stock of the Company, to file with the SEC and the New York Stock
Exchange initial reports of beneficial ownership and reports of changes in
beneficial ownership of common stock of the Company. Such persons are also
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, during 1996 all Section 16(a) filing
requirements applicable to such individuals were complied with except for a
report covering one transaction filed late by Mr. Holbrook.
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved an amendment to the first
paragraph of Article FOURTH of the Company's Restated Certificate of
Incorporation to increase the aggregate number of shares of the Company's common
stock which the Company is authorized to issue from 200,000,000 to 400,000,000.
The Company's authorized preferred stock of 6,000,000 shares will remain
unchanged. The complete text of the proposed amendment is attached to this Proxy
Statement as Exhibit A.
As of February 28, 1997 the Company had 72,700,750 shares of common stock
issued and outstanding and approximately 9,613,000 shares committed to be issued
under the Company's various employee benefit and compensation plans. With
approximately 9,830,000 shares allocated for issuance following the closing of
the business combination with Johnson & Higgins, the remaining number of
authorized shares of common stock available for issuance is approximately
107,856,250. By amending the Restated Certificate of Incorporation to authorize
an additional 200,000,000 shares of common stock, the Board of Directors would
have available the number of shares necessary to meet the Company's future needs
without experiencing the time delay of having to seek stockholder approval. The
additional shares proposed to be authorized would be issuable from time to time
for
25
<PAGE>
any corporate purpose, including stock splits, stock dividends, employee benefit
and compensation plans, acquisitions and public or private sale for cash as a
means of raising capital. The Company does not at this time have any
understanding, arrangement or agreement pursuant to which any of the additional
shares to be authorized would be issued.
If approved by the stockholders, the proposed increase in the number of
authorized shares of common stock could have the effect of making it more
difficult for another party to gain control of the Company on an unfriendly
basis, since the Company could issue such additional shares to a third party.
The Company knows of no party with intentions of gaining control of the Company
and the Company has no present plans for selling such shares in connection with
such a situation. Rather, the Company believes that approval by the Company's
stockholders of the proposed amendment will provide the Board of Directors with
flexibility and will enhance its ability to respond to various corporate
opportunities which may arise in the future.
Although the purpose of seeking an increase in the number of authorized
shares of common stock is not intended for anti-takeover purposes, SEC rules
require disclosure of charter, by-law and other provisions that could have an
anti-takeover effect. These include: (i) a classified Board of Directors
providing for three classes of directors serving three-year terms; (ii) Board
authority to issue one or more series of preferred stock on terms to be
designated by the Board of Directors, (iii) a fair price provision requiring a
supermajority vote for certain business combination transactions involving a
significant shareholder; (iv) a prohibition on shareholder actions by written
consent; (v) an advance notice provision; and (vi) a shareholder rights plan.
Under Delaware law, the favorable vote of the holders of a majority of the
outstanding shares of common stock will be required to enact the proposed
amendment. The amendment to Article FOURTH does not alter the rights and
privileges of the Company's outstanding shares or the manner in which the Board
of Directors may authorize the issuance of additional shares of common or
preferred stock. Holders of the Company's common shares have no preemptive
rights and current stockholders would not have any preferential right to
purchase any of the additional common shares.
26
<PAGE>
PROPOSAL TO APPROVE THE 1997 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
The Board of Directors of the Company has placed on the agenda for the
Annual Meeting a proposal to approve the Marsh & McLennan Companies 1997 Senior
Executive Incentive and Stock Award Plan (the "Plan", sometimes referred to as
the "1997 Plan"). The Plan was adopted by the Company's Board of Directors at
its meeting on March 20, 1997. The affirmative vote of a majority of the
Company's shares of common stock present and entitled to vote at the Annual
Meeting is required to approve this proposal. Unless otherwise directed in the
proxy, the persons named in the proxy will vote FOR the proposal to approve the
Plan, which is described below.
The following summary of certain features of the Plan is qualified in its
entirety by reference to the full text of the Plan, which has been filed with
the SEC as an exhibit to the Company's 1996 Annual Report on Form 10-K.
GENERAL
The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing a means to attract, retain and motivate senior
executives of the Company and its subsidiaries and affiliates and to qualify
certain performance awards for tax deductibility under the exception for
performance based compensation contained in Section 162(m) of the United States
Internal Revenue Code (the "Code"). The 1997 Plan is intended to replace, in
part, the 1992 Incentive and Stock Award Plan (the "1992 Plan"), under which
approximately 2,700 officers and employees have participated and which expires
by its terms in May 1997. The 1997 Plan would be limited to senior executives.
The Company expects the Board of Directors to adopt an additional stock award
plan as a replacement for the 1992 Plan with respect to those employees,
including officers, who do not participate in the 1997 Plan. Awards relating to
not more than two million, five hundred thousand (2,500,000) shares of common
stock, plus such number of shares remaining unused under pre-existing stock
plans approved by the Company's stockholders, may be made over the life of the
Plan. Senior executives of the Company, its subsidiaries and affiliates will be
eligible to be granted awards under the 1997 Plan. It is expected that
approximately 50 senior executives shall be eligible to receive awards under the
1997 Plan. The Compensation Committee of the Board of Directors (the
"Compensation Committee") will determine which eligible senior executives will
receive awards, the types of awards to be received and the terms and conditions
thereof. Although there is no explicit formula for making such awards,
guidelines exist and the past and potential performance of the employee may be
considered in making such decisions.
27
<PAGE>
ADMINISTRATION
The Plan will be administered by the Compensation Committee. None of the
members of the Compensation Committee may participate in the Plan. At any time
that a member of the Compensation Committee is not a "Non-Employee Director"
within the meaning of Rule 16b(3) of the Securities Exchange Act of 1934 (the
"Exchange Act") or an "outside director" for purposes of Section 162(m) of the
Code (together, a "Qualified Member"), any action relating to an award to be
granted to a participant who is then subject to Section 16 of the Exchange Act
or relating to an award intended to constitute "qualified performance based
compensation" for purposes of Section 162(m) of the Code, may be taken either
(i) by a subcommittee composed solely of two or more Qualified Members or (ii)
by the entire Compensation Committee with any members who are not Qualified
Members abstaining. The Compensation Committee may grant any type of award
permitted under the terms of the Plan, including stock options, stock
appreciation rights ("SARs"), restricted stock, restricted stock units payable
in Company common stock or cash, stock awards in lieu of cash awards, dividend
equivalents, performance awards (including unit-based awards) and other awards
payable in or based on the common stock or other securities of the Company or a
subsidiary or affiliate.
ANNUAL LIMIT
For each fiscal year a participant may not be granted stock options, SARs
and stock-based performance awards, in the aggregate, relating to more than one
million shares of common stock (subject to adjustment) of the Company. In the
case of a performance award not relating to the Company's common stock, the
maximum payment to a participant for any fiscal year may not exceed the greater
of the fair market value of the number of shares of the common stock of the
Company specified in the preceding sentence at the date of grant or the date of
settlement of such award.
STOCK OPTIONS
At the discretion of the Compensation Committee, stock options may be
granted under the Plan and may be incentive stock options ("ISOs"), as defined
in the Code, or non-qualified stock options. The Compensation Committee shall
determine at the date of grant or thereafter the term of the option, the time or
times at which an option may be exercised, the methods by which such exercise
price may be paid, the form of such payment, including without limitation, cash,
stock, shares or units valued by reference to shares issued under any other plan
of the Company or a subsidiary or affiliate, or notes or other property, and the
methods by which such stock will be delivered to participants. Except under
certain limited circumstances in connection with substitutions of awards under
other Company plans or plans of acquired companies as described in the Plan, no
stock option may be granted under the Plan with an exercise price of less than
the Fair Market Value (as defined below) of the stock at the time that the stock
option is granted. For the purposes of the Plan, the Fair Market Value of Stock
as of any given date generally shall mean the per share value of stock as
determined
28
<PAGE>
by using the mean between the high and low selling prices of such stock on the
immediately preceding date as reported on the New York Stock Exchange Composite
Transactions table in The Wall Street Journal. On March 24, 1997, the stock
closed at $120 1/2 on the New York Stock Exchange.
SARS
The Compensation Committee is also authorized to grant SARs to participants
in the Plan. An SAR shall confer on the participant a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of stock
on the date of exercise, over (B) the grant price of the SAR, which shall be not
less than the Fair Market Value of one share of stock on the date of grant (or,
in the case of an SAR granted in tandem with an option, the exercise price of
the underlying option). In addition, the Compensation Committee shall determine,
at the time of grant or thereafter, the term of the SAR, the time or times at
which an SAR may be exercised, the method of exercise, the method of settlement,
the form of consideration payable in settlement, the method by which stock will
be delivered to participants, whether or not an SAR will be in tandem with any
other award, and any other terms and conditions of any SAR.
Under the Code, the grant of stock options and SARs is not a taxable event
to either the recipient or the Company. If an ISO is exercised and the shares
upon the exercise thereof are held for at least one year after the exercise and
two years after the grant of the option, the optionee will not incur any tax
liability by reason of the exercise and may treat the difference between the
exercise price and the sale price of the shares as a long-term capital gain, and
the Company will receive no deduction. If shares of stock received on the
exercise of an ISO are sold less than one year after exercise or two years after
the grant of such option, a disqualifying disposition will occur and the
optionee will recognize ordinary taxable income in an amount equal to the
difference between the exercise price and the lesser of the fair market value of
the stock on the date of exercise or the amount realized on the subsequent sale,
and the Company may deduct the amount of such ordinary income recognized by the
optionee. The difference between the sale price realized by reason of a
disqualifying disposition and the fair market value of the stock on the date of
exercise will be treated as a long-term or short-term capital gain or loss as
appropriate. For purposes of the alternative minimum tax, upon exercise of an
ISO, the difference between the exercise price and the fair market value of the
stock on the date of exercise will be a tax preference item.
In the case of a non-qualified stock option, the optionee, upon exercise of
the option, will recognize ordinary income in the amount equal to the difference
between the then fair market value of the stock acquired and the exercise price
of the option, and the Company may deduct the amount of such ordinary income
recognized by the optionee. Upon the exercise of an SAR payable in cash or
stock, the holder will recognize ordinary income in the amount of the cash plus
the fair market value of any stock received, and the Company may deduct the
amount of such ordinary income recognized by the holder.
29
<PAGE>
RESTRICTED STOCK
Restricted stock may also be awarded under the Plan, and shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Compensation Committee may impose at the date of grant or thereafter. The
Compensation Committee may also determine when and under what circumstances the
restrictions may lapse and whether the participant shall have the rights of a
stockholder, including, without limitation, the right to vote and receive
dividends. Unless the Compensation Committee determines otherwise, restricted
stock that is still subject to restrictions shall be forfeited upon termination
of employment, provided, however, that the Compensation Committee may waive
restrictions or forfeiture conditions in certain instances. The grant of a
restricted stock award is not a taxable event to either recipient or the Company
under U.S. law, unless the recipient elects to be taxed at the time of award. In
the absence of such an election, when an award vests in a recipient, in whole or
in part, he or she will recognize ordinary income in an amount equal to the fair
market value of the shares as to which vesting occurs and the Company will
generally be entitled to a corresponding deduction.
RESTRICTED STOCK UNITS
Restricted stock units, payable in stock or cash, may be awarded under the
Plan. The Compensation Committee shall determine the restrictions on such units,
when the restrictions shall lapse, when the shares of stock shall vest and be
paid and upon what terms the units shall be forfeited. A participant will
recognize as ordinary income, on the date of payment, the amount of cash and the
fair market value of other property received in payment of such units, and the
Company may generally deduct the amount of taxable income recognized by the
participant.
OTHER AWARDS
The Compensation Committee may grant other awards under the terms of the
Plan that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, the common stock of the
Company or other securities, including securities of a subsidiary or affiliate.
The Compensation Committee may grant unit-based awards with value or payment
contingent upon performance of the Company, a subsidiary, affiliate or upon any
other factor or performance condition designated by the Compensation Committee.
The Compensation Committee shall determine the terms and conditions of such
awards at the date of grant or thereafter.
Under the Plan, the Compensation Committee may also grant stock as a bonus
or in lieu of cash awarded under other plans, dividend equivalents and other
stock-based or cash awards with or without restrictions. Such awards will be
taxable as ordinary income to the participants upon payment, and the Company
will generally be able to deduct the amount of taxable income recognized by the
participant.
30
<PAGE>
PERFORMANCE GOALS
Awards granted under the Plan may be subject to certain performance
conditions as may be specified by the Compensation Committee. The Compensation
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
award subject to performance conditions, except as limited by the terms of the
Plan in the case of a performance award intended to qualify under Section 162(m)
of the Code.
If the Compensation Committee determines that a performance award to be
granted to a person, who is designated as likely to be a "covered employee" (as
defined in Section 162(m) of the Code), should qualify as "qualified
performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in the Plan.
Performance goals for such awards shall consist of one or more business criteria
for the Company and/or a specified subsidiary, affiliate, business unit or
business venture and a target level or levels of performance with respect to
each such criteria. The business criteria selected by the Compensation Committee
may include, (1) earnings per share; (2) revenues; (3) cash flow; (4) cash flow
return on investment; (5) return on assets, return on investment, return on
capital, return on equity; (6) identification and/or consummation of investment
opportunities or completion of specified projects in accordance with corporate
business plans; (7) operating margin; (8) net income; net operating income;
pretax earnings; pretax earnings before interest, depreciation and amortization;
pretax operating earnings after interest expense and before incentives, service
fees, and extraordinary or special items; operating earnings; (9) total
stockholder return; and (10) any of the above goals as compared to the
performance of a published or special index deemed applicable by the
Compensation Committee including, but not limited to, the Standard & Poor's 500
Stock Index or other indexes or groups of comparable companies referenced above
under the section entitled "Comparison of Cumulative Total Stockholder Return".
CHANGE IN CONTROL
The Plan generally provides that in the event of a change in control of the
Company, an award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested, and the
restrictions, deferral limitations and forfeiture conditions applicable to any
other awards shall lapse and such awards shall be deemed fully vested, any
performance conditions shall be deemed to be fully achieved and payment of such
awards shall be made in accordance with the terms of the award agreements. For
the purposes of the Plan, a "change in control" shall be deemed to have occurred
if (i) any "person" (as defined in the Plan), other than the Company, a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or certain affiliates of the Company, is or becomes the beneficial
owner, directly or
31
<PAGE>
indirectly of fifty percent (50%) or more of the combined voting power of the
Company's then outstanding voting securities; (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof; (iii) the stockholders approve a merger or consolidation of
the Company with any other corporation, other than certain designated
transactions; or (iv) the stockholders approve a plan of complete liquidation of
the Company or an agreement for the sale of all or substantially all of the
assets of the Company. In addition, in the event that any payment made in
connection with a change in control is subjected to the excise tax imposed under
Section 4999 of the Code, the Company will increase the participant's payment as
necessary to restore such participant to the same after-tax position he or she
would have been in if the excise tax had not been imposed.
AMENDMENT, TERMINATION
The Board of Directors may amend, alter, suspend, discontinue or terminate
the Plan or the Compensation Committee's authority to grant awards thereunder
without the consent of stockholders or participants unless stockholder approval
is required by law, regulation or rules of any stock exchange on which the stock
is listed. In addition, without the consent of an affected participant, no
amendment, alteration, suspension, discontinuation or termination of the Plan
may materially adversely affect the rights of such participant under any award
granted to him or her. Following the occurrence of a change in control, the
Board may not terminate or amend the Plan in any manner adverse to employees.
Awards to be made under the terms of the Plan are not presently
determinable. The "Summary Compensation Table" above sets forth awards made
under the 1992 Plan to the named executive officers during the past three years.
The Plan shall become effective upon receipt of the affirmative vote of a
majority of the shares of common stock of the Company present and entitled to
vote at the Annual Meeting.
32
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Deloitte & Touche LLP, independent public accountants, to
audit the financial statements of the Company for the fiscal year ending
December 31, 1997. Deloitte & Touche LLP acted as the Company's independent
public accountants for the fiscal year ended December 31, 1996. Representatives
of Deloitte & Touche LLP will attend the Annual Meeting, will have an
opportunity to make a statement if desiring to do so and will be available to
answer any pertinent questions.
SOLICITATION OF PROXIES
The Board of Directors of the Company hereby solicits proxies for use at the
1997 Annual Meeting and at any adjournment thereof. Stockholders who execute a
proxy may still attend the Annual Meeting and vote in person. A proxy may be
revoked at any time before it is voted by giving to the Secretary of the
Company, at the Company's principal executive offices indicated above, written
notice bearing a later date than the proxy, by submission of a later dated proxy
or by voting in person at the Annual Meeting. Executors, administrators,
trustees, guardians, attorneys and other representatives should indicate the
capacity in which they are signing and corporations should sign by an authorized
officer whose title should be indicated. Mere attendance at the Annual Meeting
will not revoke a proxy which was previously submitted to the Company.
The cost of this proxy solicitation is borne directly by the Company.
Georgeson & Company Inc. has been retained to assist in the proxy solicitation
at a fee of approximately $15,000, plus expenses. In addition to solicitation of
proxies by mail, proxies may be solicited personally, by telephone and by
facsimile by the Company's directors, officers and other employees. Such persons
will receive no additional compensation for such services. The Company will also
request brokers and other nominees to forward soliciting material to the
beneficial owners of shares which are held of record by them, and will pay the
necessary expenses.
STOCKHOLDER AND OTHER PROPOSALS
Stockholders who wish to present a proposal at the 1998 Annual Meeting of
Stockholders of the Company must submit such proposal in writing to the Company
in care of the Secretary of the Company on or before November 28, 1997 to be
considered for inclusion in the proxy materials for that meeting. In addition,
the by-laws of the Company contain requirements relating to the timing and
content of the notice which stockholders must provide to the Secretary for any
nomination or matter to be properly presented at a stockholders meeting.
By order of the Board of Directors,
/s/ Gregory Van Gundy
Gregory Van Gundy
Secretary
33
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE
RESTATED CERTIFICATE OF INCORPORATION OF
MARSH & MCLENNAN COMPANIES, INC.
INCREASE IN AUTHORIZED CAPITAL STOCK
Article FOURTH of the Restated Certificate of Incorporation is proposed to
be amended by revising the first paragraph of Article FOURTH to read in its
entirety as follows:
FOURTH. The total number of shares of stock which the Corporation has the
authority to issue is 406,000,000 of which 6,000,000 are shares of Preferred
Stock with a par value of one dollar per share (hereinafter sometimes referred
to as "Preferred Stock"), and 400,000,000 are shares of Common Stock with a par
value of one dollar per share (hereinafter sometimes referred to as "Common
Stock").
A-1
<PAGE>
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
<PAGE>
<TABLE>
<CAPTION>
MARSH & McLENNAN COMPANIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [ ]
<S> <C> <C> <C> <C> <C> <C> <C>
1997 For Withhold For All
All All Except
P 1. Election of Directors: | | | | | |
Peter Coster, Lawrence J. Lasser, | | | | | |
R Richard M. Morrow,
John T. Sinnott, Frank J. Tasco ___________________________
O Nominee Exception(s)
X For Against Abstain For Against Abstain
2. Adoption of the amendment to the
Y Restated Certificate of | | | | | | 3. Approval of the 1997 Senior Executive | | | | | |
Incorporation increasing the | | | | | | Incentive and Stock Award Plan | | | | | |
authorized shares of common stock.
For Against Abstain
4. Ratification of Deloitte & Touche | | | | | |
LLP as auditors for 1997 | | | | | |
SIGN HERE AS NAME(S) APPEAR ON CARD
Date:______________________________, 1997
___________________________________
The signer hereby revokes all proxies heretofore given by
the signer to vote at said meeting or any adjournments
thereof. If signing for a corporation or partnership or as
agent, attorney or fiduciary, indicate capacity in which you
are signing.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTIONS ARE MADE, THEY WILL BE VOTED FOR
ITEMS 1, 2, 3 AND 4.
PLEASE RETURN THIS CARD PROMPTLY USING THE ACCOMPANYING ENVELOPE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
</TABLE>
PROXY MARSH & McLENNAN COMPANIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1997 ANNUAL MEETING
The undersigned hereby appoints A.J.C. Smith and Gregory Van Gundy proxies
(each with power to act alone and with the power of substitution) of the
undersigned to vote as directed on the reverse side all shares which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders
of Marsh & McLennan Companies, Inc. to be held on Wednesday, May 21, 1997 at
10:00 a.m. (New York City time) in the Auditorium, 2nd Floor, 1221 Avenue of
the Americas, New York, New York and at any adjournment thereof.
IMPORTANT--This proxy must be signed and dated on the reverse side.
<PAGE>
<TABLE>
<CAPTION>
MARSH & McLENNAN COMPANIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [ ]
<S> <C> <C> <C> <C> <C> <C> <C>
1997 For Withhold For All
All All Except
1. Election of Directors: | | | | | |
Peter Coster, Lawrence J. Lasser, | | | | | |
Richard M. Morrow,
John T. Sinnott, Frank J. Tasco ___________________________
Nominee Exception(s)
For Against Abstain For Against Abstain
2. Adoption of the amendment to the
Restated Certificate of | | | | | | 3. Approval of the 1997 Senior Executive | | | | | |
Incorporation increasing the | | | | | | Incentive and Stock Award Plan | | | | | |
authorized shares of common stock.
For Against Abstain
4. Ratification of Deloitte & Touche | | | | | |
LLP as auditors for 1997 | | | | | |
SIGN HERE AS NAME(S) APPEAR ON CARD
Date:______________________________, 1997
___________________________________
The signer hereby revokes all proxies heretofore given by
the signer to vote at said meeting or any adjournments
thereof. If signing for a corporation or partnership or as
agent, attorney or fiduciary, indicate capacity in which you
are signing.
THE ALLOCATED SHARES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTIONS ARE MADE, THEY WILL BE VOTED
FOR ITEMS 1, 2, 3 AND 4.
PLEASE RETURN THIS CARD PROMPTLY USING THE ACCOMPANYING ENVELOPE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE, SIGN AND RETURN THIS CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
</TABLE>
CONFIDENTIAL VOTING INSTRUCTIONS
MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN
MARSH & McLENNAN COMPANIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, MAY 21, 1997
By signing and returning this card, the undersigned directs Bankers Trust
Company, Trustee under the Marsh & McLennan Companies Stock Investment Plan,
to vote in person or by proxy all shares of stock of Marsh & McLennan
Companies, Inc. (the "Company") allocated to the undersigned under said Plan
upon all matters at the Annual Meeting of Stockholders of the Company on May
21, 1997 and at any adjournment thereof.
Provided this card is received by May 16, 1997, voting rights will be
exercised by the Trustee as directed or, if not specifically directed, FOR
the items stated herein. Under the Plan, the Trustee shall vote all other
shares in the same proportion as those shares for which it has received a
signed instruction card.
