SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
(212) 345-5000
Commission file number 1-5998
State of Incorporation: Delaware
I.R.S. Employer Identification No. 36-2668272
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -----------------------
Common Stock New York Stock Exchange
(par value $1.00
per share) Chicago Stock Exchange
Preferred Stock
Purchase Rights Pacific Stock Exchange
London Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|. No |_|.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K |_|.
<PAGE>
As of February 28, 1997, the aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately $8,449,000,000.
As of February 28, 1997, there were outstanding 72,700,750 shares of
common stock, par value $1.00 per share, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
(only to the extent set forth in the part indicated)
Annual Report to Stockholders for the
year ended December 31, 1996 . . . . . . Parts I, II and IV
Notice of Annual Meeting of
Stockholders and Proxy Statement dated
March 31, 1997 . . . . . . . . . . . . . Part III
<PAGE>
MARSH & McLENNAN COMPANIES, INC.
-----------------------
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
-----------------------
PART I
Item 1. Business.
Marsh & McLennan Companies, Inc. (the "registrant"), a professional
services organization with origins dating from 1871 in the United States, is a
holding company which, through its subsidiaries and affiliates, provides clients
with analysis, advice and transactional capabilities in the fields of insurance
and reinsurance broking, investment management and consulting. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 23 through 29 of the Annual Report to Stockholders for the year ended
December 31, 1996 (the "1996 Annual Report"), which is incorporated herein by
reference, for a discussion of the registrant's revenues and operating income by
industry segment for each of the last three fiscal years.
On March 27, 1997, Johnson & Higgins, the leading privately held
insurance services and employee benefit consulting firm, became a subsidiary of
the registrant pursuant to an agreement entered into on March 12, 1997.
Established in New York in 1845, Johnson & Higgins provides risk management and
benefit consulting services to clients worldwide. Its 1996 revenues totaled $1.2
billion. Except to the extent specifically identified herein, the information
contained in this Form 10-K reflects the business and operations of the
registrant without giving effect to the consummation of the transaction with
Johnson & Higgins.
Insurance Services. Registrant's insurance services are provided by its
subsidiaries and their affiliates on a worldwide basis, as broker, agent or
consultant for insureds, insurance underwriters and other brokers. These
services are principally provided by Marsh & McLennan, Incorporated and Guy
Carpenter & Company, Inc., a reinsurance intermediary, and their subsidiaries
and affiliates. Seabury & Smith, Inc. and its subsidiaries and affiliates
provide insurance program management services involving a wide range of
insurance and related products for individuals and others through both sponsored
and non-sponsored affinity group programs primarily in the United States and
Canada. Marsh & McLennan Risk Capital Corp. provides services principally in
connection with originating, structuring and managing investments in the
insurance industry.
<PAGE>
Risk management and insurance broking services, carried on throughout the
world principally by Marsh & McLennan, Incorporated and its subsidiaries and
affiliates, are provided for a predominantly corporate clientele through offices
in more than 80 countries, primarily in North and South America, Europe and Asia
Pacific. Clients are companies engaged in a broad range of commercial
activities, including general industries, financial and professional services,
aviation, marine, energy construction, land transportation, healthcare and
utility concerns. Clients also include various government and related agencies,
non-profit and other organizations, and individuals.
Such risk management and insurance broking services involve various types
of property and liability loss exposures, including large and complex risks that
require access to world insurance markets. Services provided to clients include
insurance broking activities and professional counseling services on risk
management issues, including risk analysis, coverage requirements,
self-insurance (in which the insured retains a portion of its insurance risks),
and alternative insurance and risk financing methods, as well as claims
collection, injury management, loss prevention and other insurance related
services. Services also include organization and administrative services for
special purpose insurance companies and other risk assumption alternatives.
Insurance placement services include the placement of insurance coverages with
insurers world-wide, sometimes involving other intermediaries. Correspondent
relationships are maintained with unaffiliated firms in certain countries. In
January 1997, the registrant acquired CECAR SA, a French insurance broker,
resulting in the registrant becoming the largest insurance broker in France.
Reinsurance services are provided to insurance and reinsurance risk takers
worldwide, principally by Guy Carpenter & Company, Inc. and its subsidiaries and
affiliates, from offices principally in North America and Europe. Such services
primarily involve acting as an intermediary for insurance and reinsurance
organizations on all classes of reinsurance. The intermediary assists the
insurer by providing advice, placing reinsurance coverage with reinsurance
organizations located around the world, and furnishing related services such as
actuarial, financial and regulatory consulting, portfolio analysis and
catastrophe modeling. Claims services are often performed for policies placed a
number of years previously. The insurance company may seek reinsurance or other
risk-transfer financing on all or a portion of the risks it insures.
Intermediary services are also provided to reinsurance companies, which may also
seek reinsurance on the risks they have reinsured.
Seabury & Smith, Inc. and its subsidiaries and affiliates provide
insurance program management services (including the
2
<PAGE>
design, placement and administration of life, health, accident, disability,
automobile, homeowners, professional liability and other insurance, and related
products) primarily on a group marketing basis to individuals, businesses and
their employees, and associations and other affinity groups and their members in
the United States and Canada. It provides underwriting management services to
insurers in the United States, Canada and the United Kingdom, primarily for
professional liability coverages. The Frizzell Group Limited and its
subsidiaries, which provided insurance program management, personal financial
planning and consumer finance services in the United Kingdom, were sold in 1996.
Marsh & McLennan Risk Capital Corp. ("MMRCC") provides services in
connection with originating, structuring and managing investments in the
insurance industry. It is an advisor to The Trident Partnership L.P., an
independent private investment partnership formed in 1994 to make private equity
investments in the global insurance and reinsurance industry. MMRCC is also an
advisor to Risk Capital Reinsurance Company (a subsidiary of Risk Capital
Holdings, Inc., a publicly held corporation), which is based in the United
States and was formed in 1995 to provide traditional and other kinds of
reinsurance, both on a stand-alone basis and as part of integrated capital
solutions for insurance companies. MMRCC and its predecessor operations were
instrumental in the formation of several substantial insurance and reinsurance
entities, including A.C.E. Insurance Company, Ltd., X.L. Insurance Company, Ltd.
and Mid Ocean Reinsurance Company Ltd. MMRCC also advises its immediate parent
company, Marsh & McLennan Risk Capital Holdings, Ltd., regarding the latter's
ownership holdings in certain insurance and reinsurance entities and funds,
primarily ones initiated by MMRCC. As a result of the foregoing activities,
subsidiaries and affiliates of the registrant may have direct or indirect
investments in insurance and reinsurance companies, including entities at
Lloyd's, which are considered for client placements by the registrant's
insurance and reinsurance brokerage businesses.
The revenue attributable to the registrant's insurance services consists
primarily of fees paid by clients; commissions and fees paid by insurance and
reinsurance companies; interest income on premiums, and in certain cases on
claims, collected and not yet remitted to insurers, reinsurers or clients, such
funds being held in a fiduciary capacity; and compensation for services provided
in connection with the formation and capitalization of various insurers and
reinsurers, including fees, royalties and dividends, as well as appreciation
that has been realized on sales of holdings in such entities.
3
<PAGE>
Revenue generated by insurance services is affected by premium rate levels
in the property and casualty insurance markets and available insurance capacity,
as compensation is frequently related to the premiums paid by insureds. Revenue
is also affected by fluctuations in the amount of risk retained by insurance and
reinsurance clients themselves and by insured values, the development of new
products, markets and services, lost business, merging of clients (including
insurance companies that are clients in the reinsurance intermediary business)
and the volume of business from new and existing clients, as well as by interest
rates for fiduciary funds. In many cases compensation may be negotiated in
advance with certain clients on an annual basis based upon the estimated value
of the services to be performed. Revenue and fees also may be received from
originating, structuring and managing investments in insurers, and income and
proceeds also may be derived from investments made by the registrant. Revenues
vary from quarter to quarter as a result of the timing of policy renewals and
the net effect of new and lost business production, whereas expenses tend to be
more uniform throughout the year.
Commission rates vary in amount depending upon the type of insurance or
reinsurance coverage provided, the particular insurer or reinsurer, and the
capacity in which the broker acts, in addition to negotiations with clients.
Occasionally, commissions are shared with other brokers that have participated
in placing insurance or servicing insureds. Placement services revenue includes
payments or allowances by insurance companies based upon such factors as the
overall volume of business placed by the broker with that insurer, the loss
performance to the insurer of that business or the aggregate commissions paid by
the insurer for that book during specific periods. In some cases, compensation
for brokerage or advisory services is paid directly as a fee by the client.
The investment of fiduciary funds is governed by the applicable laws or
regulations of insurance authorities of the states in the United States and in
other jurisdictions in which the registrant's subsidiaries do business. These
laws and regulations typically limit the type of investments that may be made
with such funds. The general amount of funds invested and interest rates may
vary from time to time.
Investment Management. Investment management and related services are
provided by Putnam Investments, Inc. and its subsidiaries ("Putnam"). Putnam
has been engaged in the investment management business since 1937, with its
principal offices in Boston, Massachusetts. Putnam also has offices in
London and Tokyo. Putnam provides individual and institutional investors with
a broad range of equity and fixed income
4
<PAGE>
investment products and services designed to meet varying investment objectives
and which afford its clients the opportunity to allocate their investment
resources among various alternative investment products as changing worldwide
economic and market conditions warrant.
Putnam's investment management services, which are performed principally
in the United States, include securities investment advisory and management
services consisting of investment research and management, accounting and
related services for a group of publicly-held investment companies. As of
December 31, 1996, there were 99 such funds (the "Putnam Funds") registered
under the Investment Company Act of 1940, including 17 closed-end investment
companies whose shares are traded on various major domestic stock exchanges. A
number of the open-end funds serve as funding media for variable insurance
contracts. Investment management services are also provided to corporate profit
sharing and pension funds, state and other governmental and public employee
retirement funds, university endowment funds, charitable foundations, collective
investment vehicles and other domestic and foreign institutional accounts.
Assets managed by Putnam, on which management fees are based, were
approximately $173.4 billion and $125.7 billion as of December 31, 1996 and
1995, respectively. Mutual fund assets aggregated $133.8 billion at December 31,
1996 and $93.4 billion at December 31, 1995. Assets under management at December
31, 1996 consisted of approximately 62% equity securities and 38% fixed income
products, invested both domestically and globally.
Putnam's revenues are derived primarily from its investment management
fees. Assets under management and revenue levels are affected by fluctuations in
domestic and international bond and stock market prices, and by the level of
investments and withdrawals for current and new fund shareholders and clients.
They are also affected by investment performance, service to clients, the
development and marketing of new investment products, the relative
attractiveness of the investment style under prevailing market conditions and
changes in the investment patterns of clients. Fluctuations in interest rates
and in the yield curve will have an effect on fixed income assets under
management and may influence the flow of monies to and from fixed-income funds
and accounts. Fluctuations in the prices of stocks have a similar effect on
equity assets under management and may influence the flow of monies to and from
equity funds and accounts.
The investment management services provided to the Putnam Funds and
institutional accounts are performed pursuant to
5
<PAGE>
advisory contracts which provide for a fee payable to the Putnam company that
manages the account. The amount of the fee varies depending on the individual
mutual fund or account and is usually based upon a sliding scale in relation to
the level of assets under management and, in certain instances, is also based on
investment performance. Such contracts automatically terminate in the event of
their "assignment", generally may be terminated by either party without penalty
and, as to contracts with the Putnam Funds, continue in effect only so long as
approved, at least annually, by their shareholders or by the Putnam Funds'
trustees, including a majority who are not affiliated with Putnam. "Assignment"
includes any direct or indirect transfer of a controlling block of voting stock
in Putnam or registrant. Management of Putnam and the trustees of the funds
regularly review the fund fee structure in light of fund performance, the level
and range of services provided, industry conditions and other relevant factors.
A Putnam subsidiary, Putnam Fiduciary Trust Company, a Massachusetts trust
company, serves as transfer agent, dividend disbursing agent, registrar and
custodian for the Putnam Funds and provides one or more of such services to
several external clients. Putnam Fiduciary Trust Company receives compensation
from the Putnam Funds for such services pursuant to written agreements which may
be terminated by either party on 90 days' notice, and for providing custody
services pursuant to written agreements which may be terminated by either party
on 30 days' notice. These contracts generally provide for compensation on the
basis of several factors which vary with the type of service being provided. In
addition, Putnam Fiduciary Trust Company provides administrative and trustee (or
custodian) services for employee benefit plans (in particular 401(k) plans),
IRA's and other clients for which it receives compensation pursuant to service
and trust or custodian contracts. In the case of employee benefit plans,
investment options are selected by the plan sponsors and include Putnam mutual
funds and other Putnam managed products, as well as employer stock and other
non-Putnam investments. In some instances, The Putnam Advisory Company, Inc., a
Putnam subsidiary, acts as investment manager for a plan's fixed income
portfolio and receives compensation for such investment management services
pursuant to an investment management agreement.
Putnam Mutual Funds Corp., a Putnam subsidiary, acts as principal
underwriter of the shares of the open-end Putnam Funds, selling primarily
through independent broker/dealers, financial planners and financial
institutions, including banks, and also directly to certain large 401(k) plans
and other institutional accounts. Shares of the open-end funds are generally
sold at their respective net asset value per share plus a sales charge,
6
<PAGE>
which varies depending on the individual fund and the amount purchased. In some
cases the sales charge is assessed if the shares are redeemed within a stated
time period. In accordance with certain terms and conditions described in the
prospectuses for such funds, certain investors are eligible to purchase shares
at net asset value or at reduced sales charges, and investors may generally
exchange their shares of a fund at net asset value for shares of another Putnam
Fund when they believe such an investment decision is appropriate without the
payment of additional sales charges.
Commissions to selling dealers are typically paid at the time of the
purchase as a percentage of the amount invested. Essentially all Putnam Funds
are available with a contingent deferred sales charge in lieu of a front-end
load. The related prepaid dealer commissions initially paid by Putnam to
broker/dealers for distributing such funds are recovered through charges and
fees received over a number of years.
Nearly all of the open-end Putnam Funds have adopted distribution plans
pursuant to Rule 12b-1 under the Investment Company Act of 1940 under which the
Putnam Funds make payments to a Putnam subsidiary to cover costs relating to
distribution of the Putnam Funds and services provided to shareholders. These
payments enable the Putnam subsidiary to pay service fees and other continuing
compensation to firms that provide services to Putnam Fund shareholders and
distribute shares of the Putnam Funds. Some Rule 12b-1 fees are retained by the
Putnam subsidiary as compensation for the costs of services provided by Putnam
to shareholders and for commissions advanced by Putnam at the point of sale (and
recovered through fees received over time) to firms that distribute shares of
the Putnam Funds. These distribution plans, and payments made by the Putnam
Funds thereunder, are subject to annual renewal by the trustees of the Putnam
Funds and to termination by vote of the shareholders of the Putnam Funds or by
vote of a majority of the Putnam Funds' trustees who are not affiliated with
Putnam. Failure of the Trustees to approve continuation of the Rule 12b-1 plans
for Class B (deferred sales charge) shares would have a material adverse effect
on Putnam.
Consulting. Through Mercer Consulting Group, Inc., subsidiaries and
affiliates of the registrant, separately and in collaboration, provide
consulting services to a predominantly corporate clientele from locations around
the world, primarily in the areas of human resources and employee benefit
programs, including retirement, health care and compensation; and general
management consulting, which comprises strategy, operations and marketing. The
Company also provides economic consulting and analysis.
7
<PAGE>
William M. Mercer Companies, Inc. ("William M. Mercer") provides
professional advice and services to corporate, government and institutional
clients from offices in approximately 27 countries and territories, primarily in
North and South America, Western Europe, East Asia, Australia and New Zealand.
Consultants help organizations design, implement, administer and communicate
retirement, compensation and other human resource programs, and provide other
types of actuarial advice. In addition, William M. Mercer advises the management
of health care providers on various business issues, including operational
reengineering, improving clinical effectiveness and establishing strategic
partnerships. Through its investment consultants, William M. Mercer assists
trustees of pension funds and others in the selection of investment managers and
investment strategies.
Mercer Management Consulting, Inc. provides advice and assistance on
issues of business strategy, primarily to large corporations in North America,
Europe and Asia. Consultants help senior executives more fully understand the
behavior of their customers, optimize the economics of their business, and
structure their organizations, processes and systems to achieve their strategic
goals. In addition, under the Lippincott & Margulies name, Mercer Management
Consulting, Inc. provides consulting services relating to brand and corporate
identity and image.
National Economic Research Associates, Inc. ("NERA"), a firm of consulting
economists, provides advice to law firms, corporations, trade associations and
governmental agencies, from offices in the United States, England and Spain.
NERA provides research and analysis of economic and financial issues arising in
litigation, regulation, public policy and management.
The major component of Mercer Consulting Group's revenue is fees paid by
clients for advice. In addition, commission revenue is received from insurance
companies for the placement of individual and group insurance contracts,
primarily life, health and accident coverages. Also, in the 401(k) record
keeping business, 12(b)(1) fees are received from mutual funds for which record
keeping services are provided.
Revenue in the consulting business is affected by changes in clients'
industries, including government regulation, as well as new products and
services, the stage of the economic cycle and broad trends in the management of
large organizations.
Regulation. The activities of the registrant are subject to licensing
requirements and extensive regulation under the laws of the United States and
its various states, territories and
8
<PAGE>
possessions, as well as laws of other countries in which the registrant's
subsidiaries operate. These laws and regulations are primarily intended to
benefit clients.
The registrant's three business segments depend on the validity of, and
continued good standing under, the licenses and approvals pursuant to which they
operate, as well as compliance with pertinent regulations. The registrant
therefore devotes significant effort toward maintaining its licenses and to
ensuring compliance with a diverse and complex regulatory structure.
In all jurisdictions the applicable laws and regulations are subject to
amendment or interpretation by regulatory authorities. Generally, such
authorities are vested with relatively broad discretion to grant, renew and
revoke licenses and approvals, and to implement regulations. Licenses may be
denied or revoked for various reasons, including the violation of such
regulations, conviction of crimes and the like. Possible sanctions which may be
imposed include the suspension of individual employees, limitations on engaging
in a particular business for specified periods of time, revocation of licenses,
censures and fines. In some instances, the registrant follows practices based on
its interpretations, or those generally followed by the industry, of laws or
regulations, which may prove to be different from those of regulatory
authorities. Accordingly, the possibility exists that the registrant may be
precluded or temporarily suspended from carrying on some or all of its
activities or otherwise fined or penalized in a given jurisdiction.
No assurances can be given that the registrant's insurance, investment
management or consulting activities can continue to be conducted in any given
jurisdiction as in the past.
Insurance Services. While the laws and regulations vary among
jurisdictions, every state of the United States and most foreign jurisdictions
require an insurance broker or agent (and in some cases a reinsurance broker or
intermediary) or insurance consultant, managing general agent or third party
administrator to have an individual and/or company license from a governmental
agency or self-regulatory organization. In addition, certain of the registrant's
insurance activities are governed by the rules of the Lloyd's insurance market
in London and self-regulatory organizations in other jurisdictions. A few
jurisdictions issue licenses only to individual residents or locally-owned
business entities. In some of these jurisdictions, if the registrant has no
licensed subsidiary, the registrant may maintain arrangements with residents or
business entities licensed to act in such jurisdiction. Also, in some
jurisdictions, various insurance related taxes may also be due either by clients
directly or from
9
<PAGE>
the broker. In the latter case, the broker customarily looks to the client for
payment.
Investment Management. Putnam's securities investment management
activities are subject to regulation in the United States by the Securities and
Exchange Commission, and other federal, state and self regulatory authorities,
as well as in certain other countries in which it does business. Putnam's
officers, directors and employees may from time to time own securities which are
also held by the Putnam funds or institutional accounts. Putnam's internal
policies with respect to individual investments require prior clearance and
reporting of transactions and restrict certain transactions so as to reduce the
possibility of conflicts of interests.
To the extent that existing or future regulations affecting the sale of
Putnam fund shares or other investment products or their investment strategies
cause or contribute to reduced sales of Putnam fund shares or investment
products or impair the investment performance of the Putnam funds or such other
investment products, Putnam's aggregate assets under management and its revenues
might be adversely affected. Changes in regulations affecting the free movement
of international currencies might also adversely affect Putnam.
Consulting. No licensing or other regulatory requirements material in the
aggregate to the consulting activities of the registrant's subsidiaries apply to
that activity in general; however, the subject matter of certain consulting
services may result in regulation. For example, employee benefit plans are
subject to various governmental regulations, and services related to investment
matters or the placing of individual and group insurance contracts subject the
registrant's subsidiaries to insurance or investment and securities regulations
and licensing in various jurisdictions.
Competitive Conditions. Principal methods of competition in insurance
services and consulting include the quality and types of services and products
that a broker or consultant provides its clients and their cost. Putnam competes
with other providers of investment products and services primarily on the basis
of the range of investment products offered, the investment performance of such
products, as well as the manner in which such products are distributed, and the
scope and quality of the shareholder and other services provided. Sales of
Putnam fund shares are also influenced by general securities market conditions,
government regulations, global economic conditions and advertising and sales
promotional efforts.
10
<PAGE>
All these businesses also encounter strong competition from both public
corporations and private firms in attracting and retaining qualified employees.
Insurance Services. The insurance and reinsurance broking services
business of the registrant is believed to be among the largest of its type in
the world.
The registrant encounters strong competition in the insurance services
business from other insurance brokerage firms which also operate on a nationwide
or worldwide basis, from a large number of regional and local firms in the
United States and in other countries, from insurance and reinsurance companies
that market and service their insurance products without the assistance of
brokers or agents and from other financial services businesses, including
commercial and investment banks that provide risk-related services and products.
Certain insureds and groups of insureds have established programs of self
insurance, as a supplement or alternative to third-party insurance, thereby
reducing in some cases the need for insurance placement services. There are also
many other providers of insurance program management services, including many
insurance companies, and many other organizations seeking to structure and
manage investments in the insurance industry.
Investment Management. Putnam Investments is one of the largest investment
management firms in the United States. The investment management business is
highly competitive. In addition to competition from firms already in the
investment management business, including commercial banks, stock brokerage and
investment banking firms, and insurance companies, there is competition from
other firms offering financial services and other investment alternatives.
Many securities dealers, whose large retail distribution systems play an
important role in the sale of shares in the Putnam funds, also sponsor competing
proprietary mutual funds. To the extent that such securities dealers value the
ability to offer customers a broad selection of investment alternatives, they
will continue to sell independent funds, notwithstanding the availability of
proprietary products. However, to the extent that these firms limit or restrict
the sale of Putnam fund shares through their brokerage systems in favor of their
proprietary mutual funds, assets under management might decline and Putnam's
revenues might be adversely affected. In addition, a number of mutual fund
sponsors presently market their funds to the general public without sales
charges. Certain firms also offer passively managed funds such as index funds to
the general public.
11
<PAGE>
Consulting. Mercer Consulting Group, one of the largest global consulting
firms, is a leader in many of its businesses. William M. Mercer is the world's
largest human resources consulting organization. Mercer Management Consulting is
a leader in strategy consulting. NERA is a leading firm of consulting
economists.
William M. Mercer, Mercer Management Consulting and NERA compete with
other privately held and publicly held worldwide and national consulting
companies, as well as regional and local firms. Competitors include independent
consulting firms as well as consulting organizations affiliated with accounting
firms, information systems providers, investment management organizations and
other financial services firms, some of which emphasize administrative or
consulting services related to other services, including the management of
401(k) plan funds, the design of information and other technology systems, and
administrative functions outsourced by corporations.
Segmentation of Activity by Type of Service and Geographic Area of
Operation. Financial information relating to the types of services provided by
the registrant and the geographic areas of its operations is incorporated herein
by reference to Note 15 of the Notes to Consolidated Financial Statements on
page 45 of the 1996 Annual Report. The registrant's non-U.S. operations are
subject to the customary risks involved in doing business in other countries,
such as currency fluctuations and exchange controls.
Employees. As of December 31, 1996, the registrant and its consolidated
subsidiaries employed about 27,000 people worldwide, of whom approximately
13,250 were employed by subsidiaries providing insurance services, approximately
4,200 were employed by subsidiaries providing investment management services,
approximately 9,250 were employed by subsidiaries providing consulting services,
and approximately 300 were employed by the registrant.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS. This report and the
registrant's financial statements and other documents incorporated herein by
reference may contain forward-looking statements. Such statements may include,
without limitation, discussions concerning revenue and expense growth, market
and industry conditions, interest rates, foreign exchange rates, contingencies
and matters relating to the registrant's operations and income taxes. Such
forward-looking statements are based on available current market and industry
materials, expert's reports and opinions, as well as management's expectations
concerning future events impacting the registrant. Forward looking statements by
their very nature involve risks and
12
<PAGE>
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by any forward looking statements contained or incorporated
herein include the impact of changes in insurance markets and natural
catastrophes in the case of registrant's insurance services business, changes in
worldwide and national securities and fixed income markets in the case of
registrant's investment management business and, with respect to all of
registrant's activities, changes in worldwide and national economies,
fluctuations in foreign currencies, changes in interest rates and the impact of
tax and other legislation and regulation in the jurisdictions in which the
registrant operates.
Item 2. Properties.
The registrant and four of its subsidiaries, as tenants in common, own a
56% condominium interest in a 44-story building in New York City which serves as
their worldwide headquarters. The principal offices of the registrant's Bowring
subsidiaries in London are located in two adjoining buildings on land under a
lease which expires in 2077.
The remaining business activities of the registrant and its subsidiaries
are conducted principally in leased office space in cities throughout the world.
No difficulty is anticipated in negotiating renewals as leases expire or in
finding other satisfactory space if the premises become unavailable. From time
to time, the registrant may have unused space and may seek to sublet such space
to third parties, depending upon the demands for office space in the locations
involved.
Item 3. Legal Proceedings.
The registrant and its subsidiaries are subject to claims and lawsuits
that arise in the ordinary course of business, consisting principally of alleged
errors and omissions in connection with the placement of insurance or
reinsurance and in rendering investment and consulting services. Some of these
claims and lawsuits seek damages, including punitive damages, in amounts which
could, if assessed, be significant. Information regarding disputes involving
run-off reinsurance contract placements primarily in the Lloyd's market and
relating to advice with respect to client purchases of guaranteed investment
contracts and annuities issued by Executive Life Insurance Company are
incorporated herein by reference to Note 14 of the Notes to Consolidated
Financial Statements on page 44 of the 1996 Annual Report.
On the basis of present information, available insurance coverage and
advice received from counsel, it is the opinion of the registrant's management
that the disposition or ultimate
13
<PAGE>
determination of these claims and lawsuits will not have a material adverse
effect on the registrant's consolidated results of operations or its
consolidated financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Market and dividend information regarding the registrant's common stock on
page 47 of the 1996 Annual Report is incorporated herein by reference.
Item 6. Selected Financial Data.
The selected financial data on pages 48 and 49 of the 1996 Annual Report
are incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Information on pages 23 through 29 of the 1996 Annual Report is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements and the Report of Independent
Auditors thereto on pages 30 through 46 of the 1996 Annual Report and Selected
Quarterly Financial Data (Unaudited) on page 47 of the 1996 Annual Report are
incorporated herein by reference. Supplemental Notes to Consolidated Financial
Statements are included on pages 23 and 24 hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
14
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information as to the directors of the registrant and compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by
reference to the material under the headings "Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 31, 1997 (the "1997
Proxy Statement").
The executive officers of the registrant as of December 31, 1996 are
Messrs. Blum, Borelli, Coster, Greenberg, Holbrook, Lasser, Sinnott and Smith,
with respect to whom information is incorporated herein by reference to the 1997
Proxy Statement, and:
Francis N. Bonsignore, age 50, has been Senior Vice President-Human
Resources & Administration of the registrant since 1990. Immediately prior
thereto, he was partner and National Director-Human Resources for Price
Waterhouse.
Gregory F. Van Gundy, age 51, is Secretary and General Counsel of
the registrant. He joined the registrant in 1974.
Item 11. Executive Compensation.
Information under the headings "Executive Compensation", "Compensation
Committee Report" and "Comparison of Cumulative Total Stockholder Return" in the
1997 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information under the heading "Security Ownership" in the 1997 Proxy
Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information under the headings "Employment and Consulting Agreements" and
"Transactions with Management and Others; Other Information" in the 1997 Proxy
Statement is incorporated herein by reference.
15
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements (incorporated herein by
reference to pages 30 through 46 of the 1996 Annual Report):
Consolidated Statements of Income for the three years
ended December 31, 1996
Consolidated Balance Sheets as of December 31, 1996 and
1995
Consolidated Statements of Cash Flows for the three
years ended December 31, 1996
Consolidated Statements of Stockholders' Equity for the
three years ended December 31, 1996
Notes to Consolidated Financial Statements
Report of Independent Auditors
Supplemental Notes to Consolidated Financial Statements
Report of Independent Auditors
Other:
Selected Quarterly Financial Data and Supplemental
Information (Unaudited) for the three years ended
December 31, 1996 (incorporated herein by reference to
page 47 of the 1996 Annual Report)
Ten-Year Statistical Summary of Operations (incorporated
herein by reference to pages 48 and 49 of the 1996
Annual Report)
16
<PAGE>
2. All required Financial Statement Schedules are included in the
Consolidated Financial Statements, the Notes to Consolidated
Financial Statements or the Supplemental Notes to Consolidated
Financial Statements.
3. The following exhibits are filed as a part of this report:
(3) --the registrant's restated certificate of incorporation
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1987)
--the registrant's by-laws
(10)--Stock Purchase Agreement, dated as of March 12, 1997, by and
among the registrant, Johnson & Higgins and the stockholders
of Johnson & Higgins (incorporated by reference to the
registrant's Current Report on Form 8-K dated March 14, 1997)
--Marsh & McLennan Companies, Inc. 1997 Senior Executive
Incentive and Stock Award Plan (subject to stockholder
approval at the 1997 annual meeting)
--Marsh & McLennan Companies, Inc. 1992 Incentive and Stock
Award Plan (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1995)
--Marsh & McLennan Companies, Inc. Restricted Shares Voluntary
Deferral Program for U.S. Employees (incorporated by reference
to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1995)
--Marsh & McLennan Companies Stock Investment Supplemental
Plan (incorporated by reference to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1994)
--Marsh & McLennan Companies Special Severance Pay Plan (as
amended and restated 11/21/96)
17
<PAGE>
--Putnam Investments, Inc. Executive Deferred Compensation
Plan (incorporated by reference to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1994)
--Marsh & McLennan Companies Supplemental Retirement Plan
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1992)
--Marsh & McLennan Companies Senior Management Incentive
Compensation Plan (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1994)
--Marsh & McLennan Companies, Inc. U.S. Employee 1996 Cash
Bonus Award Voluntary Deferral Plan
--Marsh & McLennan Companies, Inc. Canadian Employee 1996 Cash
Bonus Award Voluntary Deferral Plan
--Marsh & McLennan Companies, Inc. Directors Stock
Compensation Plan (as amended and restated 11/21/96)
--Amended and Restated Employment Agreement effective as of
December 31, 1993 between Robert Clements and Marsh & McLennan
Risk Capital Corp. and related Guaranty of the registrant
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1994)
--Amendment to Amended and Restated Employment Agreement made
as of March 21, 1996 between Robert Clements and Marsh &
McLennan Risk Capital Corp. and related Guaranty of the
registrant (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1995)
--Agreement made as of March 29, 1996 between Robert Clements,
Marsh & McLennan Risk Capital Corp. and Marsh & McLennan Risk
Capital Holdings, Ltd.
18
<PAGE>
--Employment Agreement between Jeffrey W. Greenberg and Marsh
& McLennan Risk Capital Corp. and related Guaranty of the
registrant (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1995)
(13)--Annual Report to Stockholders for the year ended December 31,
1996, to be deemed filed only with respect to those portions
which are expressly incorporated by reference
(21)--list of subsidiaries of the registrant
(as of 2/28/97)
(23)--consent of independent auditors
(24)--powers of attorney
(27)--Financial Data Schedule (filed only with SEC for EDGAR
purposes)
(b) No reports on Form 8-K were filed by the registrant in the fiscal
quarter ended December 31, 1996.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
this 31st day of March, 1997 on its behalf by the undersigned, thereunto duly
authorized.
MARSH & McLENNAN COMPANIES, INC.
By /s/ A.J.C. SMITH
-------------------------------
A.J.C. SMITH
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated this 31st day of March, 1997.
/s/A.J.C. SMITH LEWIS W. BERNARD*
- ----------------------------------- -------------------------------
A.J.C. SMITH LEWIS W. BERNARD
Director, Chairman of the Board Director
and Chief Executive Officer
/s/FRANK J. BORELLI RICHARD H. BLUM*
- ----------------------------------- -------------------------------
FRANK J. BORELLI RICHARD H. BLUM
Senior Vice President and Director
Chief Financial Officer,
Director
/s/DOUGLAS C. DAVIS ROBERT CLEMENTS*
- ----------------------------------- -------------------------------
DOUGLAS C. DAVIS ROBERT CLEMENTS
Vice President and Controller Director
(Chief Accounting Officer)
PETER COSTER* RICHARD M. MORROW*
- ----------------------------------- -------------------------------
PETER COSTER RICHARD M. MORROW
Director Director
20
<PAGE>
ROBERT F. ERBURU* GEORGE PUTNAM*
- ----------------------------------- -------------------------------
ROBERT F. ERBURU GEORGE PUTNAM
Director Director
JEFFREY W. GREENBERG* ADELE SMITH SIMMONS*
- ----------------------------------- -------------------------------
JEFFREY W. GREENBERG ADELE SMITH SIMMONS
Director Director
RAY J. GROVES* JOHN T. SINNOTT*
- ----------------------------------- -------------------------------
RAY J. GROVES JOHN T. SINNOTT
Director Director
RICHARD S. HICKOK* FRANK J. TASCO*
- ----------------------------------- -------------------------------
RICHARD S. HICKOK FRANK J. TASCO
Director Director
DAVID D. HOLBROOK* R. J. VENTRES*
- ----------------------------------- -------------------------------
DAVID D. HOLBROOK R. J. VENTRES
Director Director
LAWRENCE J. LASSER*
- -----------------------------------
LAWRENCE J. LASSER
Director
- ----------
* Gregory F. Van Gundy, pursuant to Powers of Attorney executed by each of
the individuals whose name is followed by an (*) and filed herewith, by
signing his name hereto does hereby sign and execute this Form l0-K of
Marsh & McLennan Companies, Inc. on behalf of such individual in the
capacities in which the names of each appear above.
/s/GREGORY F. VAN GUNDY
-----------------------------
GREGORY F. VAN GUNDY
21
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders of
Marsh & McLennan Companies, Inc.:
We have audited the consolidated balance sheets of Marsh & McLennan Companies,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996, and have issued our
report thereon dated February 26, 1997 (March 12, 1997, as to the last paragraph
of Note 3); such financial statements and report are included in your 1996
Annual Report to Stockholders and are incorporated herein by reference. Our
audits also included the supplemental notes to the consolidated financial
statements (the "Notes") listed in Item 14. These Notes are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, such Notes, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 1997
22
<PAGE>
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Information concerning the Company's valuation accounts follows:
An analysis of the allowance for doubtful accounts for the three years ended
December 31, 1996 follows (in millions of dollars):
1996 1995 1994
----- ----- -----
Balance at beginning of year ......... $54.6 $52.2 $50.9
Provision charged to operations ...... 9.9 12.8 11.6
Accounts written-off, net of
recoveries ......................... (10.2) (10.5) (11.3)
Effect of exchange rate changes ...... 0.9 .1 1.2
Other ................................ (11.9)(B) -- (.2)
----- ----- -----
Balance at end of year (A)............ $43.3 $54.6(A) $52.2
===== ===== =====
(A) Includes allowance for doubtful accounts related to long-term
consumer finance receivables amounting to $6.3 million in 1995 and
$7.3 million in 1994.
(B) Includes $11.2 million relating to the sale of Frizzell.
An analysis of the valuation allowance for certain foreign deferred tax assets
as of December 31, 1996, 1995 and 1994 follows (in millions of dollars):
1996 1995 1994
----- ----- -----
Balance at beginning of year ............... $25.2 $24.7 $23.6
Provision .................................. -- -- .5
Effect of exchange rate changes ............ 2.2 .5 .6
----- ----- -----
Balance at end of year (A) ................. $27.4 $25.2 $24.7
===== ===== =====
(A) Included in other liabilities in the Consolidated Balance Sheets.
23
<PAGE>
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. An analysis of intangible assets at December 31, 1996 and 1995 follows (in
millions of dollars):
1996 1995
------ ------
Goodwill ....................................... $608.7 $787.4
Other intangible assets ........................ 92.3 92.3
------ ------
Subtotal ..................................... 701.0 879.7
Less - accumulated amortization ................ (155.7) (150.0)
------ ------
Total .................................... $545.3 (A) $729.7
====== ======
(A) The decrease from December 31, 1995 is primarily due to the sale of
Frizzell ($142.5 million) and goodwill write-offs ($17 million).
18. Per share data, as presented in the Consolidated Statements of Income, is
computed by using the average number of shares of the Company's common
stock outstanding. Common stock equivalents (relating principally to stock
options), which have been excluded from the calculation because their
dilutive effect is immaterial, are shown below for the three years ended
December 31, 1996 (in millions of shares).
1996 1995 1994
---- ---- ----
Primary 1.3 .8 .7
=== === ===
Fully Diluted 1.7 1.1 .7
=== === ===
24
<PAGE>
EXHIBIT INDEX
(3)(a) --the registrant's restated certificate of incorporation
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1987)
(b) --the registrant's by-laws
(10)(a) --Stock Purchase Agreement, dated as of March 12, 1997, by and
among the registrant, Johnson & Higgins and the stockholders
of Johnson & Higgins (incorporated by reference to the
registrant's Current Report on Form 8-K dated March 14, 1997)
(b) --Marsh & McLennan Companies, Inc. 1997 Senior Executive
Incentive and Stock Award Plan (subject to stockholder
approval at the 1997 annual meeting)
(c) --Marsh & McLennan Companies, Inc. 1992 Incentive and
Stock Award Plan (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1995)
(d) --Marsh & McLennan Companies, Inc. Restricted Shares Voluntary
Deferral Program for U.S. Employees (incorporated by reference
to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1995)
(e) --Marsh & McLennan Companies Stock Investment Supplemental
Plan (incorporated by reference to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1994)
(f) --Marsh & McLennan Companies Special Severance Pay Plan (as
amended and restated 11/21/96)
(g) --Putnam Investments, Inc. Executive Deferred Compensation Plan
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1994)
<PAGE>
EXHIBIT INDEX (cont'd)
(h) --Marsh & McLennan Companies Supplemental Retirement Plan
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1992)
(i) --Marsh & McLennan Companies Senior Management Incentive
Compensation Plan (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1994)
(j) --Marsh & McLennan Companies, Inc. U.S. Employee 1996 Cash
Bonus Award Voluntary Deferral Plan
(k) --Marsh & McLennan Companies, Inc. Canadian Employee 1996 Cash
Bonus Award Voluntary Deferral Plan
(l) --Marsh & McLennan Companies, Inc. Directors Stock
Compensation Plan (as amended and restated 11/21/96)
(m) --Amended and Restated Employment Agreement effective as of
December 31, 1993 between Robert Clements and Marsh & McLennan
Risk Capital Corp. and related Guaranty of the registrant
(incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1994)
(n) --Amendment to Amended and Restated Employment Agreement made
as of March 21, 1996 between Robert Clements and Marsh &
McLennan Risk Capital Corp. and related Guaranty of the
registrant (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1995)
(o) --Agreement made as of March 29, 1996 between Robert Clements,
Marsh & McLennan Risk Capital Corp. and Marsh & McLennan Risk
Capital Holdings, Ltd.
<PAGE>
EXHIBIT INDEX (cont'd)
(p) --Employment Agreement between Jeffrey W. Greenberg and Marsh
& McLennan Risk Capital Corp. and related Guaranty of the
registrant (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1995)
(13) --Annual Report to Stockholders for the year ended December 31,
1996, to be deemed filed only with respect to those portions
which are expressly incorporated by reference
(21) --list of subsidiaries of the registrant
(as of 2/28/97)
(23) --consent of independent auditors
(24) --powers of attorney
(27) --Financial Data Schedule (filed only with SEC for EDGAR
purposes)
BY-LAWS
OF
MARSH & McLENNAN COMPANIES, INC.
RESTATED AS LAST AMENDED
May 21, 1996
<PAGE>
I N D E X
Page Number
-----------
ARTICLE I
Offices............................................. 1
ARTICLE II
Meetings of the Stockholders........................ 1
ARTICLE III
Directors........................................... 10
ARTICLE IV
Officers............................................ 13
ARTICLE V
Committees.......................................... 17
ARTICLE VI
Indemnification..................................... 23
ARTICLE VII
Checks, Contracts, Other Instruments................ 29
ARTICLE VIII
Capital Stock....................................... 30
ARTICLE IX
Miscellaneous....................................... 33
ARTICLE X
Amendments.......................................... 34
<PAGE>
BY-LAWS
OF
MARSH & McLENNAN COMPANIES, INC.
ARTICLE I
Offices
The principal office of the Corporation in Delaware shall be at
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle, in the State of Delaware, and The Corporation Trust Company shall
be the resident agent of the Corporation in charge thereof. The Corporation may
also have such other offices at such other places as the Board of Directors may
from time to time designate or the business of the Corporation may require.
ARTICLE II
Meetings of the Stockholders
SECTION 1. Place of Meetings. Meetings of the stockholders may be
held at such place as the Board of Directors may determine.
SECTION 2. Annual Meetings. The annual meeting of the stockholders
shall be held on the third Tuesday of May in each year, or such other day in May
as may be determined from time to time by the Board of Directors, at such time
and place as the Board of Directors may designate. At said meeting the
<PAGE>
stockholders shall elect a Board of Directors and transact any other business
authorized or required to be transacted by the stockholders.
SECTION 3. Special Meetings. Special meetings of the stockholders,
except as otherwise provided by law, shall be called by the Chairman of the
Board, or whenever the Board of Directors shall so direct, the Secretary.
SECTION 4. Notice of Meetings. Except as otherwise provided by law,
written or printed notice stating the place, day and hour of the meeting, and in
the case of a special meeting the purpose or purposes for which the meeting is
called, shall be delivered personally or mailed, postage prepaid, at least ten
(10) days but not more than sixty (60) days before such meeting to each
stockholder at such address as appears on the stock books of the Corporation.
SECTION 5. Fixing of Record Date. In order to determine the
stockholders entitled to notice of or to vote at any meeting of the stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
- 2 -
<PAGE>
fix, in advance, a record date which shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting, and no more than sixty (60)
days prior to any other action.
If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice of the meeting is given or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held, and such date for any other purpose shall be the date on which the Board
of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 6. Quorum. The holders of a majority of the stock issued and
outstanding present in person or represented by proxy shall be requisite and
shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by law, by the Restated
Certificate of Incorporation or by these by-laws. If, however, such majority
shall not be present or represented at any meeting of the
- 3 -
<PAGE>
stockholders, the stockholders present in person or by proxy shall have power to
adjourn the meeting from time to time without notice other than announcement at
the meeting until the requisite amount of stock shall be represented. At such
adjourned meeting at which the requisite amount of stock shall be represented,
any business may be transacted which might have been transacted at the meeting
as originally called.
SECTION 7. Voting. Each stockholder entitled to vote in accordance
with the terms of the Restated Certificate of Incorporation and in accordance
with the provisions of these by-laws shall be entitled to one vote, in person or
by proxy, for each share of stock entitled to vote held by such stockholder, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. The vote for directors and, upon demand of any
stockholder, the vote upon any question before the meeting shall be by ballot.
All elections of directors shall be decided by plurality vote; all other
questions shall be decided by a majority of the shares present in person or
represented by proxy at the meeting of stockholders and entitled to vote on the
subject matter, except as otherwise provided in the Restated Certificate of
Incorporation or by law or regulation.
- 4 -
<PAGE>
SECTION 8. Inspectors of Election. All elections of directors and
all votes where a ballot is required shall be conducted by two inspectors of
election who shall be appointed by the Board of Directors; but in the absence of
such appointment by the Board of Directors, the Chairman of the meeting shall
appoint such inspectors who shall not be directors or candidates for the office
of director.
SECTION 9. Voting List. The Secretary shall prepare and make, at
least ten days before every election of directors, a complete list of the
stockholders entitled to vote, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in his name.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
- 5 -
<PAGE>
Section 10. Stockholder Nominations of Directors. Only persons who
are nominated in accordance with the following procedures shall be eligible for
election as directors at a meeting of stockholders. Nominations of persons for
election to the Board of Directors of the Corporation may be made at a meeting
of stockholders by or at the direction of the Board of Directors, by any person
appointed by the Board of Directors or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 10. Such nominations, other than
those made by or at the direction of the Board of Directors or by any person
appointed by the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary, Marsh & McLennan Companies, Inc. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that the
meeting is not to be held on the date set forth in Article II, Section 2 and
less than 75 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 15th
- 6 -
<PAGE>
day following the day on which such public disclosure was made. Such
stockholder's notice to the Secretary shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or reelection as a director,
(i) the name, age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the class and number
of shares of capital stock of the Corporation which are beneficially owned by
the person and (iv) any other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended; and
(b) as to the stockholder giving the notice (i) the name and record address of
the stockholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth herein.
- 7 -
<PAGE>
The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 11. Advance Notice of Stockholder Proposed Business at
Annual Meetings. At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary, Marsh & McLennan Companies, Inc. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Corporation, not less than 60 days nor more than 90 days prior to the
meeting; provided, however, that in the event that the
- 8 -
<PAGE>
meeting is not to be held on the date set forth in Article II, Section 2 and
less than 75 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 15th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder and (iv) any
material interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no
business shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 11; provided, however, that nothing in this
Section 11 shall be deemed to preclude discussion by any stockholder of any
- 9 -
<PAGE>
business properly brought before the annual meeting in accordance with said
procedure.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section, and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
ARTICLE III
Directors
SECTION 1. Powers, Number, Tenure, Qualifications and Compensation.
The business and affairs of the Corporation shall be managed by its Board of
Directors which shall consist of the number of members set forth in Article
FIFTH of the Restated Certificate of Incorporation, none of whom need be
stockholders, but no person shall be eligible to be nominated or elected a
director of the Corporation who has attained the age of 72 years. In addition to
the powers and duties by these by-laws expressly conferred upon them, the Board
of Directors may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Restated Certificate of
- 10 -
<PAGE>
Incorporation or by these by-laws directed or required to be exercised or done
by the stockholders. The Board of Directors may provide for compensation of
directors who are not otherwise compensated by the Corporation or any subsidiary
thereof.
SECTION 2. Meetings and Notice. The Board shall, for the purposes of
organization, the election and appointment of officers and the transaction of
other business, hold a meeting as soon as convenient after the annual meeting of
stockholders. Regular meetings of the directors may be held without notice at
such places and times as shall be determined from time to time by resolution of
the directors. Special meetings of the Board may be called by the Chairman of
the Board on at least twenty-four (24) hours' notice to each director,
personally or by mail or by telegram or by telephone. Special meetings shall
also be called in like manner on the written request of any three (3) directors.
The attendance of a director at any meeting shall dispense with notice to him of
the meeting. Members of the Board of Directors may participate in a meeting of
the Board by means of conference telephone or similar communications equipment,
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
- 11 -
<PAGE>
SECTION 3. Offices, Books, Place of Meeting. The Board of Directors
may have one or more offices and keep the books of the Corporation outside of
Delaware, and may hold its meetings at such places as it may from time to time
determine.
SECTION 4. Quorum. At all meetings of the Board of Directors
one-third (1/3) of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Restated Certificate of Incorporation
or by these by-laws.
SECTION 5. Informal Action. The Board of Directors shall, except as
otherwise provided by law, have power to act in the following manner: A
resolution in writing, signed by all of the members of the Board of Directors
shall be deemed to be action by such Board to the effect therein expressed with
the same force and effect as if the same had been duly passed at a duly convened
meeting, and it shall be the duty of the Secretary of the Corporation to record
any such resolution in the minute book of the Corporation, under its proper
date.
- 12 -
<PAGE>
ARTICLE IV
Officers
SECTION 1. Election. The Board of Directors shall elect officers of
the Corporation, including a Chairman of the Board, one or more Vice Presidents,
a Secretary, a Treasurer and a Controller. Such officers shall be elected at the
annual meeting of the Board of Directors following the annual meeting of
stockholders. The Board of Directors may, as it deems advisable, elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers
and such other officers as it may deem appropriate. The Board of Directors may
at any meeting fill any vacancy that shall occur, or create new offices and
elect incumbents thereto.
SECTION 2. Term and Removal. The officers of the Corporation
designated in SECTION 1 of this Article IV, shall hold office for one year and
until their respective successors are chosen and qualify in their stead. Any
officer may be removed at any time, with or without cause, by the Board of
Directors. An officer appointed by the Executive Committee may also be removed
at any time, with or without cause by said Committee.
- 13 -
<PAGE>
SECTION 3. Chairman of the Board. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation and, subject
to the control of the Board of Directors, and of the committees exercising
functions of the Board of Directors, shall have general supervision over the
business and property of the Corporation. He shall preside at all meetings of
the stockholders and of the Board of Directors. He shall review and recommend to
the Board of Directors both short-term objectives and long-term planning for the
business. He shall also preside at meetings of any committee of which he is a
member which is not attended by the chairman of such committee. He or his
delegate may vote on behalf of the Corporation the shares owned by the
Corporation in other corporations in such manner as they deem advisable unless
otherwise directed by the Board of Directors. He shall have full authority to
take other action on behalf of the Corporation in respect of shares of stock in
other corporations owned by the Corporation, directly or indirectly, including
the obtaining of information and reports.
SECTION 4. Vice Presidents. The Vice President shall have such
powers, duties, supplementary titles and other designations as the Board of
Directors may from time to time determine.
- 14 -
<PAGE>
SECTION 5. Secretary. The Secretary shall attend all meetings of the
stockholders and the Board of Directors. He shall, at the invitation of the
chairman thereof, attend meetings of the committees elected by the Board or
established by these by-laws. He shall record all votes and minutes of all
proceedings which he attends and receive and maintain custody of all votes and
minutes of all such proceedings. Votes and minutes of meetings of the
Compensation and Audit Committees shall be recorded and maintained as each such
committee shall determine. The Secretary shall give or cause to be given notice
of meetings of the stockholders, Board of Directors, and, when instructed to do
so by the Chairman thereof, committees of the Board of Directors, and shall have
such other powers and duties as may be prescribed by appropriate authority. The
Secretary shall keep in safe custody the seal of the Corporation and shall affix
the seal to any instrument requiring the same. The Assistant Secretaries shall
have such powers and perform such duties as may be prescribed by appropriate
authority.
SECTION 6. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall deposit all monies and other valuable
effects in the name and to the credit of the Corporation in such depositaries as
may be
- 15 -
<PAGE>
designated by, or in accordance with general policies adopted by, the Board of
Directors or Executive Committee. He shall disburse the funds of the Corporation
as may be ordered by the Chairman, the chief financial officer, the Board of
Directors or the Executive Committee, taking proper vouchers for such
disbursements, and shall render to the Chairman, the chief financial officer and
the Board of Directors whenever they may require it, an account of all his
transactions as Treasurer. He shall have such powers and perform such duties as
shall be assigned to him by appropriate authority. The Assistant Treasurers
shall have such powers and perform such duties as may be prescribed by the chief
financial officer or the Treasurer.
SECTION 7. Controller. The Controller shall be the chief accounting
officer of the Corporation. He shall keep or cause to be kept all books of
account and accounting records of the Corporation and shall render to the
Chairman, the chief financial officer and the Board of Directors whenever they
may require it, a report of the financial condition of the Corporation. He shall
have such other powers and duties as shall be assigned to him by appropriate
authority. The Assistant Controllers shall have such powers and perform such
duties as may be prescribed by the chief financial officer or the Controller.
- 16 -
<PAGE>
SECTION 8. Bond. The Board of Directors may, or the Chairman may,
require any officers, agents or employees of the Corporation to furnish bonds
conditioned on the faithful performance of their respective duties with a surety
company satisfactory to the Board of Directors or the Chairman as surety. The
expenses of such bond shall be paid by the Corporation.
ARTICLE V
Committees
SECTION 1. Executive Committee. An Executive Committee, composed of
the Chairman and such other directors as the Board of Directors may determine
from time to time shall be elected by the Board of Directors. Except as provided
hereinafter or in resolutions of the Board, the Executive Committee shall have,
and may exercise when the Board is not in session, all the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it. The Executive Committee shall not, however, have
power or authority in reference to amending the Restated Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the
- 17 -
<PAGE>
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the by-laws of the
Corporation, or declaring a dividend. Unless and to the extent otherwise
provided for by resolutions of the Board of Directors, the Executive Committee
shall not have the power or authority to elect or appoint the Chairman of the
Board of the Corporation, or to authorize the acquisition or entering into of an
agreement for acquiring the stock or assets of any other corporation or business
entity in the event such acquisition involves an expenditure of more than
$10,000,000 or the issuance of more than 200,000 shares of the common stock of
the Corporation or in the event such other corporation or business entity is
engaged in any business other than the insurance, reinsurance, real estate
consulting, investment management or a related business. The Executive Committee
may authorize the issuance not to exceed 200,000 shares of common stock of the
Corporation at any one time for the purpose of acquiring the stock or assets of
another corporation as aforesaid, but may not authorize the issuance of stock
for any other purpose or authorize the issuance of debt obligations except for
short-term borrowings.
- 18 -
<PAGE>
SECTION 2. Compensation Committee. A Compensation Committee,
including a chairman, having such number of directors as the Board of Directors
shall determine from time to time, shall be elected by the Board of Directors.
No member of the Compensation Committee while holding such office and within the
previous year shall, in addition to usual compensation as a director, receive or
be granted or be eligible for any award or any other benefit under any
compensation, stock option or other benefit plans that the committee may
supervise, administer, or review or while holding such office shall be a
full-time employee of the Corporation or any of its subsidiaries. The
Compensation Committee shall fix the compensation of the chief executive officer
of the Corporation and approve the compensation of senior executives of the
Corporation or any of its subsidiaries designated under procedures established
by the Committee from time to time. The Compensation Committee will approve,
disapprove or modify the retention by the Corporation of advisors or consultants
on matters relating to the compensation of the chief executive officer and
senior executives of the Corporation. The Compensation Committee shall also
satisfy itself, if in its opinion circumstances make it desirable to do so, that
the general compensation policies and practices followed by the
- 19 -
<PAGE>
Corporation and its subsidiaries are in the Corporation's best interests. The
Compensation Committee shall have such other duties as may be set forth in the
Corporation's compensation, stock option or other benefit plans as they may
exist from time to time, or otherwise as provided by the Board of Directors. The
Compensation Committee shall report to the Board at least annually and whenever
the Board may require respecting the discharge of the committee's duties and
responsibilities. The term "compensation" as used in this Section shall mean
salaries, bonuses, agreements to pay deferred compensation, and discretionary
benefits such as stock options, but shall not include payments to or under any
employee pension, retirement, profit sharing, stock investment, or similar plan.
SECTION 3. Audit Committee. An Audit Committee, including a
chairman, having such number of directors as the Board of Directors may
determine from time to time, shall be elected by the Board of Directors. The
members of the Audit Committee shall be elected by the Board of Directors from
among the members of the Board who are not officers or employees of the
Corporation. The Audit Committee shall meet at least annually with the
Corporation's independent public accountants, and at any time during the year
when considered appropriate by the independent
- 20 -
<PAGE>
public accountants or the committee. The committee shall review the annual
financial statements of the Corporation with the independent public accountants
and shall review the practices and procedures adopted by the Corporation in the
preparation of such financial statements. The Audit Committee shall submit
recommendations to the Board of Directors with respect to the selection of
independent public accountants to examine the Corporation's annual financial
statements and shall review the independent public accountant's annual scope of
audit. The Audit Committee shall, as it may deem appropriate from time to time,
report and make recommendations to the Board of Directors.
SECTION 4. Reports. The Executive Committee shall report to each
regular meeting and, if directed, to each special meeting of the Board of
Directors all action taken by such committee subsequent to the date of its last
report, and other committees shall report to the Board of Directors at least
annually.
SECTION 5. Other Committees. The Board of Directors may appoint such
other committee or committees as it deems desirable.
SECTION 6. Election and Term. The Chairman and each member of every
committee shall be a member of and elected by the
- 21 -
<PAGE>
Board of Directors and shall serve until he shall cease to be a member of the
Board of Directors or his membership on the committee shall be terminated by the
Board.
SECTION 7. Meetings, Quorum and Notice. The Chairman of any
committee shall be the presiding officer thereof. Any committee may meet at such
time or times on notice to all the members thereof by the Chairman or by a
majority of the members or by the Secretary of the Corporation and at such place
or places as such notice may specify. At least twenty-four (24) hours' notice of
the meeting shall be given but such notice may be waived. Such notice may be
given by mail, telegraph, telephone or personally. Each committee shall cause
minutes to be kept of its meetings which record all actions taken. Such minutes
shall be placed in the custody of the Secretary of the Corporation except that
the Compensation and Audit Committees shall each determine who shall maintain
custody of its minutes or portions thereof. Any committee may, except as
otherwise provided by law, act in its discretion by a resolution or resolutions
in writing signed by all the members of such committee with the same force and
effect as if duly passed by a duly convened meeting. Any such resolution or
resolutions shall be recorded in the minute book of the committee under the
proper
- 22 -
<PAGE>
date thereof. Members of any committee may also participate in a meeting of such
committee by means of conference telephone or similar communications equipment,
by means of which all persons participating in the meeting can hear each other
and participation in the meeting pursuant to this provision shall constitute
presence in person at such meeting. A majority of the members of each committee
shall constitute a quorum.
ARTICLE VI
Indemnification
SECTION 1. Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that, on or
after May 21, 1987, he or she is serving or had served as a director, officer or
employee of the Corporation or, while serving as such director, officer or
employee, is serving or had served at the request of the Corporation as a
director, officer, employee or agent of, or in any other capacity with respect
to, another corporation or a partnership, joint venture, trust or other entity
or enterprise, including service with respect to employee
- 23 -
<PAGE>
benefit plans (hereinafter, an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer
or employee of the Corporation, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by Delaware law, as the same exists
or may hereafter be changed or amended (but, in the case of any such change or
amendment, only to the extent that such change or amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts to be paid in
settlement) reasonably incurred or suffered by an indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer or employee of the Corporation and shall inure
to the benefit of the indemnitee's heirs, executors and administrators;
provided, however, that except as provided in Section 3 of this Article with
respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify an indemnitee in connection with a proceeding (or
part thereof) initiated by the indemnitee only if such proceeding (or
- 24 -
<PAGE>
part thereof) was authorized by the board of directors of the Corporation. The
right to indemnification conferred in this Article shall be a contract right.
SECTION 2. Advancement of Expenses. An indemnitee who is a director
or officer of the Corporation, and any other indemnitee to the extent authorized
from time to time by the board of directors of the Corporation, shall have the
right to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter, an "advancement of
expenses"); provided, however, that, if the Delaware General Corporation Law
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter, an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter, a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Article or otherwise.
- 25 -
<PAGE>
SECTION 3. Right of Indemnitee to Bring Suit. If a claim under
Section 1 or Section 2 of this Article is not paid in full by the Corporation
within sixty days in the case of Section 1 and twenty days in the case of
Section 2 after a written claim has been received by the Corporation, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to terms of an undertaking, the indemnitee shall be entitled
to be paid also the expense of prosecuting or defending such suit. In (i) any
suit brought by the indemnitee to enforce a right to indemnification hereunder
(other than a suit brought by the indemnitee to enforce a right to an
advancement of expenses), it shall be a defense that, and (ii) any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met the applicable standard of
conduct set forth in the Delaware General Corporation Law. Neither the failure
of the Corporation (including its board of directors, independent legal counsel,
or its stockholders) to have made a
- 26 -
<PAGE>
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to the action. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article or otherwise shall be on the
Corporation.
SECTION 4. Indemnification of Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by its board of
directors, grant rights to indemnification, and to be paid by the Corporation
the expenses incurred in defending any proceeding in advance of its final
- 27 -
<PAGE>
disposition, to any agent of the Corporation to the fullest extent of the
provisions of this Article with respect to the indemnification of directors,
officers and employees of the Corporation and advancement of expenses of
directors and officers of the Corporation.
SECTION 5. Non-Exclusivity of Rights. The right to indemnification
and to the advancement of expenses conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Restated Certificate of Incorporation,
these by-laws, any agreement, vote of stockholders or disinterested directors,
or otherwise.
SECTION 6. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or of another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
- 28 -
<PAGE>
SECTION 7. Survival of Prior Indemnification Provisions; Effect of
Subsequent Change on Existing Rights. Nothing contained in this Article shall be
construed as altering or eliminating the rights to indemnification existing, or
based upon service by an indemnitee, prior to May 21, 1987. Any repeal or
modification of this Article shall not adversely affect any right or protection
of a director, officer or employee of the Corporation existing at the time of
such repeal or modification.
ARTICLE VII
Checks, Contracts, Other Instruments
SECTION 1. Documents, Instruments Not Requiring Seal. All checks,
notes, drafts, acceptances, bills of exchange, orders for the payment of money,
and all written contracts and instruments of every kind which do not require a
seal shall be signed by such officer or officers, or person or persons as these
by-laws, or the Board of Directors or Executive Committee by resolution, may
from time to time prescribe.
SECTION 2. Documents, Instruments Requiring Seal. All bonds, deeds,
mortgages, leases, written contracts and instruments of every kind which require
the corporate seal of the Corporation to be affixed thereto, shall be signed and
attested
- 29 -
<PAGE>
by such officer or officers as these by-laws, or the Board of Directors or
Executive Committee, by resolution, may from time to time prescribe.
ARTICLE VIII
Capital Stock
SECTION 1. Stock Certificates. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
the Restated Certificate of Incorporation, as shall be approved by the Board of
Directors. Each certificate shall be signed by the Chairman of the Board of
Directors or a Vice President and also by the Secretary, an Assistant Secretary,
the Treasurer or an Assistant Treasurer, provided, however, that any such
signature of an officer of the Corporation or of the Transfer Agent, Assistant
Transfer Agent, Registrar or Assistant Registrar, or any of them, may be a
facsimile. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the
- 30 -
<PAGE>
Corporation and be used and delivered as though the officer or officers who
signed the said certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be said officer or
officers of the Corporation. All certificates shall be consecutively numbered,
shall bear the corporate seal and the names and addresses of all persons owning
shares of capital stock of the Corporation with the number of shares owned by
each; and, the date or dates of issue of the shares of stock held by each shall
be entered in books kept for that purpose by the proper officers or agents of
the Corporation.
SECTION 2. Recognition of Holders of Record. The Corporation shall
be entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof, and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it has actual or other notice thereof, save as
expressly provided by the laws of the State of Delaware.
SECTION 3. Lost Certificates. Except in cases of lost or destroyed
certificates, and in that case only after conforming to the requirements
hereinafter provided, no new certificates shall be issued until the former
certificate for the shares
- 31 -
<PAGE>
represented thereby shall have been surrendered and cancelled. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates to be lost or destroyed; and the
Board of Directors may, in its discretion and as a condition precedent to the
issuance of any such new certificate or certificates, require (i) that the owner
of such lost or destroyed certificate or certificates, or his legal
representative give the Corporation and its transfer agent or agents, registrar
or registrars a bond in such form and amount as the Board of Directors may
direct as indemnity against any claim that may be made against the Corporation
and its transfer agent or agents, registrar or registrars, or (ii) that the
person requesting such new certificate or certificates obtain a final order or
decree of a court of competent jurisdiction as to his right to receive such new
certificate or certificates.
SECTION 4. Transfer of Shares. Shares of stock shall be transferred
on the books of the Corporation by the holder thereof or by his attorney
thereunto duly authorized upon the
- 32 -
<PAGE>
surrender and cancellation of certificates for a like number of shares.
SECTION 5. Regulations Governing Transfer of Shares. The Board of
Directors may make such regulations as it may deem expedient concerning the
issue, transfer and registration of stock.
SECTION 6. Appointment of Transfer Agent, Registrar. The Board may
appoint a Transfer Agent or Transfer Agents and Registrar or Registrars for
transfers and may require all certificates to bear the signature of either or
both.
ARTICLE IX
Miscellaneous
SECTION 1. Inspection of Books. The Board of Directors or the
Executive Committee shall determine from time to time whether and, if allowed,
when and under what conditions and regulations the accounts and books of the
Corporation (except such as may by statute be specifically open to inspection),
or any of them shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
- 33 -
<PAGE>
SECTION 2. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization, and the words
"Corporate Seal, Delaware".
SECTION 3. Fiscal Year. The fiscal year shall begin on the first day
of January of each year.
SECTION 4. Waiver of Notice. Whenever by statute, the provisions of
the Restated Certificate of Incorporation, or these by-laws, the stockholders,
the Board of Directors or any committee established by the Board of Directors in
accordance with these by-laws are authorized to take any action after notice,
such notice may be waived, in writing, before or after the holding of the
meeting at which such action is to be taken, by the person or persons entitled
to such notice or, in the case of a stockholder, by his attorney thereunto
authorized.
ARTICLE X
Amendments
SECTION 1. By Stockholders. These by-laws, or any of them, may be
amended, altered, changed, added to or repealed at any regular or special
meeting of the stockholders, by the affirmative vote of a majority of the shares
of stock then issued and outstanding.
- 34 -
<PAGE>
SECTION 2. By the Board of Directors. The Board of Directors, by
affirmative vote of a majority of its members, may, at any regular or special
meeting, amend, alter, change, add to or repeal these by-laws, or any of them,
but any by-laws made by the Directors may be amended, altered, changed, added to
or repealed by the stockholders.
- 35 -
MARSH & McLENNAN COMPANIES, INC.
- --------------------------------------------------------------------------------
1997 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
- --------------------------------------------------------------------------------
<PAGE>
MARSH & McLENNAN COMPANIES, INC.
- --------------------------------------------------------------------------------
1997 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
- --------------------------------------------------------------------------------
Page
----
1. Purposes......................................................... 1
2. Definitions...................................................... 1
3. Administration
(a) Authority of the Committee................................. 3
(b) Manner of Exercise of Committee Authority.................. 4
(c) Limitation of Liability.................................... 5
4. Eligibility
(a) Generally.................................................. 5
(b) Annual Per-Person Limitation Applicable to Certain Awards.. 5
5. Stock Subject to the Plan; Adjustments
(a) Shares Reserved............................................ 5
(b) Manner of Counting Shares.................................. 6
(c) Type of Shares Distributable............................... 6
(d) Adjustments. .............................................. 6
6. Specific Terms of Awards
(a) General.................................................... 7
(b) Options.................................................... 7
(c) SARs....................................................... 7
(d) Restricted Stock........................................... 8
(e) Restricted Stock Units..................................... 9
(f) Stock Bonuses and Stock Awards in Lieu of Cash Awards...... 9
(g) Dividend Equivalents....................................... 9
(h) Other Stock-Based Awards................................... 9
(i) Unit-Based Awards.......................................... 10
<PAGE>
MARSH & McLENNAN COMPANIES, INC.
- --------------------------------------------------------------------------------
1997 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
- --------------------------------------------------------------------------------
Page
----
7. Certain Provisions Applicable to Awards
(a) Stand-Alone, Additional, Tandem and Substitute Awards...... 10
(b) Terms of Awards............................................ 10
(c) Form of Payment Under Awards............................... 10
(d) Buyouts.................................................... 10
(e) Cancellation and Rescission of Awards...................... 10
(f) Awards to Participants Outside the United States........... 11
8. Performance Awards
(a) Performance Conditions..................................... 11
(b) Performance Awards Granted to Designated Covered Employees. 11
(c) Written Determinations..................................... 13
(d) Status of Section 8(b) Awards Under Code Section 162(m).... 13
9. Change in Control Provisions
(a) Acceleration Upon Change in Control........................ 13
(b) "Change in Control" Defined................................ 13
(c) "Change in Control Price" Defined.......................... 14
(d) Additional Payments........................................ 14
(e) Pooling of Interests....................................... 15
10. General Provisions
(a) Compliance with Legal and Exchange Requirements............ 16
(b) Nontransferability......................................... 16
(c) No Right to Continued Employment........................... 16
(d) Taxes...................................................... 16
(e) Changes to the Plan and Awards............................. 16
(f) No Rights to Awards; No Stockholder Rights................. 17
(g) Unfunded Status of Awards and Trusts....................... 17
(h) Nonexclusivity of the Plan................................. 17
(i) No Fractional Shares....................................... 17
(j) Governing Law.............................................. 17
(k) Effective Date and Approval Date........................... 18
(l) Titles and Headings; Certain Terms......................... 18
<PAGE>
MARSH & McLENNAN COMPANIES, INC.
- --------------------------------------------------------------------------------
1997 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN
- --------------------------------------------------------------------------------
1. Purposes. The purposes of the 1997 Senior Executive Incentive and Stock
Award Plan are to advance the interests of Marsh & McLennan Companies, Inc. and
its stockholders by providing a means to attract, retain, and motivate senior
executives of the Company and its Subsidiaries and Affiliates, and to strengthen
the mutuality of interest between such senior executives and the Company's
stockholders. This Plan shall be the successor to the Marsh & McLennan
Companies, Inc. 1992 Incentive and Stock Award Plan.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Committee as a participating employer
under the Plan, provided that the Company directly or indirectly owns at least
20% of the combined voting power of all classes of voting stock of such entity
or at least 20% of the ownership interests in such entity.
(b) "Award" means any Option, SAR, Restricted Stock, Restricted Stock
Unit, Stock Bonus or Stock Award in Lieu of Cash, Dividend Equivalent, Other
Stock-Based Award, or Unit- Based Award, including Performance Awards granted to
a Participant under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which have
been designated by such Participant in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under this Plan upon the death of the Participant, or, if there is no designated
Beneficiary or surviving designated Beneficiary, then the person, persons, trust
or trusts entitled by will or the laws of descent and distribution to receive
such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means Change in Control as defined with related
terms in Section 9.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
(h) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan.
The Committee shall consist solely of two or more directors of the Company.
(i) "Company" means Marsh & McLennan Companies, Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
- 1 -
<PAGE>
(j) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock or to
periodic distributions on other specified equity securities of the Company or
any Subsidiary or Affiliate. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award and may be paid
currently or on a deferred basis.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.
(l) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee. Unless otherwise determined by the Committee in good
faith, the Fair Market Value of Stock as of any given date shall mean the per
share value of Stock as determined by using the mean between the high and low
selling prices of such Stock on the immediately preceding date (or, if the NYSE
was not open that day, the next preceding day that the NYSE was open for trading
and the Stock was traded) as reported for such date in the table titled
"NYSE--Composite Transactions," contained in The Wall Street Journal or an
equivalent successor table.
(m) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(n) "NQSO" means any Option that is not an ISO.
(o) "Option" means a right, granted to a Participant under Section 6(b),
to purchase Stock. An Option may be either an ISO or an NQSO.
(p) "Other Stock-Based Award" means a right, granted to a Participant
under Section 6(h), that is denominated or payable in, valued in whole or in
part by reference to, or otherwise based on, or related to, Stock or other
securities of the Company or any Subsidiary or Affiliate, including, without
limitation, rights convertible or exchangeable into Stock or such other
securities, purchase rights for Stock or such other securities, and Awards with
value or payment contingent upon performance of the Company, a Subsidiary, or
Affiliate, or upon any other factor or performance condition designated by the
Committee.
(q) "Participant" means a person who, as an officer or employee of the
Company, a Subsidiary or Affiliate, has been granted an Award under the Plan.
(r) "Performance Award" means an Award of one of the types specified in
Section 6 the grant, exercise, or settlement of which is subject to achievement
of performance goals and other terms specified under Section 8.
(s) "Plan" means this 1997 Senior Executive Incentive and Stock Award
Plan, as amended from time to time.
(t) "Preexisting Plans" mean the Marsh & McLennan Companies, Inc. 1992
Incentive and Stock Award Plan and any other Company plan adopted prior to 1992
and approved by the Company's stockholders that provides for the grant or award
of equity-based compensation.
- 2 -
<PAGE>
(u) "Qualified Member" means a member of the Committee who is a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and an "outside
director" within the meaning of Treasury Regulation 1.162-27(e)(3) under Code
Section 162(m).
(v) "Restricted Stock" means an award of shares of Stock to a Participant
under Section 6(d) that may be subject to certain restrictions and to a risk of
forfeiture.
(w) "Restricted Stock Unit" means an award, granted to a Participant under
Section 6(e), representing the right to receive either Stock or cash or any
combination thereof at the end of a specified deferral period.
(x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(y) "Stock" means the Common Stock, $1.00 par value per share, of the
Company or such other securities as may be substituted or resubstituted therefor
pursuant to Section 5.
(z) "SAR" or "Stock Appreciation Right" means the right, granted to a
Participant under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right, with payment to be made in cash, Stock, other
Awards, or other property as specified in the Award or determined by the
Committee.
(aa) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(bb) "Unit-Based Award" means a unit, granted to a Participant under
Section 6(i), with value or payment contingent upon performance of the Company,
a Subsidiary, or Affiliate, or upon any other factor or performance condition
designated by the Committee.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to designate Affiliates;
(iii) to determine the type or types of Awards to be granted to each
Participant;
(iv) to determine the type and number of Awards to be granted, the
number of shares of Stock to which an Award may relate, the terms and
conditions of any Award granted under the Plan (including any exercise
price, grant price, or purchase price, any restriction or condition, any
schedule for lapse of restrictions or conditions
- 3 -
<PAGE>
relating to transferability or forfeiture, exercisability, or settlement
of an Award, and waivers or accelerations thereof, and waivers of
performance conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other matters to
be determined in connection with an Award;
(v) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an Award
may be canceled, forfeited, exchanged, or surrendered;
(vi) to determine whether, to what extent, and under what
circumstances cash, Stock, other Awards, or other property payable with
respect to an Award will be deferred either automatically, at the election
of the Committee, or at the election of the Participant, and whether to
create trusts and deposit Stock or other property therein;
(vii) to prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(viii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including for the purpose of ensuring that
transactions under the Plan by Participants who are then subject to Section 16
of the Exchange Act in respect of the Company are exempt under Rule 16b-3. In
any case in which the Board is performing a function of the Committee under the
Plan, each reference to the Committee herein shall be deemed to refer to the
Board, except where the context otherwise requires.
(b) Manner of Exercise of Committee Authority. At any time that a member
of the Committee is not a Qualified Member, any action of the Committee relating
to an Award to be granted to a Participant who is then subject to Section 16 of
the Exchange Act in respect of the Company, or relating to an Award intended to
constitute "qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder, may be taken either (i) by a
subcommittee composed solely of two or more Qualified Members, or (ii) by the
Committee but with each such member who is a not Qualified Member abstaining or
recusing himself or herself from such action, provided that, upon such
abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Participants, any
person claiming
- 4 -
<PAGE>
any rights under the Plan from or through any Participant, and stockholders. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any Subsidiary or Affiliate the authority, subject to such
terms as the Committee shall determine, to perform administrative functions and
such other functions as the Committee may determine, to the extent permitted
under applicable law and, with respect to any Participant who is then subject to
Section 16 of the Exchange Act in respect of the Company, to the extent
performance of such function will not result in a subsequent transaction failing
to be exempt under Rule 16b-3(d).
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or other employee of the Company or any
Subsidiary or Affiliate, the Company's independent certified public accountants,
or other professional retained by the Company to assist in the administration of
the Plan. No member of the Committee, nor any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
4. Eligibility.
(a) Generally. Senior executives of the Company and Subsidiaries and
Affiliates (including any director who is also an employee but excluding
directors of the Company who are not employees) are eligible to be granted
Awards under the Plan.
(b) Annual Per-Person Limitation Applicable to Certain Awards. In each
fiscal year during any part of which the Plan is in effect, a Participant may be
granted (i) Options under Section 6(b), (ii) SARs under Section 6(c), and (iii)
Performance Awards pursuant to Section 8(b), involving Awards under Sections
6(d),6(e), 6(f), or 6(h), relating, in the aggregate, to no more than one
million shares of Stock, subject to adjustment as provided in Section 5(d). With
respect to Performance Awards pursuant to Section 8(b) not relating to Stock at
the date of grant (including Unit-Based Awards), the maximum amount payable to a
Participant in settlement of such an Award in any fiscal year shall be the
greater of the Fair Market Value of the number of shares of Stock specified in
the preceding sentence (subject to adjustment) at the date of grant or at the
date of settlement of the Performance Award (this limitation is separate and not
affected by the limitation on shares of Stock set forth in the preceding
sentence).
5. Stock Subject to the Plan; Adjustments.
(a) Shares Reserved. Subject to adjustment as hereinafter provided, the
total number of shares of Stock reserved for issuance in connection with Awards
under the Plan shall be two million five hundred thousand (2,500,000), plus (for
Awards other than ISOs) the additional number of shares of Stock specified in
the succeeding sentence. There shall be added to the number of shares of Stock
reserved for issuance under this Section 5(a) the number of shares authorized
and reserved for awards under the Preexisting Plans to the extent (A) that such
shares were available for grants of awards under the Preexisting Plans
immediately prior to the Approval Date or (B) that such shares were subject to
outstanding
- 5 -
<PAGE>
awards under the Preexisting Plans on the Approval Date and thereafter an event
occurs (including expiration or forfeiture) which would result in such shares
again being available for Awards under the Plan (as determined pursuant to
Section 5(b)). No Award may be granted if the number of shares to which such
Award relates, when added to the number of shares previously issued under the
Plan and the number of shares to which other then-outstanding Awards relate,
exceeds the number of shares reserved under this Section 5(a). Shares of Stock
issued under the Plan shall be counted against this limit in the manner
specified in Section 5(b).
(b) Manner of Counting Shares. If any shares subject to an Award or
Preexisting Plan award are forfeited, canceled, exchanged, or surrendered or
such Award or award is settled in cash or otherwise terminates without a
distribution of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of or tax obligation
relating to such an Award or award and (ii) the number of shares equal to the
number surrendered in payment of any exercise or purchase price of or tax
obligation relating to any Award or award, such number of shares will again be
available for Awards under the Plan. The Committee may make determinations and
adopt regulations for the counting of shares relating to any Award to ensure
appropriate counting, avoid double counting (in the case of tandem or substitute
awards), and provide for adjustments in any case in which the number of shares
actually distributed differs from the number of shares previously counted in
connection with such Award.
(c) Type of Shares Distributable. Any shares of Stock distributed pursuant
to an Award may consist, in whole or in part, of authorized and unissued shares
or treasury shares, including shares acquired by purchase in the open market or
in private transactions.
(d) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Stock, or other
property) which is unusual and non-recurring, or any recapitalization, Stock
split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of Participants under
the Plan, then the Committee shall make such equitable changes or adjustments as
it deems appropriate and, in such manner as it may deem equitable, adjust any or
all of (i) the number and kind of shares of Stock which may thereafter be issued
in connection with Awards, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Awards or, if deemed appropriate, make
provisions for payment of cash or other property with respect to any outstanding
Award, (iii) the exercise price, grant price, or purchase price relating to any
Award, and (iv) the number and kind of shares of Stock set forth in Section 4(b)
as the annual per-person limitation; provided, however, in each case that, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(h)
of the Code, unless the Committee determines otherwise. In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria and performance objectives included in, Awards (including
Performance Awards and performance goals) in recognition of unusual or
non-recurring events (including events described in the preceding sentence, as
well as acquisitions and dispositions of assets or all or part of businesses)
affecting the Company or any Subsidiary, Affiliate, or business unit, or the
financial statements thereof, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations, or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, a Subsidiary, Affiliate, or business unit thereof, performance of
comparable organizations, economic and business
- 6 -
<PAGE>
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided that, unless otherwise determined by the Committee, no
such adjustment shall be made if and to the extent that such adjustment would
cause Options, SARs, or Performance Awards granted pursuant to Section 8(b)
hereof to Participants designated by the Committee as Covered Employees (as
defined in Section 8(d) hereof) to fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 10(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of
employment by the Participant.
(b) Options. The Committee is authorized to grant Options to participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee;
provided, however, that, except as provided in Section 7(a), such exercise
price shall be not less than the Fair Market Value of a share on the date
of grant of such Option, and in no event shall the exercise price for the
purchase of shares be less than par value.
(ii) Time and Method of Exercise. The Committee shall determine at
the date of grant or thereafter the time or times at which an Option may
be exercised in whole or in part, the methods by which such exercise price
may be paid or deemed to be paid, the form of such payment, including
cash, Stock, other Awards, shares or units valued by reference to shares
issued under any other plan of the Company or a Subsidiary or Affiliate
(including shares or units subject to restrictions, so long as an equal
number of shares issued upon exercise of the Option are subject to
substantially similar restrictions), or notes or other property, and the
methods by which Stock will be delivered or deemed to be delivered to
Participants (including deferral of delivery of shares under a deferral
arrangement).
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code.
(c) SARs. The Committee is authorized to grant SARs to Participants on the
following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom
it is granted a right to receive with respect to each share subject
thereto, upon exercise thereof, the excess of (1) the Fair Market Value of
one share of Stock on the date of exercise (or, if the Committee shall so
determine in the case of any such right other than one related to an ISO,
the Fair Market Value of one share at any time during a specified period
before or after the date of exercise, or the Change in Control Price as
defined in Section 9(c)) over (2) the grant price of the SAR as of the
date of grant of the SAR, which shall be not less than the Fair Market
Value of one share of Stock on the
- 7 -
<PAGE>
date of grant of such SAR (or, in the case of an SAR granted in tandem
with an Option, shall be equal to the exercise price of the underlying
Option).
(ii) Other Terms. The Committee shall determine, at the time of
grant or thereafter, the time or times at which an SAR may be exercised in
whole or in part, the method of exercise, method of settlement, form of
consideration payable in settlement, method by which Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR
shall be in tandem with any other Award, and any other terms and
conditions of any SAR. Unless the Committee determines otherwise, an SAR
(1) granted in tandem with an NQSO may be granted at the time of grant of
the related NQSO or at any time thereafter or (2) granted in tandem with
an ISO may only be granted at the time of grant of the related ISO.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as
the Committee may impose at the date of grant or thereafter, which
restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
may determine. Except to the extent restricted under the Award Agreement
relating to the Restricted Stock, a Participant granted Restricted Stock
shall have all of the rights of a stockholder including the right to vote
Restricted Stock and the right to receive dividends thereon.
(ii) Forfeiture. Upon termination of employment (as determined by
the Committee) during the applicable restriction period, Restricted Stock,
and any accrued but unpaid dividends or Dividend Equivalents, that is or
are then subject to a risk of forfeiture shall be forfeited; provided,
however, that the Committee may provide, by rule or regulation or in any
Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock and any
accrued but unpaid dividends or Dividend Equivalents will be waived in
whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock and any accrued but unpaid dividends or
Dividend Equivalents.
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Company shall retain physical possession of the
certificate, and the Company may require the Participant to deliver a
stock power, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or
the payment of such dividends shall be deferred or the amount or value
thereof automatically reinvested in additional Restricted Stock,
Restricted Stock Units, other Awards, or other investment vehicles, as the
Committee shall determine or permit the Participant to elect. Stock
distributed in
- 8 -
<PAGE>
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.
(e) Restricted Stock Units. The Committee is authorized to grant
Restricted Stock Units to Participants, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Stock or cash, as the case
may be, will occur upon expiration of the deferral period specified for
Restricted Stock Units by the Committee (or, if permitted by the
Committee, as elected by the Participant). In addition, Restricted Stock
Units shall be subject to such restrictions as the Committee may impose,
if any, at the date of grant or thereafter, which restrictions may lapse
at the expiration of the deferral period or at earlier or later specified
times, separately or in combination, in installments or otherwise, as the
Committee may determine.
(ii) Forfeiture. Upon termination of employment (as determined by
the Committee) during the applicable deferral period or portion thereof to
which forfeiture conditions apply (as provided in the Award Agreement
evidencing the Restricted Stock Units), or upon failure to satisfy any
other conditions precedent to the delivery of Stock or cash to which such
Restricted Stock Units relate, all Restricted Stock Units, and any accrued
but unpaid Dividend Equivalents, that are at that time subject to a risk
of forfeiture shall be forfeited; provided, however, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock Units and any accrued but unpaid
Dividend Equivalents will be waived in whole or in part in the event of
termination resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Restricted Stock
Units and any accrued but unpaid Dividend Equivalents.
(f) Stock Bonuses and Stock Awards in Lieu of Cash Awards. The Committee
is authorized to grant Stock as a bonus, or to grant other Awards, in lieu of
Company commitments to pay cash under other plans or compensatory arrangements.
Stock or Awards granted hereunder shall have such other terms as shall be
determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Participants. The Committee may provide, at the date of grant or
thereafter, that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Stock, or other
investment vehicles as the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants Other Stock-Based
Awards that are deemed by the Committee to be consistent with the purposes of
the Plan. The Committee shall determine the terms and conditions of such Awards
at the date of grant or thereafter. Stock or other securities or property
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards, notes or other property, as the Committee shall determine,
subject to any required corporate action.
- 9 -
<PAGE>
(i) Unit-Based Awards. The Committee is authorized to grant to
Participants Unit-Based Awards that are deemed by the Committee to be consistent
with the purposes of the Plan. Such Awards may be paid or settled in cash,
Stock, other Awards or property.
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in exchange or substitution for, any other
Award granted under the Plan or any award granted under any other plan of the
Company, any Subsidiary or Affiliate, or any business entity to be acquired by
the Company or a Subsidiary or Affiliate, or any other right of a Participant to
receive payment from the Company or any Subsidiary or Affiliate. Awards may be
granted in addition to or in tandem with such other Awards or awards may be
granted either as of the same time as or a different time from the grant of such
other Awards or awards. The per share exercise price of any Option, grant price
of any SAR, or purchase price of any other Award conferring a right to purchase
Stock which is granted, in connection with the substitution of awards granted
under any other plan of the Company or any Subsidiary or Affiliate or any
business entity to be acquired by the Company or any Subsidiary or Affiliate,
shall be determined by the Committee, in its discretion, and may, to the extent
the Committee determines necessary in order to preserve the value of such other
award, be less than the Fair Market Value of a share on the date of grant of
such substitute Award.
(b) Terms of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Stock, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments.
(d) Buyouts. The Committee may at any time offer to buy out any
outstanding Award for a payment in cash, Stock, other Awards (subject to Section
7(a)), or other property based on such terms and conditions as the Committee
shall determine.
(e) Cancellation and Rescission of Awards. The Committee may provide in
any Award Agreement that, in the event a Participant violates a term of the
Award Agreement or other agreement with or policy of the Company or a Subsidiary
or Affiliate, takes or omits to take actions that are deemed to be in
competition with the Company or its Subsidiaries or Affiliates, an unauthorized
solicitation of customers, suppliers, or employees of the Company or its
Subsidiaries or Affiliates, or an unauthorized disclosure or misuse of
proprietary or confidential information of the Company or its Subsidiaries or
Affiliates, or takes or omits to take any other action as may be specified in
the Award Agreement, the Participant shall be subject to forfeiture of such
Award or portion, if any, of the Award as may then remain
- 10 -
<PAGE>
outstanding and also to forfeiture of any amounts of cash, Stock, other Awards,
or other property received by the Participant upon exercise or settlement of
such Award or in connection with such Award during such period (as the Committee
may provide in the Award Agreement) prior to the occurrence which gives rise to
the forfeiture.
(f) Awards to Participants Outside the United States. The Committee may
modify the terms of any Award under the Plan granted to a Participant who is, at
the time of grant or during the term of the Award, resident or primarily
employed outside of the United States in any manner deemed by the Committee to
be necessary or appropriate in order that such Award shall conform to laws,
regulations, and customs of the country in which the Participant is then
resident or primarily employed, or so that the value and other benefits of the
Award to the Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant's residence or employment abroad,
shall be comparable to the value of such an Award to a Participant who is
resident or primarily employed in the United States. An Award may be modified
under this Section 7(f) in a manner that is inconsistent with the express terms
of the Plan, so long as such modifications will not contravene any applicable
law or regulation.
8. Performance Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
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 under Section 8(b)
hereof in the case of a Performance Award intended to qualify under Code Section
162(m).
(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to a person who is
designated by the Committee as likely to be a Covered Employee (as hereinafter
defined) should qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other terms
set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each such
criteria, as specified by the Committee consistent with this Section 8(b),
which level may also be expressed in terms of a specified increase or
decrease in the particular criteria compared to a past period. Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder (including Regulation 1.162-27
and successor regulations thereto), including the requirement that the
level or levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain." The
Committee may determine that such Performance Awards shall be granted,
exercised, and/or settled upon achievement of any one performance goal or
that two or more of the performance goals must be achieved as a condition
to settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
- 11 -
<PAGE>
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Subsidiaries, Affiliates, business units or ventures of the Company
(except with respect to the total stockholder return and earnings per
share criteria), shall be used by the Committee in establishing
performance goals for such Performance Awards: (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
Committee including, but not limited to, the Standard & Poor's 500 Stock
Index or other indexes or groups of comparable companies referenced in the
Company's proxy statement in response to Item 402(l) of Regulation S-K.
(iii) Performance Period; Timing For Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period specified by the Committee.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance Awards,
or at such other date as may be required or permitted for
"performance-based compensation"under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with such Performance Awards.
The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or an another amount
which need not bear a strictly mathematical relationship to such business
criteria.
(v) Settlement of Such Performance Awards; Other Terms. Settlement
of such Performance Awards shall be in cash, Stock, other Awards, or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards, but may not exercise discretion
to increase any such amount payable to a Covered Employee in respect of a
Performance Award subject to this Section 8(b). The Committee shall
specify the circumstances in which such Performance Awards shall be
forfeited in the event of termination of employment by the Participant
prior to the end of a performance period or settlement of Performance
Awards, and other terms relating to such Performance Awards in accordance
with Section 6 and this Section 8.
- 12 -
<PAGE>
(c) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the achievement of performance
goals relating to Performance Awards under Section 8(b), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards.
(d) Status of Section 8(b) Awards Under Code Section 162(m). It is the
intent of the Company that Performance Awards under Section 8(b) hereof granted
to persons who are designated by the Committee as likely to be Covered Employees
within the meaning of Code Section 162(m) and regulations thereunder (including
Regulation 1.162-27 and successor regulations thereto) shall, if so designated
by the Committee, constitute "qualified performance-based compensation "within
the meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c), and (d), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term "Covered Employee" as used herein shall
mean only a person designated by the Committee, at the time of grant of
Performance Awards, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9. Change in Control Provisions.
(a) Acceleration Upon Change in Control. Except as provided in
Section 9(e) or in an Award Agreement, in the event of a "Change in Control,"
as defined in this Section:
(i) any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested; and
(ii) the restrictions, deferral limitations, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse, such Awards shall be deemed fully vested, any performance
conditions imposed with respect to Awards shall be deemed to be fully
achieved, and payment of such Awards shall be made in accordance with the
terms of the Award Agreements.
(b) "Change in Control" Defined. For purposes of the Plan, a "Change in
Control" shall have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of
the Company's then outstanding voting securities;
- 13 -
<PAGE>
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii), or (iv) of this Section 9(b)) 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 of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving or parent entity) 50% or more of the combined
voting power of the voting securities of the Company or such surviving or
parent entity outstanding immediately after such merger or consolidation
or (B) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
hereinabove defined) acquired 50% or more of the combined voting power of
the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
(c) "Change in Control Price" Defined. For purposes of the Plan, "Change
in Control Price" means the higher of (i) the highest price per share paid in
any transaction constituting a Change in Control or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding or following a
Change in Control.
(d) Additional Payments. If any payment attributable to any Award under
the Plan or any Preexisting Plan (the "Payments") will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar tax that
may hereafter be imposed), the Company shall pay at the time specified below an
additional amount (the "Gross-Up Payment") such that the net amount retained by
a Participant after deduction of any Excise Tax on such Payments and any
federal, state and local income and employment tax and Excise Tax upon the
payment provided for by this Section, shall be equal to the Payments. For
purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) all payments or benefits
received or to be received by a Participant in connection with a Change in
Control of the Company or the Participant's termination of employment with the
Company, a parent corporation thereof, a Subsidiary or Affiliate (pursuant to
the Plan or any other plan, agreement or arrangement of the Company, its
Subsidiaries or Affiliates) shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Participant such payments or benefits
(in whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the base amount
- 14 -
<PAGE>
within the meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax; (ii) the amount of the Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Payments or (2) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) (after applying clause (i) above); and
(iii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Participant shall be deemed
to pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Participant's residence on the date such Gross-Up
Payment is made, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of the Gross-Up Payment, the Participant
shall repay to the Company at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by the Participant if such
repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder at the time
of the Gross-Up Payment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest payable with respect to such excess) at the time that the
amount of such excess is finally determined. Any Gross-Up Payment to be made to
the Participant under this paragraph shall be payable within thirty (30) days of
the date of the Change in Control.
(e) Pooling of Interests. Notwithstanding the provisions of this Section
9, in the event that consummation of a Change in Control is contingent on the
ability to account for such Change in Control under "pooling of interests"
accounting methodology, the provisions of Sections 9(a) and 9(d) hereof shall
not be implemented to the extent such implementation would prevent the Change in
Control transaction from being accounted for in such manner. In such event, the
Committee may in its discretion take such action as it deems appropriate,
without precluding the Change in Control transaction from being so accounted
for, to enable holders of Awards to realize substantially similar economic
results as would have been realized through application of Sections 9(a) and
9(d) hereof.
- 15 -
<PAGE>
10. General Provisions.
(a) Compliance with Legal and Exchange Requirements. The Plan, the
granting and exercising of Awards thereunder, and the other obligations of the
Company under the Plan and any Award Agreement, shall be subject to all
applicable federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Stock under any Award until
completion of such stock exchange listing or registration or qualification of
such Stock or other required action under any state, federal or foreign law,
rule or regulation as the Company may consider appropriate, and may require any
Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules and regulations.
(b) Nontransferability. Except as otherwise provided in this Section
10(b), Awards shall not be transferable by a Participant other than by will or
the laws of descent and distribution or pursuant to a designation of a
Beneficiary, and Awards shall be exercisable during the lifetime of a
Participant only by such Participant or his guardian or legal representative. In
addition, except as otherwise provided in this Section 10(b), no rights under
the Plan may be pledged, mortgaged, hypothecated, or otherwise encumbered, or
subject to the claims of creditors. The foregoing notwithstanding, the Committee
may, in its sole discretion, provide that Awards (or rights or interests
therein) other than ISOs and Awards in tandem with ISOs shall be transferable,
including permitting transfers, without consideration, to a Participant's
immediate family members (i.e., spouse, children, grandchildren, or siblings, as
well as the Participant), to trusts for the benefit of such immediate family
members, and to partnerships in which such family members are the only parties,
or other transfers deemed by the Committee to be not inconsistent with the
purposes of the Plan.
(c) No Right to Continued Employment. Neither the Plan nor any action
taken thereunder shall be construed as giving any employee the right to be
retained in the employ of the Company or any of its Subsidiaries or Affiliates,
nor shall it interfere in any way with the right of the Company or any of its
Subsidiaries or Affiliates to terminate any employee's employment at any time.
(d) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Participants to satisfy obligations
for the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such amendment, alteration, suspension, discontinuation, or termination
shall be subject to the approval of the Company's stockholders within one year
after such Board action if such stockholder approval is required by any federal
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted; provided, however, that,
without the consent of an affected Participant, no amendment, alteration,
suspension,
- 16 -
<PAGE>
discontinuation, or termination of the Plan may materially adversely affect the
rights of such Participant under any Award theretofore granted to him or her.
The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate any Award theretofore granted and any Award
Agreement relating thereto; provided, however, that, without the consent of an
affected Participant, no such amendment, alteration, suspension,
discontinuation, or termination of any Award may materially adversely affect the
rights of such Participant under such Award. Following the occurrence of a
Change in Control, the Board may not terminate this Plan or amend this Plan in
any manner adverse to employees.
(f) No Rights to Awards; No Stockholder Rights. No Participant or employee
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants and employees. No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Stock is duly issued or transferred to the Participant
in accordance with the terms of the Award.
(g) Unfunded Status of Awards and Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant. If and to the extent authorized by the Committee, the
Company may deposit into such a trust Stock or other assets for delivery to the
Participant in satisfaction of the Company's obligations under any Award. If so
provided by the Committee, upon such a deposit of Stock or other assets for the
benefit of a Participant, there shall be substituted for the rights of the
Participant to receive delivery of Stock and other payments under this Plan a
right to receive the assets of the trust (to the extent that the deposited Stock
or other assets represented the full amount of the Company's obligation under
the Award at the date of deposit). The trustee of the trust may be authorized to
dispose of trust assets and reinvest the proceeds in alternative investments,
subject to such terms and conditions as the Committee may specify and in
accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including the granting of
stock options and other awards otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of the state of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
- 17 -
<PAGE>
(k) Effective Date and Approval Date. The Plan shall become effective upon
approval by the Board of Directors (the "Effective Date"); provided, however,
that the Plan shall be subject to the subsequent approval by the Company's
stockholders at a meeting of Company stockholders duly held in accordance with
the Delaware General Corporation Law, or any adjournment thereof in accordance
with applicable provisions of the Delaware General Corporation Law, such
stockholder approval to be obtained not later than one year after the Effective
Date (the date of such approval being referred to as the "Approval Date"). Any
Awards granted under the Plan prior to such approval of stockholders shall be
subject to such approval, and in the absence of such approval, such Awards shall
be null and void.
(l) Titles and Headings; Certain Terms. The titles and headings of
the sections in the Plan are for convenience of reference only. In the event
of any conflict, the text of the Plan, rather than such titles or headings,
shall control. The term "including," when used in the Plan, means in each
case "including without limitation."
- 18 -
Marsh & McLennan Companies, Inc.
Special Severance Pay Plan
(as amended and restated as of November 21, 1996)
1. Eligibility:
Eligibility for severance payments under this Plan will be limited to
executives who terminate from the Company or its subsidiaries for reasons
other than cause, death, total and permanent disability or normal
retirement and who at time of termination:
a. are grantees of outstanding awards ("Awards") of restricted stock,
incentive units awarded in lieu of restricted stock, restricted stock
units awarded in lieu of restricted stock or restricted stock units
awarded to replace another grant under the Marsh & McLennan Companies
Restricted Stock Plan (1985), the Marsh & McLennan Companies 1988
Incentive and Stock Award Plan, the Marsh & McLennan Companies 1992
Incentive and Stock Award Plan (the "1992 Plan") or any successor
thereto, but excluding any supplemental Awards ("Supplemental Awards")
issued under the 1992 Plan (or any successor thereto) in connection with
the granting of replacement awards under any such plan in exchange for
the surrender and cancellation of then outstanding Awards (the
outstanding Awards, other than any Supplemental Awards, shall
hereinafter be referred to as the "Covered Awards"); and
b. have at least ten years of service with the Company or its
subsidiaries.
2. Non-Solicitation Agreement:
In addition to satisfying the above eligibility criteria, the executive at
or before termination will be required to enter into a Non-Solicitation
Agreement with the Company providing that in order to receive severance
payments under this Plan, the executive must refrain, for a three year
period from the date of termination, from (i) soliciting or accepting
business from any clients of the Company or its subsidiaries, and (ii)
soliciting an employee of the Company or its subsidiaries to terminate his
or her employment.
3. Forfeiture:
All payments under this Plan made in accordance with Paragraph 4 below will
be made only after the executive has, to the satisfaction of the Company in
its sole discretion, demonstrated compliance with the Non-Solicitation
Agreement. If, in the judgment of the Company, the executive has violated
such agreement, all rights to severance payments remaining under this Plan
shall be forfeited.
<PAGE>
Marsh & McLennan Companies, Inc.
Special Severance Pay Plan
Page Two
4. Severance Amount Determination:
The total severance amount shall be based on a percentage of the shares and
units subject to the executive's Covered Awards which were forfeited at the
executive's termination of employment (the "Forfeited Awards"). Such
percentage shall be determined by the executive's years of service at
termination as follows:
Severance Amount
(as a Percentage of
Years of Service Forfeited Awards)
---------------- -----------------
10-14 50%
15-19 60%
20-24 75%
25 and Above 90%
5. Dividends:
Dividends or dividend equivalents as appropriate, shall be paid on all
shares or share equivalents remaining unpaid under this Plan at the normal
times that dividends are paid to other Company common stock owners.
6. Form and Manner of Payment:
Payments under this Plan shall be made in shares of MMC common stock in
three annual installments commencing one year following termination of
employment. Such payments, however, will be made only after the executive
has, to the satisfaction of the Company, demonstrated compliance with the
Non-Solicitation Agreement.
Annual share installments will be issued in MMC stock, less the number of
shares needed to pay applicable withholding taxes. Such installments shall
be determined by multiplying (i) the number of shares remaining under this
Plan by (ii) a fraction, the numerator of which is 1 and the denominator of
which is the number of remaining installments, including the one being
made.
7. Death Benefits:
If the executive dies after termination of employment and before payment of
all installments under this Plan, shares remaining unpaid at death shall be
issued to the estate of the executive. Such payment, however, will be made
only after the executive's personal representative has to the satisfaction
of the company demonstrated compliance by the executive through the date of
his or her death with the Non-Solicitation Agreement.
<PAGE>
Marsh & McLennan Companies, Inc.
Special Severance Pay Plan
Page Three
8. Administration:
This Plan shall be administered by the Compensation Committee, which shall
be composed of disinterested persons as such term is defined in the rules
of the Securities and Exchange Commission, and whose actions and
determination on matters related to this Plan shall be conclusive. Subject
to the express provisions of this Plan, the powers of the Committee include
having the authority, in its discretion, to:
a. define, prescribe, amend and rescind rules, regulations,
procedures, terms and conditions relating to this Plan,
including any addenda required to comply with applicable
non-United States law; and
b. make all other determinations necessary or advisable for
administering this Plan, including, but not limited to,
interpreting this Plan, correcting defects, reconciling
inconsistencies and resolving ambiguities.
9. Amendment and Termination:
This Plan may be amended or terminated at any time by the Board of
Directors of the Company.
MARSH & McLENNAN COMPANIES, INC.
U.S. EMPLOYEE
1996 CASH BONUS AWARD VOLUNTARY DEFERRAL PLAN
1. ELIGIBILITY
All active U.S. employees of Marsh & McLennan Companies, Inc. (the
"Corporation") and its subsidiaries who are designated as eligible for
participation in the MMC Partners Bonus Plan or a Local Bonus Plan, and who are
presently in salary grade 15 (or its equivalent) or above, may, at management's
discretion, be considered for participation in the Marsh & McLennan Companies,
Inc. U.S. Employee 1996 Cash Bonus Award Voluntary Deferral Plan (the "1996
Plan"). Participants in the 1996 Plan may make deferral elections pursuant to
the rules outlined in Section 2 below.
2. PROGRAM RULES
Except as otherwise provided herein, the 1996 Plan shall be administered by the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"). The Committee shall have authority in its sole discretion to
interpret the 1996 Plan and make all determinations, including the determination
of bonus awards eligible to be deferred, with respect to the 1996 Plan. All
determinations made by the Committee shall be final and binding. The Committee
may delegate to any other individual or entity the authority to perform any or
all of the functions of the Committee under the 1996 Plan and references to the
Committee shall be deemed to include any such delegate. Exercise of deferral
elections under the 1996 Plan must be made in accordance with the following
rules.
a. Rights to an Award and to a Deferral Election
The right to a deferral election applies only to the annual cash bonus
scheduled to be awarded in early 1997 in respect of 1996 services, the
payment of which bonus would normally be made by the end of the first
quarter of the 1997 calendar year. The granting of such an annual cash
bonus award is discretionary and neither delivery of deferral election
materials nor an election to defer shall affect entitlement to such an
award. The right to a deferral election does not apply to bonuses
(including, but not limited to, bonuses pursuant to an employment
agreement, sign-on or guaranteed bonuses, commissions or non-annual
incentive payments) that are not awarded as part of an annual cash bonus
plan.
<PAGE>
b. Election Forms
In order to ensure that elections to defer bonus amounts are effective
under applicable tax laws, please complete and sign the attached election
form(s) and return them (postmarked or delivered) no later than November
27, 1996. Form(s) should be returned, and any questions should be
directed, to:
Vincent R. Belluccia
Manager, Executive Compensation
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
(212) 345-5657
c. Deferral Options
(i) Deferral Amount. An eligible employee may elect to defer a portion of
such employee's bonus award until January of a specific year ("year
certain") or until January of the year following retirement in an amount
represented by one of the following two choices:
1. 25%, 50% or 75% of the employee's cash bonus award,
subject to a maximum limit established by the Committee, or
2. the lowest of 25%, 50% or 75% of the employee's cash bonus
award which results in a deferral of at least $10,000.
If the percentage selected times the amount of the cash bonus award is
less than $10,000, no deferral will be made or deducted from the award.
(ii) 1996 Deferred Bonus Accounts. If a deferral election is made,
deferrals may be made into one or both of the two accounts which the
Corporation shall make available to the participating employee. The
relevant portion of the award deferral will be credited to the relevant
account on the first day of the month following the date in which the
bonus payment would have been made had it not been deferred. The available
accounts for deferrals of bonuses (the "1996 Deferred Bonus Accounts")
shall consist of (a) the 1996 Putnam Fund Account and (b) the 1996
Corporation Stock Account. Amounts may not be transferred between the 1996
Corporation Stock Account and either the 1996 Putnam Fund Account or the
"Putnam Transfer Fund Account" (as referred to in Section 2.e. below).
2
<PAGE>
d. 1996 Putnam Fund Account
(i) Account Valuation. The 1996 Putnam Fund Account is a bookkeeping
account the value of which shall be based upon the performance of selected
funds of the Putnam mutual fund group. The Corporation will determine in
its sole discretion the funds of the Putnam mutual fund group into which
deferrals may be made. Deferrals among selected funds comprising the 1996
Putnam Fund Account must be made in multiples of 5% of the total amounts
deferred into the 1996 Putnam Fund Account. Deferred amounts will be
credited to the 1996 Putnam Fund Account with units each reflecting one
Class A share of the elected fund. Fractional units will also be credited
to such account, if applicable. The number of such credited units will be
determined by dividing the value of the bonus award deferred into such
fund by the net asset value of the elected fund of the 1996 Putnam Fund
Account as of the close of business on the last trading day on the New
York Stock Exchange of the month in which such bonus payment would have
been made had it not been deferred. All dividends paid with respect to an
elected fund of a 1996 Putnam Fund Account will be deemed to be
immediately reinvested in such fund.
(ii) Fund Transfers. Amounts deferred into a 1996 Putnam Fund Account and
the Putnam Transfer Fund Account may be transferred between eligible funds
of these respective accounts (but not between the 1996 Putnam Fund Account
and the Putnam Transfer Fund Account) pursuant to an election which may be
made once per calendar month (or at such other intervals as the Committee
may prescribe). Such election shall be effective, and the associated
transfer shall be based upon the net asset values of the applicable funds
of the 1996 Putnam Fund Account or the Putnam Transfer Fund Account, as of
the close of business on the last trading day on the New York Stock
Exchange of the month (or other applicable period) in which such election
is received by the Corporation, provided the election is received by the
25th day of such month (or at least a sufficient number of days,
determined by the Committee, prior to the end of such other applicable
period) and not revoked prior to such date. In the event the election is
not received on a timely basis, such election shall be effective as of the
close of business on the last trading day on the New York Stock Exchange
of the immediately following calendar month (or other applicable period),
provided such election is not revoked prior to the 25th day of such
following calendar month (or prior to the date determined by the Committee
for any other applicable period).
e. Putnam Transfer Fund Account
By November 27, 1996, each individual with respect to whom there is
maintained an "Interest Factor Account" (established for deferrals of all
pre-1993
3
<PAGE>
bonus awards), whether or not any such individual is eligible for
participation under Section 1 above, may make an irrevocable election to
transfer all (but not less than all) of such participant's Interest Factor
Account into a "Putnam Transfer Fund Account", which election shall be
effective, and which transfer shall be based upon the net asset value of
the selected funds of such Putnam Transfer Fund Account, as of the close
of business on the last trading day on the New York Stock Exchange in
1996. The Putnam Transfer Fund Account shall be administered in a manner
consistent with the administration of the 1996 Putnam Fund Account
pursuant to Section 2.d.(i) above. Distribution elections (including the
form of payment) otherwise in effect for the Interest Factor Account shall
remain in effect for amounts transferred to the Putnam Transfer Fund
Account.
f. 1996 Corporation Stock Account
(i) Account Valuation. The 1996 Corporation Stock Account is a bookkeeping
account the value of which shall be based upon the performance of the
common stock of the Corporation. Amounts deferred into the 1996
Corporation Stock Account will be credited to such account with units each
reflecting one share of common stock of the Corporation. Fractional units
will also be credited to such account, if applicable. The number of such
credited units will be determined by dividing the value of the bonus award
deferred into the 1996 Corporation Stock Account (plus the "supplemental
amount" referred to in clause (ii) below) by the closing price of the
common stock of the Corporation on the New York Stock Exchange on the last
trading day on the New York Stock Exchange of the month in which such
bonus payment would have been made had it not been deferred. Dividends
paid on the common stock of the Corporation shall be reflected in a
participant's 1996 Corporation Stock Account by the crediting of
additional units in such account equal to the value of the dividend and
based upon the closing price of the common stock of the Corporation on the
New York Stock Exchange on the date such dividend is paid. Deferrals into
the 1996 Corporation Stock Account must be deferred to a date not earlier
than January 1, 2000.
(ii) Supplemental Amount. With respect to that portion of a bonus award
which a participating employee defers into the 1996 Corporation Stock
Account, there shall be credited to such participant's 1996 Corporation
Stock Account an amount equal to the amount deferred into such account
plus an additional amount equal to 15% of the amount so deferred (the
"supplemental amount"). The maximum percentage of any participating
employee's annual bonus award permitted to be deferred into the 1996
Corporation Stock Account (prior to giving effect to the supplemental
amount) is 50% of such award.
4
<PAGE>
g. Statement of Account
The Corporation shall provide periodically to each participant (but not
less frequently than once per calendar quarter) a statement setting forth
the balance to the credit of such participant in such participant's 1996
Deferred Bonus Accounts and Putnam Transfer Fund Account.
h. Irrevocability and Acceleration
Subject to the provisions of paragraph i. (iii) below, all deferral
elections made under this 1996 Plan are irrevocable. However, the
Committee may, in its sole discretion, and upon finding that a participant
has demonstrated severe financial hardship, direct the acceleration of the
payment of any or all deferred amounts then credited to the participant's
1996 Deferred Bonus Accounts.
i. Payment of Deferred Amounts
(i) Year Certain Deferrals. If the participant remains employed until the
deferral year elected, all amounts relating to "year certain" deferrals
will be paid in a single distribution, less applicable withholding taxes,
in January of the deferral year elected, or the participant may elect (at
the time of the original deferral election) to have distributions from the
1996 Corporation Stock Account or the 1996 Putnam Fund Account, as the
case may be, made in up to ten (10) annual installments payable each
January commencing with the deferral year elected. Annual installments
will be paid in an amount, less applicable withholding taxes, determined
by multiplying (i) the balance of the 1996 Corporation Stock Account or
the 1996 Putnam Fund Account, as the case may be, by (ii) a fraction, the
numerator of which is 1 and the denominator of which is a number equal to
the remaining unpaid annual installments.
(ii) Retirement Deferrals. For participants who retire, amounts relating
to deferrals until the year following retirement will be paid in a single
distribution in January of the year following retirement, or the
participant may elect (at the time of the original deferral election) to
have distributions from the 1996 Corporation Stock Account or 1996 Putnam
Fund Account, as the case may be, made in up to ten (10) annual
installments payable each January commencing with the year following
retirement. Annual installments will be paid in an amount, less applicable
withholding taxes, determined by multiplying (i) the balance of the 1996
Corporation Stock Account or 1996 Putnam Fund Account, as the case may be,
by (ii) a fraction, the numerator of which is 1 and the denominator of
which is a number equal to the remaining unpaid annual installments.
5
<PAGE>
(iii) Redeferral Election. Participants shall be permitted to delay the
beginning date of distribution and/or increase the number of annual
installments (up to the maximum number permitted under this 1996 Plan) for
awards previously deferred or redeferred under this 1996 Plan provided
that the redeferral election must be made at least one full calendar year
prior to the beginning date of distribution.
(iv) Termination of Employment Prior to End of Deferral Period. Subject to
the provisions of paragraph (vi) below, in the event of termination of
employment for any reason prior to completion of the elected deferral
period, all amounts then in the participant's 1996 Deferred Bonus Accounts
will be paid to the participant (or the participant's designated
beneficiary in the event of death) in a single distribution, less
applicable withholding taxes, as soon as practicable after the end of the
quarter in which the termination occurred; provided, however, that,
subject to the provisions of paragraph (vi) below, upon a participant's
retirement or termination for disability prior to completion of the
elected deferral period all such amounts shall be paid in January of the
year following such retirement or termination for disability, as the case
may be.
(v) Death During Installment Period. If a participant dies after the
commencement of payments from his or her 1996 Deferred Bonus Accounts, the
designated beneficiary shall receive the remaining installments over the
elected installment period.
(vi) Special Rules Applicable to 1996 Corporation Stock Account. Notwith
standing any provision in this 1996 Plan to the contrary (other than
Section 2.h. above), with respect to a participant's 1996 Corporation
Stock Account, in the event that prior to January 1, 2000, a participant's
employment terminates for disability or retirement, all amounts in such
account will be paid to the participant in a single distribution, less
applicable withholding taxes, in January of 2000. In the event a
participant's employment terminates on account of death prior to January
1, 2000, the distribution rule in paragraph (iv) above will apply. If,
however, the termination of employment prior to January 1, 2000 is on
account of a reason other than death, disability or retirement, the
participant will receive, as soon as practicable following the end of the
quarter in which the termination occurred, a single distribution, less
applicable withholding taxes, of (a) the balance of the participant's 1996
Corporation Stock Account less (b) the portion of such balance
attributable to the supplemental amount (including earnings thereon),
which portion shall be forfeited in its entirety. For purposes of
determining the portion of the balance of the 1996 Corporation Stock
Account attributable to the supplemental amount, the supplemental amount
shall be increased or decreased by the respective gain or loss in the 1996
Corporation Stock Account attributable to such supplemental amount.
6
<PAGE>
(vii) Change in Control. Notwithstanding any other provision in this 1996
Plan to the contrary, in the event of a "change in control" of the
Corporation, as defined in the Corporation's 1992 Incentive and Stock
Award Plan (the "1992 Incentive Plan"), all amounts credited to a
participant's 1996 Deferred Bonus Accounts as of the effective date of
such change in control, including any interest accrued thereon, will be
distributed within five days of such change in control as a lump sum cash
payment, less applicable withholding taxes.
(viii) Form of Payment. All payments in respect of the 1996 Putnam Fund
Account shall be made in cash and payments in respect of the 1996
Corporation Stock Account shall be made in shares of common stock of the
Corporation (with cash paid in lieu of any fractional shares); provided,
however, that in the event of a change in control of the Corporation,
payments from the 1996 Corporation Stock Account shall be made in cash
based upon (A) the highest price paid for shares of common stock of the
Corporation in connection with such change in control or (B) if shares of
common stock of the Corporation are not purchased or exchanged in
connection with such change in control, the closing price of the common
stock of the Corporation on the New York Stock Exchange on the last
trading day on the New York Stock Exchange prior to the date of the change
in control.
j. Tax Treatment
Under present Federal income tax laws, no portion of the balance credited
to a participant's 1996 Deferred Bonus Accounts or Putnam Transfer Fund
Account will be includable in income for Federal income tax purposes
during the period of deferral. However, FICA tax withholding is required
currently on the cash bonus amount (excluding any portion subject to a
mandatory deferral) awarded to the participant, and such withholding is
required on the supplemental amount in January of 2000. When any part of
the 1996 Deferred Bonus Accounts or Putnam Transfer Fund Account is
actually paid to the participant, such portion will be includable in
income, and Federal, state and local income tax withholding will apply.
The Corporation may make necessary arrangements in order to effectuate any
such withholding, including the mandatory withholding of shares of common
stock of the Corporation which would otherwise be distributed to a
participant.
k. Beneficiary Designation
Each participant shall have the right, at any time, to designate any
person or persons as beneficiary or beneficiaries (both principal as well
as contingent) to whom payment shall be made under the 1996 Plan and any
other Cash Bonus
7
<PAGE>
Award Voluntary Deferral Plan for which the participant has an account
balance (the "Plans"), in the event of death prior to complete
distribution to the participant of the amounts due under the Plans. Any
beneficiary designation may be changed by a participant by the filing of
such change in writing on a form prescribed by the Corporation. The filing
of a new beneficiary designation form will cancel all beneficiary
designations previously filed and apply to all deferrals in the account. A
beneficiary designation form is attached and when completed should be
forwarded to Vincent R. Belluccia, at the address set forth in Section
2.b. above. If a participant does not have a beneficiary designation in
effect, or if all designated beneficiaries predecease the participant,
then any amounts payable to the beneficiary shall be paid to the
participants estate. The payment to the named beneficiary shall completely
discharge the Corporation's obligations under the 1996 Plans.
l. Changes in Capitalization
If there is any change in the number or class of shares of common stock of
the Corporation through the declaration of stock dividend or other
extraordinary dividends, or recapitalization resulting in stock splits, or
combinations or exchanges of such shares or in the event of similar
corporate transactions, each participant's 1996 Corporation Stock Account
shall be equitably adjusted by the Committee to reflect any such change in
the number or class of issued shares of common stock of the Corporation or
to reflect such similar corporate transaction.
3. AMENDMENT AND TERMINATION OF THE 1996 PLAN
The Committee may, at its discretion and at any time, amend the 1996 Plan
in whole or in part. The Committee may also terminate the 1996 Plan in its
entirety at any time and, upon any such termination, each participant
shall be paid in a single distribution, or over such period of time as
determined by the Committee (not to extend beyond the earlier of 10 years
or the elected deferral period), the then remaining balance in such
participant's 1996 Deferred Bonus Accounts.
4. MISCELLANEOUS
A participant under the 1996 Plan is merely a general (not secured)
creditor and nothing contained in the 1996 Plan shall create a trust of
any kind or a fiduciary relationship between the Corporation and the
participant or the participant's estate. Nothing contained herein shall be
construed as conferring upon the participant the right to continued
employment with the Corporation or its subsidiaries, or to a cash bonus
award. Except as otherwise provided by applicable law, benefits payable
under the 1996 Plan may not be assigned or
8
<PAGE>
hypothecated and no such benefits shall be subject to legal process or
attachment for the payment of any claim of any person entitled to receive
the same. The adoption of the 1996 Plan and any elections made pursuant to
the 1996 Plan are subject to approval of the 1996 Plan by the Committee.
9
MARSH & McLENNAN COMPANIES, INC.
CANADIAN EMPLOYEE
1996 CASH BONUS AWARD VOLUNTARY DEFERRAL PLAN
1. ELIGIBILITY
All active Canadian employees of Marsh & McLennan Companies, Inc. (the
"Corporation") and its subsidiaries who are designated as eligible for
participation in the MMC Partners Bonus Plan or a Local Bonus Plan, and who are
presently in salary grade 15 (or its equivalent) or above, may, at management's
discretion, be considered for participation in the Marsh & McLennan Companies,
Inc. Canadian Employee 1996 Cash Bonus Award Voluntary Deferral Plan (the "1996
Plan"). Participants in the 1996 Plan may make deferral elections pursuant to
the rules outlined in Section 2 below.
2. PROGRAM RULES
Except as otherwise provided herein, the 1996 Plan shall be administered by the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"). The Committee shall have authority in its sole discretion to
interpret the 1996 Plan and make all determinations, including the determination
of bonus awards eligible to be deferred, with respect to the 1996 Plan. All
determinations made by the Committee shall be final and binding. The Committee
may delegate to any other individual or entity the authority to perform any or
all of the functions of the Committee under the 1996 Plan and references to the
Committee shall be deemed to include any such delegate. Exercise of deferral
elections under the 1996 Plan must be made in accordance with the following
rules.
a. Rights to an Award and to a Deferral Election
The right to a deferral election applies only to the annual cash bonus
scheduled to be awarded in early 1997 in respect of 1996 services, the
payment of which bonus would normally be made by the end of the first
quarter of the 1997 calendar year. The granting of such an annual cash
bonus award is discretionary and neither delivery of deferral election
materials nor an election to defer shall affect entitlement to such an
award. The right to a deferral election does not apply to bonuses
(including, but not limited to, bonuses pursuant to an employment
agreement, sign-on or guaranteed bonuses, commissions or non-annual
incentive payments) that are not awarded as part of an annual cash bonus
plan.
<PAGE>
b. Election Forms
In order to ensure that elections to defer bonus amounts are effective
under applicable tax laws, please complete and sign the attached election
form(s) and return them (postmarked or delivered) no later than November
27, 1996. Form(s) should be returned, and any questions should be
directed, to:
Vincent R. Belluccia
Manager, Executive Compensation
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
U.S.A.
(212) 345-5657
c. Deferral Options
(i) Deferral Amount. An eligible employee may elect to defer a portion of
such employee's bonus award in an amount represented by one of the
following two choices:
1. 25%, 50%, 75% or 100% of the employee's cash bonus award,
subject to a maximum limit established by the Committee, or
2. the lowest of 25%, 50%, 75% or 100% of the employee's cash
bonus award which results in a deferral of at least Canadian
$10,000.
If the percentage selected times the amount of the cash bonus award is
less than Canadian $10,000, no deferral will be made or deducted from the
award.
(ii) Period of Deferral. The payment of a bonus award may be deferred to
January of 1998 or January of 1999, as elected by the participant.
(iii) 1996 Deferred Bonus Accounts. If a deferral election is made,
deferrals may be made into one or both of the two accounts which the
Corporation shall make available to the participating employee. The
relevant portion of the award deferral will be credited to the relevant
account on the first day of the month following the date in which the
bonus payment would have been made had it not been deferred. The available
accounts for deferrals of bonuses (the "1996 Deferred Bonus Accounts")
shall consist of (a) the 1996 Putnam Fund Account and (b) the 1996
Interest Equivalent Account. Amounts may not be transferred between the
1996 Interest Equivalent Account and the 1996 Putnam Fund Account.
2
<PAGE>
d. 1996 Putnam Fund Account
(i) Account Valuation. The 1996 Putnam Fund Account is a bookkeeping
account the value of which shall be based upon the performance of selected
funds of the Putnam mutual fund group. The Corporation will determine in
its sole discretion the funds of the Putnam mutual fund group into which
deferrals may be made. Deferrals among selected funds comprising the 1996
Putnam Fund Account must be made in multiples of 5% of the total amounts
deferred into the 1996 Putnam Fund Account. Deferred amounts will be
credited to the 1996 Putnam Fund Account with units each reflecting one
Class A share of the elected fund. Fractional units will also be credited
to such account, if applicable. The number of such credited units will be
determined by dividing the value of the bonus award deferred into such
fund by the net asset value of the elected fund of the 1996 Putnam Fund
Account as of the close of business on the last trading day on the New
York Stock Exchange of the month in which such bonus payment would have
been made had it not been deferred. All dividends paid with respect to an
elected fund of a 1996 Putnam Fund Account will be deemed to be
immediately reinvested in such fund. All amounts credited to the 1996
Putnam Fund Account will be converted into U.S. dollars at the exchange
rate in effect as of the applicable date.
(ii) Fund Transfers. Amounts deferred into a 1996 Putnam Fund Account may
be transferred between eligible funds pursuant to an election which may be
made once per calendar month (or at such other intervals as the Committee
may prescribe). Such election shall be effective, and the associated
transfer shall be based upon the net asset values of the applicable funds
of the 1996 Putnam Fund Account, as of the close of business on the last
trading day on the New York Stock Exchange of the month (or other
applicable period) in which such election is received by the Corporation,
provided the election is received by the 25th day of such month (or at
least a sufficient number of days, determined by the Committee, prior to
the end of such other applicable period) and not revoked prior to such
date. In the event the election is not received on a timely basis, such
election shall be effective as of the close of business on the last
trading day on the New York Stock Exchange of the immediately following
calendar month (or other applicable period), provided such election is not
revoked prior to the 25th day of such following calendar month (or prior
to the date determined by the Committee for any other applicable period).
3
<PAGE>
e. 1996 Interest Equivalent Account
An "Interest Equivalent" shall be calculated and added to each 1996
Interest Equivalent Account as of the last day of each calendar quarter
based on the average principal balance in said account during said
calendar quarter and on the average of the 30-day Banker's Acceptance rate
of interest as published in the Toronto Globe & Mail during such calendar
quarter.
f. Statement of Account
The Corporation shall provide periodically to each participant (but not
less frequently than once per calendar quarter) a statement setting forth
the balance to the credit of such participant in such participant's 1996
Deferred Bonus Accounts.
g. Irrevocability and Acceleration
All deferral elections made under the 1996 Plan are irrevocable. However,
the Committee may, in its sole discretion, and upon finding that a
participant has demonstrated severe financial hardship, direct the
acceleration of the payment of any or all deferred amounts then credited
to the participant's 1996 Deferred Bonus Accounts.
h. Payment of Deferred Amounts
(i) Deferral Year Distributions. If the participant remains employed until
the deferral year elected, all amounts in the participant's 1996 Deferred
Bonus Accounts will be paid in a single distribution, less applicable
withholding taxes, in January of the deferral year elected.
(ii) Termination of Employment Prior to End of Deferral Period. In the
event of termination of employment for any reason prior to the completion
of the elected deferral period, all amounts then in the participant's 1996
Deferred Bonus Accounts will be paid to the participant (or the
participant's designated beneficiary in the event of death) in a single
distribution, less applicable withholding taxes, as soon as practicable
after the end of the quarter in which the termination occurred; provided,
however, that upon a participant's retirement or termination for
disability prior to completion of the elected deferral period all such
amounts shall be paid in a single distribution during January of the year
following such retirement or termination for disability, as the case may
be.
(iii) Change in Control. Notwithstanding any other provision in the 1996
Plan to the contrary, in the event of a "change in control" of the
Corporation, as defined in the Corporation's 1992 Incentive and Stock
Award Plan (the "1992 Incentive Plan"), all amounts credited to a
participant's 1996 Deferred
4
<PAGE>
Bonus Accounts as of the effective date of such change in control,
including any interest accrued thereon, will be distributed within five
days of such change in control as a single distribution, less applicable
withholding taxes.
(iv) Form of Payment. All payments under the 1996 Plan shall be made in
cash in Canadian dollars converted, if necessary, at the exchange rate in
effect as of the applicable date.
i. Tax Treatment
Under present Canadian tax law, all amounts of an employee's bonus
deferred for a period not exceeding three years from the year in which the
related service was rendered, as well as any Interest Equivalent thereon,
will be exempt from Canadian taxation during the period of deferral. When
any part of the 1996 Deferred Bonus Accounts are actually paid to a
participant, taxable employment income will be incurred.
j. Beneficiary Designation
Each participant shall have the right, at any time, to designate any
person or persons as beneficiary or beneficiaries (both principal as well
as contingent) to whom payment shall be made under the 1996 Plan and any
other Cash Bonus Award Voluntary Deferral Plan for which the participant
has an account balance (the "Plans"), in the event of death prior to
complete distribution to the participant of the amounts due under the
Plans. Any beneficiary designation may be changed by a participant by the
filing of such change in writing on a form prescribed by the Corporation.
The filing of a new beneficiary designation form will cancel all
beneficiary designations previously filed and apply to all deferrals in
the account. A beneficiary designation form is attached and when used
should be forwarded to Vincent R. Belluccia, at the address set forth in
Section 2.b. above. If a participant does not have a beneficiary
designation in effect, or if all designated beneficiaries predecease the
participant, then any amounts payable shall be paid to the participant's
estate. The payment to the named beneficiary shall completely discharge
the Corporation's obligations under the Plans.
3. AMENDMENT AND TERMINATION OF THE 1996 PLAN
The Committee may, at its discretion and at any time, amend the 1996 Plan in
whole or in part. The Committee may also terminate the 1996 Plan in its entirety
at any time and, upon any such termination, each participant shall be paid in a
single distribution, or over such period of time as determined by the Committee
(provided such period of time falls within the restriction set forth in Section
2.c.(ii) above), the then remaining balance in such participant's 1996 Deferred
Bonus Accounts.
5
<PAGE>
4. MISCELLANEOUS
A participant under the 1996 Plan is merely a general (not secured) creditor and
nothing contained in the 1996 Plan shall create a trust of any kind or a
fiduciary relationship between the Corporation and the participant or the
participant's estate. Nothing contained herein shall be construed as conferring
upon the participant the right to continued employment with the Corporation or
its subsidiaries, or to a cash bonus award. Except as otherwise provided by
applicable law, benefits payable under the 1996 Plan may not be assigned or
hypothecated and no such benefits shall be subject to legal process or
attachment for the payment of any claim of any person entitled to receive the
same. The adoption of the 1996 Plan and any elections made pursuant to the 1996
Plan are subject to approval of the 1996 Plan by the Committee.
6
MARSH & MCLENNAN COMPANIES, INC.
DIRECTORS STOCK COMPENSATION PLAN
(Restated as Amended 11/21/96)
1. Purpose.
The Marsh & McLennan Companies, Inc. Directors Stock
Compensation Plan (the "Plan") is intended to provide an incentive to members of
the board of directors of Marsh & McLennan Companies, Inc., a Delaware
corporation (the "Company"), who receive fees for their services, to remain in
the service of the Company and to encourage such Directors to acquire additional
stock ownership interests in the Company.
2. Definitions.
(a) "Accounting Date" means June 1st of each Plan Year.
(b) "Basic Fee" means the annual retainer payable to a
Director during each Plan Year (at the annual rate in effect on the Accounting
Date of such Plan Year) for such Director's services on the Board (exclusive of
any amounts payable with respect to service on a committee of the Board or other
committee of Directors or for attendance at Board or committee meetings).
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.
(f) "Compensation" means the aggregate amount payable to a
Director for such Director's services on the Board (including any amounts
payable with respect to service on a committee of the Board or other committee
of Directors or for attendance at Board or committee meetings, but excluding the
portion of the Basic Fee with respect to which shares of Common Stock are
issuable pursuant to Section 5(a) hereof).
<PAGE>
(g) "Director" means a member of the Board who receives fees
for his or her services.
(h) "Effective Date" means June 1, 1995.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(j) "Fair Market Value" on any given date means, except as
otherwise provided in Section 5(f) hereof, the average of the high and low
prices of the Common Stock on the New York Stock Exchange on the last trading
day preceding such date.
(k) "Plan Year" means the twelve-month period commencing June
1st and ending on the following May 31st.
3. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee
shall adopt such rules as it may deem appropriate in order to carry out the
purpose of the Plan. All questions of interpretation, administration, and
application of the Plan shall be determined by a majority of the members of the
Committee, except that the Committee may authorize any one or more of its
members, or any officer of the Company, to execute and deliver documents on
behalf of the Committee. The determination of such majority shall be final and
binding in all matters relating to the Plan. No member of the Committee shall be
liable for any act done or omitted to be done by such member or by any other
member of the Committee in connection with the Plan, except for such member's
own willful misconduct or as expressly provided by statute.
4. Common Stock Reserved for the Plan.
The number of shares of Common Stock authorized for issuance
under the Plan is 250,000, including Deferred Shares (as defined in Section 5(c)
hereof), whether distributed as such or paid in cash, subject to adjustment
pursuant to Section 6 hereof. Shares of Common Stock delivered hereunder may be
either authorized but unissued shares or previously issued shares reacquired and
held by the Company.
2
<PAGE>
5. Terms and Conditions of Grants.
(a) Mandatory Portion. On each Accounting Date commencing with
the Effective Date, each Director shall automatically receive a number of shares
of Common Stock with a Fair Market Value on such Accounting Date equal to
one-quarter (1/4) of his or her Basic Fee payable during the Plan Year which
commences on such Accounting Date. Such shares of Common Stock(including
fractional shares) shall be received in lieu of the payment of cash in respect
of one-quarter (1/4) of such Basic Fee and shall be transferred on such
Accounting Date in accordance with Section 5(e) hereof, except to the extent
that a Deferral Election (as defined in Section 5(c) hereof) shall be in effect
with respect to such shares or to the extent that Section 5(f) hereof applies.
(b) Elective Portion. Each Director may elect that a specified
percentage (in increments of 10%) of his or her future Compensation be paid in
shares of Common Stock. Such shares of Common Stock (including fractional
shares) shall be received in lieu of the payment of cash in respect of the
specified percentage of future Compensation payable for services rendered in the
quarters ended August 15th, November 15th, February 15th and May 15th, as the
case may be. Such shares of Common Stock shall be transferred in accordance with
Section 5(e) hereof, except to the extent that a Deferral Election (as defined
in Section 5(c) hereof) shall be in effect with respect to such shares or to the
extent that Section 5(f) hereof applies. An election hereunder shall be in the
form of a document executed and filed with the Secretary of the Company and
shall remain in effect until the effectiveness of any modification or
revocation.
(c) Deferral Election. With respect to (1) the portion of the
Basic Fee payable in Common Stock under Section 5(a) and (2) the specified
percentage of Compensation payable in Common Stock under Section 5(b) hereof,
each Director may elect to defer the receipt (a "Deferral Election") of all or
any portion of the shares of Common Stock otherwise transferable pursuant to
Section 5(e). In such event, there shall be credited to an account maintained on
behalf of such Director, as of the date on which shares would otherwise be
transferred hereunder, a number of Shares ("Deferred Shares") equal to the
number of shares otherwise transferable. A Deferral Election or revocation
hereunder shall be in the form of a document executed by the Director and filed
with the Secretary of the Company prior to the
3
<PAGE>
time that the Basic Fee or other Compensation to which such election relates has
been earned. Any such election may be modified or revoked at any time with
respect to the Basic Fee or other Compensation not yet earned, but will remain
in effect until modified or revoked.
Effective as of the Effective Date, all units representing
phantom stock which have been credited to an account maintained by the Company
for the benefit of a Director, pursuant to a deferral agreement or arrangement
with such Director, shall be converted into an equal number of Deferred Shares
pursuant to this Plan and shall thereafter be treated in accordance with the
terms hereof.
The Director shall elect (a) that Deferred Shares be
distributed (in whole shares of Common Stock and cash in lieu of any fractional
shares) in a lump sum or in substantially equal annual installments (not
exceeding 10), and (b) that the lump sum or first installment be distributed on
the tenth day of the calendar year immediately following either (i) the year in
which the Director ceases to be a Director of the Company or (ii) the earlier of
the year in which the Director ceases to be a Director of the Company or a date
designated by the Director; provided, however, that any such election shall be
subject to Section 5(f) hereof. Installments subsequent to the first installment
shall be distributed on the tenth day of each succeeding calendar year until all
of the Director's Deferred Shares shall have been distributed. Notwithstanding
anything else this Plan, the Committee may, in its sole discretion, accelerate
the distribution of Deferred Shares in cases of extreme emergency or hardship.
In the event the Director should die before all of the
Director's Deferred Shares have been distributed, the balance of the Deferred
Shares shall be distributed in a lump sum to the beneficiary or beneficiaries
designated in writing by the Director, or if no designation has been made, to
the estate of the Director.
(d) Dividend Equivalents. Deferred Shares shall be credited
with an amount equal to the dividends which would have been paid on an equal
number of outstanding shares of Common Stock ("Dividend Equivalents"). Dividend
Equivalents shall be credited (i) as of the payment date of such dividends, and
(ii) only with respect to Deferred Shares credited to such Director
4
<PAGE>
prior to the record date of the dividend. Deferred Shares held pending
distribution shall continue to be credited with Dividend Equivalents.
Dividend Equivalents so credited shall be converted into an
additional number of Deferred Shares as of the payment date of the dividend
(based on the Fair Market Value on such payment date). Such Deferred Shares
shall thereafter be treated in the same manner as any other Deferred Shares
under the Plan.
(e) Transfer of Shares. Shares of Common Stock issuable to a
Director under Section 5(a) hereof shall be transferred to such Director as of
each Accounting Date. The total number of shares of Common Stock to be so
transferred shall be determined by dividing (a) one-quarter (1/4) of such
Director's Basic Fee payable during the Plan Year commencing on such Accounting
Date by (b) the Fair Market Value of a share of Common Stock on such Accounting
Date. Shares of Common Stock issuable to a Director under Section 5(b) hereof
shall be transferred to such Director on August 31st, November 30th, February
28th and May 31st of each Plan Year. The total number of shares of Common Stock
to be so transferred on each such date shall be determined by dividing (x) the
product of (1) the percentage specified by the Director pursuant to Section 5(b)
hereof and (2) the Director's Compensation payable for services rendered in the
quarter ending on August 15th, November 15th, February 15th or May 15th of such
Plan Year, as the case may be, by (y) the Fair Market Value of a share of Common
Stock on such date. The registrar for the Company will make an entry on its
books and records evidencing that such shares (including any fractional shares)
have been duly issued as of such dates; provided, however, that a Director may
in the alternative elect in writing prior thereto to receive a stock certificate
representing the number of whole such shares acquired plus cash in lieu of any
fractional shares.
(f) Change in Control. Upon a Change in Control, all Deferred
Shares, to the extent credited prior to the Change n Control, shall be paid
immediately in cash. For purposes of this Section 5(f), with respect to
determining the cash equivalent value of a Deferred Share, the Fair Market Value
of such a Deferred Share shall be deemed to equal the greater of (i) the highest
Fair Market Value per share at any time during the 60-day period preceding a
Change in Control and (ii) the price of a
5
<PAGE>
share of Common Stock which is paid or offered to be paid, by any person or
entity, in connection with any transaction which constitutes a Change in Control
pursuant to this Section 5(f).
For purposes of the Plan, a "Change in Control" shall have
occurred if:
(i) any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company,
any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the
Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
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
institute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this Section
5(f)) 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 of the Company approve a merger
or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation
which would result in the voting securities of the
6
<PAGE>
Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of
the voting securities of the Company or such surviving
entity (or any parent of the Company or such surviving
entity) outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as herein
above defined) acquired more than 50% of the combined
voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets (or any
transaction having a similar effect).
6. Effect of Certain Changes in Capitalization.
In the event of any recapitalization, stock split, reverse
stock split, stock dividend, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event affecting the Common Stock, the maximum number or class of
shares available under the Plan, and the number or class of shares of Common
Stock to be delivered hereunder shall be adjusted by the Committee to reflect
any such change in the number or class of issued shares of Common Stock.
7. Term of Plan.
This Plan shall become effective as of the Effective Date,
provided that the Plan shall have been approved by the stockholders of the
Company at the 1995 annual meeting of stockholders. This Plan shall remain in
effect until all authorized shares have been issued, unless sooner terminated by
7
<PAGE>
the Board. No transfer of shares of Common Stock may be made to any Director
under the Plan unless stockholder approval of the Plan has previously been
obtained pursuant to this Section 7.
8. Amendment; Termination.
The Board may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part.
9. Rights of Directors.
Nothing contained in the Plan or with respect to any grant
shall interfere with or limit in any way the right of the stockholders of the
Company to remove any Director from the Board, nor confer upon any Director any
right to continue in the service of the Company as a Director.
10. General Restrictions.
(a) Investment Representations. The Company may require any
Director to whom Common Stock is issued, as a condition of receiving such Common
Stock, to give written assurances in substance and form satisfactory to the
Company and its counsel to the effect that such person is acquiring the Common
Stock for his own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with Federal and
applicable state securities laws.
(b) Compliance with Securities Laws. Each issuance shall be
subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares upon any
securities exchange or under any state or Federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance of shares hereunder, such issuance may not
be accepted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
8
<PAGE>
(c) Nontransferability. Awards under this Plan shall not be
transferable by a Director other than by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
11. Withholding.
The Company may defer making payments under the Plan until
satisfactory arrangements have been made for the payment of any Federal, state
or local income taxes required to be withheld with respect to such payment or
delivery.
12. Governing Law.
This Plan and all rights hereunder shall be construed in
accordance with and governed by the laws of the State of Delaware.
13. Headings.
The headings of sections and subsections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Plan.
9
AGREEMENT made as of March 29, 1996 between MARSH & McLENNAN RISK CAPITAL
CORP., a Delaware corporation (the "Company"), MARSH & McLENNAN RISK CAPITAL
HOLDINGS, LTD., a Delaware corporation ("MMRCH"), and ROBERT CLEMENTS (the
"Executive").
WHEREAS, the Executive is employed by the Company as its Chairman of the
Board and Chief Executive Officer pursuant to the Amended and Restated
Employment Agreement effective as of December 31, 1993 (the "Employment
Agreement");
WHEREAS, pursuant to an Investment Advisory Agreement dated September 19,
1995, between Risk Capital Holdings, Inc. ("Risk Capital Holdings") and the
Company, and an Investment Advisory Agreement dated September 19, 1995, between
Risk Capital Reinsurance Company ("Risk Capital RE") and the Company
(collectively, "Advisory Agreements"), Risk Capital Holdings and Risk Capital RE
will pay the Company certain fees as compensation for services rendered pursuant
to the Advisory Agreements;
WHEREAS, MMRCH has acquired certain Class A and Class B warrants to
acquired shares of common stock, $.01 par value per share, of Risk Capital
Holdings; and
WHEREAS, the parties desire to enter into an Agreement on the terms set
forth below.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree as follows:
1. Certain Warrants. As additional compensation for the Executive's
services to the Company and subject to the provisions of Paragraph 2 hereof,
MMRCH shall transfer to the Executive Class A Warrants to acquire an aggregate
of 200,000 shares of common stock, $.01 par value per share (the "Risk Capital
Holdings Shares"), of Risk Capital Holdings, as soon as practicable following
the date the consent described in Paragraph 2 hereof is obtained. In addition,
as soon as practicable following the date the consent described in paragraph 2
hereof is obtained, MMRCH shall deliver to an escrow agent (the "Escrow Agent")
(which Escrow Agent shall be selected by mutual agreement of the Executive and
MMRCH), Class B Warrants to acquire an additional 150,000 Risk Capital Holdings
Shares, to be held by the Escrow Agent in accordance with the provisions of an
escrow agreement, substantially in the form attached as Exhibit A (including,
however, such changes thereto as may be proposed by
<PAGE>
the Escrow Agent and are agreed to by the parties, which agreement shall not be
unreasonably withheld). Such Class B Warrants shall be transferred to the
Executive or exercised as provided in such escrow agreement, a condition to such
transfer being that the "Market Price" of Risk Capital Holdings Shares has
equaled or exceeded $35, subject to the provisions of such escrow agreement
dealing with a "Change of Control," all as more fully described in such escrow
agreement.
2. Certain Conditions. The transfer of Class A and B Warrants described
herein shall at all times comply with, and be subject to the conditions set
forth in, Section 5(a) of the Amended and Restated Subscription Agreement, dated
June 28, 1995, between Risk Capital Holdings and MMRCH ("Subscription
Agreement"). The Company and the Executive shall each use best efforts to obtain
the consent to the transfer described in Paragraph 1 hereof, in accordance with
Section 5(a)(y) of the Subscription Agreement. If such consent is not obtained,
the Company and the Executive shall in good faith negotiate an amendment hereto
which, insofar as is reasonably practicable, confers upon the Executive
substantially equivalent benefits (by means of transfer of phantom equity units,
stock appreciation rights or similar mechanisms).
3. Notice. Upon each exercise by the Executive of any Class A or B
Warrants described herein, the Executive shall give notice of such exercise and
the number of Class A or B Warrants being exercised to the Company at
Marsh & McLennan Risk Capital Corp.
80 Field Point Road
Greenwich, Connecticut 06830
Attention: Chief Executive Officer
with a copy to:
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attention: General Counsel
4. Risk Capital Holdings Performance Payment. As additional compensation
for the Executive's services to the Company, the Company shall pay to the
Executive a contingent deferred bonus (the "Risk Capital Holdings Performance
Payment"),
2
<PAGE>
determined by reference to Revenue (as hereinafter defined) with respect to each
of the calendar years 1998 and 2000. The Risk Capital Holdings Performance
Payment shall be paid in a lump sum (less any applicable withholding of taxes)
as soon as practicable after the date that the Revenue actually received with
respect to the applicable calendar year has been determined. For purposes of
this paragraph, Revenue shall mean the aggregate fees actually received by the
Company pursuant to Section 4(b) of the Advisory Agreements. The amount of such
Risk Capital Holdings Performance Payment shall be determined as follows:
with respect to 1998:
Risk Capital Holdings
Revenue Performance Payment
- ------- -------------------
$4MM $250,000
more than $ 4MM but less than $250,000 plus 20% of the excess of the
$6.5MM Revenue over $ 4MM
$6.5 MM or more $750,000
with respect to 2000:
Risk Capital Holdings
Revenue Performance Payment
- ------- -------------------
$7MM $500,000
more than $7MM but less than $500,000 plus 20% of the excess of the
$12MM Revenue over $7MM
$12MM or more $1,500,00
5. Survival of Certain Rights. Anything in this Agreement to the contrary
notwithstanding, the Executive's rights hereunder shall survive the termination
of the Employment Agreement and the termination of the Executive's employment
with the Company for any reason.
6. Assignment. The Executive may sell, assign or otherwise transfer his
rights to (a) the Class B Warrants, including his rights under the escrow
agreement referred to in Paragraph 1 hereof (subject to receipt of consent to
such
3
<PAGE>
transfer in accordance with Section 5(a)(y) of the Subscription Agreement) and
(b) the Risk Capital Holdings Performance Payment. In the event of the
Executive's death or incompetence, the Executive's executor, heirs, guardian or
other personal representative shall be entitled to exercise the Executive's
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs (in the case
of the Executive) and assigns.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals as of the day and year first above written.
MARSH & McLENNAN RISK CAPITAL CORP.
By: /s/Jeffrey W. Greenberg
-------------------------------
Chairman
MARSH & McLENNAN RISK CAPITAL
HOLDINGS, LTD.
By: /s/Frank J. Borelli
-------------------------------
Chairman
/s/Robert Clements
-------------------------------
Robert Clements
Guaranty
Marsh & McLennan Companies, Inc., a Delaware corporation, hereby guarantees to
the Executive the performance of any and all of the obligations and duties of
the Company and MMRCH under this Agreement (including any obligations and duties
under the escrow agreement that may be entered into pursuant to Paragraph 1
hereof.).
MARSH & McLENNAN COMPANIES, INC.
By: /s/A. J. C. Smith
-------------------------------
Chairman
4
EXHIBIT 21
SUBSIDIARIES OF
MARSH & McLENNAN COMPANIES, INC.
(as of 2/28/97)
<TABLE>
<CAPTION>
Where
Name Incorporated
---- ------------
<S> <C>
Marsh & McLennan Real Estate Advisors, Inc. Delaware
Omega Indemnity (Bermuda) Limited Bermuda
Epsilon Insurance Company, Ltd. Cayman Islands
Marsh & McLennan, Incorporated Delaware
Marsh & McLennan of Arkansas, Inc. Arkansas
M & M Insurance Management Services, Inc. Delaware
Marsh & McLennan Financial Markets, Inc. Delaware
Marsh & McLennan GbR Holdings, Inc. Delaware
Marsh & McLennan Pallas Holdings, Inc. Delaware
Triad Services, Inc. Delaware
Marsh & McLennan Agency, Incorporated District of Columbia
Marsh & McLennan, Incorporated Illinois
Marsh & McLennan, Incorporated Indiana
Marsh & McLennan, Incorporated Kentucky
Marsh & McLennan of Louisiana, Inc. Louisiana
Marmac Agency, Inc. Louisiana
Marsh & McLennan, Incorporated Maine
Marsh & McLennan, Inc. Massachusetts
Marsh & McLennan Michigan
Marsh & McLennan, Inc. of Nevada Nevada
Marsh & McLennan, Incorporated Ohio
Marsh & McLennan, Inc. Oklahoma
Marsh & McLennan of Puerto Rico, Inc. Puerto Rico
Marsh & McLennan, Incorporated Rhode Island
Marsh & McLennan, Inc. Texas
Marsh & McLennan of Texas, Inc. Texas
Marsh & McLennan, Incorporated Virginia
Marsh & McLennan Global Broking, Inc. New York
Marsh & McLennan Global Broking (Bermuda) Ltd. Bermuda
Bowring (Bermuda) Investments Ltd. Bermuda
Marsh & McLennan Global Broking, Inc. Connecticut
Marsh & McLennan Global Broking, Inc. Illinois
Marsh & McLennan Global Broking, Inc. Missouri
Marsh & McLennan Global Broking, Inc. New Jersey
Marsh & McLennan Intermediaries, Inc. New York
Marsh & McLennan Global Broking, Inc. Texas
Marsh & McLennan Global Broking (Dublin) Ltd. Ireland
Marsh & McLennan Holdings, Inc. Delaware
Marsh & McLennan (Korea) Ltd. Korea
Marsh & McLennan (Malaysia) SDN BHD Malaysia
Marsh & McLennan Argentina SA Asesores de Seguros Argentina
Marsh & McLennan Argentina SA Corredores de Reaseguros Argentina
Marsh & McLennan Argentina SA Risk Management Consultants Argentina
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Marsh & McLennan Pty. Ltd. Australia
Marsh & McLennan (PNG) Pty. Ltd. Papua New Guinea
Kila Bowring Insurances Pty. Ltd. Papua New Guinea
Fenchurch Insurance Brokers Pty. Limited Australia
Marsh & McLennan (WA) Pty. Ltd. Australia
Marsh & McLennan (WA Division) Pty. Ltd. Australia
Marsh & McLennan (South Australia) Pty. Ltd. Australia
Marsh & McLennan (SA Division) Australia
Marsh & McLennan Captive Management Services Pty. Ltd. Australia
Asia Pacific Insurance Wholesalers Pty. Ltd. Australia
Marsh & McLennan Versicherungs-Service GmbH Austria
Marsh & McLennan Management Services (Barbados), Ltd. Barbados
Henrijean, S.A Belgium
Marsh & McLennan Europe S.A Belgium
Marsh & McLennan Management Services (Bermuda) Limited Bermuda
Transglobe Management (Bermuda) Ltd. Bermuda
Marsh & McLennan (Cayman Islands) Ltd. Cayman Islands
Marsh & McLennan Management Services (L) Ltd. Labuan
Tudor, Marsh & McLennan Corretores de Seguros S.A Brazil
Les Assureurs Conseils Camerounais Faugere & Jutheau & Cie Cameroon
Marsh & McLennan, Limited/Limitee' Canada
D.G. Watt & Associates Ltd. Canada
Charbonneau, Dulude & Associes (1985) Limitee/Charbonneau,
Dulude & Associates (1985) Limited Canada
M&M Insurance Management Canada Ltd. British Columbia
Marshcan Insurance Brokers Limited Canada
Irish & Maulson Limited Ontario
Pratte-Morrissette, Inc. Quebec
Schatz Insurance Agencies, Inc. Saskatchewan
Marsh & McLennan (SASK) Ltd. Saskatchewan
Claro Marsh & McLennan S.A. Corredores De Seguros Chile
Claro Marsh & McLennan Consultores en Recursos Humanos, Ltda Chile
Marsh & McLennan Denmark A/S Denmark
Marsh & McLennan Norway A.S Norway
Marsh & McLennan Sweden AB Sweden
Les Assureurs Conseils Gabonais Faugere & Jutheau & Cie Gabon
Marsh & McLennan Companies GmbH Germany
Marsh & McLennan Companies Beteiligungsgesellschaft II GmbH Germany
Gradmann & Holler, K.G Germany
Erwin Warnecke GmbH Germany
Gradmann & Holler GmbH Germany
RMB-Risk Management Beratungs-GmbH Germany
Wolf & Hasselmann GmbH Germany
Gradmann & Holler-William M. Mercer GmbH Germany
VW-Versicherungsvermittlungs-GmbH Germany
VVG Gradmann & Holler Versicherungs-Vermittlungs -GmbH Germany
Airport Asserkuranz Vermittlungs GmbH Germany
GMFS Versicherungs-Vermittlungs GmbH Germany
Sudzucker Versicherungsvermittlungs GmbH Germany
Senator Assercuranz Contor GmbH Germany
Bau Asserkuranz Vermittlungs GmbH Germany
Westfalia Asserkuranz Versicherungsvermittlungs GmbH Germany
Gradmann & Holler International GmbH Germany
Gradmann & Holler Kiefhaber GmbH Germany
Gradmann & Holler AG Switzerland
</TABLE>
- 2 -
<PAGE>
<TABLE>
<S> <C>
Marsh & McLennan-Hellas-L.L.C Greece
Marsh & McLennan Management Services (Guernsey) Limited Guernsey
Marsh & McLennan Limited Hong Kong
Marsh & McLennan Budapest Insurance Brokers & Consultants Ltd. Hungary
Marsh & McLennan Management Services (Dublin) Limited Ireland
Bowring Marsh & McLennan (IOM) Ltd. Isle of Man
Marsh & McLennan Management Services (Isle of Man) Ltd. Isle of Man
Marsh & McLennan Italia & Co., S.P.A Italy
Africaine De Courtage d'Assurances Faugere & Jutheau, S.A Ivory Coast
Les Assureurs Conseils de Cote d'Ivoire Faugere & Jutheau & Cie Ivory Coast
Marsh & McLennan Japan Ltd. Japan
Marsh & McLennan Co. Inc. Liberia
Marsh & McLennan Europe S.A Luxembourg
Marsh & McLennan Luxembourg, S.A Luxembourg
Marsh & McLennan Insurance Management Services, S.A Luxembourg
S.P.K. Bowring Marsh & McLennan Sdn. Bhd Malaysia
Corredores Internacionales de Reaseguros S.A Mexico
Marsh & McLennan Polska Sp.zO.O Poland
Marsh & McLennan Romania SRL Romania
Marsh & McLennan Management Services (S) Pte. Ltd. Singapore
Marsh & McLennan Bowring Pte. Ltd. Singapore
Marsh & McLennan Slovakia s.r.o Slovakia
Marsh & McLennan Correduria de Reaseguros S.A Spain
Marsh & McLennan Espana, S.A., Correduria de Seguros Spain
Marsh Privat AIE Spain
Marsh & McLennan EWI S.A Switzerland
Marsh & McLennan (Thai) Company Ltd. Thailand
Marsh & McLennan Sigorta ve Reasurans Brokerligi AS Turkey
C.T. Bowring International Broking Holdings, Ltd. United Kingdom
Insurance Brokers of Nigeria Nigeria
Marsh & McLennan Bowring Marine & Energy Group Ltd. United Kingdom
Marsh & McLennan Limited United Kingdom
Marsh & McLennan, Incorporated Virgin Islands
Muir Beddall (Zimbabwe) Limited Zimbabwe
C.T. Bowring and Associates (Private) Limited Zimbabwe
Guy Carpenter & Company, Inc. Delaware
The Carpenter Management Corporation Delaware
Paul Napolitan, Inc. Delaware
Sellon Associates, Inc. New York
Balis & Co., Inc. Pennsylvania
Philadelphia Insurance Management Company Delaware
EQECAT, Inc. Delaware
Guy Carpenter Advisors, Inc. Delaware
Normandy Reinsurance Company Limited Bermuda
Guy Carpenter & Company, S.A Belgium
American Overseas Management Corporation (Canada) Canada
Guy Carpenter & Company (Canada) Limited Canada
Guy Carpenter & Company, A/S Denmark
Gradmann & Holler/Guy Carpenter GmbH Germany
Guy Carpenter & Company (Asia) Limited Hong Kong
Guy Carpenter Italia, S.R.L Italy
Guy Carpenter y Cia (Mexico) S.A. de C.V Mexico
Guy Carpenter & Company (Stockholm) AB Sweden
Bennich Reinsurance Management AB Sweden
Guy Carpenter & Co. Limited United Kingdom
</TABLE>
- 3 -
<PAGE>
<TABLE>
<S> <C>
Marsh & McLennan Risk Capital Holdings, Ltd. Delaware
Marsh & McLennan Risk Capital Corp. Delaware
Terra Nova (Bermuda) Holdings, Ltd. Bermuda
Marsh et McLennan France SA France
Mercer-Faugere & Jutheau SA France
Compagnie Europeenne de Courtage d'Assurances et de Reassurances France
Faugere & Jutheau, S.A France
Faugere & Jutheau Bermuda Bermuda
Assureurs Conseils Tchadiens (S.A.R.L.) Chad
Assureur Conseil de Djibouti- Faugere & Jutheau et Cie SARL Djibouti
Ancien Cabinet Pierre de Kerpezdron (S.A.) France
SNC P. Deleplanque France
Boistel S.A France
Bureau Gogioso Eyssautier S.A France
Eyssautier Flepp Malatier & Pages S.A France
Boistel Eyssautier S.A France
Omnium d'Assurances Maritimes France
Astramar S.A France
Cires SARL France
Sogescor SARL France
Gatier S.A Switzerland
Assurances Maritimes Eyssautier Malatier Inter SARL France
Ivoiriennes Assurances Conseil Ivory Coast
Societe Internationale de Courtage d'Assurances
et de Reassurances-F&J (SARL) Burkina Faso
Socodel-Paris S.A France
Union Francaise de Reassurances (S.A.) France
Guy Carpenter & Cia, S.A Spain
William M. Mercer-Faugere & Jutheau (S.A.R.L.) France
Societe d'Etude et de Gestion et de Conseil en Assurance SA Senegal
Mercer Consulting Group, Inc. Delaware
National Economic Research Associates, Inc. California
National Economic Research Associates, Inc. Delaware
Hudson Strategy Group, Inc. Delaware
Mercer Management Consulting, Inc. Delaware
Decision Research Corporation Massachusetts
LAR/Decision Research Corporation New York
Lippincott & Margulies, Inc. New York
Mercer Management Consulting, Ltd. Bermuda
Mercer Management Consulting GmbH Germany
UBM Unternehmensberatung Munchen GmbH Germany
UBM Marktforschung GmbH International Industrial Research Germany
UBM Industrial Market Research Iberica S.L Germany
UBM Consultoria Internacional S/C Ltda Brazil
UBM Consulting France International Management Consultants France
Mercer Management Consulting Limited Switzerland
Mercer Management Consulting S.L Spain
Mercer Management Consulting SNC France
MID, Inc. Delaware
INPLAN Pte. Ltd. Singapore
Mercer Consulting Services S.A Switzerland
</TABLE>
- 4 -
<PAGE>
<TABLE>
<S> <C>
Mercer Service Company, Inc. Delaware
William M. Mercer Companies, Inc. Delaware
William M. Mercer Holdings, Inc. Delaware
William M. Mercer Pty. Ltd. Australia
Superfund Nominees Pty. Ltd. Australia
William M. Mercer International S.A Belgium
William M. Mercer Limited Canada
Hickling -Johnston Ltd. Canada
Mercer Management Consulting Limited Canada
Metcalfe Agencies Limited Quebec
Societe Conseil Mercer Limitee Quebec
Mercer Limited Ireland
P.I.C. Advisory Services Limited Ireland
P.I.C. Management Services Limited Ireland
Mercer Fraser P.I.C. Trustees Limited Ireland
William M. Mercer Limited of Japan Japan
William M. Mercer Limited Hong Kong
William M. Mercer (Malaysia) Sdn. Bhd Malaysia
William M. Mercer Zainal Fraser Sdn. Bhd Malaysia
William M. Mercer Ten Pas B.V Netherlands
Germas B.V Netherlands
Reitmulders & Partners B.V Netherlands
William M. Mercer Services B.V Netherlands
William M. Mercer Limited New Zealand
William M. Mercer, Incorporated Puerto Rico
William M. Mercer, S.A Switzerland
William M. Mercer Limited United Kingdom
William M. Mercer Fraser (Irish Pensioneer Trustees) Limited Ireland
William M. Mercer Srl Italy
DCF Consultants PTE Limited Singapore
William M. Mercer Fraser Pension Fund Trustees Limited United Kingdom
Duncan C. Fraser & Co. United Kingdom
William M. Mercer Fraser Computer Services Limited United Kingdom
Mercer Management Consulting, Limited United Kingdom
MF Trustees Limited United Kingdom
William M. Mercer Fraser Pension Fund Trustees Limited United Kingdom
William M. Mercer (Isle of Man) Limited Isle of Man
Pensioneer Trustees (Leeds) Limited England
William M. Mercer Lda Portugal
William M. Mercer Fraser Limited United Kingdom
MPA (International) Limited United Kingdom
Pension Trustees Limited United Kingdom
Pensioneer Trustees Limited United Kingdom
Pensioneer Trustees (London) Limited United Kingdom
Southampton Place Trustee Co. Ltd. United Kingdom
William M. Mercer, Incorporated Delaware
National Medical Audit California
Hansen International Limited Delaware
William M. Mercer Plan Participant Services, Inc. Delaware
William M. Mercer of Indiana, Incorporated Indiana
Mercer Investment Consulting, Inc. Kentucky
William M. Mercer of Kentucky, Inc. Kentucky
William M. Mercer, Incorporated Louisiana
William M. Mercer, Incorporated Massachusetts
William M. Mercer of Michigan, Incorporated Michigan
William M. Mercer, Incorporated Nevada
William M. Mercer, Incorporated Ohio
</TABLE>
- 5 -
<PAGE>
<TABLE>
<S> <C>
William M. Mercer, Incorporated Oklahoma
William M. Mercer of Texas, Inc. Texas
William M. Mercer of Virginia, Incorporated Virginia
MPA Superannuation Services Limited Australia
MPA Superfund Nominees Pty. Limited Australia
Mercer R.H. SARL France
William M. Mercer-MPA Limited Hong Kong
William M. Mercer Philippines, Incorporated Philippines
William M. Mercer Pte. Ltd. Singapore
William M. Mercer S.A Argentina
William M. Mercer S.A. Asesores de Seguros Argentina
William M. Mercer Comercio Consultoria e Servicos Ltda Brazil
William M. Mercer Consultoria Ltda Brazil
Grupo Assistencial De Economia E Financas Tudor S/C Ltda Brazil
Mercer MW Ltda Brazil
Mercer MW Pesquisas Ltda Brazil
Mercer MW Servicos Ltda Brazil
Mercer MW Saude Ltda Brazil
Vida Network Ltda Brazil
William M. Mercer, S.A Belgium
William M. Mercer Limitada Chile
William M. Mercer Claro Corredores de Seguros Chile
William M. Mercer A/S Denmark
William M. Mercer A.B Sweden
William M. Mercer (Korea) Co., Ltd. Korea
Mercer C & B Servicios, S.A. de C.V Mexico
Mercer C & B S.A. de C.V Mexico
William M. Mercer Broking (Taiwan) Ltd. Taiwan
William M. Mercer Consulting (Taiwan) Ltd. Taiwan
Seabury & Smith, Inc. Delaware
Seabury & Smith of Arkansas, Inc. Arkansas
Trust Consultants, Inc. California
Appleby & Sterling Agency, Inc. Delaware
Marsh & McLennan National Marketing Corporation Delaware
Marsh & McLennan Securities Corporation Delaware
Smith-Sternau Organization, Inc. Delaware
The Schinnerer Group, Inc. Delaware
Victor O. Schinnerer & Company, Inc. Delaware
Victor O. Schinnerer & Co. (Bermuda), Ltd. Bermuda
Potomac Insurance Managers, Inc. Delaware
Victor O. Schinnerer of Illinois, Inc. Illinois
Victor O. Schinnerer & Company, Inc. Ohio
Encon Holdings, Inc. Texas
Panhandle Insurance Agency, Inc. Texas
Encon Underwriting Agency, Inc. Texas
Encon Holdings, Inc. Ontario
Encon Insurance Managers Inc. Canada
National Program Administrator Investments, Inc. Canada
Encon Management Services, Inc. Canada
Encon Reinsurance Managers Inc. Canada
Encon Title Insurance Managers Inc. Canada
Rockcliffe Investors, Ltd. Canada
</TABLE>
- 6 -
<PAGE>
<TABLE>
<S> <C>
Victor O. Schinnerer & Company Ltd. United Kingdom
Encon Underwriting Limited United Kingdom
Admiral Holdings Limited United Kingdom
Admiral Underwriting Agencies Limited United Kingdom
Admiral Ireland Limited Ireland
Admiral Underwriting Agencies (Ireland) Ltd. Ireland
Seabury & Smith of Georgia, Inc. Georgia
M. A. Gesner of Illinois, Inc. Illinois
Seabury & Smith of Illinois, Inc. Illinois
Seabury & Smith, Inc. Indiana
Seabury & Smith, Inc. Kentucky
Seabury & Smith, Inc. Louisiana
Seabury & Smith, Inc. Massachusetts
Seabury & Smith, Inc. Michigan
Seabury & Smith, Inc. Nevada
Seabury & Smith Agency, Inc. Ohio
Seabury & Smith, Inc. Oklahoma
Seabury & Smith, Inc. Texas
Seabury & Smith, Inc. Virginia
Seabury & Smith Limited Ontario
G. E. Freeman Insurance Agency Limited Ontario
Seabury & Smith Limited United Kingdom
Putnam Investments, Inc. Massachusetts
Putnam Investment Management, Inc. Massachusetts
Putnam Future Advisors, Inc. Massachusetts
Putnam Fiduciary Trust Company Massachusetts
Putnam Investor Services, Inc. Massachusetts
Putnam Mutual Funds Corp. Massachusetts
Putnam Insurance Agency, Inc. Massachusetts
The Putnam Advisory Company, Inc. Massachusetts
Putnam Europe Ltd. United Kingdom
The Putnam Corporation Massachusetts
Putnam Rhumbline Corporation Massachusetts
Primary Funds Service Corp. Delaware
Putnam Overseas Institutional Management Company, Ltd. Bahamas
Putnam International Distributors, Ltd. Cayman Islands
Putnam Deutschland GmbH Germany
Putnam International Advisory Company, S.A Luxembourg
NKK-Putnam Management, S.A Luxembourg
Putnam International Growth Management, S.A Luxembourg
Putnam Luxembourg, S.A Luxembourg
The Bowring Group Limited England
C.T.B. Services Ltd. England
C.T. Bowring & Co. Ltd. England
Importbest Ltd. England
Bowring Financial Services Ltd. England
Marsh & McLennan Management Services (Guernsey) Ltd. Guernsey
Bowring Marsh & McLennan (IOM) Ltd. I.O.M.
Marsh & McLennan Management Services (Isle of Man) Ltd. I.O.M.
Carpenter Bowring (UK) Ltd. England
Carpenter Bowring Ltd. England
Marsh Re Correduria de Reaseguros S.A Spain
Bowring Reinsurance Brokers Ltd. England
Tower Insurance Brokers Ltd. England
Winchester Bowring Ltd. England
White Kennett Ltd. England
Marsh Re Correduria de Reaseguros S.A. Spain
</TABLE>
- 7 -
<PAGE>
<TABLE>
<S> <C>
C.T. Bowring & Co. (Insurance) Ltd. England
Bowring Worldwide Services Ltd. England
Marsh & McLennan Global Broking Ltd. England
Bowring Aviation Ltd. England
Bowring Financial & Professional Insurance Brokers Ltd. England
Aviation Risk Management Services Ltd. England
C.T. Bowring Space Projects Ltd. England
Aviation Insurance Advisory Services Ltd. England
Bowring Aviation Advisory Services Ltd. England
Marsh & McLennan Marine & Energy Ltd. England
Bowring Marsh & McLennan Ltd. England
Marsh & McLennan Services Ltd. England
Marsh & McLennan Holdings Ltd. England
Marsh & McLennan Nederland B.V Netherlands
Marsh & McLennan Lda Portugal
Marsh & McLennan Bowring Ltd. England
Bowring Gauntlet Ltd. England
Bowring Risk Management Ltd. England
Bowring Professional Indemnity Scotland Ltd. Scotland
Microsafe Ltd. England
Ulster Insurance Services Ltd. N. Ireland
RIAS Insurance Services Ltd. Scotland
Bowring Camper & Nicholsons Ltd. England
RIC Management Services Ltd. Eire
Insurance Management Services Ltd. Eire
Marsh & McLennan Ireland Ltd. Eire
C.T. Bowring Ireland Ltd. Eire
Mathews Mulcahy & Sutherland Ltd. Eire
Surveyors Insurance Brokers Ltd. England
Surveyors Claim Services Ltd. England
Bowring Information & Communications Systems Ltd. England
Marsh & McLennan Holdings Ltd. New Zealand
Marsh & McLennan Ltd. New Zealand
Reinsurances New Zealand Ltd. New Zealand
Risk Management Ltd. New Zealand
Marsh & McLennan Ltd. Fiji
Reinsurances (Pacific) Ltd. Fiji
Bowring Services Ltd. England
C. T. Bowring (Underwriting Agencies) Ltd. England
C. T. Bowring Trading (Holdings) Ltd. England
Baffin Trading Company Ltd. Canada
C.T.B. Ltd. England
Tower Hill Property Company Ltd. England
Bowring In The Community Ltd. England
C. T. Bowring (Insurance) Holdings Ltd. England
C. T. Bowring Japan Ltd. Japan
Carpenter Bowring Australia Pty. Ltd. Australia
Carpenter Bowring New Zealand Ltd. New Zealand
Australian World Underwriters Pty. Ltd. Australia
</TABLE>
- 8 -
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the previously filed
Registration Statements of Marsh & McLennan Companies, Inc. on Form S-8
(Registration File Nos. 2-58660, 2-65096, 2-82938, 33-32880, 33-48803, 33-48804,
33-48807, 33-54349, 33-59603, and 33-63389) and in the previously filed
Registration Statement on Form S-4 (Registration File No. 33-24124) of our
reports dated February 26, 1997 (March 12, 1997 as to the last paragraph of Note
3) appearing in, and incorporated by reference in, this Annual Report on Form
10-K of Marsh & McLennan Companies, Inc. for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
New York, New York
March 24, 1997
Exhibit 24
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Lewis W. Bernard
--------------------
Lewis W. Bernard
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Richard H. Blum
-------------------
Richard H. Blum
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Frank J. Borelli
--------------------
Frank J. Borelli
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Robert Clements
-------------------
Robert Clements
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Peter Coster
----------------
Peter Coster
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Robert F. Erburu
--------------------
Robert F. Erburu
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Jeffrey W. Greenberg
------------------------
Jeffrey W. Greenberg
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ R.J. Groves
---------------
R. J. Groves
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Richard S. Hickok
---------------------
Richard S. Hickok
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ David D. Holbrook
---------------------
David D. Holbrook
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Lawrence J. Lasser
----------------------
Lawrence J. Lasser
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Richard M. Morrow
---------------------
Richard M. Morrow
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ George Putnam
-----------------
George Putnam
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Adele Smith Simmons
-----------------------
Adele Smith Simmons
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ John T. Sinnott
-------------------
John T. Sinnott
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ A. J. C. Smith
------------------
A. J. C. Smith
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Frank J. Tasco
------------------
Frank J. Tasco
<PAGE>
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a
Delaware corporation (the "Company"), does hereby constitute and appoint any one
of A. J. C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the
undersigned's agent and attorney-in-fact, each with the power to act fully
hereunder without the other and with full power of substitution to act in the
name and on behalf of the undersigned:
To sign or to transmit electronically in the name and on behalf of
the undersigned, as a Director of the Company, and file with the
Securities and Exchange Commission on behalf of the Company an Annual
Report on Form 10-K for the year ended December 31, 1996, any
registration statements for the registration of the Company's common
stock and related interests to be issued pursuant to the Company's
duly adopted employee benefit, compensation and stock plans, any
registration statements for the registration of the Company's common
stock for issuance in connection with future acquisitions or for
resale by the holders thereof who acquired or will acquire such stock
in connection with past or future acquisitions, and any amendments or
supplements to such Annual Report on Form 10-K and such registration
statements; and
To execute and deliver, either through a paper filing or
electronically, any agreements, instruments, certificates or other
documents which they shall deem necessary or proper in connection
with the filing of such Annual Report on Form 10-K, registration
statements and prospectuses and amendments or supplements thereto and
generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally
present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney effective the 20th day of March, 1997.
/s/ Romeo J. Ventres
--------------------
Romeo J. Ventres
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated Marsh & McLennan Companies, Inc., and subsidiaries December 31,
1996 financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 299,600,000
<SECURITIES> 0
<RECEIVABLES> 1,129,100,000
<ALLOWANCES> 43,300,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,748,600,000
<PP&E> 1,465,800,000
<DEPRECIATION> 695,700,000
<TOTAL-ASSETS> 4,545,200,000
<CURRENT-LIABILITIES> 1,556,300,000
<BONDS> 458,200,000
0
0
<COMMON> 76,800,000
<OTHER-SE> 1,811,800,000
<TOTAL-LIABILITY-AND-EQUITY> 4,545,200,000
<SALES> 0
<TOTAL-REVENUES> 4,149,000,000
<CGS> 0
<TOTAL-COSTS> 3,433,700,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,900,000
<INTEREST-EXPENSE> 61,600,000
<INCOME-PRETAX> 668,000,000
<INCOME-TAX> 208,700,000
<INCOME-CONTINUING> 459,300,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 459,300,000
<EPS-PRIMARY> 6.34
<EPS-DILUTED> 6.34
</TABLE>
